Newcastle City Council v Pace Farm Egg Products Pty Ltd (No 3)

[2005] NSWLEC 423

Land and Environment Court

of New South Wales

CITATION:	Newcastle City Council v Pace Farm Egg Products Pty Limited [No 3] [2005] NSWLEC 423
PARTIES:	PROSECUTOR: Newcastle City Council DEFENDANT: Pace Farm Egg Products Pty Limited
FILE NUMBER(S):	50071 of 2004
CORAM:	Pain J
KEY ISSUES:	Prosecution :- penalty - prior offence - where defendant placed pollutant in a position where it did or was likely to fall or descend into waters - applicability of Crimes (Sentencing Procedure) Act 1999 s 10 Costs :- whether prosecution entitled to costs
LEGISLATION CITED:	Crimes Act 1900 s 556A Crimes (Sentencing Procedure) Act 1999 s 10, s 21A Criminal Procedure Act 1986 s 253 Land and Environment Court Act 1979 s 41 Protection of the Environment Operations Act 1997 s 120, s 241
CASES CITED:	Axer Pty Limited v Environment Protection Authority (1993) 113 LGERA 357; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683; Environment Protection Authority v Attard [2000] NSWCCA 242; Environment Protection Authority v Johnson and Johnson Pacific Pty Ltd [2001] NSWLEC 99; Hunter Water Board v State Rail Authority of New South Wales [No 2] (1992) 75 LGRA 22; Newcastle City Council v Pace Farm Egg Products Pty Limited [2002] NSWLEC 66; Newcastle City Council v Pace Farm Egg Products Pty Limited [2005] NSWLEC 139; Newcastle City Council v Pace Farm Egg Products Pty Limited [No 2] [2005] NSWLEC 241; Thorneloe v Filipowski (2001) 52 NSWLR 60
DATES OF HEARING:	04/08/2005
DATE OF JUDGMENT:	08/05/2005
LEGAL REPRESENTATIVES:	PROSECUTOR: Mr M Craig QC and Mr M Seymour (barrister) SOLICITORS: Sparke Helmore DEFENDANT: Mr T Hale SC and Mr S Docker (barrister) SOLICITORS: Paul Hines

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

5 August 2005

50071 of 2004 Newcastle City Council v Pace Farm Eggs Products Pty Limited [No 3]

JUDGMENT

1 Her Honour: This is a penalty hearing following my earlier judgment in Newcastle City Council v Pace Farm Egg Products Pty Limited [No 2] [2005] NSWLEC 241 (“Pace No 2”) in which I found the Defendant guilty under s 120 of the Protection of the Environment Operations Act 1997 (“the POEO Act”) in that it polluted waters known as Warabrook Lagoon (Upper Pond) (“Warabrook Lagoon”) on 3 October 2003 by placing egg waste in a position where it was likely to fall or descend into Warabrook Lagoon. The Defendant had pleaded not guilty. The maximum penalty for corporations is $250,000 for an offence under s 120(1) of the POEO Act.

Background

2 In my earlier judgment I found that on 3 October 2003, the Defendant owned and operated an egg products factory located at 23 Warabrook Boulevard, Warabrook (“the site”). A pollutant consisting of poultry egg waste, caustic and chlorinated cleaning solution and rinse water and in particular, sterols, cholesterol, carboxylic acids, filtered sodium, chloride, oil and grease and coliforms (“egg waste”) from the site leaked from a black tank on the site used for storing egg waste (“the black tank”) sometime on 2 or 3 October 2003. The egg waste flowed from the black tank into the onsite stormwater drainage system.

3 On the evidence I found that the Prosecutor had not proven beyond reasonable doubt that the egg waste had reached Warabrook Lagoon. As the egg waste was placed in a position where it was likely to descend or fall into Warabrook Lagoon, given evidence of a direct connection between the stormwater system on the site and Warabrook Lagoon through the offsite stormwater pipes, I found the Defendant guilty of water pollution in accordance with definition (d)(ii) of water pollution in the dictionary to the POEO Act.

4 The Defendant’s employees stopped the flow of egg waste when it was discovered at 5.45 am on 3 October 2003 by placing a stick in the hole in the black tank and placing saltbags over SW1, a stormwater access pit located on the site to stop the flow of egg waste into it. Cleanup measures were undertaken by employees of the Defendant a few hours after the spill was discovered by flushing the onsite stormwater system and vacuuming the area around the black tank.

5 In the contested hearing the bulk of the time was spent by the Prosecutor seeking to prove that egg waste had reached Warabrook Lagoon. While the Defendant was found guilty of polluting waters it was on a less serious basis than the principal case argued by the Prosecutor that there had been actual pollution of the Lagoon.

Section 241 of the Protection of the Environment Operation Act 1997 factors to be taken into consideration in imposing a penalty
Section 241(a) - the extent of the harm caused or likely to be caused to the environment by the commission of the offence

6 The Prosecutor submitted that the likely harm to the environment, at least in the short term, was significant. The Prosecutor relied on undisputed evidence in the affidavit of Mr Paul Anink, Aquatic Ecologist, sworn 5 November 2004 that if egg waste had entered Warabrook Lagoon, in the immediate short term it could have been expected to have resulted in the death and disturbance of aquatic fauna as a result of prolonged oxygen deletion. In the long term, the discharge could have been expected to have resulted in an increase in the overall nutrient concentration in the water, contributing to plant growth and algal blooms in Warabrook Lagoon. This was confirmed by evidence contained in the affidavit of Dr Ian Joliffe, Drainage Engineer, sworn 27 September 2004, which indicated that the makeup of the egg waste comprised material including sterols, cholesterol and carboxylic acid which had the potential to detrimentally affect the biological oxygen demand of Warabrook Lagoon.

7 Contrary to the Prosecutor’s submissions, the Defendant submitted that the likelihood of harm to the environment was minimal or non-existent. The evidence of Dr Staniland, a civil engineer and consultant, was that if the pollutant had escaped from the site, the likelihood of it reaching Warabrook Lagoon was low. It was unlikely that any more than a small amount of egg waste would have reached Warabrook Lagoon given the length of time required and the volume of egg waste needed for it to reach Warabrook Lagoon in sufficient quantities to cause harm. The Defendant also submitted that it was unlikely that the egg waste would make its way to Warabrook Lagoon without being noticed, given its distinctive odour. Further the Defendant argued that any harm to the environment would be short term as the quantity of the pollutant was small.

Finding

8 Mr Anink’s evidence demonstrated that if liquid egg waste did enter Warabrook Lagoon it would have short and long term impacts, the severity of which would depend on the amount of pollution. In my earlier judgment I was not able to conclusively decide on the expert evidence how much egg waste escaped from the black tank, flowed over a concrete drive and reached the Defendant’s stormwater system. It was not necessary that I did so in terms of the findings I had to make. I did conclude that the spill was likely to be small, a minimum of about 300 litres, rather than large. I rejected the evidence of Dr Joliffe suggesting the quantity was in the range of 1,000 to 4,000 litres. Assuming the quantity of egg waste spilled was between 300 and 1,000 litres, approximately 300 litres would have flowed into a void under the concrete between the black tank and SW1, the closest entry to the stormwater system. Dr Staniland’s evidence was that the viscosity of the mixture when added to water would result in the slower progress of the egg waste through the stormwater drainage system. In my earlier judgment I did not reach any conclusion on how quickly the liquid would flow. The evidence of the two experts is conflicting in that while Dr Joliffe agreed that the viscosity of the water/egg waste mix would slow the progress of the liquid he also considered the wetting of the pipes by rainwater would cause any liquid to flow faster.

9 I do not accept the submission that no egg waste escaped from the site, hence my finding at [92] of Pace No 2. I accept that Dr Staniland’s evidence does suggest on the balance of probabilities less rather than more egg waste was likely to escape. It is likely that only a small amount of egg waste would have reached Warabrook Lagoon suggesting the harm likely to be caused was minimal.

Section 241(b) - the practical measures that may be taken to prevent, control, abate or mitigate that harm

10 The Prosecution argued that there were clearly practical measures which could be taken to prevent egg waste being placed in a position where it was likely to fall, descend, or be washed into Warabrook Lagoon. The evidence is that there was no bund around the black tank to control any spill that might occur, there were no emergency procedures in place to deal with a spill of this nature, there was no maintenance of the black tank by the Defendant and no measures were taken to clean up the egg waste until several hours after it was discovered.

11 The Defendant argued that it took immediate practical measures to stop the flow of egg waste from the black tank and to block the flow of egg waste into the onsite stormwater system. The Defendant noted that Mr King, maintenance coordinator of the Defendant, also organised for the onsite stormwater drainage system to be flushed out on 3 October 2003.

Finding

12 I accepted the Prosecutor’s submissions and found that an offence of pollute waters occurred in the circumstances of this case so that the egg waste was likely to fall or descend in Warabrook Lagoon. In Axer Pty Limited v Environment Protection Authority (1993) 113 LGERA 357, Mahoney JA noted at 359 that the quantum of fines fixed indicates the seriousness with which pollution is regarded and also that these were intended to “procure that they [the Defendants] will take the precautions necessary to ensure that it [pollution] does not occur”.

Section 241(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

13 The Prosecutor argued that in light of the Defendant’s previous conviction in Newcastle City Council v Pace Farm Egg Products Pty Limited [2002] NSWLEC 66 for pollution of waters in similar circumstances, it could reasonably have foreseen the likely harm caused to the environment by the commission of the offence.

14 The Defendant conceded that if sufficient quantities of egg waste did leak from the black tank, it would have been reasonably foreseeable that egg waste could reach Warabrook Lagoon. However, the Defendant argued that it was not reasonably foreseeable that a volume sufficient to reach Warabrook Lagoon would leak from the black tank. The black tank was owned and cleaned by one of the Defendant’s contractors, Transpacific Industries Pty Limited trading as Valley Disposals Services (“Valley Disposals”). There was no reason that the Defendant could have known that it was liable to leak.

Finding

15 As emphasised in Axer, the Defendant has a responsibility to ensure that its prevention systems are adequate. It is not sufficient for the Defendant to argue that as the tank belonged to another party who was responsible for its maintenance that it therefore had no responsibility to ensure that there were adequate measures in place in the event of a spill. It is foreseeable that given the volume of the tank was approximately 6,830 litres that a leak from it could result in egg waste escaping into Warabrook Lagoon. In this case I found there was a 14 hour period in which the leak could have occurred. These circumstances suggest that it should have been seen as necessary that measures be taken to prevent a leak.

Section 241(d) - the extent to which the person who committed the offence had control over the causes that gave rise to the offence

16 The Defendant accepted that it had control of the premises. However, the Defendant submitted that the maintenance of the black tank was the responsibility of Valley Disposals.

Section 241(e) - whether, in committing the offence, the person was complying with orders from an employer or supervising employee.

17 The parties agreed that this section was not relevant to these proceedings.

Prosecutor’s further submissions

18 The Prosecutor noted that the Defendant had previously been convicted of a pollution offence in Newcastle City Council v Pace Farm Egg Products Pty Ltd [2002] NSWLEC 66. In that case, the Defendant pleaded guilty to the offence under s 120(1) of the POEO Act of polluting waters. On 10 July 2000 waste water which leaked through a concrete floor over a long period and collected under a building, entered the stormwater system on the site and flowed into an underground stormwater pipe outside the premises. The waste water then discharged into a concrete stormwater pit and ultimately flowed into Warabrook Lagoon.

19 The Prosecutor submitted that a prior conviction is an aggravating factor in determining penalty under s 21A(2) of the Crimes (Sentencing Procedure) Act 1999 (“the Crimes (Sentencing Procedure) Act”) which should be taken into account under s 21A(1) of the Crimes (Sentencing Procedure) Act, suggesting a higher penalty is warranted.

Defendant’s submissions

20 The Defendant argued that the offence was not deliberate and no harm resulted from the accidental spill from the black tank. Further, the Defendant argued that the prior conviction had extenuating circumstances attached as the manner of escape of the waste in Newcastle City Council v Pace Farm Egg Products Pty Ltd [2002] NSWLEC 66 was unusual given that egg waste leaked through undetectable hairline fractures in the floor of the Defendant’s building and accumulated in the base of the building for years before leaking into Warabrook Lagoon. The Defendant also noted that it had changed its waste collection system so that it was no longer using the black tank.

Section 10 of the Crimes (Sentencing Procedure) Act 1999

21 The Defendant argued that s 10 of the Crimes (Sentencing Procedure) Act ought be applied because the offence was trivial, no environmental harm was likely to be caused and it was justified given the Defendant’s antecedents including the prior offence.

22 The Prosecutor argued that it was not appropriate for the Court to apply s 10 of the Crimes (Sentencing Procedure) Act. The Prosecutor noted that in Newcastle City Council v Pace Farm Egg Products Pty Ltd [2002] NSWLEC 66, Lloyd J refused to apply s 10 of the Crimes (Sentencing Procedure) Act.

Finding

23 The relevant factors to take into account are listed in s 10(3) of the Crimes (Sentencing Procedure) Act as follows:

(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; and
(d) any other matter that the court thinks proper to consider.

24 Several cases have made it clear that s 10 of the Crimes (Sentencing Procedure) Act (and its predecessor s 556A of the Crimes Act 1900) is rarely applied in pollution cases. In Environment Protection Authority v Attard [2000] NSWCCA 242, Sperling J (with whom Mason P and Smart AJ agreed) stated at [5] that s 556A would only be applied in exceptional circumstances. In Hunter Water Board v State Rail Authority of New South Wales [No 2] (1992) 75 LGRA 22, Stein J at 23 said:

This Court has not infrequently stated that it will be a rare case when a dismissal under s556A is seen as appropriate for an environmental offence, especially a breach of the Clean Waters Act

25 In Thorneloe v Filipowski (2001) 52 NSWLR 60, Spigelman CJ at 74 adopted the statement of Stein J in Hunter Water Board in the context of s 10 of the Crimes (Sentencing Procedure) Act. Similarly, in Environment Protection Authority v Johnson and Johnson Pacific Pty Ltd [2001] NSWLEC 99, Bignold J stated in the context of s 10 of the Crimes (Sentencing Procedure) Act at [20] that:

“water pollution” offences created by the PEO Act (and its predecessor legislation) have long been considered to be serious offences for which significant maximum penalties have been prescribed by Parliament.

26 After a contested hearing I found the Defendant guilty of water pollution albeit on a less serious basis than the primary case argued by the Prosecutor. The circumstances are not trivial given the similar prior offence to which the Defendant pleaded guilty before Lloyd J which also involved a leak of waste water into the same stormwater system, and my finding that it was reasonably foreseeable that harm could be caused by the leak of the egg waste. While there is no evidence of actual harm and the offence was not deliberate it is not trivial. In my view s 10 should not apply. It is therefore necessary to consider the level of penalty I should impose.

Penalty

27 While this is a strict liability offence regard must be had to the culpability of the Defendant and the individual circumstances which led to the commission of the offence. I accept that the offence was not intentional and the Defendant has very low culpability.

28 The sentence must be proportional to the gravity of the crime. In Newcastle City Council v Pace Farm Egg Products Pty Ltd [2002] NSWLEC 66 Lloyd J commented that offences with a similar degree of seriousness to the matter before him have been given 10 to 30 per cent of the maximum penalty. Lloyd J imposed a fine of 12.5 per cent of the maximum minus a 25 per cent reduction for a guilty plea (which does not apply in this case). That case involved actual harm. The objective seriousness of this offence is lower than that in the prior offence.

29 The Court is also to have regard to the maximum penalty applicable, as this is an expression of the seriousness Parliament attributes to the offence: see Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683:

The task of a court is to assess the relative seriousness of the offender’s particular offence in relation to a worst case for which the maximum penalty is provided. (at 698)

… the more serious the lasting environmental harm involved the more serious the offence and, ordinarily, the higher the penalty . (at 701)

30 While I did not find the offence to be trivial for the purposes of s 10 this matter is not particularly serious in relation to the factors outlined in s 241. It is far less serious than the matter which was before Lloyd J.

General deterrence

31 It is a sentencing principle that there is a need to show general deterrence when sentencing.

Specific deterrence

32 This Defendant has a prior conviction in relation to a more serious offence where actual harm to the environment was caused in similar circumstances involving the same stormwater drainage system and waterbody. This suggests the fine should be more than nominal.

Mitigating factors

33 In mitigation it is clear from the evidence that the Defendant responded quickly to the incident and undertook measures to clean up the spill of egg waste from the black tank early on the day the leak was detected.

34 In all the circumstances I think that the Defendant’s penalty should be $12,000.

Prosecutor’s submissions

35 The Prosecutor submitted that as the successful party it should be entitled to its costs as agreed or assessed. While the Prosecutor was not successful on its primary case, it argued that there was no basis for a diminution of an order for costs in its favour on the basis of Pace Farm Egg Products No 2 at [92] where I found that:

While I have held that the Prosecutor has not proved beyond reasonable doubt that egg waste did reach Warabrook Lagoon, that is not the same as conclusively finding that it did not reach it as the Defendant sought to argue.

Defendant’s submissions

36 The Defendant submitted that the question of costs was one for the discretion of the Court and the Court was entitled to refuse to award costs in favour of a successful party, or to make an order that only a proportion of a successful party’s costs be paid.

37 In the current proceedings, the Defendant submitted that it was appropriate that the Court order that each party pay its own costs, or order that the Defendant pay no more than a small proportion of the Prosecutor’s costs. The Defendant argued that the majority of the hearing time taken up and the evidence prepared for the case, was directed toward the Prosecutor’s primary argument that the pollutant had actually entered Warabrook Lagoon from the site. As noted in Pace Farm Egg Products No 2 at [6] and [91] only a small proportion of the case was directed at the Prosecutor’s secondary argument as to whether the Defendant placed pollutant in a position where it did or was likely to fall or descend into Warabrook Lagoon. In addition, the Defendant noted that approximately one day of the hearing was taken up by the Prosecutor’s application to amend the summons and its particulars. This application was unsuccessful, save the amendment to the description of the pollutant, which was uncontested (see Newcastle City Council v Pace Farm Egg Products Pty Limited [2005] NSWLEC 139). As the Prosecutor was unsuccessful on its primary case and only a small proportion of time was taken in arguing the Prosecutor’s secondary case it was appropriate that each party pay its own costs, or that the Defendant pay no more than a small proportion of the Prosecutor’s costs.

Finding on costs

38 The Court’s power to award costs arises under s 253 of the Criminal Procedure Act 1986 (“the Criminal Procedure Act”). This section applies to these proceedings by reason of s 41 of the Land and Environment Court Act 1979. The effect of s 253 of the Criminal Procedure Act is that the Court may order a person against whom an offence is proved to pay the Prosecutor’s costs.

39 I have discretion in awarding costs. I agree with the Defendant that the contested evidence and the bulk of the hearing related to the primary argument made by the Prosecutor, that egg waste did reach Warabrook Lagoon. The Prosecutor failed on this aspect of the case and should not be awarded all its costs. Further, it was not successful in its application to amend the summons and particulars and should not be awarded its costs of the application.

40 I accept that the Prosecutor was in part successful and that the Defendant ran and then withdrew a no case submission which also took up part of the hearing.

41 I consider that it is appropriate in these circumstances that the Defendant pay 30 per cent of the Prosecutor’s costs as agreed or assessed.

42 The Court orders that:

1. The Defendant is convicted of the offence with which it is charged.

2. The Defendant is fined the sum of $12,000 to be paid to the Registrar of the Court within 28 days of today's date.

3. The Defendant must pay 30 per cent of the Prosecutor’s costs of the proceedings, as agreed or assessed.

4. The exhibits may be returned.