Land and Environment Court New South Wales

• Medium Neutral Citation: Environment Protection Authority v Peak Gold Mines Pty Limited [2013] NSWLEC 158
• Hearing dates: 11 September 2013
• Decision date: 11 September 2013
• Jurisdiction: Class 5
• Before: Preston CJ

Decision

Orders as set out at [35]

• Catchwords: ENVIRONMENTAL OFFENCES - pollution of waters - sentencing - objective circumstances of offence - low level of environmental harm - risk of harm to environment clearly foreseeable and practical measures could and should have been taken to prevent harm - defendant had control over causes that gave rise to offence - subjective circumstances of case and mitigating factors - no prior convictions - defendant of good character - unlikely to re-offend - remorse demonstrated - plea of guilty entered at the first reasonable opportunity - defendant provided assistance to prosecutor in relation to investigation of offence and conduct of proceedings - purposes of sentencing - general deterrence - no particular need for specific deterrence - relevance of retribution and denunciation - need for consistency in sentencing and determining the appropriate penalty - defendant convicted as charged - penalty imposed - defendant to provide funding for effluent reuse scheme - publication order made - defendant to pay prosecutor's costs
• Legislation Cited: Crimes (Sentencing Procedure) Act 1999 ss 21A, 22, 23; Protection of the Environment Operations Act 1997 ss 120, 193, 241, 248, 250
• Cases Cited: Environment Protection Authority v Coal and Allied Operations Pty Ltd [2013] NSWLEC 134; Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222; Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd [2010] NSWLEC 114; (2010) 174 LGERA 314; R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383
• Category: Principal judgment
• Parties: Environment Protection Authority (Prosecutor); Peak Gold Mines Pty Limited (Defendant)
• Representation: Ms N G Hammond (Solicitor) (Prosecutor); Mr T G Howard (Barrister) (Defendant); Office of Environment and Heritage, Legal Services Branch (Prosecutor); Corrs Chambers Westgarth (Defendant)
• File Number(s): 51170 of 2012
• Publication restriction: No

Judgment

1 Peak Gold Mines Pty Ltd ('Peak Gold Mines') operates five gold and copper ore mines at Hillston Road, Cobar, nine kilometres from the town of Cobar. The ore is processed on the premises at a copper-gold processing plant. Tailings from the processing plant are fed into a tailings storage facility which is a large open dam retained by a wall to the south. Water is decanted from the tailings dam to a decant dam further to the south of the wall of the tailings dam.

2 The system for surface water management separates clean water from dirty and contaminated water. The tailings dam and the decant dam are within one contaminated water catchment area. An open earthen drain to the east of this catchment area collects clean surface water and diverts it from entering this catchment area.

3 As part of a plant upgrade to increase the storage capacity of the tailings dam, a contractor installed, as a temporary measure, a new decant pipe through the eastern end of the southern wall of the tailings dam. The outlet of the decant pipe was near to the existing clean water drain. Sandbags were installed to block the entry into the decant pipe. However, in anticipation of undertaking further works, the sandbags were removed.

4 During rainfall events between 24 November 2011 and 21 December 2011, contaminated water (containing tailings) discharged from the tailings dam through the temporary decant pipe into the clean water drain. The contaminated water descended the drain for about a kilometre until dispersing into surrounding bushland at the end of the drain. Tailings were deposited along the length of the drain. The discharge of the contaminated water into the drain constituted pollution of waters.

5 Peak Gold Mines have pleaded guilty to the charge that it committed an offence of polluting waters in contravention of s 120(1) of the Protection of the Environment Operations Act 1997 ('POEO Act') between 24 November 2011 and 21 December 2011 at the premises. The Court's task is to sentence Peak Gold Mines for this offence.

6 The prosecutor and Peak Gold Mines have agreed and have tendered a statement of agreed facts and a bundle of documents. I take those facts into account and my findings on matters relevant to sentence are based on that evidence. The prosecutor and Peak Gold Mines also adduced expert evidence on the issue of the actual or likely harm caused to the environment by the commission of the offence from Dr M Julli, an ecotoxicologist, and Dr D Robertson, an ecologist, respectively. Peak Gold Mines also read an affidavit of a director and the General Manager of Peak Gold Mines, Mr Flores.

7 In sentencing for the offence, the Court is to consider the objective and subjective circumstances of the offence and the offender. The Court is required to take into consideration the matters in s 241(1) of the POEO Act, the aggravating, mitigating and other factors in s 21A of the Crimes (Sentencing Procedure) Act 1999 ('CSP Act'), and the purposes of sentencing.

8 The objective circumstances include the maximum penalty, the environmental harm caused, the foreseeability of the environmental harm, the practical measures to prevent environmental harm, and the defendant's control over the circumstances of the offence.

9 The maximum penalty for a breach of s 120(1) of the POEO Act for a water pollution offence for a corporation is $1 million: s 123(a) of the POEO Act.

10 The Court is to consider the extent of the harm caused or likely to be caused to the environment by the commission of the offence: s 241(1)(a) of the POEO Act. In this case, there was actual harm to the environment in that water pollution occurred for a period of up to 27 days during which tailings material containing a range of chemicals, including cyanide and heavy metals such as zinc, copper and iron, was discharged into a clean water drain of approximately one kilometre in length.

11 There was no evidence of actual harm to fauna or flora during this period. There was, however, a likelihood of harm being caused to the environment by reason of the water pollution in the clean water drain, although it was low. The contaminated water contained cyanide. The concentration of cyanide in the tailings fed into the tailings dam is lethal to birds and animals. The toxicity of the tailings water in the tailings dam is evidenced by the fact that, in past years, three native ducks, a fox and a goat were killed by drinking tailings water. However, the cyanide concentrations in the contaminated water discharged during the rain events into the clean water drain would have been lower, but the precise concentrations are not known.

12 There were five rainfall events between 17 and 23 November 2011 and another five rainfall events between 10 and 20 December 2011, during which contaminated water was discharged into the clean water drain. The soil of the drain is well draining so that contaminated water discharged into it was unlikely to persist for more than a day or two. This meant that the total period of time during which pooled water would be in the clean water drain was considerably less than the full 27 days that the decant pipe was able to discharge contaminated waters into the clean water drain. The potential for wildlife, including the threatened mammal, the Kultarr, to be harmed by exposure to or ingesting the contaminated water was primarily restricted to the times when contaminated water was pooled in the clean water drain.

13 After considering the scale and duration of the potential harm from the pollution event, Dr Robertson concluded that the discharge of contaminated water was unlikely to have impacted upon individuals of the Kultarr and was not likely to have had a significant impact upon the population of Kultarrs in the locality. Dr Robertson also concluded that the discharge of contaminated water would have posed a similarly low risk to other wildlife in the area.

14 In these circumstances, there was a low level of likely harm to wildlife by the commission of the offence.

15 The Court is required to consider the extent to which Peak Gold Mines could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence: s 241(1)(c) of the POEO Act. Here, the risk of harm to the environment by the incident was clearly foreseeable. The engineer's construction drawing number 5, entitled "Tailings Storage Facility Upgrade Design South Embankment Design Layout" (Drawing 5), showed drains (which were the clean water drains) and the temporary decant pipe discharging near one of the clean water drains. The technical specification and Drawing 5 showed the need to excavate a five metre wide channel to direct flow from the new secondary spillway being constructed in the tailings dam towards the decant dam and to backfill identified sections of the drains shown (being the clean water drains). It was reasonably foreseeable that if the contractor did not follow these steps, contaminated water could discharge from the temporary decant pipe into the clean water drain, as actually happened.

16 The Court is to consider the practical measures that may be taken to prevent, control, abate or mitigate the harm to the environment: s 241(1)(b) of the POEO Act. In this case, there were practical measures that could and should have been taken to prevent the harm caused or likely to be caused to the environment by the commission of the offence. The major factors that led to the incident were summarised in the statement of agreed facts as follows:

(a) the Engineer did not provide a construction sequencing document;

(b) the Engineer did not clearly identify the Clean Water Drain on Drawing 5 of the Drawings;

(c) the Engineer did not, in its preparation of the Technical Specification, emphasise the importance of the diversion drain;

(d) the Engineer did not provide the location or GPS coordinates of the diversion drain, or details of the design to the Defendant or the Contractor;

(e) the Contractor failed to manage supernatant water from the tailings and storm water run-off from the active and existing tailings in accordance with the Technical Specification;

(f) noting that the Contractor did not understand the purpose or function of the Clean Water Drain;

(i) the Contractor did not adequately sandbag the outlet of the trenches for the decant pipe prior to 24 November 2011;

(ii) on 5 December 2011, the sandbags that blocked the decant pipe were removed from the inlet to the decant pipe by the Contractor's personnel and without consultation with the Defendant. The sandbags were removed to allow the installation of a concrete junction box for the decant pipe; and

(iii) the Contractor failed to place sandbags or other sediment controls in place [sic] between 5 and 21 December 2011 despite the fact that it had earlier formed the view that the trench to the decant pipe was a sediment risk;

(g) the Defendant did not instruct the Contractor in respect of the extent of backfill of the Clean Water Drain, as required by Drawing 5 of the Drawings;

(h) there was a misunderstanding between the Defendant and the Contractor in respect of the nature of the Clean Water Drain. While the Defendant made the Contractor aware of the Clean Water Drain in meetings before the works commenced, the Contractor stated that it did not realise when carrying out the works that the Clean Water Drain did not flow to the Decant Pond and that it was a clean catchment;

(i) the Defendant had not carried out rigorous enough inspections on all aspects of the TSF [Tailings Storage Facility] Upgrade Project and did not identify that the diversion drain had not been constructed; and

(j) the Defendant did not indicate to the Contractor that the run-off from the trenches for the decant pipe was an area of environmental concern and required an erosion and sediment control plan for this particular aspect of the TSF Upgrade Project (such plans were implemented in respect of the northern wall of the Tailings Storage Facility).

17 The practical measures that Peak Gold Mines could have undertaken were to have ensured that the engineer, the contractor and Peak Gold Mines itself took steps to overcome each of these factors.

18 The Court is to consider the extent to which the person who committed the offence had control over the causes that gave rise to the offence: s 241(1)(d) of the POEO Act. Peak Gold Mines had, to a significant extent, the capability of exercising control as superintendent over the carrying out of the works. Therefore, Peak Gold Mines had the necessary control for the purposes of s 241(1)(d) of the POEO Act.

19 The subjective circumstances of relevance in this case include many of the mitigating factors in s 21A(3) of the CSP Act. The harm caused or likely to be caused to the environment was not substantial: s 21A(3)(a) of the CSP Act. Peak Gold Mines does not have any record of previous convictions for environmental offences: s 21A(3)(e) of the CSP Act.

20 Peak Gold Mines, as a corporate defendant, is of good character, as described in the evidence of its General Manager, Mr Flores. Peak Gold Mines has actively contributed to various community development programs and donated to various charitable organisations. It has implemented waste management principles, is in the process of seeking voluntary certification of its compliance with the International Cyanide Management Code, and has developed an education program for the threatened species, the Kultarr: see s 21A(3)(f) of the CSP Act.

21 In the circumstances of this case, Peak Gold Mines is unlikely to re-offend: s 21A(3)(g) of the CSP Act. As the particular offence occurred during the course of construction works, which are now completed, and the secondary spillway diversion drain was constructed shortly after the incident was identified by Peak Gold Mines and notified to the regulator, a similar incident is unlikely to re-occur. Peak Gold Mines has also taken a number of steps to minimise the likelihood of a similar incident occurring.

22 Peak Gold Mines has shown remorse for the commission of the offence: s 21A(3) of the CSP Act. Peak Gold Mines has demonstrated its remorse by: voluntarily reporting the incident to the Environment Protection Authority; completing the clean-up of the clean water drain within two days; taking immediate action to address the causes of the incident; taking steps to minimise the likelihood of a similar incident occurring in the future; and expressing its remorse through a high level manager, being the General Manager, Mr Flores. In addition, its remorse is demonstrated by the presence at the sentence hearing in court of not only Mr Flores but also Mr Nicholson, the Health, Safety and Environment Manager and Mr Higgins, the Environment and Social Responsibility Coordinator, of Peak Gold Mines.

23 Peak Gold Mines has entered an early guilty plea: see ss 21A(3)(k) and 22 of the CSP Act. Peak Gold Mines entered a guilty plea on 1 March 2013 shortly after receiving the prosecutor's response dated 27 February 2013 to Peak Gold Mines' offer to enter into an enforceable undertaking. Although there was some delay, it should nevertheless be regarded as the entry of a plea of guilty at the first reasonable opportunity. Peak Gold Mines submitted that it should be entitled to the full discount of 25% for the utilitarian value of the guilty plea: R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 at [152] and [160]. The prosecutor does not contend otherwise.

24 Peak Gold Mines has assisted the prosecutor with its investigation of the offence and the conduct of these proceedings: ss 21A(3)(m) and 23 of the CSP Act. Peak Gold Mines assisted the EPA during its investigation of the incident by cooperating with the EPA's officers during site inspections, participated in interviews with the EPA, provided a preliminary incident report, provided further sample results, and responded to a notice to provide information and records under s 193 of the POEO Act. Furthermore, Peak Gold Mines has cooperated with the prosecutor in the conduct of the proceedings, including agreeing a statement of agreed facts and bundle and agreeing on how the expert evidence should be admitted.

25 The Court is also required to take into account the purposes of sentencing. In this case, the purpose of general deterrence is relevant to ensure that companies engaging in activities near waters do not pollute waters and take the necessary precautionary and preventative measures. In the circumstances of this case, having regard to Peak Gold Mines' lack of prior record, remorse and contrition, good character, actions taken following the incident and unlikelihood of re-offending, there is no particular need for specific deterrence.

26 The purposes of retribution and denunciation are also relevant. Pollution of waters is viewed by the community as serious and the community expects the Court to take the community's views of the seriousness into account in the sentencing process. The Court, by its sentence, needs to denounce the offence and there also needs to be an element of retribution.

27 In determining the appropriate penalty, the Court should be consistent with the pattern of sentencing for like offences. The prosecutor and Peak Gold Mines referred to the sentences imposed in three water pollution cases in the last few years, namely, Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd [2010] NSWLEC 114; (2010) 174 LGERA 314 ($50,000 fine), Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222 ($50,000 fine), and Environment Protection Authority v Coal and Allied Operations Pty Ltd [2013] NSWLEC 134 ($45,000 fine). The objective and subjective circumstances in those cases are similar to those in this case.

28 Balancing the objective and subjective circumstances and considering the purposes of sentencing, I consider an appropriate penalty is $67,000, which should be discounted by 25% for the utilitarian value of the plea of guilty. This amounts to $50,000 in round terms.

29 The parties have agreed that this is a case where it is appropriate to make an order under s 250(1)(e) of the POEO Act that Peak Gold Mines pay an appropriate amount towards a project for the restoration or enhancement of the environment or for general environmental purposes in lieu of imposing a fine.

30 The particular project is one proposed by Cobar Shire Council ('the Council') to further facilitate its effluent reuse scheme. The Council proposes to expand its existing effluent reuse scheme to incorporate three further facilities to relieve pressure on the town's potable water supply. The Council described the project in a letter to the Environment Protection Authority of 6 September 2013. Although the Council does not identify the amount of funds that would be required to undertake the expansion of its existing effluent reuse scheme, I would infer from the works described by the Council that it would be in excess of the amount that I have determined would be an appropriate penalty, that is $50,000. Accordingly, a contribution of $50,000 towards the scheme would be of benefit.

31 I agree that it is appropriate in the circumstances of this case to make an order under s 250(1)(e) of the POEO Act for the payment of that specified amount to the Council for that specified project for the enhancement of the environment.

32 Where such an order is made, it is appropriate to also make a publication order under s 250(1)(a) of the POEO Act. The parties have agreed on the terms of such an order.

33 The parties have also agreed that Peak Gold Mines should be ordered under s 248(1) of the POEO Act to pay the prosecutor's costs and expenses of investigation of the offence in the sum of $4,567.60.

34 The parties also agreed that Peak Gold Mines should pay the prosecutor's legal costs in the agreed sum of $52,000.

35 Accordingly, the Court makes the following orders:

(1) The Defendant is convicted of the offence as charged.

(2) The Defendant, pursuant to s 250(1)(e) of the Protection of the Environment Operations Act 1997, is to pay to the Cobar Shire Council, within 28 days of this order, the amount of $50,000 to contribute to the expansion of council's Effluent Reuse Project.

(3) The Defendant, pursuant to s 248(1) of the Protection of the Environment Operations Act 1997, is to pay the Prosecutor's costs and expenses of investigation of the offence, in the sum of $4,567.60.

(4) The Defendant is to pay the prosecutor's legal costs in the sum of $52,000.

(5) The Defendant, at its expense and pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997, shall:

(a) within 28 days of the date of these orders cause to be published an advertisement in the form of Annexure "A" to be placed in the Sydney Morning Herald, the Dubbo Daily Liberal and the Cobar Weekly at a minimum size of 8 centimetres by 12 centimetres; and

(b) within 28 days of such publication, notify the Prosecutor of publication.

(6) All future references by the defendant to its funding of the Cobar Shire Council's Effluent Reuse Project shall be accompanied by the following passage (pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997):

Peak Gold Mine's funding of the Cobar Shire Council's Effluent Reuse Project is part of a penalty imposed on Peak Gold Mine by the Land and Environment Court after it was convicted of polluting waters, being a constructed clean water drain at the Peak Gold Mine, an offence against s 120(1) of the Protection of the Environment Operations Act 1997.

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Annexure A

Peak Gold Mines Pty Ltd convicted for a pollution incident at Cobar Peak Gold Mines Pty Ltd (Peak Gold) has been convicted after pleading guilty in the Land and Environment Court of NSW of having polluted waters in breach of section 120(1) of the Protection of the Environment Operations Act 1997. Peak Gold holds an Environment Protection Licence. Peak Gold operates Peak Gold Mines, which is a gold and copper ore mining operation located about 9 kilometres from Cobar. Between 24 November 2011 and 21 December 2011, mine tailings, which contain contaminants including cyanide and heavy metals, discharged into a constructed clean water drain at the mine site. The drain is generally dry except during rainfall events. The pollution did not leave the mine site and did not enter any natural watercourse or water body. The incident occurred while contractors carried out construction works at the mine. As licence holder and occupier of the mine site, Peak Gold was responsible for the pollution incident. Peak Gold was prosecuted by the Environment Protection Authority (EPA). Peak Gold cooperated with the EPA during the course of its investigation and pleaded guilty to the charge. Peak Gold was ordered to pay $50,000 to the Cobar Shire Council to contribute to the expansion of council's Effluent Reuse Project, and was also ordered to pay the EPA's legal costs in the amount of $52,000. This notice was placed by order of the Land and Environment Court of NSW and was paid for by Peak Gold.

Amendments

30 September 2013 - Correction to case name from Environmental Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222 to Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222
Amended paragraphs: coversheet and [27]

30 September 2013 - Correction of s 240(1) to s 241(1)
Amended paragraphs: [15], [16] and [18]

Decision last updated: 30 September 2013