Newcastle Port Corporation v MS Magdalene Schiffahrtsgesellschaft MBH; Newcastle Port Corporation v Vazhnenko - [2013] NSWLEC 210

Land and Environment Court

New South Wales

Medium Neutral Citation: Newcastle Port Corporation v MS Magdalene Schiffahrtsgesellschaft MBH; Newcastle Port Corporation v Vazhnenko [2013] NSWLEC 210
Hearing dates: 12 and 13 June 2013
Decision date: 11 December 2013
Jurisdiction: Class 5
Before: Sheahan J
Decision:
In Matter No 12/50522
(1) The Court finds the offence proved.
(2) The defendant is convicted of the charge set out in the summons.
(3) The defendant is fined the sum of $1.2 million.
In Matter No 12/50523
(4) The Court finds the offence proved.
(5) Pursuant to s 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999, I direct that no conviction be recorded, and that the proceedings be dismissed.
In Matters Nos 12/50522 - 50523
(6) The defendant MS Magdalene Schiffahrtsgesellschaft MBH is ordered to pay the Prosecutor's costs of both proceedings on a party-party basis, as agreed or assessed, and to pay the Prosecutor's reasonable investigation expenses.
(7) With the exception of Exhibit P1, all exhibits may be returned.

Catchwords: PROSECUTION: Marine pollution offences by ship in Newcastle Harbour - admissions of guilt predating the summonses - pleas of guilty - sentencing principles - no truly comparable cases - aggravating and mitigating factors.
Legislation Cited: Clean Waters Act 1970
Crimes Act 1900
Crimes (Sentencing Procedure) Act 1999
Criminal Procedure Act 1986
Fisheries Management Act 1994
Marine Pollution Act 1987
National Parks and Wildlife Act 1974
Protection of the Environment Operations Act 1997
Threatened Species Conservation Act 1995
Victims Compensation Act 1996
Uniform Civil Procedure Rules 2005
Cases Cited: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357
Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234
Blue Mountains City Council v Carlon [2008] NSWLEC 296
Blue Mountains City Council v Tzannes [2009] NSWLEC 19
Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304
Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683; 82 LGERA 21
Chief Executive of the Office of Environment and Heritage v Bombala Investments Pty Ltd [2013] NSWLEC 185
Chief Executive, Office of Environment and Heritage, Department of Premier and Cabinet v Powell [2012] NSWLEC 129
Chow v Director of Public Prosecutions (1992) 28 NSWLR 593
Cobiac v Liddy (1969) 119 CLR 257
Director-General of the Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121
Director of Public Prosecutions (NSW) v Roslyndale Shipping Pty Ltd [2003] NSWCCA 356
Environmental Protection Authority v Barnes [2006] NSWCCA 246
Environment Protection Authority v Big River Group Pty Ltd [2011] NSWLEC 80
Environment Protection Authority v Boral Australian Gypsum Ltd [2009] NSWLEC 26
Environment Protection Authority v Orange City Council [1995] NSWLEC 103
Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222
Environment Protection Authority v Timber Industries Ltd [2001] NSWLEC 25
Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299
Filipowski v Bak and Anor [2004] NSWLEC 498
Filipowski v Fratelli D'Amato S.r.1 and others [2000] NSWLEC 50; (2000) 108 LGERA 88
Filipowski v Hemina Holdings S.A.; Filipowski v Rajagopalan (No 2) [2009] NSWLEC 104
Filipowski v Lyndon and ADI [2001] NSWLEC139
Filipowski v Magnavia Schiffahrtsgesellschaft MBH & Co Kommanditgesellschaft, Pablo Dion and Suzanic Branco [2007] NSWLEC 404
Filipowski v Mediterranean Shipping Company SA [2005] NSWLEC 159
Filipowski v Schiffsbeteiligungsges m.b.H. & Co KG; Filipowski v Kleemann [2004] NSWLEC 207, (2004) 134 LGERA 48
Filipowski v Thorneloe [2000] NSWLEC 269; (2000) 112 LGERA 184
Filipowski v Vopak Terminals Sydney Pty Ltd [2006] NSWLEC 104
Garrett v Freeman (No 5); Garrett v Port Macquarie Hastings Council; Carter v Port Macquarie Hastings Council [2009] NSWLEC 1; (2009) 164 LGERA 287 Garrett v Williams [2006] NSWLEC 785; (2006) 160 LGERA 115
Gittany v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189
Graham v The Queen [2009] NSWCCA 212
Hardt v Environment Protection Authority [2007] NSWCCA 338; (2007) 156 LGERA 337
House v R (1936) 55 CLR 499
Hunter Water Board v State Rail Authority of New South Wales [No 2] (1992) 75 LGRA 22
Ibbs v The Queen (1987) 163 CLR 447
Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357
Mickelberg v The Queen (1984) 13 A Crim R 365
Morrison v Che Mat and others (1997) 95 LGERA 212
Morrison v Defence Maritime Services Pty Ltd and Coates [2007] NSWLEC 421
Morrison v Peacock [2002] HCA 44; (2002) 210 CLR 274
Morrison v Peacock and Roslyndale Shipping Co Pty Ltd [2003] NSWLEC 68
Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120
Plath v Rawson [2009] NSWLEC 178; (2009) 170 LGERA 253
R v Ellis (1986) 6 NSWLR 603
R v Gent [2005] NSWCCA 370; (2005) 162 A Crim R 29
R v McNaughton [2006] NSWCCA 242; (2006) 66 NSWLR 566
R v Mako [2004] NSWCCA 90
R v Olbrich [1999] HCA 54, (1999) 199 CLR 270
R v O'Neill [1979] 2 NSWLR 582
R v Palu (2002) 134 A Crim R 174
R v Peel [1971] 1 NSWLR 247
R v Borkowski [2009] NSWCCA 102
R v Sharma [2002] NSWCCA 142; (2002) 54 NSWLR 300
R v Slattery (1996) 90 A Crim R 519
R v Smith (1982) 7 A Crim R 437
R v Storey [1998] 1 VR 359
R v Sukkar [2006] NSWCCA 92
R v Sutton [2004] NSWCCA 225
R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383
R v United Keno Hill Mines Ltd (1980) 1 YR 299
R v Way [2004] NSWCCA 131; (2004) 60 NSWLR 168
R v Wisbey [2001] NSWCCA 434
R v Gallagher (1991) 23 NSWLR 220
Ryan v The Queen [2001] HCA 21; (2001) 206 CLR 267
SZ v The Queen [2007] NSWCCA 19; (2007) 168 A Crim R 249
Thewlis v R [2008] NSWCCA 176
Thorneloe v Filipowski [2001] NSWCCA 213; (2001) 52 NSWLR 60
Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715; 75 LGRA 71
Veen v The Queen [1979] HCA 7; (1979) 143 CLR 458
Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465
Warringah Council v Bonanno [2012] NSWLEC 265
Webb v Chung & Ors [2002] NSWLEC 135
Weininger v The Queen [2003] HCA 14; (2003) 212 CLR 629
Category: Principal judgment
Parties: Matter No 50522 of 2013
Newcastle Port Corporation (Prosecutor) MS Magdalene Schiffahrtsgesellschaft MBH (Defendant)
Matter No 50523 of 2013
Newcastle Port Corporation (Prosecutor)
Volodymyr Vazhnenko (Defendant)
Representation: E G H Cox, Barrister (Prosecutor)
G J Nell SC (Defendants)
Piper Alderman (Prosecutor)
James Neill Solicitors (Defendants)

File Number(s): 50522 of 2012 50523 of 2012

Judgment

Introduction

These two matters were heard together, after the registered owner (matter 12/50522), and the Master (matter 12/50523), of a bulk carrier pleaded guilty to charges arising from a serious oil spill incident in Newcastle harbour on 25 August 2010.

The prosecutor was represented in each matter by Mr E G H Cox of counsel, and both defendants by Mr G J Nell SC, and counsel accepted that evidence in either matter would also be evidence in the other.

The subject ship was "MS" or "MV" Magdalene, registered in Monrovia, the capital of Liberia. (The ship's particulars in Exhibit P8 name the owner as "Prime Shipholding Limited of Monrovia, Liberia").

The summons in matter 12/50522 names the ship "MS" (as in "motor ship"), but the particulars in both summonses refer to "MV" (as in "motor vessel"). Both terms refer to "a ship propelled by an internal combustion engine, usually a diesel engine", so it would appear that nothing turns, at least in the present case, on any difference in prefix.

Magdalene was first commissioned on 16 June 1989 (Exhibit P8), and was acquired by the defendant owner in December 2006. It is of 149,530 deadweight tonnes, and has been managed, since that purchase, by a company based in Hamburg, Germany, and known as "Blumenthal", the Managing Director of which, Heinz-Dieter Czech, swore an affidavit on behalf of the defendant owner.

The spill incident which is the subject of the charges occurred while Magdalene was berthed, for the purposes of loading coal, at Kooragang Berth No 4 ("K4") on the western side of Kooragang Island, in the port of Newcastle.

Both summonses give the following particulars of the charges:

On 25 August 2010, at approximately 1030 hours, while berthed at Kooragang Berth 4 in the Port of Newcastle, the MV "Magdalene" commenced the deballasting of the number 6 starboard double bottom ballast tank. During the deballasting of the starboard number 6 double bottom ballast tank, oil was discharged from this tank into the Hunter River at the Port of Newcastle.

Both charges are brought under s 8(1) of the Marine Pollution Act 1987, which makes it an offence, by both owner and Master, for a ship to discharge "oil", or an "oily mixture", into State waters.

The maximum fines, following major increases in 2002, were at the charge date, and are now, $10M for a body corporate (such as the owner), and $500,000 for a natural person (such as, here, the defendant Master, Captain Volodymyr Vazhnenko).

Negotiations between the parties

As early as 10 December 2010, the solicitors representing the ship wrote to the Chief Executive Officer of the prosecutor (Exhibit M3), making relevant admissions, and conceding that none of the defences available in ss 8(2) and 8(4) of the Marine Pollution Act1987 were available to the defendants (c.f. Morrison v Peacock [2002] HCA 44; (2002) 210 CLR 274).

The summonses were not issued until 30 May 2012, but both defendants pleaded guilty to their respective charges at the first opportunity (the first directions hearing on 20 July 2012).

Negotiations which commenced on or shortly after 10 December 2010, resulted in agreement between the parties on an Agreed Statement of Facts ('ASF'), the final version of which was filed on 24 May 2013 (Exhibit P1). As foreshadowed in the defendants' 10 December 2010 letter, the only "facts" which remained "contentious" at the hearing were of "a small ambit".

Over that same period the parties also negotiated the reimbursement of clean-up costs. The prosecutor claimed $1,913,197.23; the owner paid $500,000 on 21 December 2010, $800,000 on 20 June 2012, and a final instalment, as agreed, of $400,000 on 10 May 2013, making a total of $1.7M (see ASF 28, and defence subs par 33).

Some sentencing issues arising in this matter

In the context of strict liability offences, Mr Cox notes (in the prosecution's subs, par 6) that there is no suggestion that the discharge the subject of these prosecutions was caused by "any intentional conduct, or recklessness".

His submission is that this was a significant oil spill, which caused significant actual, but not "long term", harm (T12.6.13, p16, LL25-6, and p39, LL37-8).

The prosecutor originally accepted (in written subs, par 2), that the defendants' early pleas entitle them to the pleas' "full utilitarian value" on sentence, in accordance with the principles laid down by the New South Wales Court of Criminal Appeal ("CCA") in R v Thomson; R v Houlton ("Thomson/Houlton") [2000] NSWCCA 309; (2000) 49 NSWLR 383. However, Mr Cox later submitted, orally (T13.6.13, p7, L31), that the defendants should get only a "significant" discount in respect of their pleas.

On the other hand, the defendants claim a total discount on sentence of between 35 and 40% (written subs, pars 104 and 123), or up to 50% (oral submissions T13.6.13, p30, LL20-5).

The defendants in no way impeded the investigation of the incident. Crew members, including the Master himself, were made available for interview, and provided relevant documents to the prosecutor. Part of the total discount claimed by the defendants is based on such cooperation and assistance, as well as some other mitigating factors.

Mr Nell (subs, par 116) "respectfully submitted that this is an appropriate case for affording the Master the benefit of an order under s 10(1) of the Crimes (Sentencing Procedure) Act 1999 (NSW) [(the CSP Act)] dismissing the offence" ("a s 10 order").

Mr Nell also indicated (T13.6.13, p39, LL29-34) that the defendant owner accepted that it would be ordered to pay the prosecutor's costs in both matters.

The Relevant Facts

Much of what follows in this section of this judgment is gleaned from the ASF, but I have also had regard to the prosecutor's unchallenged opening remarks, and the parties' written submissions.

The spill

On 23 August 2010, pursuant to her ballasting procedure (in Exhibit P9), Magdalene "took up" 376 cubic metres of ballast water into its No 6 starboard double bottom ballast tank (ASF 6).

At the relevant time (i.e. between 0820 and 1500 hours on 25 August 2010), the crew were de-ballasting.

Tank No 6 is relatively low in the ship, "between the cargo hold and the outside shell of the hull ..." (T12.6.13, p4, LL46-7), adjacent to, and having a common steel wall with, a fuel tank (LL49-50), but the prosecutor notes (T12.6.13, p5, LL1-3):

That is a common arrangement as we would understand it for ships of this kind and perfectly acceptable.

In the course of the de-ballasting of tank No 6, i.e. between 1030 and 1400 hours on the 25th, Magdalene discharged into the Hunter River, on her port side, "a mixture of oily water", containing an agreed amount of 72,000 litres of "heavy fuel oil" ("HFO"), among, or along with, about 500 cubic metres of ballast water (ASF 5 & 6, and T12.6.13, p6, LL1-10).

The experts suggest that early in the pumping procedure the discharge would have been water only, then oily water, then oil (T13.6.13, p12, LL30-50), but they cannot be definitive about how long each of those three stages might take (T13.12.13, p13).

At and from about 1435 hours on the 25th, oil was observed drifting on the surface of the water near Kooragang berths 2-5 and into Newcastle Harbour (ASF 7), not only on the port side of Magdalene (T13.6.13, p14, L33).

Orders were given to stop the cargo and de-ballasting operations, effective at 1500 hours. At around 1500 hours the ship's duty officer (the Second Officer) reported (to the Master) seeing oil, and the Master went to the bridge, and observed it himself (defence subs par 17).

Containment and clean-up

Extensive boom containment action commenced at about 1545 hours on 25 August (ASF 11), and clean-up operations commenced next morning (ASF 17), and continued until 8 October 2010 (ASF 27). Difficulties were encountered due to the thickness of the oil, and a longer-than-anticipated manual clean-up operation was required (ASF 17).

As already noted ([13] above), the cost of the clean-up was $1.9M, in respect of which the Port accepted a settlement from the defendants in the sum of $1.7M (ASF 28).

The cause

Detailed investigations were carried out on 25, 26 and 27 August (ASF 12-14).

It emerged as common ground that oil came into the ballast tank as a result of a 15mm diameter hole, which occurred in the internal transverse bulkhead between the ballast and HFO tanks.

It is understood that the oil would have leaked into the ballast tank over an extended period of time prior to Magdalene's arrival in Australia (ASF 9), i.e. between the maintenance/inspections on about 27 February 2010, and the ballasting operation on 23 August 2010 (T12.6.13, p5, LL35-8).

That "seeping" process may take "two weeks if the oil was warm and up to two months if it wasn't" (T13.6.13, p10, LL34-5), and the ballast tank had not been used "for ... at least two months" (LL48-9 and p11, LL1-20).

The prosecutor says (T12.6.13, p5, LL21-3) that it is, "particularly with [an] older vessel, a recognised risk that from time to time you will have corrosion holes develop" in the common wall between the ballast and fuel tanks.

The harm

It is alleged that extensive harm was caused to the Hunter River environment and associated eco-systems, including internationally significant wetlands, but it is conceded that that harm was not permanent.

The prosecutor notes (T12.6.13, p5, LL37-44):

... [HFO] is a, when cold, a very thick non viscous liquid and ... has to be heated before it can be moved ... as it becomes colder ... it starts to congeal ..."

Overnight on 25-26 August, the oil originally noticed up to approximately 100 metres from the K4 and K5 berths, and around the ships docked at them (Magdalene and MV Citrus), spread into other parts of the harbour (details in defendants' subs, pars 25-26). On those dates the weather was "cold" (T12.6.13, p5, LL41-4).

The oil reached up into the North Arm of the Hunter River, at the entrance of the Stockton Channel about one nautical mile south of the Stockton Bridge, by 1430-1500 hours on 26 August 2010 (ASF 13), affecting mangroves and sand beaches (ASF 18), and the Hunter Wetlands National Park (ASF 19). Oil was not apparent in the North Arm at 0630 hours on the 27th (ASF 14).

The Hunter Wetlands National Park is a Wetlands park of international significance under the Ramsar Convention on Wetlands of International Importance. Australia became a party to the Ramsar Convention on 21 December 1975. This area comprises the Stockton Sand Spit, an important roosting area for 37 species of international migratory birds (ASF 20).

The movement of the oil spill into and within the Park was caused by strong westerly winds and tidal action. On the day of the spill it would appear that there was a westerly wind of "up to 30knots" blowing (T12.6.13, p8, LL37-45).

The oil observed in the Stockton Sand Spit wetlands could enter only through the entrance channel to their lagoon (ASF 21-22). Many booms were placed on 25 and 26 August (details in ASF 11), but no boom was placed across the lagoon until early on the morning of the 27th (ASF 15). Doing so before any oil had entered the North Arm adjacent to Stockton Bridge "would have significantly reduced the likelihood of oil entering the lagoon and the Stockton Sand Spit" (ASF 23).

Further particulars of actual environmental harm are provided in the ASF, as follows (ASF 24-27):

24. There was the potential, if the oil had not been cleaned up prior to the arrival of the international migratory birds in October, for the plumage of the international migratory birds to have been fouled. If oil had interfered with migratory birds, it would have resulted in a loss of the bird's water proofing which makes it difficult for the bird to float, fly, and control its body temperature. This can result in death through hypothermia, dehydration, drowning or starvation. The birds can also ingest the toxic oil resulting in the destruction of red blood cells, alteration to liver function, and adrenal damage. These detrimental effects were avoided due to the clean-up operation by Newcastle Port Corporation.

25. A total of approximately 40-50 pelicans were oiled as a result of the oil discharge from the MV 'Magdalene'. 32 pelicans were required to be transported to Taronga Zoo for intensive care, and rehabilitation which can take upwards to 2 weeks. The oil affects the pelicans in the same way as it affects the international migratory birds as discussed in paragraph 24 above.

26. Light oil spotting was observed on the protected salt-marshes and mangroves in the Hunter Wetlands National Park. Oiled mangroves and salt-marshes needed to be removed of oil because they are an important ecosystem for the feeding, and roosting of international migratory birds. Accordingly, if not cleaned, the negative effect the oil could have had on the international migratory birds and pelicans as described in paragraphs 24 and 25 above would have been exacerbated. This clean up required further damage to the salt-marshes and mangroves through the pruning of oiled leaves, an offence under the Fisheries Management Act 1994 (NSW), in the absence of the appropriate approvals. Pruning affects the following mangrove species in the following ways:

a. Sporobolus (grass) and Triglochin (reed) will readily reshoot after cutting provided roots are retained - the roots were retained;

b. Sarcocornia (red/green succulent) may resprout, but if not will rapidly recolonise via seed; and

c. Suedau (green shrub) will not regrow if cut off at the base - the pruning did not require any shrubs to be cut off at the base.

The pruning presented only a very small risk to the long term health of the saltmarsh.

27. The extent and duration of the harm the oil discharge had on the environment was minimised by the clean up initiated by Newcastle Port Corporation which finished on 8 October 2010. However, actual harm was caused and consisted of oil contamination of pelicans, oil spotting of protected saltmarsh and mangrove vegetation, and contamination of invertebrate animals on mudflats. As the harm occurred in areas with a high ecological value, namely a National Park and listed Ramsar Convention wetland which supports a high abundance of internationally protected migratory birds the harm was ecologically significant.

In terms of potential harm, ASF 29 says:

The oil spill had it not been contained and cleaned up had potential to have a far grater impact on the environment. There was potential for:

a. international migratory birds to be oiled;

b. organisms moving through the Hunter River's surface to be harmed;

c. the environment of the substratum including oyster beds, and mud flats to be harmed.

d. risk to a significant proportion of the world's Golden Plover population (5% of the world's population are found in the area of the spill);

e. mangrove, and salt-marsh leaves could have died if not cleaned;

f. mangrove and salt-marshes could have become sources of contamination for snails, birds, lizards and snakes'

g. organisms moving on the surface of the water could have become coated with the floating oil.

h. oiled animals could have died due to the inability to perform thermoregulation, and blockages to respiratory and feeding mechanisms; and

i. Contamination of a larger area of the Ramsar Wetlands, the National Park and the Port Stephens Great Lakes Marine Park.

But no such actual harm occurred. The potential for this further harm was avoided due to the clean-up operation by Newcastle Port Corporation.

Other matters in the ASF

The remaining paragraphs of the ASF record the co-operation of the defendants, including the letter of 10 December 2010 ([10] above) and the assistance provided by the Master (ASF 30-31); the 2012 commencement of the proceedings, and the early pleas (ASF 33-4); and the consequent savings in terms of the costs and expenses of the prosecutor (ASF 32).

The Master's Affidavit

The defendant Master affirmed an affidavit on 30 August 2012, in which he expresses his personal contrition (par 5), but also his great concern at the impact of the recording of a criminal conviction against him in these proceedings (pars 11-18).

He was born on 27 August 1965, in the Ukraine (par 2), and has been at sea since 1989. He qualified as a Master in 1998, and has served as such, continuously, since 2004, almost exclusively on bulk carriers engaged worldwide in the "tramp dry bulk trades", including iron ore, coal, grain, bauxite, alumina and phosphates. In his 21 years at sea around the world, this is the first oil spill incident of his career (pars 6-8).

His contract for a vessel is usually for 4 to 6 months, with 1-2 months leave between vessels. He took command of Magdalene for the first time on 29 May 2010, in China (pars 9 and 10).

As the Master of a vessel working in "the tramp trades", he has no fixed circuit of ports, and receives orders from his vessel's operators while at sea. His duties require him to be able to go ashore whenever and wherever he is in port.

After his 21-year clean record he is concerned that a conviction in the present matter could be used as grounds for the refusal of visas for his entry into certain countries. When completing necessary arrival and customs documentation, he is "commonly" asked if he has ever been convicted of a criminal offence. Other necessary procedures, such as "noting protest", may be similarly affected by a conviction. Any delays in clearance of his vessel by local customs authorities would delay the vessel's operations, costing operators significant amounts of money. He fears this would make operators more reluctant to engage him in future.

His affidavit is silent, however, as to his experience on ships which are more than 20 years old.

Other Evidence in the Defendants' Case

Apart from the Master's affidavit, the defence relied on an affidavit affirmed by Mr Czech ([5] above). Czech was born in 1959 (pp6 and 7), but Blumenthal has been in business for more than 100 years (par 1), and has managed Magdalene since 2006. Czech deposed that this is also the first time that either the defendant company or Blumenthal has been prosecuted, anywhere in the world, for the discharge of oil into waters.

Magdalene had completed her five-yearly Special Survey on 1 September 2009. That survey included plate thickness measurements of ballast tanks and bulkheads in June 2009. Diminution of thickness levels was recorded "below the maximum allowable 25%". As a part of the regular programme of inspection, maintenance and repairs on the ship, the ballast tank was inspected on 27 February 2010. Average diminution of steel construction etc. by "spotwise" corrosion is noted as 1 mm (see Annexure 'C', and par 14).

Mr Czech attaches (as Annexure 'F') a photograph of the offending hole in the bulkhead, and opines (pars 15-16) that it resulted from a "rust nib", which is caused by a small paint-coating flaw which rusts and then "pops out from pressure from the oil in the adjacent tank, leaving a hole through which oil can then leak through into the adjoining tank ... It would be very difficult to see ... unless you were measuring the plate thickness at that exact point of the rust nib...".

A survey by Magdalene's Classification Society, Nippon Kaiji Kyokai, on 26-27 August 2010 (par 10, and Annexure 'E') measured the hole to be "about 15 millimeters in diameter".

The hole was quite simply repaired (both temporarily, and later permanently), once identified (par 17), and the "company has taken steps to conduct ... third party inspection to make sure a similar incident does not take place again" (par 18).

Evidence in the Prosecutor's Case

Notwithstanding the agreement reached on the ASF, the defendants made no objection to the prosecutor's reading in support of it of a number of its affidavits and some of their annexures. None of the deponents was required for cross-examination, and their evidence may be briefly summarised:

Sig Purins is a highly experienced Plant Maintenance Officer with the prosecutor. He was engaged in the management and clean-up of the spill, from 1430 hours on 25 August 2010. He says (par 4) that "it was the worst spill [he] had seen because it was so heavy". He deposes (pars 4-5) to the "distinct smell of oil, and a continuous oval shaped area of black heavy oil", 300m by 200m, extending into the middle of Newcastle Harbour from the K4 and K5 berths, varying in thickness between 5 and 10mm. He says (par 7) that no clean-up operations took place on 25 August, but by 2130 hours that night "the majority of the oil spill had been contained". When the clean-up commenced on 26 August, the spill proved too thick for the skimmers he had deployed, and "a daisy chain" of buckets was established (pars 8-9).

Purins variously noted, photographed or video'd his observations. The prosecutor tendered (as Exhibit P3) some 41 out of approximately 200 photographs Purins had taken. They depict the thicker areas of pooling, the attempts at using skimmers, manual clean-up operations, oil on rocks, harbour beaches, and other surfaces, numbers of people engaged in clean-ups, the use of the relevant waters by birdlife (no 39), and (no 41) a truck loaded with oil-damaged items apparently removed from affected areas. Also tendered (as Exhibit P4) was a CD, which included 19 video files, taken by Mr Purins, the first five of which were shown to the court, depicting (T12.6.13, p19, LL18-28, and p42, LL38-40):

... the worst and most difficult parts of the cleanup activity taken within I think on the day after, the first major day of the cleanup, cleaning up the worst parts but continuing where it was still thick in the way as described by the witnesses.

HIS HONOUR: And generally manual.

COX: Generally manual, yes, not using skimmers, using a bucket being passed in a daisy chain type arrangement up to a mini skip so a slow and laborious manual process of cleanup because the oil as it's hit the colder water has congealed and become less manageable and less viscous.

James Neill Lawson is the prosecutor's Safety and Environment Manager. He was notified at 1430 hours on 25 August, and attended the scene immediately. He observed oil of a "very continuous black colour", and a "pungent smell", and estimated the thickness between two vessels at 20cm (par 4). At that time the oil was confined to the area around K4 and K5. He then became involved in the investigation, including witness interviews, and he deposes to his activities in that regard. Representatives of the Australian Maritime Safety Authority ("AMSA") boarded Magdalene at 1020 hours on 26 August, and she was officially "detained" (see Annexure 'JL3'). The master was interviewed at about 1200 hours, and samples were taken from the No 6 tank. Lawson was on board again on 27 August, conducting further observations, continuing the interview of the Master (Annexure 'JL4'), and then interviewing several other officers. The prosecutor also tendered (as Exhibit P7) a bundle of copies of documents produced by the Master to the investigators during his interview. That bundle included a signed-off copy of the ship's ballast water handling log for 25 August 2010, showing the reduction of water in No 6 tank from 505 cubic metres down to 2 cubic metres.

Frederick James Eckford is a relief Port Officer with the prosecutor. On 25 August he was Master of MV "Brian Cecil", touring the port with Lawson and another officer, when he took a call advising of the report of the spill. As they approached the spill site, he observed a fuel smell in the air, and "a very black substance" on the water surface, up to 100m out into the harbour from berths K4 and K5, "being pushed to the East by the wind towards the K3 berth" (pars 4 and 11), and later towards K2 (par 13). He was later engaged in the laying and moving of booms.

Michael Robert Moss is a Ports Services Officer with the prosecutor. He is highly trained and experienced in clean-up and investigation of spills. He attended the subject spill early on 26 August. He deposes in detail to his observations and activities, and annexes an aerial photo (Annexure 'MM1'), plus his notes and shoreline status reports (Annexure 'MM2').

Phillip Hawke is a Marine Pilot with the prosecutor, and he performed an "aerial observation" of the port early on 26 August, to identify the area of spread of the spill, before clean-up operations commenced. He observed (par 2) "areas of oil sheen, areas of heavy oil, and areas along the foreshore and seawall rocks covered in oil". His observations were later marked, by the Incident Control Centre, on a map which is annexed to his affidavit. Scott Curline is a Senior Marine Pilot with the prosecutor. He performed a further "aerial observation" early on 27 August, and he also prepared and annexed a map. (A large map of the port, not so marked-up, is before the court as Exhibit P2).

Malcolm Mountford Goodfellow is a Master Mariner now employed by the prosecutor as a Marine Pilot. Before joining the Corporation, he was a ship surveyor, and served as a Senior Marine Surveyor with AMSA. He inspected the spill, from a Corporation survey vessel at 1430 hours on 26 August; he recorded his observations, and annexed his notes and a plan to his affidavit.

The prosecutor also relied on an affidavit affirmed by Dr Peter Raymond Scanes, Manager of the Coastal Waters Science Unit of the NSW government agency then known as the Department of Environment, Climate Change and Water.

He has a distinguished CV, with expertise in estuarine ecology, and oil spill response planning. Since the late 1990s he has been designated as State Environment and Science Coordinator ("ESC") under the NSW State Oil and Chemical Spill Plan implemented by "New South Wales Maritime", as it was then known.

Scanes was, relevantly, ESC during the Laura D'Amato spill in Sydney Harbour in 1999, and during other major and smaller incidents. (That 1999 incident resulted in this court's decision in Filipowski v Fratelli D'Amato S.r.1 and others ("D'Amato") [2000] NSWLEC 50, (2000) 108 LGERA 88, to which I will return).

Scanes was engaged by the prosecutor to advise on, and plan for the spill response in, the North Arm of the Hunter, and then, on 19 October 2010 (Annexure 'E'), to provide an expert report for this prosecution. He agreed to be bound by the Expert Witness Code of Conduct, scheduled to the Uniform Civil Procedure Rules 2005.

His main focus was the Stockton Sand Spit, in the North Arm, at the eastern end of Stockton Bridge, but he was also conscious that the spill impacted on the eastern bank of the Hunter, to both the North and South of the bridge.

He notes that the Spit is actively managed as a bird habitat, including for migratory "Shorebirds" (or Shoreline Birds), which are protected by international treaties, and are "threatened" under the Threatened Species Conservation Act 1995 ("TSCA"). The Spit is characterised by extensive salt marshes (listed as an endangered ecological community under the TSCA), a lagoon, and "a raised area used by birds for roosting". The National Parks and Wildlife Service and community volunteers control vegetation on the Spit to encourage bird usage, and a bird hide has been constructed to facilitate observation (see aerial photos at Annexure 'C', and page 28 of 'D"). Being part of the Hunter Estuary Wetlands National Park, the Spit and the shores to the north are protected as waterfowl habitat under the Ramsar Convention (ASF 20, and [40] above).

Scanes was first informed of the spill on the evening of 25 August, but the prosecutor did not, at that stage, require any assistance from his department. On 30 August, he was informed that oil had been reported in the saltmarsh near the bridge, and he obtained and assembled background information, including photos taken on 29 August (Annexure 'F'), in preparation for a field trip to the area on 31 August. He deposes an extensive account of his findings on 31 August and associated research (pars 39-52).

He then prepared a cleaning strategy for the Spit and adjacent areas, on a segment basis (see diagram "j" at p33), and the clean-up of the Spit area commenced (pars 55-56). He returned to the Spit on 3, 6, and 10 September to review progress, and he made his last official visit on 6 October 2010, for a final inspection under the Site Signoff Plan.

His expert opinion on environmental harm issues (pars 63-86) formed the basis of those paragraphs of the ASF (24-27) which I have quoted above (at [43]). In par 77 of his affidavit, he notes that "the extent and duration of the harm caused was minimised as a consequence of the rapid action taken to clean up the oil", but he goes on to observe that:

Oil persisted on the Spit for a period of at least 10 days. On low priority parts of the shore there was still oil up to 5 weeks after it was initially observed.

"Expert" Evidence

Written materials

Apart from the affidavit evidence of Mr Scanes, the parties relied on reports prepared by other witnesses with relevant expertise - Leonard Michaels (for the prosecutor - Exhibit P5), Brendan Quinlan (for the defendants - Exhibit M1), and Richard Howe (also for the defendants - Exhibit M2).

The court acknowledges and accepts the superior qualifications of these gentlemen to express the relevant views they include in their reports.

Michaels and Quinlan met, agreed upon a joint report (Exhibit P6), and were called to give oral evidence, some of it concurrently.

Howe was not called, and counsel for the parties agreed to exclude from the court some of the contents of his report, as the observations he recorded after his more recent visit were made without the more relevant expertise of Scanes on the question of environmental harm.

What emerges from the written materials of these three witnesses may be summarised as follows:

Michaels opined that oil was in the ballast tank when the ballast water was taken on board, and would rise to the top of the water as the latter is taken up. That contamination would have been detected if the ballast tank had been either properly sounded or physically inspected before ballasting commenced. He also opined that ballast tanks should be inspected internally between the ship's annual surveys.

The owner and Master should be well aware of the pollution risks, and it was, therefore, not "reasonable" for them not to manually sound the tank in advance of filling it. He opines that tanks should be sounded routinely once per week during their non-use. In this case tank No 6 had not been used for at least three months. Manual soundings involve dropping a tape down a pipe dedicated for sounding purposes. Any more "remote" methods of sounding indicate only the level of liquid in a tank, and not its content.

The owner and the Master should also ensure that their crew maintain "a good watch", as in "deck watch monitoring", during any de-ballasting operations. Proper crew training is required for keeping a good watch.

Magdalene's published de-ballasting procedure is "correct and reasonable", but it neither includes the keeping of a good watch, nor mandates the taking of manual soundings. The ship's age calls for extra attention to these sorts of precautions.

After Michaels prepared the earlier of his two reports in Exhibit P5 (the one dated 12 February 2013 and summarised above), in which he had assumed that the sounding pipes on Magdalene were "perforated" or "slotted", it became known that they were, in fact, "solid".

In that circumstance, even a manual sounding would not indicate that the contents of the tank were contaminated, so alternative precautions are essential, in order to ensure that no pollutants enter the environment. He suggests that the defendants should have either (1) dropped the sounding tape down the air ventilation pipe, or (2) if readily feasible, opened the hatch or manhole of the tank and accessed the contents in that way (see T12.6.13, p6, LL21-30).

Quinlan reviewed Michaels's reports. He rejected the air pipe option, and also opined that gauging systems are not considered accurate. He thought the ship's policy document inferred the need for manual soundings, and he thought it would be "highly prudent" to conduct tank inspections. It would not be unusual, and it accords with proper practice, even if not mandated by it.

He found the ship's pumping system to be "safe", and able to be "left unattended", but, in his view, officers should "occasionally look over the side" for any signs of mishap. There is always a need to maintain a good watch in port, but he acknowledged "enormous stress" on the crew on 25 August. Magdalene's officers would not be expecting "such a rare and extremely unusual event", but compliance with proper practice requires no more than that someone "occasionally look" over the ship's side. (The evidence suggests that no crew were observing over the side of the ship from which the oil was discharged, namely the port side, during the 4.5 hours from 1030 to 1500hrs - T12.6.13, p6, LL32-40).

In their joint report, Michaels and Quinlan agree that manual soundings are "standard shipboard practice" for dry bulk carriers, but that "perforated" or "slotted" pipes are not required by either statute or class.

They relevantly agreed that:

(1) ... the Magdalene was following a planned maintenance tank inspection program which required that each water ballast tank be inspected by Ship's Officers at least once every twelve months, and that this program was followed as evidenced by the Ship's planned maintenance program onboard documentation. The Ship had undergone a 20 year survey in July 2009 where plate thickness measurements of No.6 Starboard Double Bottom Tank were conducted. In addition, the tank was visually inspected by Ship's Officers on 27th February, 2010.

(2) ... the Master of the Magdalene, by not ordering an inspection of No.6 Starboard Double Bottom Tank prior to use, followed current shipping practices/procedures when deciding to use this tank for filling with ballast water, prior to entering the Port of Newcastle. ... A highly prudent Ships Master or a Ship Owner may order/instruct water ballast tank openings and inspections at a more frequent interval than a 12 monthly Shipboard inspection for each tank as contained within a Planned Maintenance System. This will depend upon the actual condition of the ballast tanks as surveyed by Ships Officers, Class Surveyors and Ship Owners, factors that will affect the actual condition of the tanks are the original protective coatings applied at new build stage, breakdown of tank coatings, extent to which a tank has steel wastage/corrosion since new build, damage to tank coatings from external forces such as cargo grab contact or contact with wharves/tugs etc, susceptibility to steel fracture, and whether a tank is used frequently or is only used on isolated voyages. All these factors will be considered by Ships Masters/Ship Owners when determining a time interval for ballast tank inspections to be included in the Planned Maintenance System. The Ship Master or Ship Owner can order an inspection of a tank at any time they have concerns with a tank, such as time since last tank was used, heavy contact - potential damage, blocked sounding pipes or difficulty with tank suction et al.

...

(3) On the day of the incident whilst berthed at No.4 Kooragang Coal Loader Berth, the Magdalene was loading her designated cargo with qualified personnel on deck watches. This included the Cargo Officer On Watch, Chief Officer, Duty Able Seaman and an Able Seaman on Security Watch. The Magdalene was berthed port side to the wharf, with the gangway located aft. The vessel was discharging water ballast from No.6 Starboard Double Bottom Tank through an eductor system. The eductor system discharged its contents overboard on the port side aft.

They were:

... surprised that the Oil Pollution was not discovered at an earlier time, given the qualified personnel on watch and the quantity of oil discharged. With a more vigilant watch the Oil Pollution would have been detected earlier.

Howe relevantly visited Newcastle Harbour, with which he is very familiar, on 30 August 2010, and 21 August 2012.

He included in his report (in par 11) twelve photos taken of the wetlands on 30 August 2010, while the clean-up was still in progress, but he reports that the amount of oil pollution he saw there was "not extensive" (p3). The boom was still in place at the narrow access point (p10). He saw oil on foreshore rocks at the Bird Migration areas, and on driftwood, mangroves etc.

When he returned on 21 August 2012, he observed (p13) no evidence of oil, and found the water clear, the mangroves and foreshore flora "healthy", and the wildlife "abundant". Counsel for the parties agreed that the court could examine the fourteen photos he took on that visit (T12.6.13, p39), and I have considered them.

Oral evidence

Mr Quinlan

Quinlan was called for cross-examination by Mr Cox. He was present when AMSA inspected Magdalene on or about 26 August, and attempted to check tank No 6 by soundings, and he was also present when the cargo hold adjacent to it was inspected. He did not inspect tank No 6, but he did inspect the air vents on deck. He commented (T12.6.13, p49, L3) that "access and soundings are completely separate". He adhered (LL20-3) to the comment in his report that "it wasn't possible to take manual soundings through the air vent pipes".

He was then questioned about the manhole access to tank No 6, and his observation of the removal of the hatch on cargo hold No 9 by the crew's removal of 12 bolts, with a spanner, an operation which might take about 20 minutes (T12.6.13, p50). That hold would have been cleaned at some stage between its last unloading and the ballasting on 23 August, but, on his inspection, Quinlan could smell HFO (T51, LL1-3).

Mr Cox and Quinlan then had the following exchange (T12.6.13, p51, LL7-46):

COX: And would the removal of that hatch be all that was required to check the contents of the number 6 double bottom ballast tank for any contaminants?

WITNESS QUINLAN: Yes.

COX: To remove that hatch?

WITNESS QUINLAN: Yes.

COX: There would be no other steps required to check?

WITNESS QUINLAN: You would go inside the tank if you were suspicious of something and that's one way of accessing the tank.

COX: In the case of this tank on the 23rd, 24th or 25 August you wouldn't need to go inside the tank to know she was contaminated, would you?

WITNESS QUINLAN: You would smell I would suspect.

COX: And you would also see the black oil on the walls of the ballast tank?

WITNESS QUINLAN: Yeah if it had been filled up with ballast it was on the 23rd, it's quite possible that the - the level of the tank is above that, if the level of the tank is above the tank top you're not going to open it.

COX: So you may need to check?

WITNESS QUINLAN: You would have to access the other way.

COX: But to check for contaminants before you put the ballast water in, that would be the ideal way to check if there was anything in there, wouldn't it?

WITNESS QUINLAN: Yes, yes.

COX: So if you were concerned about the tank and wanted to check it for whatever reason you would check it before you put the ballast water in, correct?

WITNESS QUINLAN: If you had reasonable concerns to - to want to access a tank, yes, through that manhole.

Mr Cox also questioned Quinlan on the use of perforated sounding pipes, a practice Quinlan described (T12.6.13, p53, L29) as "a reasonably good idea", more commonly adopted on ships built later than Magdalene (LL14-25), but not "a requirement" (LL22-25). They are adopted for a range of purposes, and "not specifically" for checking for contaminants "on top of the water in the tank" (LL31-44). There was then this exchange (LL46-50):

COX: It was not possible to check for liquid contaminants in this double bottom tank once there was ballast water in there taking a manual sounding via the sounding pipes, was it?

WITNESS QUINLAN: No.

Alternative methods for checking were then canvassed (T12.6.13, pp54-5). A few options were identified as available, even in the event of there being cargo in the hold.

Concurrent evidence

Michaels then joined Quinlan in the witness box (Tp58), to enable both counsel to clarify the joint expert report (Exhibit P6).

Neither expert could be more specific than estimating one to two months for the oil to move into the ballast tank (Tp59).

Insofar as the joint report indicates the witnesses' agreement ([88](2) above) that more frequent inspections than 12-monthly would be "highly prudent" "shipping practice", Quinlan was referring to his own Newcastle experience, but Michaels was referring to "international practice" (Tp60).

They agreed that not all "masters and operators ... meet that standard of highly prudent" because their "standard will vary" (Tp60, LL33-44), but they agreed also (Tp61) that "current shipping practices" would be to order an inspection of a tank at any time the Master or owner has "concerns with a tank" (see Tp60, L46-p61, L9).

Michaels went further, however, in respect of owners. He said (T12.6.13, p61, LL13-25, and p61, L46-p63, L20):

WITNESS MICHAELS: Well I believe the owner should know a little bit more about his ship and should know it's condition more than the Master would. I would say they would issue instructions if there was anything untoward to the Master to ensure it was done.

COX: I'll just ask one more question to Mr Michaels but don't answer it immediately in case there is an objection. In terms of an owner giving instructions to its Master about something that related to the particular condition of the ship, would the procedure to be adopted in respect of having sounding pipes without perforations fall within that category?

WITNESS MICHAELS: It would be something that the owners would be aware of.

...

WITNESS MICHAELS: If the owner knew from the condition of his ship, from the survey reports and from the conditions of coatings within the tank that they were deteriorating, the ship was old, then he would give some instruction to the ship that these type of things should be done. If the ship was in good condition and the coatings were very good then there would be no reason for it.

COX: Do you have any opinion as to what sort of instruction an owner should reasonably do, having regard to shipping practices and procedures internationally?

WITNESS MICHAELS: Well I believe that would be internationally what would be done. The owner has the technical expertise which is not on the ship and they would instruct the ship through their planned maintenances for inspection and for, through any procedures where a tank had not been used, to take account of this. They had the report from the class society ,they've got their reports from the recent dockings, and they know the condition of the coatings in their tanks.

COX: But the particular recommendations would vary from ship to ship?

WITNESS MICHAELS: Yes. Definitely.

COX: Mr Quinlan, do you agree or disagree with that or wish to supplement what I have just asked Mr Michaels about?

WITNESS QUINLAN: I think the ship owner referring to perforations is a highly specific point. I don't necessarily share the opinion that they would have particular instructions in relation to that when sounding ballast tanks.

COX: Would you agree that with sounding pipes that have no perforations such that soundings would not detect a contaminant like oil, that is a risk that some steps should be taken to guard against and have a procedure in place to stop oil pollution.

WITNESS QUINLAN: I think the notion that the sounding pipes, whether they are solid or perforated, is a highly specific point in relation to a sounding pipe. I would be, the only way I can explain it is I would be surprised there may be some ship owners that issue instructions in relation to that but I would be surprised if it is the case.

COX: Well--

WITNESS QUINLAN: Seems to me it is very very specific, too highly specific.

COX: So is your point that you don't think all the ship owners in the world would in fact do it, even though it is a good idea to try and stop pollution.

WITNESS QUINLAN: Well the sounding pipe, the primary purpose of the sounding pipe is tank measurement.

COX: Yes.

WITNESS QUINLAN: If the tank does have perforations it is a secondary means to, to establish not necessarily contaminants such as fuel. As I mentioned previously earlier whether there is mud or silt in the tank, it needs cleaning.

COX: But having regard to the fact that it is one purpose, albeit not the primary one, where you can't do it, would you agree that a prudent owner or any reasonable owner should take steps to have in place an alternate procedure where you can't use your sounding pipe.

WITNESS QUINLAN: No. The alternate procedure would be a tank inspection.

COX: Yes.

WITNESS QUINLAN: Yes. In that respect yes.

COX: So you would agree that they should have an alternate procedure like a tank inspection.

WITNESS QUINLAN: Yes, that is the primary, that is the primary means for inspection, not the sounding pipe.

In respect of Michaels' reference to a ship being known to be "old", I asked him (T12.6.13, pp63-4) to define "old" for the court, and he responded (Tp63, LL36-46 - emphasis added):

WITNESS MICHAELS: Well I think I used the, what the Classification Society views as old and we draw the line at about twenty years. If you look at Classification Surveys, they start off at, you have them at five year intervals. The first five years you look at the ship but don't do any phenomenal depth. Ten years you go more, twenty years you look at everything and then if the ship lasts any longer you keep looking at everything, and so old tends to be in the line of twenty years.

HIS HONOUR: And this is post, this is 1989 ?

WITNESS MICHAELS: So it's old, yes.

Mr Nell then put to Michaels (T12.6.13, p64, LL1-40):

... you suggested that a ship owner should give instructions to the Master in relation to, should give specific instructions to a Master where the ship owner is aware that the sounding pipe is a solid pipe rather than a perforated pipe.

WITNESS MICHAELS: That's not exactly what I said. What he should do is he should give instructions if he believes the tank is deteriorated. If the coatings have deteriorated, there is wastage in the tank and the tank hasn't been used, because if he had perforated pipes, then he wouldn't have to open the tank up. He can check for any contaminants, if he doesn't have them, then he's got no way of knowing the tank has become contaminated, so the only way then is he takes a risk. He says, "Do I just assume the ship's in tact, the tank's in tact, or do I check it?" And the risk of a tank not being in tact increases if the coatings are to any level broken down and on old ships they normally are, and for the time the vessel has the tank empty. Because when coatings break down, generally you protect the tank by putting an anode in, a zinc anode which will waste away instead of the ship. But when the tank is empty the anode doesn't work. It only works when it is under water. So when the tank is empty it will deteriorate faster.

NELL: But do I take it from your answer that you have just given that you don't suggest that the mere fact that a vessel has solid sounding pipes is itself a cause for a ship owner as a matter of practice, good practice to provide the Master with instructions in relation to the inspection of the tanks.

WITNESS MICHAELS: No, not if the tank's in good condition.

NELL: Your evidence as to that being a matter of practice that such instructions should be given is dependent upon the owner knowing or believing or apprehending that the tank is not in good condition, is that correct?

WITNESS MICHAELS: Yes, yes.

NELL: And absent such knowledge or apprehension you would agree that it wouldn't normally be practice for a ship owner to provide specific instructions in relation to the inspection of the tank simply because the sounding pipe was a solid not a perforated pipe, is that correct?

WITNESS MICHAELS: I'd agree with that but I also there would be very few owners wouldn't know what condition their ships were in.

Michaels then conceded to Mr Nell (T12.6.13, pp64-5) that his recent experience at sea was very limited, and (Tpp65-6) that ships, including bulk carriers, are "capable of operating at the age of twenty years and plus" (Tp65, LL38-9) if "well maintained" (L48). He said (Tp66, LL9-10 and LL17-20):

... you can find twenty-odd or older than twenty year old ships that are better than ten year old ships. ... [However,] as ships get older they do get damaged, and this damage builds up so the risk is greater as the ship gets old but I agree you could have a ship that was twenty years old in nearly new condition.

Quinlan then opined (T12.6.13, p66, LL36-48) that, if perforated sounding pipes "were such a critical piece of equipment", they would be "legislated ... and in place", and they are not. However, as noted above (in [102]), it would be "good practice for a ship owner to provide specific instructions to the ship in relation to inspection of the ballast tank for example simply because the sounding pipes happen to be solid rather than of the perforated type", but (T12.6.13, p67, LL1-3) "it's such a specific nature I would seriously doubt the, that many vessels would receive such instruction. Just too specific".

Questioning then turned (T12.6.13, p67) to the expert witnesses' expression of shared surprise "that the oil pollution was not discovered at an earlier time" (see [89] above).

Quinlan commented (LL21-30 - emphasis mine):

... I don't know the time at which oil actually entered harbour waters. Given that the tank was pumped for three and a half hours and the adductor (sic) system has a certain rating and we knew there was a certain volume in the tank therefore to say that oil came out as soon as you started the pump can't be said. Whether it was half an hour before 1400 hours, I don't, simply don't know. ... [T]here is a certain period of time where the oil wasn't discovered and that's what I'm referring to and I am clearly saying that with a more vigilant watch that the potential is that that oil being pumped over the side may have been detected at an earlier time.

Michaels (LL34-38) had a "very similar" view, but added that, "with the pungent smell of heavy oil", he was surprised that "no one on deck saw it, smelt it and picked it up. But you don't have to put much oil in the water to actually smell it and see it".

Quinlan opined (T12.6.13, p68, LL30-2) that the primary focus of keeping watch is safety - of personnel, the ship, cargo, and the marine environment, but (LL38-9) the officer of the watch has "a whole range of tasks and duties". He further opined (LL46-50) that when de-ballasting first commences, the "designated crew person" would "have a look over the side" in order to be "satisfied that the water ballast going over the side is clean initially", and "that would be as far as examining the ballast itself pretty much ... it".

Michaels responded on the watch issue (T12.6.13, p69, LL11-22):

WITNESS MICHAELS: Well my view is that the watch system is the duty officer who in this case was the second officer. Part of his rounds, while he is going around, he would look over the side of the ship. He wouldn't spend his entire time looking over the side of the ship, but while he was looking after the cargo, while he was checking mooring lines, while he was going out on the quay to check the drafts, and the various other things he would be doing on deck, he would be looking over the side and at that time I would think he would notice that there was oil coming out of the side of the ship.

COX: If he was keeping a proper look out.

WITNESS MICHAELS: Yes.

Quinlan then added (T12.6.13, p70, LL11-14):

The situation of oil being pumped out through a water ballast tank in my opinion is an extremely low risk event. I really, the officer of the watch keeping his eye out on the marine environment is part of that practice, and I accept that as fair and reasonable, yes.

Michaels responded (LL23-40):

WITNESS MICHAELS: My opinion if the officer on watch does his job properly I think it is fair and reasonable.

COX: Yes, very well.

WITNESS MICHAELS: I think if the officer is doing his job--

COX: Does his job properly--

WITNESS MICHAELS: Yes.

COX: I followed that.

WITNESS MICHAELS: Then it is fair and reasonable.

COX: But it assumes that that one person will do their job properly.

WITNESS MICHAELS: Yes, obviously.

Other Tendered Materials

Apart from the exhibits to which reference has already been made, there are before the court post-incident photographs (in Exhibit P10) of No 6 tank, taken on 26 and 27 August 2010. One of those (p10) is an enlargement of the photograph produced and relied upon by Mr Czech (his annexure 'F' - see T12.6.13, p45, LL26-43). Another (p5) was put to Mr Quinlan during his evidence (T12.6.13, p48, L26).

Sentencing Principles

Both counsel adhered to, and relied upon, pre-prepared written submissions, which they put before the court at the end of the first day, and then enlarged upon them orally on the second day, in light of the first day's evidence (see T13.6.13, p8, LL42-3).

There was, however, no serious disagreement between them as to the sentencing principles to be applied by this court, but there was some disagreement on their application in the present case.

This court's sentencing principles have been frequently stated in judgments, usually in summary form. They apply to all environmental offences, not just marine pollution cases, and, because there were many nuances in the submissions made in this particular marine pollution case, I have decided to set out the principles, and some judicial commentary, in more than the usual detail.

The main principles were usefully listed in Plath v Rawson ("Rawson") [2009] NSWLEC 178; (2009) 170 LGERA 253, to which I will return after quoting some relevant statutory provisions.

Relevant statutory provisions

In determining the penalties in this case, regard must be had to ss 3A, 10, 21A, 22, and 23 of the CSP Act:

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.

...

10 Dismissal of charges and conditional discharge of offender

(1) Without proceeding to conviction, a court that finds a person guilty of an offence may make any one of the following orders:

(a) an order directing that the relevant charge be dismissed,

(b) an order discharging the person on condition that the person enter into a good behaviour bond for a term not exceeding 2 years,

(c) an order discharging the person on condition that the person enter into an agreement to participate in an intervention program and to comply with any intervention plan arising out of the program.

(2) An order referred to in subsection (1) (b) may be made if the court is satisfied:

(a) that it is inexpedient to inflict any punishment (other than nominal punishment) on the person, or

(b) that it is expedient to release the person on a good behaviour bond.

(2A) An order referred to in subsection (1) (c) may be made if the court is satisfied that it would reduce the likelihood of the person committing further offences by promoting the treatment or rehabilitation of the person.

(2B) Subsection (1) (c) is subject to Part 8C.

(3) In deciding whether to make an order referred to in subsection (1), the court is to have regard to the following factors:

(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,

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

(4) An order under this section has the same effect as a conviction:

(a) for the purposes of any law with respect to the revesting or restoring of stolen property, and

(b) for the purpose of enabling a court to give directions for compensation under Part 4 of the Victims Compensation Act 1996, and

(c) for the purpose of enabling a court to give orders with respect to the restitution or delivery of property or the payment of money in connection with the restitution or delivery of property.

(5) A person with respect to whom an order under this section is made has the same right to appeal on the ground that the person is not guilty of the offence as the person would have had if the person had been convicted of the offence.

...

21A Aggravating, mitigating and other factors in sentencing

(1) General

In determining the appropriate sentence for an offence, the court is to take into account the following matters:

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

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

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

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

(2) Aggravating factors

The aggravating factors to be taken into account in determining the appropriate sentence for an offence are as follows:

...

(d) the offender has a record of previous convictions ...

...

(g) the injury, emotional harm, loss or damage caused by the offence was substantial,

...

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

...

(o) the offence was committed for financial gain,

...

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

(3) Mitigating factors

The mitigating factors to be taken into account in determining the appropriate sentence for an offence are as follows:

(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,

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

(h) the offender has good prospects of rehabilitation, whether by reason of the offender's age or otherwise,

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

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

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

...

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

...

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

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

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

...

22 Guilty plea to be taken into account

(1) In passing sentence for an offence on an offender who has pleaded guilty to the offence, a court must take into account:

(a) the fact that the offender has pleaded guilty, and

(b) when the offender pleaded guilty or indicated an intention to plead guilty, and

(c) the circumstances in which the offender indicated an intention to plead guilty,

and may accordingly impose a lesser penalty than it would otherwise have imposed.

(1A) A lesser penalty imposed under this section must not be unreasonably disproportionate to the nature and circumstances of the offence.

(2) When passing sentence on such an offender, a court that does not impose a lesser penalty under this section must indicate to the offender, and make a record of, its reasons for not doing so.

(3) Subsection (2) does not limit any other requirement that a court has, apart from that subsection, to record the reasons for its decisions.

(4) The failure of a court to comply with this section does not invalidate any sentence imposed by the court.

...

23 Power to reduce penalties for assistance provided to law enforcement authorities

(1) A court may impose a lesser penalty than it would otherwise impose on an offender, having regard to the degree to which the offender has assisted, or undertaken to assist, law enforcement authorities in the prevention, detection or investigation of, or in proceedings relating to, the offence concerned or any other offence.

(2) In deciding whether to impose a lesser penalty for an offence and the nature and extent of the penalty it imposes, the court must consider the following matters:

(a) (Repealed)

(b) the significance and usefulness of the offender's assistance to the authority or authorities concerned, taking into consideration any evaluation by the authority or authorities of the assistance rendered or undertaken to be rendered,

(c) the truthfulness, completeness and reliability of any information or evidence provided by the offender,

(d) the nature and extent of the offender's assistance or promised assistance,

(e) the timeliness of the assistance or undertaking to assist,

(f) any benefits that the offender has gained or may gain by reason of the assistance or undertaking to assist,

...

(3) A lesser penalty that is imposed under this section in relation to an offence must not be unreasonably disproportionate to the nature and circumstances of the offence.

(4) A court that imposes a lesser penalty under this section on an offender because the offender has assisted, or undertaken to assist, law enforcement authorities must:

(a) indicate to the offender, and make a record of the fact, that the lesser penalty is being imposed for either or both of those reasons, and

(b) state the penalty that it would otherwise have imposed, and

(c) where the lesser penalty is being imposed for both reasons-state the amount by which the penalty has been reduced for each reason.

(5) Subsection (4) does not limit any requirement that a court has, apart from that subsection, to record the reasons for its decisions.

(6) The failure of a court to comply with the requirements of subsection (4) with respect to any sentence does not invalidate the sentence.

The concept of "Harm"

The concept of "injury, ... harm, loss or damage" is specifically noted in s 21A(2)(g), as quoted above, as an "aggravating factor", and is raised also by Preston J in his "checklist" in Rawson (at [68], quoted below in [131]).

On this subject, his Honour had previously remarked, in Environment Protection Authority v Waste Recycling and Processing Corporation ("Waste Recycling") [2006] NSWLEC 419; (2006) 148 LGERA 299, at [145] - [149]:

145 Harmfulness needs to not only be considered in terms of actual harm, the potential or risk of harm should also be taken into account: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 366 and Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34 (6 February 2006) at [175]. Harm should not be limited to measurable harm such as actual harm to human health. It can also include a broader notion of the quality of life.

146 Harm can include harm to the environment and its ecology. Harm to an animal or plant not only adversely affects that animal or plant, it also affects other biota that have ecological relationships to that animal or plant: Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34 (6 February 2006) at [174].

147 Harm can be direct or indirect, individual or cumulative. Activities that contribute incrementally to the gradual deterioration of the environment, even when they cause no discernable direct harm to human interest, should also be treated seriously.

148 The culpability of the defendant depends in part on the seriousness of the environmental harm. Sentencing courts have exercised their discretion in relation to penalty on the principle that the more serious the lasting environmental harm involved, the more serious the offence and, ordinarily, the higher the penalty: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority ("Camilleri") (1993) 32 NSWLR 683; [82 LGERA 21, at 701/39]. If the harm is substantial, this objective circumstance is an aggravating factor: s 21A(2)(g) of the Crimes (Sentencing Procedure) Act 1999.

149 The fact that the environment harmed by the offender's conduct was already disturbed or modified is not a mitigating factor ...

Pleas of guilty and discounts

In respect of s 22, as also quoted above, it is established by the authorities that a plea of guilty amounts to an admission of liability in respect of each element of the offence charged: See R v O'Neill [1979] 2 NSWLR 582, at 588.

I have already noted ([16] and [17]) that there is some contention between counsel for the parties, concerning the "utilitarian value" of the pleas of guilty in this case, and the "discount" those pleas should attract on sentence.

It is, therefore, appropriate that I set out the actual principles to be applied when discounting for a plea.

They were comprehensively stated by Spigelman CJ, on behalf of five senior and experienced judges in the CCA, in its 2000 "guideline judgment" in Thomson/Houlton (citation in [16] above), at [152]-[162] (emphasis mine, but some citations omitted):

152 In my opinion, the appropriate range for a discount is from 10-25 per cent.

153 The determination of where, within such a range, the discount should fall in a particular case is a matter for the discretion of the sentencing judge.

154 There are however two circumstances which will generally affect the appropriate level of discount in a particular case:

(i) The time at which a plea is entered. ...

(ii) The complexity of the issues about which evidence will have to be gathered and adduced affects the value of the plea. The greater the difficulty of assembling the relevant evidence and the greater the length and complexity of the trial, the greater the utilitarian value of a plea.

155 The top of the range would be expected to be restricted to pleas at the earliest possible opportunity and should not be given, save in an exceptional case, after a matter has been set down for trial. A discount towards the bottom of the range is appropriate for late pleas, for example, on the date fixed for trial, unless there are particular benefits arising from the prospective length and complexity of the trial.

156 Rare cases involving exceptional complexity and trial duration may justify a higher discount. In some cases no discount is appropriate at all. In some cases the "discount" will be reflected in a step down in the hierarchy of sentencing options.

157 There are circumstances in which the protection of the public requires a long sentence to be imposed so that no discount for the plea is appropriate ...

158 There are crimes that so offend the public interest that the maximum sentence, without any discount for any purpose, is appropriate. ...

159 It is also pertinent to state that a discount of 10-25 per cent is not a range within which trial judges may exercise a discretion that will not be subject to appellate review. Appeals against severity or leniency of sentence focus on the range which is appropriate for the particular case, not on the range appropriate for pleas in the full variety of circumstances:

Conclusion:

160 The Court should adopt the following guideline applicable to offences against State laws:

(i) A sentencing judge should explicitly state that a plea of guilty has been taken into account. Failure to do so will generally be taken to indicate that the plea was not given weight.

(ii) Sentencing judges are encouraged to quantify the effect of the plea on the sentence in so far as they believe it appropriate to do so. ...

(iii) The utilitarian value of a plea to the criminal justice system should generally be assessed in the range of 10-25 per cent discount on sentence. The primary consideration determining where in the range a particular case should fall, is the timing of the plea. What is to be regarded as an early plea will vary according to the circumstances of the case and is a matter for determination by the sentencing judge.

(iv) In some cases the plea, in combination with other relevant factors, will change the nature of the sentence imposed. In some cases a plea will not lead to any discount.

...

162 The discount range propounded for a guilty plea based on utilitarian considerations is not intended to result in any change in the level of sentences generally. Nothing in these reasons should be construed as indicating an opinion that trial judges have not in fact been giving appropriate consideration and weight to pleas in such a way as to distort the general level of sentences. The purpose of identifying a discount range is to improve the transparency of the process and to alter the widespread perception that there is no benefit from an early plea. In so far as existing sentencing practice has been to allow discounts for pleas up to 35 per cent, encompassing all relevant matters, such a practice remains appropriate.

The application of the principles in Thomson/Houlton was discussed by Howie J (with whom Studdert and Dunford JJ agreed, without comment) in R v Sutton ("Sutton") [2004] NSWCCA 225, a case in which the CCA reviewed a sentence imposed for "aggravated dangerous driving occasioning death".

Howie J said, in Sutton (at [12],[13] and [16]):

12 This Court has pointed out, time and time again, that the strength of the Crown case is an irrelevant factor in determining the utilitarian value of the plea of guilty. The strength of the Crown case is relevant only to the evaluation of remorse and what weight should be given to that factor in determining the appropriate sentence....

13 ...In the present case the strength of the Crown case was completely irrelevant because his Honour found that the applicant was genuinely remorseful. The utilitarian value of the plea was as significant as a plea made at the first opportunity in the Local Court could be. The Crown before this Court relied upon the fact that the present would not have been a lengthy or complex case had the applicant sought to defend the charge. But that is a factor that will only rarely affect the benefit obtained by the plea and it is not the reason given by his Honour for devaluing it.

...

16 ... As Dunford J noted in R v Mako [2004] NSWCCA 90 at [21]:

In all cases the important consideration is to expose the transparency of the process so that it can be seen that an appropriate discount has been allowed.

The "guilty discount" question, and, indeed, the appropriateness of using the word "discount", were considered by Howie J, in another principal judgment of the CCA, in R v Borkowski ("Borkowski") [2009] NSWCCA 102, at [31]-[36] (most citations omitted):

31 As a matter of general practice, the maximum discount for the utilitarian value of the plea of guilty should be awarded only to those accused persons who plead guilty in the Local Court and continue that plea of guilty in the District Court. There may be a valid reason in the exercise of discretion for awarding the maximum discount where the plea of guilty does not occur until the District Court but that would be exceptional and arise from the peculiar factual situation in a particular case. The amount of the discount cannot depend upon the practice of the particular court based upon its administrative arrangements. It is difficult to see how, in the usual case, a plea of guilty on arraignment could justify a discount of more than about 15 per cent. There was nothing in the present case that justified a discount above that range.

32 It should not be necessary to do so, but, because there appears to be discrepancies in the application of the discount for the utilitarian value of the plea, it is apposite to set out in point form the principles laid down by this Court and to be applied by sentencing courts. Of course these are principles of general application and are subject to the scheme set out in and regulations made under that Act:

1. The discount for the utilitarian value of the pleas will be determined largely by the timing of the plea so that the earlier the plea the greater discount: Thomson/Houlton at [154]; ...

2. Some allowance may be made in determining the discount where the trial would be particularly complicated or lengthy: Thomson/Houlton at [154].

3. The utilitarian discount does not reflect any other consideration arising from the plea, such as saving witnesses from giving evidence but this is relevant to remorse: Thomson/Houlton at [119] to [123]; nor is it affected by post-offending conduct: ...

4. The utilitarian discount does not take into account the strength of the prosecution case: Sutton: ...

5. There is to be no component in the discount for remorse nor is there to be a separate quantified discount for remorse: ...

6. Where there are multiple offences and pleas at different times, the utilitarian value of the plea should be separately considered for each offence: ...

7. There may be offences that are so serious that no discount should be given: Thomson/Houlton at [158]; ... where the protection of the public requires a longer sentence: ...

8. Generally the reason for the delay in the plea is irrelevant because, if it is not forthcoming, the utilitarian value is reduced: ...

9. The utilitarian value of a delayed plea is less and consequently the discount is reduced even where there has been a plea bargain: ... or where the offender is waiting to see what charges are ultimately brought by the Crown: ... or the offender has delayed the plea to obtain some forensic advantage... such as having matters put on a Form 1: ...

Aggravating and Mitigating Factors

Section 21A of the CSP Act lists various aggravating and mitigating factors on sentence ([119] and [177] above).

As already noted ([135] above), facts adverse to the defendant must be proved beyond reasonable doubt and those favourable to the defendant need be proved only on the balance of probabilities. The absence of any mitigating factors proven in favour of the defendant is not an aggravating factor against the defendant.

Both lists of factors include "harm", and in this case it is clearly the only aggravating factor.

The harm caused by this spill was substantial and significant, but, fortunately, neither long-lasting, nor permanent. It cannot be accepted as a mitigating factor.

Clearly, in terms of the relevant s 21A mitigating factors:

(1) this offence is not part of any planned or organised criminal activity;

(2) neither defendant is known to have any criminal record;

(3) neither defendant has seen its/his character questioned; and

(4) both have good prospects of rehabilitation.

I am also not satisfied that, on what has been put before the court, either defendant can be regarded as likely to reoffend (c.f. Mr Cox at T13.6.13, p7, L46-p8, L17).

Of the five mitigating factors recognised by Mr Cox (at [164] above), numbers 4 and 5, namely the defendant owner's payment of the clean-up costs, and its preparedness to pay the legal costs of both defendants, require no discussion at this point, but they operate to the credit of both defendants.

I turn, therefore, to consider the other three, namely (1) the pleas of guilty, (2) cooperation and assistance, and (3) contrition and remorse, all three of which are specified in s 21A.

I will then consider to what extent they, singly or in combination, might lead to a discount on the indicative penalty I have just stated ([249] above).

Pleas of Guilty (Cox Factor (1))

I respectfully find rather nebulous the prosecution argument, for which no authority was advanced, that the utilitarian value of the defendants' pleas should be reduced in the circumstances of this case. I will apply, in full, the principles so clearly stated in Thomson/Houlton (and quoted in [125] above). Those principles set a maximum "guilty discount" of 25%.

Despite the early admissions, which were made well before the summons was issued, it remained necessary for the prosecution to prepare very substantial material in order to secure, on 30 May 2012, this court's order that a summons be issued.

The agreement on the ASF, and the very limited amount of oral evidence that was needed, including absolutely none from the prosecution's witnesses of fact, and none from either Czech or the Master, represent substantial utilitarian value to the court's resources.

The Thomson/Houlton principles clearly require me, in all the circumstances, to allow the defendants the full maximum 25% discount for their pleas.

Cooperation and Assistance (Cox Factor (2))

There was little argument between counsel about this consideration.

Clearly substantial credit is due (a) to the owner for its formal admission of liability within three months, well before the commencement of proceedings, (b) to the Master for the admissions made on his behalf in that 10 December 2010 letter, and (c) to both defendants for the preparedness of the Master (and his crew) to participate, subject to the limitations of entirely appropriate legal advice, in the prosecution's investigation.

Only a modest discount should, however, follow on these grounds, as ss 10, 50 and 53 of the Marine Pollution Act 1987 impose very strict obligations on ship owners and crew in respect of frankness and cooperation, and prescribe serious penalties for their breach.

Contrition and Remorse (Cox Factor (3))

Unlike Preston J in Rawson, I do not consider such sentiments to be absent in this case, and I will apply the principles in Waste Recycling ([133] above).

There was here not just "smooth apologies" from counsel ([203] in [133]). Contrition is demonstrated in the affidavits of Czech and the Master (albeit without their personal attendance at court - [214] in [133]). Also, there was "speed and efficiency of action to rectify any harm [and] ... action to prevent further pollution ... and address the causes of the offence" ([204], [205] and [212] in [133]).

The qualifications imposed by the CSP Act on s 21A(3)(i) ([119] above) does not mitigate any allowance which the court might make in this case for remorse, and I find genuine contrition on the part of both defendants.

More discount than 25%?

There are more mitigating factors to consider on sentencing than there are factors for which specific discounts have been defined in the authorities. There is really only the Thomson/Houlton discount for a guilty plea which finds clear definition (10-25%), but the cases recognise that undefined percentages will be added to the guilty discount to take account of those mitigating factors discussed above, or any other exculpatory factor which may be established (T13.6.13, p30).

One of the discount principles stated in Borkowski (see [32](5), quoted in [128] above) provides, for example, that there should be no separate discount for remorse.

"Total" discounts of 30 to 35%, and occasionally more, are not uncommon in environmental prosecutions; see, e.g., Environment Protection Authority v Big River Group Pty Ltd [2011] NSWLEC 80 (33%), Environment Protection Authority v Boral Australian Gypsum Ltd [2009] NSWLEC 26 (35%), and Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222 ($30,000 off $80,000).

In marine pollution cases, Lloyd J allowed a total discount of 35% (rounded down to one-third) in Filipowski v Schiffsbeteiligungsges m.b.H. & Co KG; Filipowski v Kleemann ("Kleemann") [2004] NSWLEC 207, (2004) 134 LGERA 48, at [32], and discounts of 40% were allowed by Bignold J in both Vopak and Mediterranean.

In his final submissions, Mr Nell urged on the court a possible 50% combined/total discount for all mitigating considerations ([201]).

In a drug-related CCA case, SZ v The Queen (to which Preston J referred in Rawson at [46] - quoted above in [131]) total discounts as high as 50% (and sometimes above) were discussed by Buddin and Howie JJ, at some length.

Buddin J delivered the primary judgment on the appeal, but Howie J, in concurring with him, added some comments of his own on "combined discounts". The presiding judge, Simpson J, specifically agreed with both of them, and, at some risk to brevity, I wish to quote some comments from both judgments.

Howie J said (at [3]-[11]):

3 ... I do not recant from my view that in general a combined discount for pleas of guilty and assistance should be given and that such a discount should not normally exceed 50 per cent.

4 ... there still is ...a bottom line beneath which a sentence cannot legitimately be set. If that bottom line is not respected, the sentence will fail to carry out the purposes of punishment. ...

5 ... whatever be the subjective circumstances of the offender and whatever discounts are applied to achieve a recognised public policy, the sentence must bear a reasonable relationship with the objective seriousness of the offence and fulfil the manifold purposes of punishment: ... the sentencing judge is required to stand back and ask whether the resulting sentence is just and reasonable, not only to the offender but also to the community at large.

6 ... because there is only limited room to discount a sentence without going below the bottom line, it must follow that the application of one discount for one purpose will inevitably impact upon the extent to which another discount can be applied to achieve a different purpose. The extent to which a sentence is discounted in recognition of the utilitarian value of the plea must necessarily affect the ability of the court to discount the sentence in recognition of assistance and the consequences of it for the offender. ...

7 Counsel for the applicant argued...appropriate case to discount a sentence by up to 75 per cent. ... it is impossible to see how a sentence that is only 25 per cent of what would otherwise be appropriate could not be "unreasonably disproportionate to the nature and circumstances of the offence".

8 ... the primary task of imposing a sentence that reflects the objective circumstances of the offence...

9 ... if an Ellis discount is allowed for disclosing unknown criminality in addition to a discount for an early plea, the ability to give any further discount for whatever purpose is reduced.

10 ... There is still on offer, even after an early plea, a discount of somewhere in the vicinity of 25 per cent, or more in an exceptional case. The simple fact is that it is more important to the administration of justice to encourage and reward early pleas of guilty. If the pursuit of that policy diminishes the ability to encourage and reward assistance, so be it. There is a greater public policy at stake and that is public confidence in the courts to impose sentences that are just and reasonable to all concerned.

11 In my opinion the application of two discrete discounts, as was done in the present case, is liable to lead to error unless the court is conscious of the overall discount being given and considers whether a discount of that degree can result in a sentence that does not infringe s 23(3). ...

Buddin J said (at [42]-]54]):

42 The applicant was entitled to a discount, in addition to a discount for his pleas of guilty, for his assistance to the authorities

...

46 In R v Sukkar [2006] NSWCCA 92, Latham J (with whom McClellan CJ at CL and Howie J agreed) said ([pars 54, 46]):

...

While there is no fixed tariff for assistance to the authorities, discounts customarily ranged between 20 percent and 50 percent. There have been comparatively rare cases where a discount in the order of 55 percent or 60 percent has been given. Generally speaking however, a discount of 50 percent is regarded as appropriate to assistance of a very high order. No doubt, that is in part a reflection of the principle that a discount for assistance must not produce a result which is disproportionate to the objective gravity of a particular offence and the circumstances of a particular offender. ...

Bearing these considerations firmly in mind, I regard a discount of 45 percent as excessive in the circumstances of this case. The respondent's assistance could not, in my view, be characterised as assistance of a very high order. ...I consider that a composite discount of 35 percent would have been appropriate to the recognition of both the respondent's plea of guilty and his assistance to the authorities, such as it was...

47 Howie J made the following additional observations [par 5]:

... In my opinion discounts for a plea and assistance of more than 40 per cent should be very exceptionally, if at all, granted in a case where there is no evidence that the offender will spend the sentence, or a substantial part of it, in more onerous conditions than the general prison population. ...

...

50 ...In Regina v Gallagher (1991) 23 NSWLR 220 at 232 - well before s 23(3) was enacted - Gleeson CJ ... said:

Public confidence in the administration of criminal justice would be diminished if courts were to give uncritical assent to arguments for leniency, which are being jointly urged by both the prosecution and the defence, in circumstances which may call for a close examination of the alleged assistance. Care must also be taken to ensure that the ultimate sentencing result that is produced is not one that is so far out of touch with the circumstances of the particular offence and the particular offender that, even understood in the light of the considerations of policy which supports [the discounts given], it constitutes an affront to community standards. If sentencing principles are capable of producing an outcome of that kind, then that calls into question their legitimacy.

...

52 I acknowledge, as did Latham J in Sukkar (supra), that there will be cases in which a combined or composite discount of more than 50% is called for. There may well be a case in which the assistance proffered is of a quite extraordinary kind. Alternatively there may be a case in which the offender is entitled to an additional discount, in accordance with the principles enunciated in R v Ellis..., on account of having disclosed information which was otherwise unknown to the authorities. Indeed, composite discounts in excess of 50% have been allowed on several occasions when this Court has proceeded to re-sentence following a successful appeal by an offender. ...

53 However, in light of the authorities to which I have referred and particularly given the statutory mandate contained in s 23(3) of the Act, it is my opinion that a combined discount exceeding 50% should be reserved for an exceptional case. ...

54 ... I have concluded that the discount which the sentencing judge allowed was unduly favourable to the applicant.

I have now reviewed the sentencing remarks of the judges in many cases, and am prepared to allow a total discount of one-third in this case, for the pleas, co-operation, remorse, the pre-trial payment of $1.7M for clean -up, and the commitment to pay costs.

In the case of the owner (12/50522), that would bring me to a fine of $1.8M, reduced by $600,000 to $1.2M.

The Master

I turn now to consider the position of the Master (12/50523).

The history of marine pollution prosecutions shows a trend towards mostly blaming the owner, because in the majority of incidents there is management failure.

One major exception was Filipowski v Bak and Anor [2004] NSWLEC 498, where Cowdroy J found ([56]) the Master "more culpable than the owner because of his acknowledged neglect", and fined him more than double the amount of fine imposed on the owner, despite the 5:1 ratio of the maximums. His Honour also made separate costs orders against them.

At risk of repetition, I need to review some relevant marine pollution decisions, from the Master's viewpoint.

In many cases all defendants charged have been punished, e.g. Morrison v Che Mat and others (1997) 95 LGERA 212, where I fined the owner $50,000, the Master $10,000, and the Chief Officer $1,000, having found no grounds for extending to any of them the benefits of what was then s 556A of the Crimes Act 1900. In that case the real underlying failure was lack of education/instruction of the crew, by owner and Master. That failure seriously disadvantaged the Chief Officer, hence the much lower fine I imposed on him.

In Filipowski v Lyndon and ADI [2001] NSWLEC139, McEwen AJ refused to make a discharge order under s 10 against an apprentice who made a mistake. His Honour fined the owner $100,000 plus costs, and put Mr Lyndon on a one-year good behaviour bond (under s 10(1)(b) and (2)), with no order as to costs.

In Thorneloe, the CCA granted a s 10 order where the trial judge (Talbot J) had refused one. The Chief Justice noted, however, that s 10 orders are rarely appropriate for environmental offences ([165], quoted in [151] above). The CCA also allowed his Honour's adverse costs order to stand.

In Webb v Chung & Ors [2002] NSWLEC 135, a "latent defect" case, Cowdroy J granted s 10 orders to both the Master and the Chief Engineer, but ordered them to pay costs. The discharge was minimal, so the owner was fined only $35,000 plus costs.

In the penultimate chapter of the Morrison v Peacock litigation, which involved a small spill into a lagoon at Lord Howe Island, the defendants pleaded guilty when their proceedings were remitted by the High Court, and Pearlman J granted both of them s 10 orders, with no orders as to costs: Morrison v Peacock and Roslyndale Shipping Co Pty Ltd [2003] NSWLEC 68.

The prosecutor, in the final chapter of the case, appealed to the CCA, and her Honour's decisions on both s 10 and costs were allowed to stand, as being "within the range of permissible sentences" (on the s 10), and not within the CCA's appeal jurisdiction (on the costs issue): Director of Public Prosecutions (NSW) v Roslyndale Shipping Pty Ltd [2003] NSWCCA 356.

In Kleemann, Lloyd J considered Thorneloe, and (at [39]-[40]) the question of "what the defendant could, as a matter of practical reality, have done to avert the event that had occurred", and his Honour concluded:

40 In applying the principles explained in Thorneloe, I have regard to the absence of any evidence of the actual environmental harm, the absence of any personal fault on the part of the Master, the fact that it was the Chief Engineer who was in charge of the bunkering operation, the Master's hitherto impeccable record after forty five years of seagoing experience, including some twenty nine years as a Master, the fact that matter was well under control until the monsoon type rain arrived, and the Master's expression of regret over the incident. The fact that the Master is now retired from service means that considerations of deterrence do not arise. In these circumstances it is appropriate to exercise the discretion under s 10(1)(a) of Sentencing Act in favour of the Master.

In so doing, his Honour said (at [39]): "one does not look for a standard of virtual perfection".

In Mediterranean, Bignold J noted that the ship had a poor record, and was "very old" ([74] and [81](i) of his Honour's judgment, and [103] above). That age reasonably required "greater vigilance and care" in the ship's ordinary operations. It was "broken up" in February 2002 (ASF 27 in [10]). His Honour said:

83 My evaluation of the totality of relevant evidence leads me to conclude that chief culpability for the oil spill must be laid at the feet of the ship owner, but that neither the Master nor the Third Mate has been shown to be not culpable, albeit to a lesser extent, than my evaluation of the ship owner's culpability.

84 It is relevant to note that the Master and the third Mate were only very briefly associated with the "Viviana" prior to the oil spill incident.

85 This is an unfortunate association, especially in the light of their unblemished records at sea, especially so in the case of the Master who has been as sea for some 40 years. This fact is mitigating of their culpability but It does not absolve them.

86 The application made on behalf of the Master for discharge without conviction pursuant to the Crimes Sentencing Procedure Act 1999, s 10 in my opinion has not been substantiated. Although the Master's "character, antecedents, age" (vide s 10(3)(a)) operate clearly in his favour, I do not find the offence to be "trivial in nature" (vide s 10(3)(b)) and I do not find the "circumstances to be extenuating" (vide s 10(3)(c)).

87 In my judgment, the objective facts of the offence, together with the nature and degree of the culpability of each Defendant justifies the recording of a conviction and the imposition of a penalty commensurate with my evaluation of the relevant objective/subjective factors relevant to the offences.

...

89 There are, of course, mitigating factors operating in favour of each Defendant, namely-

(i) the early plea of guilty;

(ii) the contrition and regret of each Defendant;

(iii) the first environmental offence of each Defendant; and

the exemplary seafaring record of each Defendant.

90 These taken collectively justify a significant global reduction of sentence for each Defendant in the order of 40 percent.

His Honour fined the owner $150,000, the Captain $25,000, and the Third Mate $15,000, all plus costs.

In Vopak, Bignold J again both refused a s 10 order, and allowed, as I have earlier noted, a 40% discount.

For completeness, I again draw attention here to the outcome in D'Amato ([221] above), where a s 10 order was made, despite the subject event being anything but "trivial".

I also again note the presence of some aggravating factors in Hemina, where the s 10(1)(b) discretion was exercised in favour of the Master (a two-year good behaviour bond).

Contamination of ballast is rare, but not unknown; it is clearly foreseeable, and more likely in "old" ships, which are more likely, after 20 years service, and despite good maintenance and good surveys, to develop corrosion and a "rust nib", which, ex post facto, was the opinion of the owner's representative, Czech, whose company has 100 years management experience in the industry, as to what occurred in this case ([54]).

Hemina was a case of hull fracture, and it is pertinent to note Pain J's comment, in respect of management's role (at [134]):

... that additional maintenance is necessary for older ships is demonstrated by the hull fracture on the Carla. Relying on the absence of an incident to suggest that there is no problem with the hull is not sufficiently preventative for a prudent owner. The potential for hull stress in and around fuel tanks as identified by Mr Burge's evidence means that class surveys which provide for a dry dock inspection every five years are not necessarily sufficient. A prudent owner needs to deal with hull maintenance more proactively.

Such matters are more the province of owners, rather than Masters, and the offence in this case is more a system or command failure anyway.

The Master was new to the vessel, and we know nothing of his experience in leadership roles in ships of its age. He provided no detail of his service in previous ships, but he had been a Master only since 2004, and the prosecutor brought forward no evidence that supported any submission that the court could find that "he should have known better".

He joined Magdalene just as she underwent a major survey. He may well have felt entitled to rely on that for not inspecting the tank before ballasting it on the 23rd August.

His major contribution to the incident on the 25th August is said to be his failure to properly test the tank for contamination, but the ship had no established procedures requiring it, and initiating it, without a clear indication that it was necessary, (1) goes beyond the experts' baseline positions, (2) would approach Lloyd J's "standard of virtual perfection", and (3) could not form the basis of a finding of negligence on the part of a master, who does not necessarily have to have the credential "highly prudent".

On the other hand, in simple terms, a 10-20 minute job removing a hatch before commencing de-ballasting would have released the strong smell of HFO, and ensured the discovery by the crew of the contamination of the No 6 tank.

As Mr Nell observed (T13.6.13, p32, LL37-40):

...one could think of as a counsel of perfection any number of things that could be done. ... section 10 doesn't require the identification - doesn't require the removal of every possibility in order to get the benefit of it. One has to look at what he could reasonably have done.

That brings me to the question of watch-keeping on such a ship at the time of such operations as de-ballasting, and loading cargo.

It was not part of the Master's duties to take personal charge of the port operation of the ship. I believe that he was entitled to rely on the "qualified personnel" ([192] above), among his senior officers, to do better.

Their failures in this regard are more the vicarious responsibility of the owner, than of the Master. Likewise, the need for perforated sounding pipes, or procedures to compensate for their absence, while matters perhaps of recommendation by a Master to the owner, is really a matter for owners.

A decision to make a s 10 order in the defendant Master's favour in this case is not free from difficulty or doubt, but, on the approach I have observed in the cases surveyed above, I am prepared, on balance, to accept Mr Nell's submissions ([204]) and do so.

Costs

The corporate defendant has undertaken ([20]) to pay the prosecutor's costs of both matters, but the court was not notified of any agreement on, or estimate of, the amount.

Orders

The orders of the Court will, therefore, be:

In Matter No 12/50522

(1) The Court finds the offence proved.

(2) The defendant is convicted of the charge set out in the summons.

(3) The defendant is fined the sum of $1.2 million.

In Matter No 12/50523

(4) The Court finds the offence proved.

(5) Pursuant to s 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999, I direct that no conviction be recorded, and that the proceedings be dismissed.

In Matters Nos 12/50522 - 50523

(6) The defendant MS Magdalene Schiffahrtsgesellschaft MBH is ordered to pay the prosecutor's costs of both proceedings on a party-party basis, as agreed or assessed, and to pay the prosecutor's reasonable investigation expenses.

(7) With the exception of Exhibit P1, all exhibits may be returned.

Decision last updated: 02 January 2015

Medium Neutral Citation:	Newcastle Port Corporation v MS Magdalene Schiffahrtsgesellschaft MBH; Newcastle Port Corporation v Vazhnenko [2013] NSWLEC 210
Hearing dates:	12 and 13 June 2013
Decision date:	11 December 2013
Jurisdiction:	Class 5
Before:	Sheahan J
Decision:	In Matter No 12/50522 (1) The Court finds the offence proved. (2) The defendant is convicted of the charge set out in the summons. (3) The defendant is fined the sum of $1.2 million. In Matter No 12/50523 (4) The Court finds the offence proved. (5) Pursuant to s 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999, I direct that no conviction be recorded, and that the proceedings be dismissed. In Matters Nos 12/50522 - 50523 (6) The defendant MS Magdalene Schiffahrtsgesellschaft MBH is ordered to pay the Prosecutor's costs of both proceedings on a party-party basis, as agreed or assessed, and to pay the Prosecutor's reasonable investigation expenses. (7) With the exception of Exhibit P1, all exhibits may be returned.
Catchwords:	PROSECUTION: Marine pollution offences by ship in Newcastle Harbour - admissions of guilt predating the summonses - pleas of guilty - sentencing principles - no truly comparable cases - aggravating and mitigating factors.
Legislation Cited:	Clean Waters Act 1970 Crimes Act 1900 Crimes (Sentencing Procedure) Act 1999 Criminal Procedure Act 1986 Fisheries Management Act 1994 Marine Pollution Act 1987 National Parks and Wildlife Act 1974 Protection of the Environment Operations Act 1997 Threatened Species Conservation Act 1995 Victims Compensation Act 1996 Uniform Civil Procedure Rules 2005
Cases Cited:	Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234 Blue Mountains City Council v Carlon [2008] NSWLEC 296 Blue Mountains City Council v Tzannes [2009] NSWLEC 19 Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304 Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683; 82 LGERA 21 Chief Executive of the Office of Environment and Heritage v Bombala Investments Pty Ltd [2013] NSWLEC 185 Chief Executive, Office of Environment and Heritage, Department of Premier and Cabinet v Powell [2012] NSWLEC 129 Chow v Director of Public Prosecutions (1992) 28 NSWLR 593 Cobiac v Liddy (1969) 119 CLR 257 Director-General of the Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121 Director of Public Prosecutions (NSW) v Roslyndale Shipping Pty Ltd [2003] NSWCCA 356 Environmental Protection Authority v Barnes [2006] NSWCCA 246 Environment Protection Authority v Big River Group Pty Ltd [2011] NSWLEC 80 Environment Protection Authority v Boral Australian Gypsum Ltd [2009] NSWLEC 26 Environment Protection Authority v Orange City Council [1995] NSWLEC 103 Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222 Environment Protection Authority v Timber Industries Ltd [2001] NSWLEC 25 Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299 Filipowski v Bak and Anor [2004] NSWLEC 498 Filipowski v Fratelli D'Amato S.r.1 and others [2000] NSWLEC 50; (2000) 108 LGERA 88 Filipowski v Hemina Holdings S.A.; Filipowski v Rajagopalan (No 2) [2009] NSWLEC 104 Filipowski v Lyndon and ADI [2001] NSWLEC139 Filipowski v Magnavia Schiffahrtsgesellschaft MBH & Co Kommanditgesellschaft, Pablo Dion and Suzanic Branco [2007] NSWLEC 404 Filipowski v Mediterranean Shipping Company SA [2005] NSWLEC 159 Filipowski v Schiffsbeteiligungsges m.b.H. & Co KG; Filipowski v Kleemann [2004] NSWLEC 207, (2004) 134 LGERA 48 Filipowski v Thorneloe [2000] NSWLEC 269; (2000) 112 LGERA 184 Filipowski v Vopak Terminals Sydney Pty Ltd [2006] NSWLEC 104 Garrett v Freeman (No 5); Garrett v Port Macquarie Hastings Council; Carter v Port Macquarie Hastings Council [2009] NSWLEC 1; (2009) 164 LGERA 287 Garrett v Williams [2006] NSWLEC 785; (2006) 160 LGERA 115 Gittany v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189 Graham v The Queen [2009] NSWCCA 212 Hardt v Environment Protection Authority [2007] NSWCCA 338; (2007) 156 LGERA 337 House v R (1936) 55 CLR 499 Hunter Water Board v State Rail Authority of New South Wales [No 2] (1992) 75 LGRA 22 Ibbs v The Queen (1987) 163 CLR 447 Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 Mickelberg v The Queen (1984) 13 A Crim R 365 Morrison v Che Mat and others (1997) 95 LGERA 212 Morrison v Defence Maritime Services Pty Ltd and Coates [2007] NSWLEC 421 Morrison v Peacock [2002] HCA 44; (2002) 210 CLR 274 Morrison v Peacock and Roslyndale Shipping Co Pty Ltd [2003] NSWLEC 68 Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120 Plath v Rawson [2009] NSWLEC 178; (2009) 170 LGERA 253 R v Ellis (1986) 6 NSWLR 603 R v Gent [2005] NSWCCA 370; (2005) 162 A Crim R 29 R v McNaughton [2006] NSWCCA 242; (2006) 66 NSWLR 566 R v Mako [2004] NSWCCA 90 R v Olbrich [1999] HCA 54, (1999) 199 CLR 270 R v O'Neill [1979] 2 NSWLR 582 R v Palu (2002) 134 A Crim R 174 R v Peel [1971] 1 NSWLR 247 R v Borkowski [2009] NSWCCA 102 R v Sharma [2002] NSWCCA 142; (2002) 54 NSWLR 300 R v Slattery (1996) 90 A Crim R 519 R v Smith (1982) 7 A Crim R 437 R v Storey [1998] 1 VR 359 R v Sukkar [2006] NSWCCA 92 R v Sutton [2004] NSWCCA 225 R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 R v United Keno Hill Mines Ltd (1980) 1 YR 299 R v Way [2004] NSWCCA 131; (2004) 60 NSWLR 168 R v Wisbey [2001] NSWCCA 434 R v Gallagher (1991) 23 NSWLR 220 Ryan v The Queen [2001] HCA 21; (2001) 206 CLR 267 SZ v The Queen [2007] NSWCCA 19; (2007) 168 A Crim R 249 Thewlis v R [2008] NSWCCA 176 Thorneloe v Filipowski [2001] NSWCCA 213; (2001) 52 NSWLR 60 Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715; 75 LGRA 71 Veen v The Queen [1979] HCA 7; (1979) 143 CLR 458 Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 Warringah Council v Bonanno [2012] NSWLEC 265 Webb v Chung & Ors [2002] NSWLEC 135 Weininger v The Queen [2003] HCA 14; (2003) 212 CLR 629
Category:	Principal judgment
Parties:	Matter No 50522 of 2013 Newcastle Port Corporation (Prosecutor) MS Magdalene Schiffahrtsgesellschaft MBH (Defendant) Matter No 50523 of 2013 Newcastle Port Corporation (Prosecutor) Volodymyr Vazhnenko (Defendant)
Representation:	E G H Cox, Barrister (Prosecutor) G J Nell SC (Defendants) Piper Alderman (Prosecutor) James Neill Solicitors (Defendants)
File Number(s):	50522 of 2012 50523 of 2012