Land and Environment Court New South Wales

• Medium Neutral Citation: Environment Protection Authority v Sibelco Australia Limited [2011] NSWLEC 160
• Hearing dates: 2 September 2011
• Decision date: 07 September 2011
• Jurisdiction: Class 5
• Before: Pain J

Decision

1. The Defendant is convicted of the offence charged.

2. The Defendant, pursuant to s 250(1)(e) of the Protection of the Environment Operations Act 1997 (POEO Act), is to pay to Hunter Central Rivers Catchment Management Authority (the CMA) within 28 days of this order, the amount of $78,000 to be used for general environmental purposes to deliver outcomes against the Management Targets set out it in the CMA Catchment Action Plan (the payment).

3. The payment is not to be used for works on the Defendant's land or for works in relation to any agreement entered into between the Defendant and the CMA.

4. All future public references by the Defendant to the payment above shall be accompanied by the following passage: "Sibelco Australia's contribution to the funding of the Hunter Central Catchment Management Authority is part of a penalty imposed on it by the Land and Environment Court of NSW after it was convicted of polluting waters, an offence against s120 of the Protection of the Environment Operations Act 1997."

5. Pursuant to s 250(1)(a) of the POEO Act, the Defendant, within 21 days of this order, is to place a notice in the first five pages of the following publications:

(a) Singleton Argus newspaper;

(b) Scone Advocate newspaper; and

(c) Australian Mining monthly magazine,at a quarter of a page in size in the form of Annexure A.6. Within 35 days of the date of these orders, the Defendant is to provide to the Prosecutor a complete copy of the page of the publications in which the notice appears.

7. The Defendant is to pay within 28 days of this order the Prosecutor's costs as agreed in the following amounts:

(a) legal costs of $25,270;

(b) investigation costs pursuant to s 248 of the POEO Act of $9,730.

• Catchwords: ENVIRONMENTAL OFFENCES - guilty plea - water pollution - unintentional discharge of sediment laden water into creek - sentence - consideration of objective and subjective factors - actual and potential environmental harm caused by the pollution - offence in the low to moderate range of objective gravity - defendant otherwise of good character - early guilty plea - appropriate to make alternative order in lieu of fine - order for payment to environmental organisation for use for general environmental objectives made - publication order made
• Legislation Cited: Crimes (Sentencing Procedure) Act 1999 s 3A, s 21A; Protection of the Environment Operations Act 1997 s 3, s 120, s 241(1), s 244(3), s 248, s 250(1)(a), s 250(1)(e)
• Cases Cited: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357; 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; Environment Protection Authority v Baiada Poultry Pty Limited [2008] NSWLEC 280; (2008) 163 LGERA 71; 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 Buchanan (No 2) [2009] NSWLEC 31; (2009) 165 LGERA 383; Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2008] NSWLEC 194; Environment Protection Authority v Centennial Newstan Pty Ltd [2006] NSWLEC 732; Environment Protection Authority v Centennial Newstan Pty Ltd [2010] NSWLEC 211; Environment Protection Authority v Chillana Pty Ltd [2010] NSWLEC 255; Environment Protection Authority v George Weston Foods Ltd [2010] NSWLEC 120; Environment Protection Authority v Snowy Hydro Ltd [2008] NSWLEC 264; (2008) 162 LGERA 273; Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299; Gosford City Council v Australian Panel Products Pty Ltd [2009] NSWLEC 77; Hili v R; Jones v R [2010] HCA 45; (2010) 204 A Crim R 434; Hoare v R [1989] HCA 33; (1989) 167 CLR 348; Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357; Newcastle City Council v Pace Farm Egg Products Pty Ltd [2002] NSWLEC 66; R v Carroll [2008] NSWCCA 218; (2008) 188 A Crim R 253; R v Sharma [2002] NSWCCA 142; (2002) 54 NSWLR 300; R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383; Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465
• Category: Sentence
• Parties: Environment Protection Authority (Prosecutor); Sibelco Australia Limited (Defendant)
• Representation: Mr R Fox (solicitor) (Prosecutor); Mr P Clay (Defendant); Office of Environment and Heritage, Department of Premier and Cabinet (Prosecutor); Sparke Helmore (Defendant)
• File Number(s): 50390 of 2011

Judgment ON SENTENCE

1 The Defendant is charged that on 15 May 2011 it committed an offence against s 120 of the Protection of the Environment Operations Act 1997 (the POEO Act) in that waters known as Middle Brook at Parkville NSW were polluted with sediment laden water discharged from the Defendant's property as a result of a dam wall failing.

2 The Defendant has pleaded guilty and has therefore admitted the essential elements of the offence. The offence is one of strict liability so that mens rea is not an element of the offence. It is now necessary to sentence the Defendant. The maximum penalty applicable to offences under s 120(1) of the POEO Act is $1 million for a corporation.

Agreed statement of facts

3 The parties have usefully provided a statement of agreed facts (SOAF) which identifies the circumstances leading up to the offence and clean-up activities undertaken by the Defendant after the offence. The statement included a plan of the mine site layout, photographs showing the breached dam wall and sediment in Middle Brook, and photographs taken along the 2.8 kilometres of affected creek after clean-up operations had commenced.

4 Sibelco operates a small open cut bentonite mine at Cressfield Road, Parkville NSW (the premises). Two employees work at the mine. The premises are located about 12 km north of Scone. The premises are approximately 15 hectares in size and comprise an active mine void, future mine cells, product drying beds, processing and stockpile areas and a number of dams used for the capture and storage of stormwater.

5 Open cut mining for bentonite has been occurring at the premises since 1974. Mining occurs on a campaign basis when stockpiles require replenishment.

6 The development consent issued by Scone Council in 2000 only allows mining operations to be conducted Monday to Friday.

7 The mine is closed during weekends and public holidays.

8 The operations at the premises include overburden removal for the development of new mining cells, mining of bentonite clay by excavator and haulage to open drying areas.

9 The bentonite is mixed with soda ash and dried on the drying pads.

10 The winning of bentonite has not occurred at the mine since 2008.

11 The mining activities carried out on the premises are the subject of an environment protection licence issued by the Environment Protection Authority (the EPA) pursuant to the POEO Act. The licence does not permit the water pollution the subject of the present charge.

12 The mining activities are also subject to a mining lease and Sibelco's five year Mine Operations Plan. A copy of Sibelco's Mine Operations Plan was provided.

13 At the time of the incident Sibelco had in place a Water Management Plan. A copy of the Water Management Plan at the time of the incident was attached [which stated that Dam 4 (known as Dam 2 south) was not to be used for water with sediment].

14 Water management at the mine involved controlling stormwater runoff to minimise off-site discharge.

15 The Mine Operations Plan provided that Dam 1 was for the storage of sediment laden water from the run-off from the drying pads on the premises.

16 The Mine Operations Plan also provided that Dams 2, 3 and 4 were to capture clean water from areas not affected by the mining operation.

17 It is believed that Dam 4 was constructed between 1984 and 1990.

18 At the time of the incident stormwater run off from the mining operation was primarily directed to Dam 1. Stormwater run off from the lower drying pad drained to Dam 4 by means of an underground pipe that had been connected to a stormwater collection point on the lower drying pad.

19 Shortly after the incident, Sibelco removed the pipe that took stormwater to Dam 4.

Details of the offence

20 On Saturday 15 May 2010 Mr Peter Warbrick, Acting Mine Superintendent, was working in the office at the mine. He was the only Sibelco employee at the mine that day.

21 About 7.30am Mr Warbrick conducted an inspection of the lower drying pad. Whilst there he checked dam levels at Dam 4 as he did every day. When he inspected the dam levels he was about 10 metres from the closest portion of Dam 4 and approximately 100 metres uphill from the wall of Dam 4 that failed.

22 From this position Mr Warbrick saw that the dam level was the same level as it has been in the previous months before the incident.

23 Mr Warbrick did not see anything unusual nor did he observe any signs that would indicate that the wall to Dam 4 would fail.

24 Some time on around 15 May 2010 part of the wall of Dam 4 on the premises failed, resulting in the release of sediment laden water into an adjacent gully and then into Middle Brook (the incident).

25 The precise amount of discharge from Dam 4 is not known although it is estimated that between 2.8 megalitres and 5 megalitres of water containing sediment was discharged into the adjacent gully. The discharge flowed along the adjacent gully for approximately 200 metres and then into Middle Brook.

26 There were no significant rainfall events in the area around this time.

27 On 15 May 2010 about mid morning, Mr Hamish Henderson a neighbour of the mine observed sediment laden waters in the Middle Brook. About midday Mr Henderson flew over Middle Brook and observed that a dam wall at the premises had failed and that sediment laden waters had flowed into Middle Brook.

28 On 17 May 2010 the incident was reported to the EPA by Mr Henderson. The EPA then contacted Sibelco and informed it of the incident.

29 On 17 May 2010 EPA officers inspected Dam 4 and the affected area. The officers observed a portion of the dam wall had failed. They observed turbid water flowing down the gully line from the section of the failed wall. EPA officers took a number of photographs of the dam wall where it failed. Photographs of the external part of the dam wall and of the internal part of the dam wall which failed were attached.

30 On that day EPA officers also took a number of samples upstream and downstream of the dam wall.

31 After becoming aware of the incident on 17 May 2011 Sibelco immediately mobilised personnel, plant and equipment to undertake repairs to the dam wall and commence clean-up works.

32 On 18 May 2010 Sibelco temporarily repaired the dam wall by plugging the section of the wall that had failed.

33 On 19 May 2010 Sibelco started removing and rebuilding the wall that had failed.

34 Between 18 May 2010 and 21 May 2010 Sibelco staff engaged specialist contractors and specialist machinery to assist Sibelco with the clean-up operation.

35 On 21 May 2010 Sibelco staff undertook trials to identify the most appropriate clean-up method. Trials were undertaken in pools closest to the boundary of the mine site.

36 Initially, vacuum trucks were used to suck the sediment slurry out of the upstream pools nearest the spill source. When the water was removed from the pools, a fire hose was used to flush remaining sediment into deeper sections of pools. Further vacuuming was then used to remove this sediment.

37 This approach continued until about 31 May when conditions in Middle Brook changed. Increased creek flows resulting from catchment rainfall meant that downstream pools that had already been cleaned were inundated with sediment washing in from upstream of the premises.

38 Due to the increased flow of the creek it was no longer practical to use the vacuuming process as there was too much water flowing downstream. The focus of the clean-up operation changed to flushing sediment downstream to deeper pools to allow for easier removal by suction pumping.

39 On 25 and 26 May 2010 Environmental Resources Management Australia (ERM), on behalf of Sibelco, conducted longitudinal transects of Middle Brook to map the extent of the impact of the incident and evaluate the clean-up.

40 Evidence of sediment was found up to 2.8km from where it had entered Middle Brook.

41 Only negligible traces of sediment remained after the clean-up conducted by Sibelco.

42 The clean-up of Middle Brook was completed on around 27 July 2010.

Affidavit of Mr Williams

43 The Defendant relied on the affidavit of Mr Williams, Sibelco's general manager of operations, filed on 30 August 2011. Mr Williams has held that position since 2003. He attests that the Defendant has implemented an integrated environment health safety (EHS) management system since 2000 and it was developed in line with international and Australian standards. The EHS management system contains policies and procedures to guide the Defendant and its employees. For example, EHS risk assessment to identify hazards, assess and control the risks of activities, products and services associated with the site; ongoing development of EHS knowledge and competencies, identification of environmental aspects and impacts; and audits including corporate environmental audits. In 2010 the Defendant undertook a review of the EHS management system which led to a detailed risk assessment of its operations to determine the key areas of risk to be prioritised and controlled. The Defendant is committed to responsible environmental management, sustainable use of natural resources and positively contributing to local communities. The Defendant recognises the importance of the prevention of incidents. Part of the implementation of the EHS management system in 2011 involved all managers and supervisors attending a two-day workshop which provided lessons on the application of the theory and implementation of EHS policies and procedures to assist them to effectively manage and monitor hazards and risks inherent on their sites. The workshop emphasised effective incident investigation and learning from incidents so that they do not recur.

44 As part of the clean-up program the Defendant immediately implemented a system of daily reviews involving a consideration of the relevant safety and environmental matters, dam stabilisation and water management issues. Mr Williams stated that following the incident the Defendant increased the frequency of inspections that were undertaken at the site, extended the scope of the ground control inspections to specifically require inspections of all dams on the premises, implemented a system of weekly dam inspections and undertook a company-wide review of management structures across the whole of its numerous operations in Australia.

45 It is Mr Williams' evidence that the Defendant is committed to environmental management and minimising the impact of its activities on the environment and takes its environmental responsibilities seriously. To this end it has implemented its EHS management system across all of its operations and employed experienced environmental officers to advise and support its operations. Once it became aware of the incident the Defendant focussed all of its efforts on the clean-up operation and supporting affected community members. The Defendant acknowledges that the impacts of the incident on the environment and the community were unacceptable and that it should have ensured that the risk arising from Dam 4 was better managed and controlled. It is remorseful for failing to meet the high standards expected of it by the community and has implemented measures to prevent such an incident occurring in the future.

46 Mr Williams also gave oral evidence concerning the donation of $100,000 to the Hunter-Central Rivers Catchment Management Authority (CMA) for a catchment management project in the area near the Defendant's bentonite mine, the subject of a letter from CMA tendered by the Defendant (exhibit 1). This was done to demonstrate that the Defendant was concerned about environmental issues and wished to contribute to a project with local benefits. Mr Williams checked the Defendant's internal accounting system to check the accuracy of the estimate of clean-up costs of $640,000 referred to in his affidavit and believes this to be accurate or an underestimation. Mr Williams also gave evidence of local press coverage of the incident at the time it occurred.

Relevant sentencing considerations

47 Section 3A of the Crimes (Sentencing Procedure) Act 1999 (the CSP Act) sets out the purposes of sentencing. Section 3A provides:

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.

48 The CSP Act (in particular, Pt 3 Div 1) contains provisions relevant to sentencing procedures. Section 21A of the CSP Act sets out aggravating, mitigating and other factors to be taken into account in sentencing. The sentence must reflect both the objective circumstances of the offence and the personal (subjective) circumstances of the defendant; Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 at [73].

49 The objects of the POEO Act identified in s 3 are also relevant to consideration of sentence, and include the protection of the environment in NSW, the reduction of risk to human health and prevention of degradation of the environment.

Objective gravity of the offence

50 In identifying the relevant objective circumstances, s 241(1) of the POEO Act identifies the following factors to be taken into consideration in imposing a penalty for offences committed under that Act (so far as they are relevant):

(a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence

51 Environment is broadly defined in the dictionary to the POEO Act as:

... components of the earth, including:

(a) land, air and water, and

(b) any layer of the atmosphere, and

(c) any organic or inorganic matter and any living organism, and

(d) human-made or modified structures and areas,

and includes interacting natural ecosystems that include components referred to in paragraphs (a)-(c).

Harm to the environment is broadly defined in the dictionary as:

harm to the environment includes any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution.

52 The parties reached agreement on issues relevant to environmental harm as set out in the SOAF. The Middle Brook catchment includes a National Park upstream and a variety of agricultural properties and two quarries. The surrounding land use is primarily used for cattle and horse grazing, with improved pasture and fodder crops. The creek is accessible by both cattle and horses upstream and downstream, with evidence in some parts of trampling, erosion and direct livestock faecal contamination in the creek. It is expected that nutrient-enrichment and increased sediment loading occurs as a result of run-off from eroded soils. Despite the surrounding land uses Middle Brook is in relatively good ecological condition. Middle Brook is the primary source of drinking water for several residents in the area. It is also a primary source of stock watering.

53 Following the incident there was evidence of sediment across 2.8km of Middle Brook. The sediment was subsequently removed in the clean-up operation. After the incident Sibelco provided drinking water by tanker to the Henderson family living on a property that relied on drinking water from the affected area of Middle Brook as well as providing bottled water to the staff from the Middle Brook Valley Lodge until the clean-up works were completed.

54 ERM provided a report setting out the results of the clean-up and its conclusions about harm to the environment found and it is agreed that:

(a) The clean-up operations conducted by Sibelco along with the natural flushing of the creek appear to have limited the impacts of the sediment spill on the aquatic environment of Middle Brook.

(b) Only minor, short lived impacts on water quality were observed during the initial water quality monitoring due to increased suspended solids and turbidity levels.

(c) Subsequent monitoring indicates that following the incident water quality is excellent and there appears to be no significant risk of any lasting water quality impacts from the spill event in Middle Brook.

(d) There is no evidence of biodiversity loss or fish kills other than a temporary reduction of macro invertebrate abundance; however, there were good indications that following the clean-up and the removal of the majority of excess sediment, the macroinvertebrate community will recover rapidly.

(e) It is expected that small amounts of residual sediment from the spill will have a negligible effect on water quality.

55 On 18 May 2011 Dr Eren Turak for the EPA inspected Middle Brook. Dr Turak was of the opinion and it is agreed that:

(a1) the potential impact of a discharge of sediment laden waters into a stream may include:

• The reduction of light which can impede photosynthesis and hence plant growth in the stream.
• The periphyton or the layer algae bacteria and unicellular organisms on in-stream surfaces may also be affected by both the reduction of light and the smothering of in-stream surfaces by the deposition of a layer of sediment. The adverse effects on the periphyton may reduce its quality and availability as a source of food for the many invertebrate species which feed on it and this may have adverse effects on macroinvertebrate and fish species further up in the food chain.
• Harm by the direct deposition on the respiratory structures of invertebrates, by impeding filter feeding.
• An alteration of habitat by filling the spaces between particles of gravel, pebble cobble and boulders which serve as habitat for macroinvertebrates.
• The adverse effects on macroinvertebrates will reduce the food available for many fish species but it can also cause poor health and in extreme cases death by clogging gill filaments.
• Further sediment deposition on in-stream surfaces may reduce the suitability of spawning habitat for fish and hinder the development of fish eggs, larvae and juveniles, change migration patterns in adult fish and reduce the efficiency of visual predation.

(a) That the clean-up operation may also have caused some harm by altering in-stream habitat and dislodging animals.

(b) That the recovery of plants and animals after an impact associated with fine sediments is determined by the duration and intensity of the impact and, where extensive loss of local populations has occurred, the availability of refugia from which recolonization can occur.

(c) It is likely that the harm caused was temporary, and localised given that refugia may have existed upstream.

(d) The environmental impact of this incident alone on the Hunter River System as a whole would likely have been negligible.

56 The Prosecutor submitted that harm should not be limited to measurable harm relying on Preston J in Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299 at [145]-[147] and also includes the potential or risk of harm. At [146] his Honour held:

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].

57 Likely harm was identified in Newcastle City Council v Pace Farm Egg Products Pty Ltd [2002] NSWLEC 66 Lloyd J stated at [44] that:

In considering the harm likely to be caused to the environment, it is to be noted that the word "likely" in this context has been held to mean "a real or not remote chance or possibility regardless of whether it is less or more than a fifty per cent chance" ( Mathews v Goulburn Wool Processors , NSWSC, Smart J, 6 November 1986, unreported); "only a real chance or possibility, and not more probably than not" ( State Pollution Control Commission v Blayney Abattoirs Pty Ltd (1991) 72 LGERA 221 at 224); and "does not mean 'probable'. It means 'a real possibility'" ( New South Wales Sugar Milling Co-operative Ltd v State Pollution Control Commission (1991) 73 LGRA 86 at 100, affirmed by the Court of Criminal Appeal on other grounds, (1992) 75 LGRA 320).

58 The Defendant submitted that:

(a) it is likely that the harm caused was temporary and localised given that refugia may have existed upstream;

(b) only minor short lived impacts on water quality were observed, due to increased suspended solids and turbidity levels;

(c) the cleanup operations conducted by Sibelco along with the natural flushing of the creek have limited the impacts of the sediment spill on the aquatic environment of Middle Brook;

(d) there is no evidence of biodiversity loss or fish kills other than a temporary reduction of macroinvertebrate abundance;

(e) small amounts of residual sediment from the spill will have a negligible impact on water quality;

(f) the cleanup operation may also have caused some harm by altering in stream habitat and dislodging animals;

(g) the environmental impact of this incident alone on the Hunter River system as a whole would likely have been negligible;

(h) following cleanup and removal of the majority of sediment the macro invertebrate community has recovered rapidly;

(i) about 14 months after the event, the water quality was excellent with very low turbidity, no visible suspended solids, and no surface sheens or odours and the water quality in terms of both physical and chemical parameters shows no residual effects attributable to the incident.

59 While it is agreed that there is potential for harm as outlined above (par 56), that should be distinguished from likely harm to the environment. The environmental harm is at the lower end of the low to moderate range.

60 I conclude that, as submitted by the Prosecutor, actual harm was caused to Middle Brook which is in relatively good ecological condition despite upstream rural land uses and is relied on by some residents for drinking water and for livestock water. A significant amount of sediment was discharged into it along 2.8 km, there was a localised impact on the environmental quality resulting in macroinvertebrate reduction, increased turbidity and suspended solids levels and the water was unsuitable for drinking for neighbours from around 15 May to 27 August 2010.

61 The clean-up operations were invasive and also caused harm as they required the vacuuming of the floor of Middle Brook and then flushing of sediment remaining into deeper pools, then further vacuuming over a six week period. This caused alteration of in-stream habitat. Small amounts of sediment remain which are likely to have a small, though negligible, impact on water quality. This results in cumulative impact on water quality.

62 There was moderate actual harm to the environment of Middle Brook given the agreed evidence of the volume of sediment in the creek and the impacts. The harm was relatively short term in the sense that once invasive clean-up operations over a six week period were complete it is agreed that the creek has returned to its usual ecological state. The Defendant sought to distinguish between the agreed evidence of Dr Turak expressed as the potential for harm and "likely harm to the environment" as referred to in s 241(1)(a) on the basis there was no evidence of likely harm. Likely has been defined as "a real possibility" which is different in meaning to potential. As potential for harm is relevant for sentencing purposes under the POEO Act (see Waste Recycling referred to above) that is not a distinction which affects my consideration of the agreed evidence on environmental harm. The impacts identified by Dr Turak of potential harm are relevant to sentencing in this matter.

63 The environmental harm caused was in the low to moderate range.

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

64 On 29 October 2010 the EPA received a report under condition U4 - Revision of Water Management System as modified on 9 September 2010. Sibelco stated it would retain Dam 4 as a clean water dam, as its removal would lead to significant erosion issues throughout the gully in which it was located.

65 Sibelco has implemented the following improvements to water management on the premises:

(a) removed the drainage pipe that drained into Dam 4;

(b) runoff from roofed areas was diverted into storage tanks. Guttering has been repaired;

(c) the drying pad to the north of Dam 4 is no longer used for drying purposes (however it still contains a stockpile of bentonite);

(d) Dam 4 has been desilted;

(e) a pumping system has been installed to maintain a reduced water level in Dam 4. The system will pump water to Dam 1, as required, to maintain water levels and prevent discharge; and

(f) a weekly inspection program was implemented following the offence and monitoring is ongoing.

Prosecutor's submissions

66 The Defendant had poor practices in relation to the control of sediment laden stormwater at the premises. There were simple practical measures that may have been taken to prevent, control or mitigate the harm. These include:

(a) ensuring that sediment laden waters from the drying pads did not enter Dam 4 by means of a stormwater collection point and pipe, contrary to the terms of the Mine Operations Plan and the Water Management Plan.

(b) Conducting an inspection of the integrity of the wall of Dam 4 (the inspection on the day prior to the day the offence occurred was conducted from a distance of 100m from which it would not have been possible to view or assess the external part of the wall of Dam 4 that failed.

(c) Conducting an inspection of the integrity of the wall of Dam 4 on Monday, 17 May 2011 after the incident had occurred. This may have mitigated the extent of the harm (the incident was reported by a neighbouring resident and then notified to the Defendant by the EPA on 17 May 2011;

(d) Desilting Dam 4 to minimise the sediment load and potential for failure (this has occurred subsequent to the offence;

(e) Installing a pump to maintain water levels and prevent discharge.

(f) Reduce the amount of sediment entering the pipe resulting in less sediment in Dam 4. This could be done by improving sediment and erosion controls on the premises by taking steps such as set out in the SOAF.

67 Upon being notified of the incident, the Defendant took appropriate steps promptly to mitigate the immediate harm. The Defendant subsequently implemented the measures set out in the SOAF (identified in par 65) after the incident.

Defendant's submissions

68 Sibelco accepts it could have and now has implemented a more rigorous inspection process of its water management system including Dam 4 but it is simply not possible to determine whether this incident could have been avoided with a different system of inspection in place. The reason for the dam wall failing is unknown. Given that the incident occurred on 15 May 2011 (Saturday), an inspection on Monday 17 May 2011 would not necessarily have resulted in harm being mitigated as the damage had arguably been done by then. It is not clear that sediment load in the water caused the dam wall to fail. The Defendant's employee regularly inspected that dam to see if water levels were constant, as an indicator of whether the dam was leaking.

69 It was not intended to use Dam 4 as part of the mine operations and the pipe still being operational was an oversight. The dam had been in place for some 20 to 30 years. Sibelco submits this is a neutral factor for sentencing purposes. The Court should not be satisfied that regular dam wall inspection would have made a difference but the Defendant accepts that is a way to reduce risk.

70 I conclude that there were practical measures that could have been taken to avoid the harm caused, most obviously the decommissioning of the offending stormwater pipe which caused the flow of water into Dam 4. This was overlooked at the Defendant's premises and was not intended to be in use. As the reason for the dam wall failing is not known the Defendant urged that no conclusion can be drawn that regular inspections would have avoided the wall collapse. It is incumbent on owners and operators of premises such as the Defendant to implement all proper measures to avoid circumstances arising which result in water pollution. Those measures have since been implemented by the Defendant and could have been implemented before the incident.

71 Further, a neighbouring landowner of the mine noticed the sediment in the water and notified the EPA. The alarm was not raised as a result of any system in place at the mine site. This suggests that more could have been done to monitor the dam wall and have in place a system to deal with the possibility of collapse.

72 I accept that the Defendant did move quickly to clean-up when informed of the failure of the dam and therefore mitigate the long-term harm albeit that the clean-up operations were of necessity also harmful but necessary. There was no delay and significant steps were taken to mitigate the harm.

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

73 The Prosecutor submitted that the discharge of sediment laden water resulting in harm to the environment could have been avoided but for the Defendant's use of Dam 4 for that purpose contrary to the Mine Operations Plan and Waste Management Plan. The harm caused by the failure of the dam wall was clearly foreseeable. The Defendant has an environment protection licence which confers the privilege of carrying out a potentially environmentally detrimental activity, a factor considered by Craig J in Environment Protection Authority v Centennial Newstan Pty Ltd [2010] NSWLEC 211 at [81]. The Defendant did not take positive steps to satisfy itself of the integrity of the dam wall or monitor the dam wall or take precautions to prevent pollution in the event of failure, factors considered by Preston J in Environment Protection Authority v Baiada Poultry Pty Limited [2008] NSWLEC 280; (2008) 163 LGERA 71 at [29]. The Defendant had a responsibility to address the potential for harm including taking positive precautions to prevent the offence. The Defendant should have had in place a system of regular inspections of the dam wall.

74 The Defendant submitted that it could not have foreseen the harm to the environment caused by the collapse of the dam wall in that the cause of the collapse of the wall is unknown. It accepts that sediment laden water was not intended to reach that dam but there is no link established between the presence of that water in the dam and the collapse of the dam wall.

75 I conclude that the general requirement identified by the Prosecutor and relying on the authorities cited by it that holders of an environment protection licence have a responsibility to prevent pollution from their premises applies in this case. That the precise explanation for why the dam wall collapsed is unknown does not prevent a conclusion that a more regular inspection of the dam wall was appropriate given that the stormwater pipe was not decommissioned, an admitted oversight by the Defendant. The harm was foreseeable in that the collapse of the dam wall would result in the dam contents discharging into Middle Brook.

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

76 The Prosecutor submitted that the Defendant as owner and operator of the premises and employer of all at the premises had control over the circumstances which led to the harm, the use of Dam 4 for sediment laden water and the failure to identify the failure after it occurred.

77 The Defendant accepted that as owner it has control of the premises including all dams including that which failed. As it is unknown why the dam wall collapsed the extent to which the Defendant had control over the causes is uncertain but it accepts that it controlled the procedure by which the dam was inspected.

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

78 Not applicable.

Conclusion on objective gravity

79 The level of seriousness of the offence in relation to s 241(a) in relation to the environmental harm caused is in the low to moderate range.

80 In relation to the other s 241 factors and the need to consider the objective circumstances, regard must be had to the culpability of the Defendant and the individual circumstance which led to the commission of the offence and the consequences of those circumstances, R v Carroll [2008] NSWCCA 218; (2008) 188 A Crim R 253 . The reason for the offence can also be relevant to the objective gravity. In this case the offence was not committed deliberately or for commercial gain. The matters discussed in relation to s 241(b), (c) and (d) suggest a low to moderate level of culpability on the part of the Defendant.

Other factors relevant to sentencing

81 In setting a penalty the Court should have regard to the maximum penalty applicable, as this is an expression of the seriousness Parliament attributes to the offence: see Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at [698] and [701] respectively that:

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

..the more serious the lasting environmental harm involved the more serious the offence and, ordinarily, the higher the penalty.

82 The maximum penalty for this offence was increased to $1 million from $250,000 in May 2006. Offences must continue to be assessed as to their level of criminality so that the relative seriousness is determined in relation to the worst case for which the maximum penalty is provided, see Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304 at 312.

General deterrence

83 Section 3A(b) CSP Act states that one of the purposes for a court in imposing a sentence is to prevent crime by deterring offenders. Sentences imposed in relation to environmental offences must embrace powerful considerations of general deterrence: see Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357, per Badgery-Parker J at 367. In Axer , Mahoney J stated at 359:

The quantum of the fines which the legislation allows to be imposed has no doubt been fixed not merely to indicate the seriousness with which such pollution is regarded but also to deter those engaged in such activities and to procure that they will take the precautions necessary to ensure that it does not occur.

84 The Prosecutor submitted that the sentence imposed must serve as a general deterrent. General deterrence is accepted as an important part of determining a penalty when sentencing as numerous authorities in this Court recognise.

Specific deterrence

85 Specific deterrence was referred to in Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 at 477 as being relevant to a defendant who displays:

uncharacteristic aberration or whether the offender has manifested in his commission of the instant offence a continuing attitude of disobedience of the law .

86 The Prosecutor also submits the sentence imposed must act as a specific deterrent in order to ensure the Defendant continues to take the necessary steps and precautions to comply with environmental legislation. The Defendant submitted that specific deterrence was not a relevant factor given the response by the Defendant to the incident outlined in Mr Williams affidavit in implementing preventative measures both at this site and across all its extensive operations throughout Australia. In light of the measures implemented by this Defendant I accept it is unlikely to reoffend so that specific deterrence is of less significance in sentencing in this matter.

Retribution and Denunciation (s 3A(a) and (b) CSP Act)

87 As identified in s 3A of the CSP Act retribution and denunciation of the offence are relevant considerations when sentencing. I adopt Pepper J's approach in Environment Protection Authority v Big River Group Pty Ltd [2011] NSWLEC 80 at 115 as follows:

The penalty must be such as to ensure that retribution and denunciation, which are part of the purpose of sentencing (s 3A(a) and (e) of CSPA), are properly addressed. The sentence of this Court is a public denunciation of the conduct of the offender which must ensure that the offender is held accountable for his or her actions and is adequately punished ( Director-General, Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121 at 127 at [8]-[9] and Environment Protection Authority v Hanna [2010] NSWLEC 98 at [34]). Accordingly, I take these elements into account.

88 There are no aggravating factors as identified in s 21A(2) of the CSP Act.

Subjective factors

89 A number of mitigating factors must be taken into account to reduce that penalty, as provided for in s 21A(3) of the CSP Act.

Early guilty plea s 21A(3)(k), 22 CSP Act

90 The Defendant pleaded guilty at the earliest opportunity. A plea of guilty entitles the Defendant to a discount in penalty under s 22 of the CSP Act in the range of 10-25 per cent: R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383; R v Sharma [2002] NSWCCA 142; (2002) 54 NSWLR 300. The Prosecutor accepts that there was a guilty plea at the earliest opportunity. There should be a large discount on this basis.

Remorse (s 21A(3)(i) CSP Act)

91 The affidavit of Mr Williams expresses remorse on behalf of the Defendant. Together with the other actions of the Defendant in entering an early guilty plea and cooperating in the investigation, I accept the Defendant is remorseful.

No prior convictions (s 21A(3)(e) CSP Act)

92 The Defendant has no prior convictions in NSW for environmental offences.

Good character (s 21A(3)(f) CSP Act)

93 The Defendant also submitted and I accept it is of good corporate character and has taken steps to improve its environmental performance throughout Australia as well as at these premises. It has contributed locally to an organisation with environmental objectives with the aim of benefiting the local environment.

Assistance to law enforcement authorities (s 21A(3)(m), s 23 CSP Act)

94 The Prosecutor accepted that the Defendant has cooperated in the investigation of the offence with staff attending interviews without requiring notices under the POEO Act and has complied with statutory notices requiring provision of documents and information.

Evenhandedness

95 The principle of evenhandedness requires that the Court consider if there is any general sentencing pattern for like offences in order to determine a consistent approach to penalty. This principle must always be applied subject to the particular circumstances of the case before the Court, mindful of the different circumstances leading to penalty in other cases. An appropriate sentence is to be determined mindful that:

... a basic principle of sentencing law is that a sentence...imposed by a court should never exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in the light of its objective circumstances (see Veen v. The Queen (No. 2) [1988] HCA 14; (1988) 164 CLR 465, at pp 472, 485-486, 490-491, 496).

per Hoare v R [1989] HCA 33; (1989) 167 CLR 348 at 354 (Mason CJ, Deane, Dawson, Toohey and McHugh JJ).

96 In relation to the need for care in considering sentencing patterns, if any, I adopt the following reference to Hili v R; Jones v R [2010 ] HCA 45; (2010) 204 A Crim R 434 at [54] in Big River at [118]:

In Director of Public Prosecutions (Cth) v De La Rosa , Simpson J accurately identified the proper use of information about sentences that have been passed in other cases. As her Honour pointed out, a history of sentencing can establish a range of sentences that have in fact been imposed. That history does not establish that the range is the correct range, or that the upper or lower limits to the range are the correct upper and lower limits. As her Honour said: "Sentencing patterns are, of course, of considerable significance in that they result from the application of the accumulated experience and wisdom of first instance judges and of appellate courts." But the range of sentences that have been imposed in the past does not fix "the boundaries within which future judges must, or even ought, to sentence". Past sentences "are no more than historical statements of what has happened in the past. They can, and should, provide guidance to sentencing judges, and to appellate courts, and stand as a yardstick against which to examine a proposed sentence " (emphasis added). When considering past sentences, "it is only by examination of the whole of the circumstances that have given rise to the sentence that 'unifying principles' may be discerned".

97 The Prosecutor submitted there were four cases of discharge of sediment laden water into the natural environment which were relevant to sentencing. In Environment Protection Authority v Centennial Newstan [2010] NSWLEC 211, the defendant pleaded guilty to polluting an unnamed creek (the waters of which ultimately flowed into Lake Macquarie) between 18 August 2008 and 22 August 2008 contrary to s 120 of the POEO Act. This was the Defendant's second offence under the POEO Act. At the time of the offence the defendant was the owner and operator of the Newstan Colliery at Fassifern, south of Newcastle where it was undertaking longwall mining. The defendant agreed that between 1.4 ML and 1.8 ML of sediment-laden water was discharged into the unnamed creek. Upon discovery of the discharge, the defendant's response was considered immediate and the prosecutor accepted it was appropriate. The defendant continued mitigatory, clean-up and rehabilitation works until 21 November 2008 and was subsequently advised by officers of the prosecutor that no further work was required. Craig J found that the offence was of moderate objective gravity and considered that whilst the incident gave rise to the potential for serious environmental harm, the actual environmental harm was in the relatively low range in the long term. The defendant entered an early guilty plea and subjective circumstances considered included that the defendant was remorseful and cooperated with authorities in relation to the management and clean-up of pollutant. The defendant was fined a penalty of $150,000 reduced to $105,000 and ordered to pay the prosecutor's costs in the sum of $28,500 and its investigation costs agreed in the sum of $10,000.

98 Craig J summarised the three other cases the Prosecutor referred to as follows:

92 ... in Environment Protection Authority v Centennial Newstan Pty Ltd [2006] NSWLEC 732, the defendant pleaded guilty before the Chief Judge to the commission of an offence against s 120(1) of the POEO Act in that on 13 February 2005 it polluted waters. It was then convicted of that offence and ordered to pay the sum of $50,000 to the Hunter-Central Rivers Catchment Management Authority for the purpose of undertaking bushland and stream rehabilitation works. That sum was ordered to be paid in accordance with s 250(1)(e) of the POEO Act in lieu of the imposition of a fine. The defendant was also ordered to pay the prosecutor's costs in the sum of $28,000 as well as being required to bear the cost of a publication order under s 250(1)(a).

93 That offence also occurred as the result of operations carried out at the Newstan Colliery site. At the time, the defendant was carrying out auger mining in addition to underground longwall mining. The auger mining operation involved substantial surface disturbance, necessitating implementation of a detailed soil and water management plan. Site works were not carried out in accordance with that plan. They were inadequate to control erosion and run-off from the site. During storms that occurred between 10 and 13 February 2005, catchment dams overtopped, resulting in sediment-laden waters discharging into a creek and then into Lake Macquarie. [I note that the maximum penalty at the time of that offence was $250,000]

...

119 In Environment Protection Authority v Snowy Hydro Ltd [2008] NSWLEC 264; (2008) 162 LGERA 273, Biscoe J was required to determine the penalty to be imposed following a plea of guilty to an offence against s 120 of the POEO Act. Snowy Hydro was responsible for carrying out spillway upgrade and outlet works associated with the Jindabyne Dam located on the Snowy River. It engaged a contractor to carry out some of the required works. In a series of related events occurring over four days, somewhere between 4 and 11 tonnes of sediment were discharged into the Snowy River as a result of the works which the contractor was carrying out. This sediment comprised soil, earth, clay or similar inorganic matter. It was accepted that environmental harm was minor and short term while the offence was described as being "of moderate objective seriousness". Snowy Hydro was fined the sum of $100,000 and also ordered to pay the prosecutor's legal costs in the sum of $84,289 as well as its investigation costs in the sum of $1897.50.

120 The fine imposed upon Snowy Hydro reflected an allowance of a 25 percent discount for its early plea of guilty. The subjective circumstances considered also reflected the fact that it had no prior convictions for an environmental offence; that it had devoted considerable resources to mitigating the harm occasioned and that it had fully co-operated with the prosecutor.

121 The contractor to Snowy Hydro was convicted of the identical offence arising from the same circumstances as those that gave rise to the prosecution of Snowy Hydro: Environment Protection Authority v Fulton Hogan Pty Ltd [2008] NSWLEC 268; (2008) 163 LGERA 345. A fine of $100,000 after allowing discount for an early plea was also imposed upon that defendant who had no prior convictions

99 The Defendant submitted there were four cases Environment Protection Authority v Boral Australian Gypsum Ltd [2009] NSWLEC 26, Gosford City Council v Australian Panel Products Pty Ltd [2009] NSWLEC 77, Environment Protection Authority v George Weston Foods Ltd [2010] NSWLEC 120 and Environment Protection Authority v Chillana Pty Ltd [2010] NSWLEC 255 which could be considered as relevant to sentence identified and summarised in Big River by Pepper J at [120] - [123] and also the penalty imposed in Big River . In Big River 6,000 litres of resin was discharged into a wetland. A head penalty of $100,000 was imposed, discounted to $67,000 in light of various subjective factors. I find the cases relied on by the Prosecutor of most assistance in identifying an appropriate penalty.

Costs

100 The Defendant has agreed to pay a total of $35,000 in legal costs and investigation costs of the Prosecutor.

Clean-up costs

101 The Defendant has spent more than $600,000 on clean-up costs and submits this is a relevant consideration in sentencing relying on Environment Protection Authority v Snowy Hydro Ltd [2008] NSWLEC 264; (2008) 162 LGERA 273. In Environment Protection Authority v Buchanan (No 2) [2009] NSWLEC 31 ; ( 2009) 165 LGERA 383 at [118] I took into account the clean-up costs in relation to an individual defendant who lacked financial resources. Here the Defendant is a substantial corporate entity. The fact that large clean-up costs were necessarily incurred because of the lengthy distance of Middle Brook that was affected by sediment is not relevant to my determination of penalty.

Alternative order under s 250(1)(e)

102 The parties have agreed that this is an appropriate matter for an alternative order under s 250(1)(e) which provides that payment be made to the CMA for the general environmental purposes of that organisation. An order of this kind is within the terms of s 250(1)(e) and I agree with the parties that such an order is appropriate in this matter and can be ordered instead of the imposition of a fine by way of penalty.

Appropriate penalty if one was imposed

103 Taking into account the objective and subjective factors referred to above I consider that a penalty of $120,000 should be imposed subject to discounting for the numerous mitigating factors relevant to this Defendant in the order of 35 per cent. If I were to impose a penalty it would therefore be in the amount of $78,000. As already identified above I intend to make an alternative order as provided for under s 244(3) of the POEO Act.

Publication order to be made

104 The EPA seeks a publication order in specified terms to be placed in two local newspapers and the Australian Mining monthly magazine, pursuant to s 250(1)(a) of the POEO Act. This is opposed by the Defendant on the basis that there has already been adverse publicity in the local media, identified in the oral evidence of Mr Williams, and it is not necessary to further publicise the offence given the steps taken by the Defendant to ensure environmental compliance at all its sites. Its counsel relies on Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2008] NSWLEC 194 Lloyd J at [73] where his Honour did not make a publication order because he considered the company had demonstrated that it was taking sufficient measures to ensure its environmental performance. In Environment Protection Authority v Centennial Newstan Pty Ltd [2006] NSWLEC 732 Preston J at [141] stated that if an order under s 250(1)(e) is imposed a publication order ought be made because it is important to publicise to the community at the time such an order is made that the works are being undertaken as a result of committing an offence. I consider the same approach should be adopted in this matter and will make the publication order sought by the Prosecutor, the terms of which are otherwise agreed between the parties.

Orders

105 The Court makes the following orders:

1. The Defendant is convicted of the offence charged.

2. The Defendant, pursuant to s 250(1)(e) of the Protection of the Environment Operations Act 1997 (POEO Act) , is to pay to Hunter Central Rivers Catchment Management Authority (the CMA) within 28 days of this order, the amount of $78,000 to be used for general environmental purposes to deliver outcomes against the Management Targets set out it in the CMA Catchment Action Plan (the payment).

3. The payment is not to be used for works on the Defendant's land or for works in relation to any agreement entered into between the Defendant and the CMA.

4. All future public references by the Defendant to the payment above shall be accompanied by the following passage:

"Sibelco Australia's contribution to the funding of the Hunter Central Catchment Management Authority is part of a penalty imposed on it by the Land and Environment Court of NSW after it was convicted of polluting waters, an offence against s120 of the Protection of the Environment Operations Act 1997 ."

5. Pursuant to s 250(1)(a) of the POEO Act, the Defendant, within 21 days of this order, is to place a notice in the first five pages of the following publications:

(a) Singleton Argus newspaper;

(b) Scone Advocate newspaper; and

(c) Australian Mining monthly magazine,

at a quarter of a page in size in the form of Annexure A.

6. Within 35 days of the date of these orders, the Defendant is to provide to the Prosecutor a complete copy of the page of the publications in which the notice appears.

7. The Defendant is to pay within 28 days of this order the Prosecutor's costs as agreed in the following amounts:

(a) legal costs of $25,270; and

(b) investigation costs pursuant to s 248 of the POEO Act of $9,730.

ANNEXURE A

Sibelco Australia convicted for polluting waters near Parkville

Sibelco Australia Limited has been convicted in the Land and Environment Court for polluting waters near Parkville on around 15 May 2010. The offence occurred as the result of the failure of a dam wall at Sibelco's bentonite mine. It is estimated that between 2.8 and 5 megalitres of sediment laden water escaped from the Dam some of which flowed into Middle Brook. The incident caused actual harm to the environment by reducing the numbers of some macro-invertebrates. Some local residents were unable to extract drinking water from Middle Brook for around 4 weeks following the incident. Sibelco acted promptly to remove the sediment from the affected area and provide drinking water to affected residents.

Following Sibelco's clean-up operation Middle Brook has recovered to its condition prior to the incident.

Sibelco was prosecuted by the Environment Protection Authority, part of the Office of Environment and Heritage (OEH).

Sibelco co-operated with the OEH during the course of its investigation and pleaded guilty to the charges at the first available opportunity. Sibelco was ordered to pay $78,000 to the Hunter Central Rivers Catchment Management Authority in lieu of a fine, and ordered to pay the OEH's costs of $35,000 .

This notice was placed by order of the Land and Environment Court and was paid for by Sibelco.

Decision last updated: 14 September 2011