Land and Environment Court of New South Wales CITATION: Environment Protection Authority -V- Sydney Water Corporation Ltd [1999] NSWLEC 60 PARTIES Prosecutor: Environment Protection Authority Defendant: Sydney Water Corporation Ltd NUMBER: 50019 of 1996 CORAM: Talbot J KEY ISSUES: :- costs and penalty LEGISLATION CITED: costs and penalty DATES OF HEARING: 03/15/1999 DATE OF JUDGMENT DELIVERY: 03/19/1999 Prosecutor: Mr J Glissan QC with: Mr B Docking (Barrister) Solicitors: Environment Protection Authority LEGAL REPRESENTATIVES: Defendant: Mr L P Robberds QC with: Mr D Brogan (Barrister) Solicitors: Sydney Water Corporation JUDGMENT: IN THE LAND AND MATTER No. 50019 of 1996 ENVIRONMENT COURT CORAM: Talbot J OF NEW SOUTH WALES DECISION DATE: 19 March 1999 ENVIRONMENT PROTECTION AUTHORITY Prosecutor v SYDNEY WATER CORP LTD Defendant REASONS FOR JUDGMENT ON PENALTY & COSTS 1. Both parties have made submissions following a finding by the Court on 11 December 1998 that it was satisfied beyond reasonable doubt that the defendant committed an offence against the Environmental Offences and Penalties Act 1989 (the EOP Act) when it contravened condition L4 of licence No. 000378 contrary to s 17D(9) of the Pollution Control Act 1970. 2. The defendant failed to comply with its obligation to maintain penstock controls in an efficient manner. It did not detect that a tie line to emergency power had been connected to the main switchboard in the reverse order. The controls were inefficient and did not function as expected when the mains power was disrupted. 3. Because the phase rotation within the emergency power circuit was not synchronised or matched, when the penstock controls were operated under emergency power they were driven down into the seat rather than opening to allow the flow of effluent as expected. 4. The successful complaint had been particularised by the prosecutor as a failure to carry out necessary mechanical and electrical maintenance to ensure that the penstocks would operate in an efficient manner when required. 5. Other particularised claims relative to the maintenance of the penstocks themselves, the 7-section siphons and stopboards and raw sewage pump (RSP) No. 1 as evidence of the failure to maintain the industrial plant in an efficient condition, were unsuccessful. 6. The Court recognised that some proper maintenance was carried out from time to time according to a Works Information Management System (WIMS), but the program did not identify the problem associated with a switch to emergency power because no appropriate test had been undertaken to facilitate an understanding of whether the penstocks would operate under emergency power. When the controls were activated under emergency power, they operated in reverse and accordingly did not function efficiently. 7. The defendant has made a number of submissions which depend upon a formal finding as to whether there was any environmental harm caused by the breach of the licence condition. 8. This submission is relevant to a consideration of the application of s 556A of the Crimes Act 1900, s 9(a) of the EOP Act and penalty generally. Section 556A Crimes Act 9. The defendant claims that because the prosecutor failed to prove that the breach caused any environmental harm, it is inexpedient to inflict any punishment on the defendant. 10. Secondly, because the prosecutor has not proved there was any harm caused by the breach of condition L4, the nature of the offence is trivial. 11. In either case, the defendant says that the provisions of s 556A(1)(a) should be applied. 12. Underlying the defendant's submission is the contention that the prosecutor has not proved beyond reasonable doubt, or at all, that in the absence of a failure to comply with the conditions in respect of the phasing of emergency power, the same consequences in terms of harm to the environment would have followed in the circumstances which arose in the early hours of 7 March 1995. 13. The evidence of Milo Julius Taragel is that, in his opinion, unless the operator is in a position to open the NSOOS bypass penstocks within a period of seven minutes, then the critical inundation depth of 0.5 metres within the raw sewage pumping chamber would still have occurred. In the situation faced at the plant, followed by the loss of power on 7 March 1995, staff would have been required to operate the NSOOS penstocks well within a period of seven minutes. In that case it was highly likely in his opinion that the impact of the incident would have been reduced by limiting the period of the discharge. 14. According to Mr Robberds QC, this left a number of questions unanswered by the prosecutor, including what is the evidence the NSOOS penstocks would have been opened within seven minutes in the circumstances which existed at the plant on 7 March. 15. The NSOOS penstocks when opened allow direct flow from the inlet channel to the cliff face outfall. The outlet channel penstocks permit a discharge to the cliff face when effluent overtops the 7-section siphon and stopboards. 16. The defendant's report on the incident shows that there was only one person underground in the control room at the time of power supply failure. He reported that several attempts were made to restart the pumps by pushing the storm flow button and by trying to restart each pump individually. Then, "after a few minutes" an attempt was made to open the outlet channel penstocks but the penstocks would not move. At this stage he said the raw sewage was overtopping weirs and flowing to the cliff face. The Court assumes that the weirs referred to were over the NSOOS bypass penstocks. 17. The report continues that a further attempt was made to restart the pumps. At that stage sewage was observed flowing out of the dismantled RSP into the basement of the pump chamber. Further attempts were then made to raise penstocks to facilitate flow to the cliff face and enable water left within the inlet and outlet channels to drop. 18. Mr Robberds relies upon a lack of evidence to show how long it would have taken the operator to react to failure of his attempts to restart the pumps and to open the outlet channel penstocks before he attempted to open the NSOOS bypass penstocks. Further there is no evidence to show that the NSOOS penstocks could be opened within seven minutes, even if the operator had gone directly to them. This reaction time is relevant in the light of Mr Taragel's evidence that, in the situation which occurred on 7 March 1995, the staff would have been required to operate the NSOOS penstocks well within a period of seven minutes to prevent inundation. 19. What the submission by Mr Robberds overlooks is that there was a real delay of a further three hours before any of the NSOOS bypass penstocks could be opened. The consequence was that no work to rehabilitate the pumps could commence for at least that time. Although the pumps could not be restarted for 56.5 hours, this time would have been shorter if the penstocks had been operational. During a period of three hours, significant discharge over the cliff face took place. 20. Mr Taragel gave his evidence based on the assumption that the plant operated normally with the NSOOS bypass penstocks in the totally closed position and with the outlet channel penstocks in the fully open position. Accordingly, he assumed that the outlet channel would not be sufficient to solve the problem. He did not know that the outlet channel penstocks were kept closed during normal operations. 21. The point of Mr Robberds submission appears to be that even if the bypass penstocks had been in perfect working order, there is no evidence to show that they could have been opened in time to prevent the inundation of the RSP and the electrical equipment. 22. Not only is there no evidence about how long it would take to open the NSOOS penstocks under normal conditions, there is no evidence as to how long it would have taken in the circumstances that prevailed on 7 March 1995. 23. If Mr Taragel is correct, then it would appear the operator did not agree with his assessment or was in error in attempting to open the outlet channel penstocks. It is relevant to know however that when the operator attempted to open the outlet channel penstocks, he observed that at that stage raw sewage was already overtopping weirs and flowing to the cliff face. 24. Mr Robberds asked a further question about the time it might have taken the operator to realise that the opening of the outlet channel penstocks was not sufficient and thereafter to move to open the NSOOS bypass penstocks. 25. The control for the two sets of penstocks are at different locations. Mr Robberds submitted there is no evidence about how long it might have taken to commute from one point to the other. 26. The Court's attention has been directed to only one piece of evidence regarding the travel time for the upward movement of a penstock. That evidence related to the four penstocks for the RSPs. The time was indicated as being 6.75 minutes. This time in itself is perilously close to the seven minutes referred to by Mr Taragel. More decisively however, there is no evidence as to the time involved in raising the NSOOS bypass penstocks under normal operating conditions, let alone under the conditions of flooding which were occurring on 7 March 1995. 27. The Court is being asked by the defendant whether it can be satisfied beyond reasonable doubt that environmental harm caused by the extended discharge to the cliff face may be attributed to the reverse phasing of the electrical circuit which prevented the opening of penstocks under emergency power. 28. The conclusion the Court is asked to draw is that the environmental harm was caused by an event or an omission not connected to the inability to open the penstocks. For example, it may have been the failure to provide a Tee Pee or blanking flange in the opening to the RSP under repair at the time or the inadequate height of the penstock in the pump suction channel. 29. The Court rejected other alleged omissions as being breaches of the relevant conditions for the reasons set out in the judgment delivered on 11 December 1998. 30. Former sewage treatment manager at the North Head Sewage Treatment Plant, Eric Ralph de Rooy, agreed that the majority of forces required to lift a penstock are in overcoming the initial resistance in moving it. The pressure is extensively relieved as soon as there is a flow underneath the penstock. This evidence suggests that once the penstock begins to rise, the subsequent passage of the penstock to the fully open position is facilitated. 31. For the purposes of s 556A the alleged failure by the prosecutor to make a direct link between the failure to maintain the plant in an efficient condition and the discharge over the cliff face for in excess of 56 hours does not lead to the necessary conclusion that the offence was trivial in nature. 32. The function of the penstocks is an integral part of the operation of the plant. The system is designed so that effluent can be directed to the various areas of the plant to enable it to be adequately treated before discharge through the deep ocean outfall. They are also designed to permit a bypassing of the plant when and if required and within the terms of the licence under emergency conditions. 33. Interruptions to the supply of electricity were anticipated. The consequences of loss of main power were recognised by the provision of an alternative power supply. It was not some minor or inconsequential part of the industrial plant that the defendant failed to maintain in accordance with the condition of the licence. 34. Irrespective of whether the failure gave rise to a major event which caused significant environmental harm, the omission was serious. The breach was a failure to ensure that an essential part of the plant operated under all conditions. 35. Furthermore, questions relating to the prospect of the NSOOS penstocks within seven minutes are not critical. For reasons explained later in regard to the extent of harm caused to the environment, the Court is of the view that Mr Taragel was not correct in his approach that assumed the plant operated with the outlet channel penstocks open (see paragraph 29 of judgment 11 December 1998). 36. The Court is not satisfied that the defendant is entitled to the benefit of the of the Court's discretion to exercise the power to dismiss the charge pursuant to s 556A of the Crimes Act. Section 9(a) EOP Act 37. The defendant has not attempted to meet the prosecutor's case that the prolonged discharge of untreated and unscreened effluent caused significant environmental harm. 38. Rather, it says the prosecutor has not proved beyond reasonable doubt that the overflow into the RSP chamber and electrical control equipment was caused by the reverse phasing. According to the defendant no harm was caused within the meaning of s 9(a). 39. During the hearing, the Court heard evidence which, inter alia, attributed the cause of the flooding to the following:- (a) the failure of the penstocks to operate; (b) the failure to maintain penstocks of a sufficient height; (c) the failure to use a "Tee Pee" or a blanking flange at the entrance to the RSP chamber during maintenance of RSP No. 1; (d) the failure to install stopboards at the entrance to the pumping chambers; (e) the failure to maintain the outlet channel penstocks in the fully open position during normal operations; (f) leaving the plant in a "fail to danger" situation rather than a fail safe condition. 40. They are all probable contributing or exacerbating factors. 41. Only (a) was found to be relevant to the offence alleged as a breach of conditions of the licence. 42. In paragraph 32 of the judgment dated 11 December 1998, I found that in cross examination Mr de Rooy demonstrated that there was the capacity to pass all inflow to the cliff face without opening the bypass penstocks but instead by taking it all over the stopboards, through the siphons and out through the outlet channel. 43. Accordingly if the operator on duty on 7 March had been able to open the outlet channel penstocks within the seven minute period estimated by Mr Taragel, the evidence of Mr de Rooy is that the inflow could have been diverted to the cliff face. His further evidence is that, by opening up the NSOOS bypass penstocks only, there would still be sewage flowing into the screening chamber area. He said that it would be necessary to close the inlet penstocks to stop that and then to close the outlet penstocks to stop it coming back the other way through the outlet channel and back into the facility. 44. It is therefore difficult to accept Mr Robberds' submission that the Court should focus on the time that it may have taken to open the bypass penstocks in the context of the emergency which occurred on 7 March 1995. 45. According to the written report of the incident, the staff operator, after trying to restart the pumps, first went to the outlet penstocks. They failed to operate. 46. In the absence of direct evidence from the operator or other plausible explanation, it is reasonable to infer that it would have taken less than seven minutes to cause the outlet penstocks to operate. The Court is satisfied beyond reasonable doubt that if the outlet penstocks had operated when the staff member first tried to open them, there would have been a discharge to the cliff face with a reasonable chance of averting the inundation. 47. Even if this had not been accomplished within the estimated seven minutes, the level of flooding would have been reduced to allow recovery activity to commence approximately three hours earlier. 48. In either case, the consequence is a serious discharge over the total period of 56.5 hours, or at least three hours, either of which could have been avoided. 49. For the purpose of determining the level of fine, the failure of the outlet penstocks to open should be regarded as being directly responsible for the discharge that occurred for over 56 hours. 50. For the purpose of the consideration required by s 9(a) of the EOP Act, the extent of harm caused or likely to be caused is the result of the total discharge. 51. It must be borne in mind that the discharge is not the offence for which the defendant has been found guilty. Section 9(a) nevertheless dictates the level of seriousness irrespective of the apparent inherent gravity of the offence itself. 52. In summary the prosecutor points to the following consequences for the environment:- (a) 1590ML of effluent (comprising 250ML untreated, 1340ML unscreened) was discharged over 56.5 hours. This contrasts to total discharge for the balance of 1994/95 licence year over a period of 3.38 hours and the permissible period of 48 hours allowed for the whole year under the licence; (b) actual visual pollution described as "… an indistinct brown plume was visible, generally tracking North East during the incident" and "visual inspections of floatables (cotton bud sticks, condoms, pads, grease etc) at the high tide mark … were made" extending as far as Curl Curl to the north; (c) beach water bacterial results over the period of the bypass appeared compatible with normal storm conditions; (d) the results of analysis for faecal bacteria indicated that the limit for faecal coliforms set by the New South Wales Department of Health Guidelines was exceeded on several occasions; (e) the discharge of untreated sewage at the cliff face increases the risk of viruses being present in the water; (f) having regard to the high incidence of water based recreation, the introduction of faecal contamination and other hazards exposed the health and safety of water users to the risk of contact with diseases such as eye, ear, nose and throat infection, skin diseases and gastrointestinal disorders. 53. The executive summary of the defendant's report on the bypass has been admitted into evidence. This report confirms that sewerage derived materials consisting mostly of sewerage grease, sanitary pad liners, cotton tips, condom rings and tampons were observed at a number of beaches during or after the incident. The beaches worst affected by sewerage grease were Freshwater and Curl Curl beaches. Grease particle size ranged from less than 0.5 cm to 22 cm and was typically grey/white pitted on the surface and brown inside. Particles of sewerage grease were most prevalent on beaches from 9 March 1995 to 10 March 1995. 54. For the purposes of s 9(a) of the EOP Act, the extent of harm caused to the environment by the commission of the offence was widespread and patently serious. 55. It is difficult to image a more repugnant consequence from a pollution event. Section 9(b) EOP Act 56. The prosecutor identifies the following practical measures which it says might have been taken to prevent, control, abate or mitigate the harm. (i) To carry out a test to facilitate an understanding of whether the penstocks would operate under emergency power. The Court found these checks were not undertaken. (ii) The installation of stopboards to above the floor level to prevent flooding of the RSP chamber while the pump body and motor were dismantled. Maintenance procedures have been subsequently modified by providing an isolation penstock and the use of stopboards as a first level of protection against flooding. (iii) The use of a blanking flange or Tee Pee on the RSP as a second level of protection against flooding. Again, this practical measure is demonstrated by the remedial measures undertaken by the defendant following the offence. (iv) The installation of a penstock in the pump suction channel at an appropriate height. (v) Testing the pump suction channel penstocks and the outlet penstocks every three months rather than every six months. (vi) The outlet channel penstocks could have been left open to accommodate wet weather flows. The practice of keeping them closed was changed as a remedial measure. 57. Mr Robberds reminds the Court that each of the suggested practical measures relied upon by the prosecutor were rejected by the Court as breaches of the requirement of condition L4 to maintain the industrial plant in an efficient condition. 58. Section 9(b) is not directed to a consideration of the offence. It is a direction to the Court to take into consideration the matters set out in the section in regard to penalty. 59. Practical measures to prevent, control, abate or mitigate harm are to be taken into consideration upon the assumption that an offence has been proved. The prospect of control, abatement or mitigation is in the context of the extent of harm which is the consequence of the offence. 60. If the defendant is right, then an accused person who omits to build a bund around a sensitive area would be entitled to say that because there was no requirement to maintain a bund, the failure to do so may not be taken into account in imposing a penalty for a breach of the legislation or a condition of licence in another respect where the bund might have eliminated the likelihood of any harm. 61. The purpose of the pollution control legislation is to make provision to control the consequences of pollution by a system of licences and approvals. Section 9 recognises that the legislation envisages proper precautions should be taken to ensure the pollution does not occur. Adopting what Mahoney JA said in Axer Pty Ltd v Environment Protection Authority (unreported 22 November 1993 CCA60763 of 1992) the legislation envisages that in many cases care must be supplemented by positive precautions. This includes anticipation that a breach of a condition of licence might occur. 62. To take the above matters into account pursuant to s 9(b) is not to find the defendant guilty of an offence for a breach of the conditions of its licence in that respect. The purpose is to ensure that the penalty reflects the overall expectation that "business must be arranged and precautions taken so as to ensure that pollution will not occur" (Mahoney JA Axer p 2). 63. The Court therefore proposes to take into account that the steps identified by the prosecutor could have been taken as practical measures to prevent the flooding of the RSP chamber and the electrical equipment and that subsequent events confirm these were reasonably open to the defendant at the time. Section 9(c) EOP Act 64. Even without the benefit of hindsight, the defendant was aware that power supply fluctuations would occur and that in those circumstances, it could become necessary to rely on emergency power. The licence conditions envisaged that circumstances could arise where a bypass to the cliff face would be necessary and allowable. The plant was designed so that bypass to the cliff face could occur in an emergency. The effectiveness of the bypass procedure was inherently dependent upon the operation of the penstocks. 65. The need to switch the plant to bypass phase was not unprecedented and therefore reasonably foreseeable. 66. It would be obvious to even the most casual observer that the purpose of switching to bypass is to protect the integrity of the plant in the case of emergency. How else, one might ask, would the discharge of unscreened and untreated effluent directly into the ocean adjacent to the shoreline be justified. 67. The Court is satisfied that the defendant could reasonably have foreseen that significant harm could be caused to the environment if the plant was not maintained in an efficient condition and thereby cease to operate effectively, or at all, for other than a short period of time. 68. Although the purpose of the plant is to provide a public service by the handling and disposal of the inevitable waste produced by modern society, once having accepted the responsibility to limit the extent of harm caused by that disposal, the defendant, as the responsible authority in that respect, must be regarded as being in a position to foresee the harm if the plant is not maintained in an efficient condition. Section 9(d) EOP Act 69. The defendant through its servants and agents had the sole responsibility to control the extent and effectiveness of maintenance procedures. Penalty generally 70. The reason for the failure to identify the problem with the rotation of the phasing through the switchboard was, at best, justified by evidence of the difficulty involved with testing the equipment on a practical basis. The Court rejected these difficulties. The failure to maintain the penstocks in an efficient condition at all times, in particular under emergency power, led to the foreseeable result that the plant was rendered inoperative over a long period of time. It would have been obvious to any reasonable person that the loss of capacity to operate the penstocks placed the viability of the sewage treatment plant in a condition of high risk. 71. The defendant has a responsible role to play in the public interest. It is reasonable to expect that it, particularly having regard to its status as a state owned corporation, adopt preventative measures in circumstances where the potential harm to the environment is manifest to itself and to the public in general. 72. The effect of the discharge of raw sewage into the sea in the vicinity of sensitive water recreation areas is obvious. It is a matter of constant media attention and comment and complaint from members of the public. 73. It is a primary purpose of the existence of the defendant to, as far as practicable, keep the environment free from the effects of what occurred on 7 March 1995. 74. The defendant is not entitled to any discount pursuant to s 439 of the Crimes Act 1900 in the light of its plea of not guilty. It is of course entitled to insist on its right to defend the charge and to put the prosecution to its proof. 75. The Court reiterates its observations and findings in regard to the matters which fall for consideration pursuant to s 9 of the EOP Act. 76. The ultimate result is that the defendant has been found guilty of an offence which led to environmental consequences of the most disgusting and abhorrent kind. 77. The remedy was in its own hands. It is only through its own careless omission to properly check the efficiency of an essential integral part of the plant that the consequences occurred. 78. The submission made on the defendant's behalf that the offence should be treated as trivial and the consequences as minor is rejected. 79. It is important that the Court respond to the intentions expressed by the legislature through the penalty provisions of the EOP Act with the imposition of a fine at the highest end of the scale set by the maximum fine of $125,000. 80. The Court adopts the general principle expressed by Kirby P in Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 82 LGERA 21 at 36 as follows:- A maximum penalty is to be imposed where the case falls within the worst category of cases for which the penalty is prescribed. This is to be determined on the facts of the case: Ibbs v The Queen (1987) 163 CLR 447 at 452. However, "that does not mean that a lesser penalty must be imposed if it is possible to envisage a worse case; ingenuity can always conjure up a case of greater heinousness. A sentence which imposes the maximum penalty offends this principle only if the case is recognisably outside the worst category": Veen v The Queen (No. 2) (1988) 164 CLR 465 at 478. 81. The only mitigating factors to be taken into account are that the defendant, as a public authority, carries out an important community function, that it cooperated with the EPA in its inquiries and that it has expressed contrition and apology by way of press release and other public announcements. To that extent the defendant is entitled to some remission. The record produced to the Court shows that there have been four previous convictions for pollution offences. As I said in Matter No. 50029 of 1996 (unreported 18 December 1996) the antecedent of the defendant must be regarded in the context of a large statutory authority having control of a vast operation extending over the whole of the Sydney Metropolitan area. 82. Having regard to the whole of the circumstances, the seriousness of the consequences and the extent to which the prevention of the occurrence was under the control of the defendant, it is appropriate that a fine in the sum of $100,000 be imposed. Costs 83. The defendant points to particularised aspects of the offence which were at an early stage or ultimately abandoned together with the failure of the prosecutor to prove a number of allegations. 84. The offence proved arose out of the finding of incorrect phasing of the electrical wiring to the emergency power. In effect, so says the defendant, the prosecutor failed to prove any matter which substantiated the finding of guilt. Proof of the offence was based solely on evidence which came from the defendant's witnesses on 11 November 1998. 85. Notwithstanding the evidence in the defendant's case, the prosecutor did not abandon the original case. It cannot be said therefore that the prosecutor would have abandoned the other allegations once the question of phasing had been disclosed. 86. I think it is appropriate nevertheless to regard the proceedings as a whole and to determine whether the prosecutor was successful in proving the offence of breach of condition rather than seeking to assess the liability for costs on the outcome of each particularised item. 87. A single offence was alleged and the prosecutor, on any view of the proceedings, succeeded in proving the offence was committed. 88. The usual rule is that the Court order that the costs follow the event except where it appears that some other order should be made as to the whole or any part of the costs. A successful party in litigation is entitled to an award for costs in its favour subject to certain exceptions. 89. Although the incorrect phasing may not have come to the attention of the defendant until after the proceedings had commenced, nevertheless it was information which should be regarded as being within the sole knowledge of the defendant and that it could not be determined readily by any person other than the defendant. 90. These proceedings were commenced only after detailed investigation by and consultation with the defendant. It was reasonable for the prosecutor to proceed on the basis that the plant had not been maintained in an efficient condition. The nature of the incident indicated there was some inherent problem. 91. As the Court of Criminal Appeal observed ((1997) 98 LGERA 361 at 363 Gleeson CJ) the EPA led evidence which established a prima facie case, a failure to maintain in an efficient condition four of the five items particularised. However, in its case in chief, the prosecutor did not succeed in making out a prima facie case of failure to maintain in an efficient condition one of the five items, that is to say the 7-section siphon and stopboards. 92. The Chief Justice went on to say at p 365:- The single offence alleged in the present case is a contravention of condition L4. According to the particulars, the prosecution relies upon five aspects of the failure to maintain the sewage plant in an efficient condition. In order to succeed, the prosecution only needs to establish one of those aspects. It was consistent with the requirements of fairness, and of the orderly conduct of the litigation, that the prosecution should be required to state, in advance of the hearing, the aspects of failure to maintain plant in an efficient condition upon which it intended to rely. Fairness to Sydney Water, however, does not require that the prosecution should be precluded from relying upon evidence which may emerge during the course of the defence case. Nor does it require that a distinction be drawn between evidence which strengthens the Crown case in respect of a particular that was made out to a prima facie level in chief, and evidence relating to a particular which the Crown did not succeed in establishing to that level in chief. There is no basis in legal principle for such an artificial distinction. 93. The Court recognises that an order for costs is not made to punish an unsuccessful party, but the most important factor which influences the exercise of the costs discretion is the outcome of the litigation. 94. There is no room in the present case for an allegation of the type of misconduct identified by McHugh J in Oshlack v Richmond River Council (1997) 96 LGERA 173 at 193:- "Misconduct" in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute. Apart from anomalous examples in the equity jurisdiction, there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. 95. It is apparent therefore that exceptional circumstances must exist in order to deprive a successful party of the entitlement to its costs. 96. The observations by Toohey JA at p 565-6 in Latoudis v Casey (1990) 170 CLR 534 again points to the principle that a refusal of costs to a successful party will ordinarily be based upon the conduct of that party in relation to the proceedings. 97. Section 52 of the Land and Environment Court Act provides the Court with the undoubted discretion to order the defendant under the present circumstances to pay to the prosecutor costs determined in accordance with s 52(2). 98. Costs are compensatory and they are awarded to indemnify the successful party against the expense of conducting the proceedings. 99. The making of an order for costs is not to be regarded as if it amounted to the imposition of a penalty or punishment unless the order for costs recognises a default on the part of the successful party. 100. The Court is not satisfied that there should be any special order as to costs having regard to the whole of the circumstances under which these proceedings were conducted. 101. It follows therefore that the defendant will be ordered to pay the costs of the prosecutor. Orders 102. The Court makes the following orders:- 1. The defendant is convicted of the offence as charged in the summons. 2. The defendant is ordered to pay a fine in the sum of $100,000. 3. The defendant is ordered to pay the costs of the prosecutor in such amount as may be agreed or if no such agreement can be reached in accordance with the regulations under the Land and Environment Court Act 1979. 4. The exhibits may be returned. I hereby certify that this and the preceding 20 pages are a true and accurate record of the reasons for judgment herein of the Honourable Justice R N Talbot. 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