Natural Resources Access Regulator v Lidokew Pty Ltd

[2024] NSWLEC 59

Land and Environment Court

New South Wales

Medium Neutral Citation:

Natural Resources Access Regulator v Lidokew Pty Ltd [2024] NSWLEC 59

Hearing dates:

29 May 2024

Date of orders:

17 June 2024

Decision date:

17 June 2024

Jurisdiction:

Class 5

Before:

Duggan J

Decision:

See orders at [63]

Catchwords:

SENTENCING – Defendant guilty of three offences against of s 91I(2) of the Water Management Act 2000 (NSW) – objective seriousness low – strict liability – no environmental harm – subjective circumstances – totality principle – fine imposed – publication order – moiety

Legislation Cited:

Crimes (Sentencing Procedure) Act 1999 (NSW)

Fines Act 1996 (NSW)

Water Management Act 2000 (NSW)

Cases Cited:

Ace Demolition & Excavation Pty Ltd v Environment Protection Authority [2024] NSWCCA 4

AxerPty Ltd v Environment Protection Authority (1993) 113 LGERA 357

Camilleri's Stock Feeds Pty Ltd v EPA (1993) 32 NSWLR 683

Chief Executive, Office of Environment & Heritage v Orica Pty Ltd; Environment Protection Authority v Orica Pty Ltd [2015] NSWLEC 109

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

Environment Protection Authority v Barnes [2006] NSWCCA 246

Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 Hoare v The Queen (1989) 167 CLR 348

Markarian v The Queen (2005) 228 CLR 357

Natural Resources Regulator v Lidokew Pty Ltd [2023] NSWLEC 130

Pearce v The Queen (1998) 194 CLR 610

R v De Simoni (1981) 147 CLR 383

R v Visconti [1982] 2 NSWLR 104

Category:

Sentence

Parties:

Natural Resources Access Regulator (Prosecutor)
Lidokew Pty Ltd (Defendant)

Representation:

Counsel:
H El-Hage SC and A Brown (Prosecutor)
C R Ireland (Defendant)

Solicitors:
Crown Solicitor’s Office (Prosecutor)
Bell & Johnson Solicitors (Defendant)

File Number(s):

2020/88368, 2020/88369, 2020/88370

Publication restriction:

No

JUDGMENT

Nature of proceedings

1. Lidokew Pty Ltd (the Defendant) had been charged with six offences against the Water Management Act 2000 (NSW) (WM Act). The Defendant pleaded not guilty to each of the offences and after a hearing I determined in Natural Resources Regulator v Lidokew Pty Ltd [2023] NSWLEC 130 (Lidokew No 1) that the Defendant was guilty with respect to three of the offences. These proceedings relate to the sentencing of the Defendant with respect to the three charges.

Facts

2. The relevant facts relating to the determination of the appropriate sentence are those agreed between the parties and tendered as admissions in the sentence proceedings, as summarised below.

The offences

1. On 28 November 2023, Lidokew Pty Ltd ACN 002 942 289 (the Defendant) was found to have committed three offences against s 911(2) of the Water Management Act 2000 (the Act), namely taking water by means of a metered work while its metering equipment was not operating properly. Each offence concerned the same charge period, the period 29 January 2019 to 28 April 2019.

The Defendant

2. The Defendant is an Australian company registered on 4 June 1985. Mr Gary Phelps is the Defendant's sole director and secretary. The Defendant is a proprietary company limited by shares, with a share capital comprising 77 ordinary shares. Havana North Pty Ltd is the majority shareholder, holding 75 ordinary shares in the Defendant. The remaining 2 ordinary shares are held by Mr Phelps.

The Property

3. The offences occurred at a property located at 1563 Doreen Lane, Wee Waa NSW (Lot 1 DP 1128755) known as “Havana North” (the Property). The Defendant was the registered owner of Havana North, which is approximately 1,225 hectares in size. Image 1 above is an aerial map showing the boundaries of Havana North.

4. Havana North is located near Wee Waa in Northern NSW, approximately 41 kilometres north­west of Narrabri. The relevant Local Government Area is Narrabri Shire. At all relevant times, the Defendant used the property primarily for cotton production.

5. At all relevant times, the Defendant took bore water from the Lower Namoi Groundwater Source by using three metered works installed at Havana North. At the relevant time, the use of that groundwater source was regulated by the Water Sharing Plan for the Upper and Lower Namoi Groundwater Sources 2003 (WSP).

Application of Part 2 and 3 of Chapter 3 of the Act

6. At the relevant time, Parts 2 and 3 of Chapter 3 of the Act applied to the Lower Namoi Groundwater Source. Part 2 of Chapter 3 of the Act provides for a system of access licences (known as Water Access Licences (WAL)) in respect of water sources to which it applies.

Water access licence and approvals

7. At the relevant time, the Defendant held WAL 12400. The share component of WAL 12400 was 494 units, with an available water determination of 1ML/unit. The annual use limit for WAL 12400 during the charge period was 988ML.

8. The location of the three metered works the subject of the offences correspond with the location of groundwater bore sites on Havana North as follows: the Diesel Pump (extraction site 17637); the Electric Pump (extraction site 105552); and the House Pump (extraction site 17636). Each pump was, and remains, an approved water supply work for the purposes of the Act. At all relevant times, the Defendant held combined approval 90CA806356 for those three water supply works. The indicative location of the three metered works is shown in Image 1 above.

Investigation of meter offences at Havana North

9. On 4 December 2018, investigators with the Natural Resources Access Regulator (NRAR) attended Havana North for the purposes of inspecting the three meters associated with the Diesel, Electric and House Pumps respectively. Each of the meters was a Davies Shephard mechanical flow meter.

10. On 4 June 2019, each of the three meters were seized by NRAR investigators in order to test their accuracy.

Testing of meters

11. On 25 June 2019, the three meters were taken to Manly Hydraulics Laboratory (MHL) for testing and inspection. Each of the three meters was inspected at MHL by Andrew Judge, an approved signatory for the National Association of Testing Authorities and National Measurement Institute, with expertise and experience in hydraulic and metering testing. In Mr Judge's opinion, each of the meters felt rough when turning the impeller, implying that some of the bearings in the units may be worn or used. In his opinion the wear and tear on the units was consistent with their age. All three units were showing their age but appeared to be sealed with no leakage.

12. The House Pump impeller was new and had the price tag on it. The Diesel Pump impeller and Electric Pump impeller were clearly scuffed and showed signs of discolouration and wear and tear.

13. The meter body, stem and propeller and unit base plate were delivered to Mr Judge. The installed meter pipes connected to the meters when in situ at Havana North were not delivered to him as the meters were welded to long steel pipes. MHL manufactured replica PVC pipes to enable testing. Mr Judge ran each meter through a test rig at low, medium and high flow rates with a calibrated magnetic flow meter as the point of reference. Results showed that each of the three meters was inaccurate across a range of flow rates, as set out below:

14. The product documentation for the relevant Davies Shephard meters specified an accuracy of ± 3%. Accordingly, compared to the factory margin of error, the meters were under-recording by ranges of: 8-8.11% (the Diesel Pump); 6.08-8.97% (the Electric Pump); and 4.98-23.04% (the House Pump). This error rate on each pump meter was likely caused by the wear and tear on the component parts of the meters over time.

Recorded water use over the charge period

15. The Defendant's Water Account Statement for the 2018/2019 water year showed usage of each of the three metered works over the period 29 January 2019 to 28 April 2019. The following table shows the recorded water usage, along with calculations of the amount of additional water that could have been taken based on the error rate at each meter being at the lowest and highest ends of the above ranges (that is, taking account of both the factory error rate and the lowest and highest error ranges identified by Mr Judge):

Recorded interview with Gary Phelps on 19 December 2019

16. On 19 December 2019, Mr Phelps participated in an interview with NRAR Investigators as the nominated corporation representative for Lidokew. During the course of the interview, the following matters relevant to sentencing were recorded:

1. The meters installed on each bore were old Davies Shepherd meters. They have been there, in Mr Phelps' words “forever”;

2. Mr Phelps had no set maintenance regime for the meters. If he happened to go past them, he would check whether the wheel was turning and make sure they're functioning, and “that’s about the limit of it”;

3. Maintenance was only performed when it was brought to Mr Phelps' attention by the meter reader, in which case he would remove the meters and take them to an authorised repairer and get them fixed;

4. This had not occurred very often as far as Mr Phelps was concerned, generally the meters had been pretty reliable. In terms of his water usage, Mr Phelps relied exclusively on the meter readings;

5. On one occasion when a meter reader told Mr Phelps the meter was not functioning, Mr Phelps recalled that he turned the meter straight off and said he would get it attended to. He knew that the meters had been working fine a week earlier as he had checked them. As soon as anything like that was brought to his attention he would respond straight away;

6. As soon as things to do with the meters were brought to his attention he responded. He did not think it was his place to be pulling them out at whatever schedule and checking them. Mr Phelps checked them when driving past to make sure the little wheel is turning and at least he knows they're functioning. That was all he did, not being able to do anymore. He would stop as he was going past, pulled up and read the meter. The meters were repaired or inspected earlier in 2019. He could not tell whether there's something wrong with it or not until it ceases operating. He did not pull them out to see if they're mechanically sound or not. He was not aware of any requirement to remove the meters and send them off to Gunnedah or wherever for accuracy checking and never had to do this. He only replaced impellers when he was asked to pull them out for maintenance. He was of the view that generally the meters were pretty reliable. Normally he did not have to do anything with them. Generally, they're pretty maintenance free. On one occasion recently he was told the meter on Doreen Lane was not working and turned the pump straight off and pulled the meter out and it was repaired. As soon as things were brought to his attention to do with anything with the meters he would respond. He did not think it was his place to be pulling them out at whatever schedule and checking them. “The only thing I do, I check them when I'm driving past to make sure the little wheel is turning and I, at least I know they're functioning. That's all I can do really”; and

7. Mr Phelps believed it was illegal to pull the meters out to have them tested. Mr Phelps never removed the meters for testing. He believed he was not obliged to do so as long as he checked that they were working. Mr Phelps checked the meters on a regular basis to see if they were working.

Nature of charges to which sentencing relates

3. The three charges relate to a breach of s 91I(2) of the WM Act which provides:

91I   Taking water when metering equipment not working

…

(2)   A person who takes water from a water source to which this Part applies by means of a metered work while its metering equipment is not operating properly or is not operating is guilty of an offence.

Tier 2 penalty.

4. The three charges relate to the charge period 29 January 2019 to 28 April 2019 (Charge Period). Each of the three pumps were situated on the Property and were used for the pumping of water from an underground water source for use in the Defendant’s agricultural enterprise.

Sentencing principles

5. Section 3A of the Crimes (Sentencing Procedure) Act 1999 (NSW) (CSP Act) provides that the purposes of sentencing are:

3A   Purposes of sentencing

The purposes for which a court may impose a sentence on an offender are as follows -

(a)   to ensure that the offender is adequately punished for the offence,

(b)   to prevent crime by deterring the offender and other persons from committing similar offences,

(c)   to protect the community from the offender,

(d)   to promote the rehabilitation of the offender,

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

(f)   to denounce the conduct of the offender,

(g)   to recognise the harm done to the victim of the crime and the community.

Statutory matters required to be taken into account in sentencing

6. For the purposes of sentencing the factors as provided for in s 21A of the CSP Act are relevant and s 21A(1) provides in particular:

21A   Aggravating, mitigating and other factors in sentencing

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

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

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

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

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

7. The Prosecutor accepted that there were no aggravating features as provided for in s 21A(2) of the CSP Act that were relevant to the determination of the appropriate sentence in this matter.

8. Of the mitigating factors provided for in s 21A(3) of the CSP Act the following matters were identified as relevant considerations:

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

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

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

…

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

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

…

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

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

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

9. In addition, the provisions of s 364A of the WM Act makes provision for the following matters to be considered in sentencing:

364A   Matters to be considered in imposing penalty

(1)   In imposing a penalty on a person for an offence against this Act or the regulations, the court is to take into consideration the following (so far as they are relevant)—

(a)   the impact of the offence on other persons’ rights under this Act,

(b)   the market value of any water that has been lost, misused or unlawfully taken as a consequence of the commission of the offence,

(c)   the extent of the harm caused or likely to be caused to the environment (including, in particular, any water source or waterfront land) by the commission of the offence,

(d)   the practical measures that may be taken to prevent, control, abate or mitigate that harm,

(e)   the extent to which the person could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence,

(f)   the extent to which the person had control over the causes that gave rise to the offence,

(g)   whether the offence was committed during a severe water shortage or an extreme event (that is, in contravention of an order in force under section 49A, 49B or 324),

(h)   the person’s intentions in committing the offence,

(i)   whether, in committing the offence, the person was complying with orders from an employer or supervising employee,

(j)   in the case of an offence of taking water in contravention of this Act, whether the water so taken had been released for environmental purposes and, if so, whether the person was aware of that fact,

(k) any civil penalty that has been imposed on the person under section 60G in relation to the conduct from which the offence arises.

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

Objective seriousness of offences

10. In Hoare v The Queen (1989) 167 CLR 348 at 354 the determination of an appropriate sentence is to be undertaken bearing in mind that:

354   …a sentence of imprisonment imposed by a court should never exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in the light of its objective circumstances (see Veen v. The Queen [No. 2] (1988) 164 CLR 465 at 472, 485-486, 490-491, 496.

11. In Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 at [139]-[140] identified the role of objective seriousness as:

139   The primary factor to be considered in sentencing is the objective seriousness of the offences Lawrenson Diecasting Pty Ltd v WorkCover Authority (NSW) (1999) 90 IR 464 at 474, 475 and Fletcher Construction Australia Ltd v WorkCover Authority (NSW) (1999) 91 IR 66 at 77-80.

140   The objective gravity or seriousness of the crime fixes both the upper and lower limits of proportionate punishment. It fixes the upper limit because a sentence should never exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in light of its objective circumstances: Veen v R (No 2) at 472, 485-486, 490- 491 and 496; Baumer v The Queen (1988) 166 CLR 51 at 57-58; Hoare v The Queen (1989) 167 CLR 348 at 354. It fixes the lower limit because allowance for the subjective factors of the case, particularly of the offender, cannot produce a sentence which fails to reflect the objective gravity or seriousness of the offence (R v Dodd (1991) 57 A Crim R 349 at 354; R v Nichols (1991) 57 A Crim R 391 at 395; R v Allpass (1993) 72 A Crim R 561 at 563; R v Murray (unreported, Court of Criminal Appeal, NSW, Barr J, 29 October 1997) at 6-7 per Barr J with whom Newman J agreed; and R v Scott ( 18 April 2005) at [15])…

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

Nature of offences and maximum penalty

13. Each of the three offences are strict liability offences and carry the maximum penalty for a corporation of $2,002,000.

14. The strict liability nature of the offence and the quantum of the maximum penalty are indicators of the public expression by Parliament of the seriousness of the offence and the gravity of the offences as perceived by the community: AxerPty Ltd v Environment Protection Authority (1993) 113 LGERA 357 (Axer) at 359; Camilleri's Stock Feeds Pty Ltd v EPA (1993) 32 NSWLR 683 at 698.

15. The provisions of the WM Act relevant for the purposes of the consideration of sentence in these proceedings, include as its stated objects:

3   Objects

The objects of this Act are to provide for the sustainable and integrated management of the water sources of the State for the benefit of both present and future generations and, in particular—

(a)   to apply the principles of ecologically sustainable development, and

(b)   to protect, enhance and restore water sources, their associated ecosystems, ecological processes and biological diversity and their water quality, and

(c)   to recognise and foster the significant social and economic benefits to the State that result from the sustainable and efficient use of water, including—

(i)   benefits to the environment, and

(ii)   benefits to urban communities, agriculture, fisheries, industry and recreation, and

(iii)   benefits to culture and heritage, and

(iv)   benefits to the Aboriginal people in relation to their spiritual, social, customary and economic use of land and water,

(d)   to recognise the role of the community, as a partner with government, in resolving issues relating to the management of water sources,

(e)   to provide for the orderly, efficient and equitable sharing of water from water sources,

(f)   to integrate the management of water sources with the management of other aspects of the environment, including the land, its soil, its native vegetation and its native fauna,

(g)   to encourage the sharing of responsibility for the sustainable and efficient use of water between the Government and water users,

(h)   to encourage best practice in the management and use of water.

16. These relevant objects reinforce the public protective nature of the legislative regime and the importance of sustainable and efficient water use. The provisions of the WM Act, including s 91I(2), play an essential role in the management of water sources through the provision of metering systems and the maintenance of such meters.

17. The Prosecutor submitted that the objective seriousness of the charges included a consideration of the extent to which the offending conduct acted to undermine the regulatory scheme, as metered extraction data was a key input in determining objective benchmarks upon which future water allocation decision-making could be based. In addition, accurate metering data was essential to ensuring that a person is limited to taking the water that has been allocated to them.

18. Having regard to the evidence adduced, I accept that the criminal conduct demonstrated in these proceedings undermines the efficient and equitable sharing of water and further undermines the capacity for sound future decision-making with respect to the future allocation of water.

Relevant considerations pursuant to s 364A of the WM Act

19. The Prosecutor accepted that the matters for consideration under s 364A(1)(a), (d), (e), (g), (i), (j) and (k) were not relevant considerations in the circumstances of this case. I do, however, give significant weight in the determination of the objective seriousness of the offending to the fact that it was agreed that there was no environmental harm caused as a consequence of the offending conduct.

20. As to the matters that the Prosecutor submitted would be relevant to the determination of the objective seriousness of the offending I will deal with those matters in turn.

The extent to which the person had control over the causes that gave rise to the offence – 364A(1)(f) of the WM Act

The person’s intentions in committing the offence – 364A(1)(h) of the WM Act

21. I have grouped the consideration of s 364A(1)(f) and (h) as the circumstances of this case give rise to a degree of overlap in these considerations and I will deal with them as a single group to ensure that there is no double counting of the relevant objective seriousness.

22. The Prosecutor acknowledged that there was a Tier 1 equivalent to the strict liability offence under s 91I(2) of the WM Act, being s 91I(1). The requisite mental elements for s 91I(1) are: intentionally or negligently failing to ascertain whether the metering equipment was not operating properly; and knowing or having reasonable cause to believe that the metering equipment was not operating properly. To sentence the Defendant on the basis that it held any state of mind as would constitute the more serious Tier 1 offence would involve a breach of the principle in R v De Simoni (1981) 147 CLR 383 (De Simoni) at 389.

23. In this case, the Prosecutor submitted that the Defendant's state of mind should, and consistent with De Simoni, must be seen as falling short of the standard of criminal negligence that would found an offence under s 91I(1) of the WM Act. It was submitted that the state of mind of the Defendant should be characterised as a lack of regard to whether the meters were operating properly (as opposed to operating at all) in circumstances where there was an absence of steps taken to ensure their proper operation (through regular maintenance or otherwise) prior to taking water.

24. I note that I had found in Lidokew No 1 at [301]-[303]:

301   The adjusted error rates demonstrate that the pumps were not operating within the guaranteed error rate and in all respects were under recording water take by more than 3% and in all cases were more than double that accepted amount. This operating level was, on the evidence, likely caused by the wear and tear on the component parts of the pumps over time. The evidence is also apparent that apart from when a pump failed no regular checking of the pump metering system, or the pump more generally was undertaken. That is, they were left to operate unchecked until failure. Whilst the pump was generally considered robust the evidence also indicates that it was accepted that the accuracy of the pump would diminish with time.

302   Whilst I accept that the pump accuracy diminished by fair wear and tear, I do not accept that such diminution is not to be considered in the assessment of whether the pump was operating properly for the reasons outlined above. A diminution of the accepted error rate to double or triple that sum is more than a de minimus change. The allocation of water relies upon a degree of accuracy in recording – absent that degree of accuracy both efficiency and sustainability of water resources is diminished. In this case, even excluding the anticipated 3% inaccuracy on the total water take allocated a 4.98% error would result in an additional 49.2ML being taken. Such sum is not inconsequential or not material in the context of the legislative scheme.

303   As to the honest and reasonable mistake defence, the only evidence of Mr Phelps’ dealings with the pumps is that contained in the ROI. To that extent he gives evidence that he satisfied himself from time to time that the meter dials were moving and when the pump stopped working, he had it fixed. The relevant mistake of fact must be that the meters were operating properly – Mr Phelps, on the available evidence, does not appear to have ever turned his mind to this fact. The movement of the dial of a meter or the fact that a pump is pumping is not a determination or assessment of the proper operation of the pump or meter. Accordingly, I find that the Defendant did not hold a relevant mistake as to fact.

25. I restate those findings in consideration of the Defendant’s conduct and state of mind. I further take into consideration that the impact of fair wear and tear on the metering accuracy was unable to be ascertained from a causal inspection of the metering equipment by the Defendant or as a consequence of general repair by a pump repairer. The evidence suggests that the extent of any inaccuracy in the metering equipment could only be ascertained by a competent analysis as was undertaken by Manly Hydraulics Laboratory as referred to at [2(11)] above.

26. I also take into account that the Defendant held the mistaken belief (through Mr Phelps) that it was not legally entitled to “pull the meters out to have them tested” as stated in [2(16)(g)] above and deposed to in Mr Phelps’ affidavit.

27. Taking all of those factors into consideration, I consider that the Defendant’s state of mind was not a feature that added materially to the objective seriousness of the offending. Whilst the Defendant should have ascertained the accuracy of the metering equipment as it was obliged to do in order to meet its obligations under the WM Act, the failure to do so was not a positive action but inaction over a period of many years resulting in fair wear and tear, rendering the meters inaccurate in the recording of water taken.

The market value of any water that has been lost, misused or unlawfully taken as a consequence of the commission of the offence – 364A(1)(b) of the WM Act

28. Evidence was adduced from the Prosecutor as to the market value of the water that comprised the unrecorded water take to the following effect:

1. In relation to the House Pump (proceeding 2020/88368), the volume of unrecorded water taken was between 3.07ML and 17.66ML. By reference to the lowest and highest of the monthly weighted average prices over the course of the Charge Period, the unrecorded water taken would have had a market value in the approximate range of $543.99 - $6,181;

2. In relation to the Diesel Pump (proceeding 2020/88369), the volume of unrecorded water taken was between 2.97ML and 3.01ML. By reference to the lowest and highest of the monthly weighted average prices over the course of the Charge Period, the unrecorded water taken would have had a market value in the approximate range of $525.69 - $1,053.50; and

3. In relation to the Electric Pump (proceeding 2020/88370), the volume of unrecorded water taken was between 5.69ML and 7.15ML. By reference to the lowest and highest of the monthly weighted average prices over the course of the Charge Period, the unrecorded water taken would have had a market value in the approximate range of $1,007.13 - $2,502.50.

29. The Defendant disputed the calculation of these sums on the basis that the water trading figures disclosed in the evidence indicated that (excluding related entity transfers of $0/ML) additional megalitre entitlement could be purchased for $80 in January 2019, $202 in February 2019, $300 in March 2019 and $200 in April 2019. It was submitted that, as there was no evidence as to precisely when the water was taken, the lesser figure of $80/ML should be reasonably adopted which produces the sum of $245 - $1,412.80 for the House Pump, $237.60 - $240.80 for the Diesel Pump and $455.20 - $572 for the Electric Pump.

30. Further, the Defendant submitted that, in this case, the market value of the unrecorded water taken would not be a relevant consideration in the determination of an appropriate sentence as the market value of this water was the amount a licensed user would have been charged by WaterNSW, rather than any amount a user needing to augment its entitlement would need to outlay to purchase it on the open water trading system. The latter amount would only be relevant if there had been a need to augment Lidokew's entitlement, which was not the case given the findings in Lidokew No 1 at [262]. The Defendant’s WaterNSW tax invoice for the offence period shows the unit value of the water at $3.09/ML. This gives a market value in the approximate range of $9.48 - $54.57 in additional water taken for the House Pump, $9.18 - $9.30 for the Diesel Pump, and $17.58 - $22.09 for the Electric Pump.

31. In the circumstances of this case, I accept that the determination of the value of the water on the open market, whilst a relevant consideration, would be afforded little weight in the assessment of the objective seriousness of the criminality. The volume of unrecorded water taken was numerically small and for the Charge Period the Defendant had not exceeded its water entitlement. Therefore, any water taken unrecorded, if recorded, would have been charged pursuant to the water license and not the market price of water in the open market. I accept the Defendant’s submissions that in the circumstances of this case such factors do not increase the objective seriousness of the offending.

Conclusions on objective seriousness

32. Having regard to the totality of the evidence, I determine that the objective seriousness is at the low end of the range of criminality. I give significant weight to the fact that there was no actual harm to the environment occasioned by the offending conduct and that the cause of the inaccurate metering was fair wear and tear rather than some positive physical act. However, I also take into account impacts on and that failing to maintain accurate metering systems undermines the legislative regime relating to the management of an important resource both to water users and the environment.

Subjective circumstances of the offender

Contrition and remorse – s 21A(3(i) of the CSP Act

33. Within the limits set by reference to the objective gravity of the offence, the favourable and unfavourable factors, personal to the offender, may be taken into account in determining the appropriate sentence.

34. Mr Phelps deposed to the Defendant’s contrition and remorse in his affidavit sworn 2 May 2024 in the following terms:

25   Although I was of the view at the time that I was doing all I could or was allowed to, based on the findings of the Court in this case, I understand that I should have done more to check and reduce the error rate of the meters as that is what the current legislation now requires. I apologise for not doing so and contravening the legislation in that regard. I know that now but emphasise I did not know I was doing anything wrong at the time.

26   I work hard as a farmer for myself and my family and am personally embarrassed and devastated by this prosecution. I regard myself as an honest and hardworking member of the community and this will never happen again, I will make sure of that. It cannot in any case with the new meters.

35. I accept that the Defendant understands the nature of the criminality involved in the charges and that the Defendant is genuinely remorseful, and I take that factor into account as a mitigating feature in the determination of an appropriate sentence.

Prior convictions – s 21A(2)(d) of the CSP Act

36. The Defendant was incorporated in 1985 and since that time the Defendant (and its principal, Mr Phelps) has no prior convictions.

Good character – s 21A(3)(f) of the CSP Act

37. A number of character references were tendered by the Defendant. The referees each indicated that they were aware of the nature of the offending and the purpose for which their reference was being used. I note that each reference related to Mr Phelps personally rather than the corporate Defendant, however, I consider the references relevant due to the fact that Mr Phelps was at the time of the offending, and remains still, the controlling mind of the corporate Defendant.

38. I take into account that the Defendant, through Mr Phelps, is of otherwise good character.

39. To the extent that the references also indicated that Mr Phelps has suffered some reputational impact, as well as indicating his public remorse, I take these into account, not as relating to a submission of extra-curial punishment, but rather as reinforcing the findings I make as to the Defendant’s contrition and remorse together with the need for deterrence in the circumstances of this case.

Deterrence, retribution and denunciation

40. The CSP Act requires consideration of the effect that the imposition of a sentence will have on the offender and upon other persons that may commit similar offences.

41. Evidence was adduced in cross-examination of the prosecution witness, Ms Tracey Brownbill, that indicated that there had been a change to the policy relating to the metering of water taking. In particular, the type of meters were being dictated and stringent regular testing and maintenance regimes were being implemented. As this policy related to the Defendant, it had, at the date of sentence, replaced each of its meters in accordance with this policy at a financial cost and that it was now required to comply with the maintenance and testing regimes. I accept the Defendant’s submissions that in light of the regulatory policy changes, together with the implementation of the new metering equipment on the Property, that the prospect of the Defendant committing a similar offence in the future is extremely low such that there is little need for specific deterrence.

42. As to general deterrence, the policy changes once implemented will also reduce the prospect of others committing similar offences. However, to the extent that there remains a risk in the intervening period the imposition of a monetary penalty, together with the publication order (referred to below at [58]-[59]), is sufficient to provide for the requisite general deterrent.

Consistency in decision-making

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

44. Having regard to the authorities to which I have been directed, I accept the submission of both parties that prior sentencing does not indicate a pattern to which regard would be had to ensure even-handedness in sentencing.

Summary disposal in the Local Court

45. The Defendant submitted that due to the objective seriousness of this case I should take into account the fact that the proceedings to which the sentence relates could have been commenced in the Local Court with the corresponding lesser jurisdictional limit on penalty. I do not accept that such a consideration is relevant in the circumstances of this case. The charges upon which I now proceed to sentence the Defendant were part of a number of Summons which incorporated alternate charges. Of the alternate charges, the Tier 1 charges were unable to be brought in the Local Court and therefore by necessity required commencement in this Court. In the circumstances, it is artificial to apply the consideration only to those charges upon which the Defendant was ultimately found guilty divorced from the totality of the charges to which the proceedings relate.

Legal costs

46. The parties have agreed that there be no order for costs with respect to these proceedings and accordingly this matter does not arise for consideration in the context of the appropriate sentence as would otherwise be the case: Environment Protection Authority v Barnes [2006] NSWCCA 246 at [88].

47. As requested by the parties, I will make no order as to costs.

Totality principle

48. The principle of totality is a relevant sentencing principle in the present case where each of the offences with which the Defendant has been charged and which it has been found guilty arise from the same identical facts and circumstances (albeit with differing error rates for each offence).

49. The principle has been concisely described by the majority of the High Court in Pearce v The Queen (1998) 194 CLR 610 (Pearce) at 623 as:

623   To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common. No doubt that general principle must yield to any contrary legislative intention, but the punishment to be exacted should reflect what an offender has done; it should not be affected by the way in which the boundaries of particular offences are drawn. Often those boundaries will be drawn in a way that means that offences overlap. To punish an offender twice if conduct falls in that area of overlap would be to punish offenders according to the accidents of legislative history, rather than according to their just deserts.

50. Each party also referred me to the statement of the principle expressed by Preston CJ of LEC in Chief Executive, Office of Environment & Heritage v Orica Pty Ltd; Environment Protection Authority v Orica Pty Ltd [2015] NSWLEC 109 at [142] that:

142   The effect of the totality principle is to require the Court, which has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed, to review the aggregate sentence and consider whether the aggregate is just and appropriate and reflects the total criminality before the Court. In the case of fines, adjustment may be made by reducing the amount of the fine for each offence. Care needs to be taken, however, to ensure that any adjustment of individual sentences does not cause the aggregate sentence not to reflect the total criminality of the offender's conduct or the sentence for any individual offence to become disproportionate to the objective gravity of that offence.

51. The Prosecutor submitted that the totality principle was applicable as it accepted that there was a degree of overlap in the criminality that called for some moderation of the penalties to be imposed in circumstances where the offending across the three offences was of like character and occurred over the same period of time.

52. I also have had regard to the expression of the principle in Ace Demolition & Excavation Pty Ltd v Environment Protection Authority [2024] NSWCCA 4 at [108]-[111] where Leeming JA considered the application of principle of totality in the following manner:

108   I turn to totality. The primary judge found that the three offences involving Mr Al Sarray’s fraudulent provision of information formed part of a single course of conduct, and was satisfied on the balance of probabilities that the fourth offence was carried out by Mr Al Sarray and was part of the same course of conduct: at [89]-[90]. His Honour regarded that finding as favourable to ACE, as is reflected by his application of the civil standard in respect of the fourth offence. I should proceed on the same basis.

109   EPA v Barnes [2006] NSWCCA 246 at [43]-[50] contains an extensive analysis by Kirby J writing for this Court on the applicable principles, confirming that the principle of totality applied to fines. The principle was applied at [50]:

Here, the fine in respect of count 1 ($4,000) was significantly different from that in respect of count 2 ($500). However, the disparity by itself does not suggest error. Where there are multiple offences, each punishable by a custodial sentence, the totality principle may find expression through the complete or partial accumulation of sentences, or through making all or some of the sentences concurrent (cf Pearce v The Queen (1998) 194 CLR 610, per McHugh, Hayne and Callinan JJ at 624 (para 45)). However, there is obviously no room for partial accumulation or concurrence in the case of fines. If the sentencing Judge believed that the totality principle required an adjustment to the fines which may otherwise be appropriate, the amount of each fine had to be altered, applying the sentencing principles suggested in Johnson v The Queen (2004) 205 ALR 346.

110   In EPA v Ghossayn Group Pty Ltd [2023] NSWLEC 127 at [128], Preston CJ of LEC said:

The totality principle applies where an offender has committed, and is to be sentenced for, multiple offences. The effect of the totality principle is to require the court in passing a series of sentences, each properly calculated in relation to the offence for which it is imposed, to review the aggregate sentence and consider whether the aggregate is “just and appropriate” and reflects the total criminality before the court: Mill v the Queen (1988) 166 CLR 59 at 62-63; [1998] HCA 70; Pearce v the Queen (1998) 194 CLR 610; [1998] HCA 57 at [49]; Gittany Constructions Pty Ltd v Sutherland Shire Council (2006) 145 LGERA 189; [2006] NSWLEC 242 at [196]. In the case of a sentence of a fine, if the Court believes the totality principle requires an adjustment to the individual fines that would otherwise be appropriate, the amount of each fine can be altered: Environment Protection Authority v Barnes [2006] NSWCCA 246 at [50].

111   There is the potential for overlap when considering offending which is a “single course of conduct” and applying the principle of totality. As will be seen below, the third offence overlaps with the first, and properly warrants a discount for that reason. In a sense, whether that is an aspect of the offending being part of the same course of conduct, or through the application of totality does not greatly matter. Nonetheless, the principled approach, as applied by Kirby J and Preston CJ of LEC in the passages reproduced above, is to leave questions of totality to the end, and apply a final check of the aggregate against whether it is a just and appropriate punishment for the entire criminality. That is the course I shall follow.

53. In determining whether the principle of totality applies to the circumstances of this case I am not convinced that the multiplicity of offences arises as a consequence of what was described in Pearce as “accidents of legislative history” rather it arises as a consequence of the Defendant undertaking the same course of conduct as it related to the three pumps. The multiplicity of pumps suffered from the same wear and tear over a similar period of time. Accordingly, I accept that it is appropriate that I take into account the fact that the Defendant is exposed to three penalties arises as a consequence of the Prosecutor having to commence a single prosecution relating to each of the respective pumps. The Defendant’s criminality, however, did not vary in any respect as between those pumps. Accordingly, I consider that the Defendant’s criminality should be judged as a single course of conduct and that the total criminality should be determined taking all three pumps into account and then such amount should be equally attributed as between the three charges.

Capacity to pay

54. Section 6 of the Fines Act 1996 (NSW) (Fines Act) provides:

6   Consideration of accused’s means to pay

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

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

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

55. In this case, the totality of the information provided to me as to the Defendant’s means to pay a fine comprised par 3 of the Affidavit of Mr Phelps sworn 24 May wherein 2024, he stated:

Effect of a fine

3   The imposition of a substantial fine on the defendant company will significantly affect the ability of the company to continue to operate. The recent significant increase in costs experienced by the company in carrying on its business due to current economic circumstances has had the effect that profit margins available to the defendant are very thin. A one off fine of over $50,000 for instance would act to strangle the defendant company and would cause severe difficulty in the company meeting its other financial obligations.

56. I do not consider that such evidence is sufficient to enable me to ascertain the means of the Defendant such that I could determine its capacity to pay a fine.

57. Counsel for the Defendant accepted the limited utility of this evidence but submitted that I should consider this evidence as part of the objective synthesis of determining an appropriate fine. Whilst Mr Phelps was not cross-examined upon this evidence (or at all), I consider that absent some further information relating to the Defendant’s financial position I am unable to place any weight on this evidence such that it would enable me to consider it in the sentencing exercise.

Publication order

58. In addition to any penalty imposed, the Court may make further orders as identified in Pt 3A of the WM Act. Section 353G(1)(a) of the WM Act provides:

353G   Additional orders

(1)   The court may do any one or more of the following:

(a)   it may order the offender to take specified action to publicise the offence (including the circumstances of the offence) and its environmental and other consequences and any other orders made against the offender,

59. The Prosecutor has requested that such publication order be made. The Defendant agrees to the making of the publication order. The form of the order and the publications in which it is to be placed have been agreed. I consider that it is appropriate in the circumstances of this case that the publication order be made in the form as agreed between the parties. The publication of the sentence will assist in providing publicity of the proceedings such that it will also operate as a general deterrent to other potential offenders.

Moiety

60. The Prosecutor seeks an order that one half of any monetary penalty imposed by the Court be paid to the Prosecutor pursuant to s 122 of the Fines Act. The Defendant does not oppose the making of such order. I will order accordingly.

Appropriate sentence

61. The appropriate sentence is to be derived by an “instinctive synthesis” of all of the relevant factors in order to determine an appropriate proportionate sentence: Markarian v The Queen (2005) 228 CLR 357 at 378.

62. Taking into account the objective seriousness of the charges and the factors identified above, I have determined that the appropriate sentence in this case includes the imposition of a total monetary penalty (in addition to the publication order) in the amount of $25,000 which sum is to be divided across the three charges (rounded to $8,333 per charge).

Orders

63. The Court orders that:

1. In proceedings 2020/88368:

1. The Defendant is convicted as charged pursuant to s 91I(2) of the Water Management Act 2000 (NSW); and

2. The Defendant is fined the sum of $8,333.

2. In proceedings 2020/88369:

1. The Defendant is convicted as charged pursuant to s 91I(2) of the Water Management Act 2000 (NSW); and

2. The Defendant is fined the sum of $8,333.

3. In proceedings 2020/88370:

1. The Defendant is convicted as charged pursuant to s 91I(2) of the Water Management Act 2000 (NSW); and

2. The Defendant is fined the sum of $8,333.

4. Pursuant to s 122 of the Fines Act 1996 (NSW) a half share of each of the fines imposed under orders (1)(b), (2)(b) and (3)(b) above is to be paid to the Prosecutor.

Proceedings 2020/88368, 2020/88369 and 2020/88370:

5. Pursuant to s 353G(1)(a) of the Water Management Act 2000 (NSW), the Defendant must:

1. Within 28 days of this order at their own expense, cause an advertisement to be published in the terms of Annexure A to this order in the digital and print versions of The Land newspaper, at the minimum size of 18.6cm x 12.9cm (and of corresponding size in the digital edition), in the next available edition and on the earliest available page;

2. Within 28 days of this order at their own expense, cause an advertisement to be published in the terms of Annexure A to this order in the digital and print versions of the North Western Courier newspaper, at the minimum size of 18.6cm x 12.9cm (and of corresponding size in the digital edition), in the next available Thursday edition and on the earliest available page; and

3. Within 7 days of the date of publication of the advertisements referred to in orders (a) and (b) above, provide to the Prosecutor a complete copy and screenshot of the entire page of the advertisement in the publications in which it appears.

6. The exhibits are returned.

Annexure A

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Decision last updated: 17 June 2024