> Land and Environment Court of New South Wales CITATION : Environment Protection Authority v Lubrizol International Inc [2003] NSWLEC 349 PROSECUTOR: Environment Protection Authority PARTIES : DEFENDANT: Lubrizol International Inc ARBN 002 747 944 FILE NUMBER(S) : 50044 of 2003 CORAM: Lloyd J KEY ISSUES: Environmental Offences :- water pollution - plea of guilty - penalty - strict liability - mitigation - environmental harm - remedial action LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999 s 3A, s 21A, s 22, s 22A, s 23 Protection of the Environment Operations Act 1997 s 120(2), s 241(1), s 241(2) Axer v Environment Protection Authority (1993) 113 LGERA 357; Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683; Environment Protection Authority v Excel Fuels Pty Ltd [2002] NSWLEC 160; Environment Protection Authority v Mobil Oil Australia Pty Ltd [2000] NSWLEC 43; CASES CITED: Environment Protection Authority v Supreme Poultry & Chickens Pty Ltd & Anor [2001] NSWLEC 215; Environment Protection Authority v Tenterfield Shire Council (2000) 112 LGERA 173; Environment Protection Authority v Timber Industries Ltd [2000] NSWLEC 39; R v Olbrich (1999) 199 CLR 270; R v Thomson; R v Houlton (2000) 49 NSWLR 383; Ryan v The Queen (2001) 206 CLR 267; Walden v Hensler (1987) 163 CLR 561 DATES OF HEARING: 08/12/2003 DATE OF JUDGMENT: 12/19/2003 PROSECUTOR: Mr D Anderson SOLICITORS: Stephen Garret Environment Protection Authority LEGAL REPRESENTATIVES: DEFENDANT: Ms J M Jagot (barrister) SOLICITORS: Cowley Hearne JUDGMENT: - 15 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 50044 of 2003 Lloyd J 19 December 2003 ENVIRONMENT PROTECTION AUTHORITY Prosecutor v LUBRIZOL INTERNATIONAL INC ARBN 002 747 944 Defendant JUDGMENT Introduction 1 The defendant, Lubrizol International Inc (hereinafter "the defendant"), has pleaded guilty to a charge of an offence against s 120 of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that on or about 4 June 2002 it caused waters to be polluted. That section headed "Prohibition of pollution of waters", at the relevant time, provided as follows: (1) Prohibition on polluting A person must not pollute any waters. (2) Prohibition on causing pollution A person must not cause any waters to be polluted. (3) … … (4) Offence A person who contravenes this section is guilty of an offence. 2 The remaining issues relate to costs and penalty. The former question has been resolved by an agreement between the parties to the effect that the defendant will pay the prosecutor's costs of $20,000. The maximum penalty for the offence in the case of a corporation is $250,000. 3 At the time of the water pollution incident ("the incident"), the defendant carried out activities which involved the transfer of product known as LZ4980A ("the product") from a barge docked on Duck River to a storage tank located at No. 28 River Street, Silverwater ("the premises"). The storage tank overflowed and the product was discharged from the premises into the waters, namely, Duck River. 4 The relevant facts which are derived from an agreed statement of facts may be briefly discussed as follows. Background facts 5 The defendant is an entity of a global fluid technology company focusing on high-performance chemical products, systems and services for industry and transportation. It supplies hydrocarbon based oil products for Australia and New Zealand. The defendant occupies the premises for the purpose of carrying on the business of storage and distribution of fuel and lubricant additives with a small amount of manufacturing. 6 Ordinarily, the defendant's products, including the one involved in the incident on 4 June 2002, are shipped from its oversees manufacturing facilities to White Bay in Sydney, where the defendant's personnel, known as "the ship team", transfer cargo from a bulk marine carrier to a barge which then transports loads up the Parramatta River for onward discharge at the Silverwater wharf. At the Silverwater wharf, the defendant's personnel, known as "the shore team", transfer the contents of the barge into above ground storage tanks which are located within a bunded area at the defendant's premises adjoining Holker Street. 7 At the time of the incident the defendant had standard operational procedures in place concerning uploading the contents of barges into above ground storage tanks. Those included the procedure known as "Work Instruction LZW-4.15.8: Uploading Bulk Additives from Chemical Tankers" issued 20 May 2002 and the procedure known as "Work Instruction LZW – 4.9.8 Pollution Control" issued 17 January 2002. The standard operational procedures were regularly reviewed as part of the defendant's quality control arrangement. The incident 8 On 4 June 2002, the defendant's ship team at White Bay loaded 461,000 litres of the product onto a barge known as "Lubrizol III" ("the barge"). The barge has eight internal compartments or tanks, four of which are located on the port side (1P, 2P, 3P and 4P) and the other four are located on the starboard side (1S, 2S, 3S and 4S) of the barge. Each internal compartment of the barge had apparently been loaded with approximately 60,000 litres of the product. 9 It had been previously decided by the defendant's inventory co-ordinator, Mr Joseph Krason, that the product contained in three of the barge's internal compartments was to be unloaded into a storage tank (described as "Tank 66") at the premises. The product contained in the remaining five compartments was to be unloaded into another storage tank (described as "Tank 51"). In further discussions, however, the above-named inventory co-ordinator and Mr Steve Thompson, the defendant's plant supervisor, reassessed the capacity of Tank 66 and agreed that in order to improve handling efficiency of the process, four of the barge's compartments, instead of three, could be pumped into Tank 66. Tank 66 had a safe fill capacity of 323,000 litres and there would be 83,000 litres, or 2.3 metres leeway in the tank after filling. The barge's compartments to be unloaded into Tank 66 were 1P, 2P, 1S and 2S. The necessary preparations to transfer the product from the barge then took place. 10 After completing the unloading of the barge's compartments 1P, 2P and 1S, and during the pumping of product from 2S, the shore team noticed that the barge was unexpectedly listing to the port side which indicated that there was more product remaining in the port side compartments than in the starboard side compartments. At about 3.00 pm on 4 June 2002 while product was still being pumped into Tank 66, the defendant's personnel opened the hatches of the barge's compartments 3S and 4S to reveal that 3S was almost empty and 4S was half empty. At that time the defendant's personnel assumed that compartments 3S and 4S had not been filled during the unloading operation at White Bay and that the ship team had not communicated this to them. These assumptions were based upon the earlier telephone call from Mr Anthony Lynch, the defendant's supervisor at White Bay, advising that there was a problem with the loading because of a faulty hose; and further upon the perceived listing of the barge as it approached the Silverwater wharf. Mr Thompson immediately telephoned Mr Krason to inquire whether the barge was loaded differently but was unable to find out what exactly had occurred that morning. At that time the pumping of the product into Tank 66 continued and neither Mr Thompson nor any other personnel undertook physical inspections of the suction valves on barge compartments 3S and 4S in order to ensure that they were shut down. 11 At about 3.30 pm on 4 June 2002 the diesel pump cut out due to an unrelated mechanical problem and the shore team made attempts to restart the pumping. Whilst going up the ladder from the pontoon to the wharf, Mr Thompson saw a substance, which appeared to him to be the defendant's product, flowing from the stormwater pipe into the waters of Duck River. Mr Thompson immediately shut down the discharge valve on the wharf before opening and closing the appropriate valves to transfer product from Tank 66 to Tank 51. With the assistance of another employee of the defendant, Mr Thomson also jumped into the river to stuff rags directly into the stormwater drain. 12 The product was overflowing from Tank 66 and running down Holker Street into the river via the stormwater drain. Some of the product was contained in the bund area around Tank 66. Due to the pressure of the pumping, however, the product flowed out of the hatch on the tank's roof and sprayed over the bund wall into Holker Street. 13 It later became evident that the content of six of the barge's compartment rather than four had been transferred into Tank 66. 14 The defendant, without delay, informed the Sydney Ports Corporation, NSW Fire Brigade and the Shell emergency response team of the incident. The defendant informed the prosecutor of the incident at 4.16 pm on the same day. The defendant's personnel immediately placed booms across Duck River to prevent the product migrating further along the river. Cloth was used to bund the stormwater drain and absorbent mats were used to soak up any of the product. On advice from the Fire Brigade, sand was applied on top of the absorbent material. Rags, sand and absorbent material were left overnight to soak up as much product as possible. 15 Further clean up of the area effected by the incident was undertaken from 5 June 2002 to 7 June 2002 by the Sydney Ports Corporation, using a skimmer unit. The defendant also hired a road sweeper to remove sand and absorbent material from the road. The clean-up by the defendant appears to be both prompt and effective. Of the 7,520 litres of the product that had escaped from the premises during the spill 3, 480 litres was cleaned up from Holker Street, 1,534 litres was cleaned up from Duck River and about 165 litres was not recovered. 16 The evidence reveals a number of factors that would have contributed to the occurrence of the incident. It is to be noted that all of the contributing factors were promptly identified in the defendant's incident report which was prepared on 12 June 2002 and submitted to the prosecutor. 17 One possible cause of the escape of the product named in the report was that the suction valves on two of the barge's internal compartments were not fully closed. If they were even slightly open then it would result in overfill of Tank 66 beyond its volumetric capacity. 18 The failure to stop pumping product when it was found that the barge's compartment 3S was almost empty and 4S was half empty represents a serious error of judgment on the part of the defendant's personnel. Moreover, a physical check of the suction valves could have averted the overfill. 19 There was also a breakdown in communications between the ship team at White Bay and the shore team at Silverwater which contributed to the incident. 20 The defendant's incident report further identified a number of additional factors that may have contributed to the incident, namely, there was no inspection of the barge or measurements of the load when it arrived at Silverwater to ascertain or verify the cargo; and there were no periodical inspections of the barge's internal compartments for apparent loss of content or the receiving above ground storage tank during the pumping process. 21 In response to the incident the defendant took a number of steps to prevent recurrence and improve environmental performance, including addressing each of the matters which it had identified after the incident and self managing the implementation process. These changes include a comprehensive review of the standard operating procedures and, in particular, its unloading and loading procedures to reflect the need for improvements that were contributing factors to the incident occurring. Further, the defendant implemented a number of engineering changes such as installation of overflow barriers and high level audible and visual alarms to all its storage tanks. 22 The direct and immediate cost incurred by Lubrizol in mitigating the spill and cleaning up of the spill area is estimated at $111,000. The defendant has estimated the approximate cost to implement the procedural and engineering measures to prevent the reoccurrence to be approximately $23,640. Effect on the environment 23 The prosecutor's officers, upon being notified of the incident, attended the premises and recorded their observations of the product as having a thick texture, similar to thick honey, and of a light brown to yellow colour, floating on the surface of the water. On 5 and 6 June 2002 the prosecutor's officers made more extensive observations of the effect of the incident on the environment, including young mangrove plants and mud flats in Duck River which were coated by the product. An oily sheen near the boat ramp at Silverwater Bridge on the Parramatta River, which is approximately 50 metres downstream of the confluence of Duck River and Parramatta River, was noted. It was also observed that an oil type substance was very obvious near the shoreline where the pneumatophores (mangrove peg roots) met the water. The oil on the pneumatophores had formed a distinctive whitish mousse which was sticky to touch. Some of the mangroves had oil on their trunks to about one metre high and penetration of the oil into the mangrove forest was observed up to 30 metres up shore opposite Holker Street. Fortunately, subsequent observations revealed no acute effects on the mangrove plants due to observed oil penetration. The mangrove seedlings did not show the presence of appreciable numbers of dead mangrove seedlings. There were no dead fish or oiled birds in the area of the spill. Experiments on an oyster population, which were conducted between 6 June 2002 and 26 June 2002, showed no decrease in its survival or condition when compared to oysters placed elsewhere in the Parramatta River. There were no acute effects on the environment due to the low toxicity of the product and components and prompt clean up undertaken by the defendant. The parties' submissions 24 Mr D Anderson, appearing for the prosecutor, relies upon the following relevant submissions on penalty. (a) The maximum penalty of $250,000 for breaches of s 120(2) of the PEO Act indicates the gravity of the offence as perceived by the community (Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698). "The [legislation] requires that proper, and strict precautions be taken by those whose activities may cause proscribed pollution"; and "envisages that at least in many cases, proper precautions must be taken to ensure that pollution does not occur" (Axer v Environment Protection Authority (1993) 113 LGERA 357 at 359). (b) Notwithstanding that this particular offence rates between 1 and 3 on a scale of 1 to 10 and therefore does not warrant the maximum penalty, the offence is one of strict liability, rendering unnecessary a finding that the defendant acted negligently in the commission of the offence. (c) Sentencing must incorporate considerations of general deterrence (Axer at 357). Entities that transport and handle hydrocarbon products should be sent a clear message that adequate steps need to be taken, in terms of prevention and control, to ensure that waters are not polluted by such products. (d) As to the relevant considerations listed under s 241(1) of the PEO Act: (i) Approximately 165 litres of the discharged product was not recovered and was lost to the environment. This disbursement of the thick, honey-like textured substance, observed after the spill in Duck and Parramatta Rivers and in the mangrove forest on the shoreline of Duck River, constitutes actual "harm to the environment". Also there was a likelihood, attributable to the offence, of harm to birds and fish which frequent the area, and to ducks observed in the vicinity of the spill, albeit they did not appear to be oiled. (ii) The defendant had ineffective and inadequate systems in place to prevent environmental incidents of this type. The defendant's employees neglected to undertake inspections of the barge and the tank. Such omission was identified as contributing to the incident. Further, overflow pipes could have been installed on top of tank 66, directing any overfilled product into the bund. The emergency stop button could have been pressed at the time it was discovered that tanks 3S and 4S were empty. Moreover, the fact that the barge was observed to be listing whilst coming up the river should have alerted the defendant's employees of the need to check the volume of the barge compartments before proceeding. Since the incident, the defendant has implemented additional procedures, (set out in paras 53-55 of the statement of agreed facts). These measures should have been taken previously, however, so as to prevent such an incident for occurring at all. (iii) The harm or potential for harm was foreseeable by the defendant. Any unloading operation where hydrocarbon product is transferred from a barge to an on-ground storage tank has potential for a spill. (iv) At all times the defendant had control over the causes that gave rise to the offence. (e) The defendant entered a plea of guilty at an early stage and is therefore entitled to a discount for the utilitarian value of facilitating the course of justice (s 22 of the Crimes (Sentencing Procedure) Act 1999, R v Thomson; R v Houlton (2000) 49 NSWLR 383). (f) The defendant cooperated with the EPA and has no record of environmental offences. (g) The prosecutor's costs incurred in the conduct of this matter amount to $20,000. 25 Ms J M Jagot, appearing for the defendant, relies upon the following submissions on penalty. (a) Specific deterrence is not required due to the extraordinary diligence of the defendant to ensure that there is no recurrence. The need for general deterrence is acknowledged. Given the unique combination of circumstances that led to the offence, however, such requirement does not warrant being counted as an aggravating factor in determining penalty. These particular circumstances should be addressed with "due regard to the current maximum penalty and the seriousness of the offence and the need for deterrents thereby indicated together with all other relevant matters" (Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304 at 312). (b) In relation to strict liability offences, where there is the purpose in deterrence of educating the offender and the community in the law's proscriptions, "care must be taken in imposing a penalty lest the offender be made to shoulder an unfair burden of community education" (Walden v Hensler (1987) 163 CLR 561 at 570). (c) As to the relevant considerations under s 241(1) of the PEO Act: (i) The harm caused by the leaked product was visual and transient and its toxicity was low. No other impacts can be identified and the defendant is entitled to the benefit of the doubt. The visual impact was short–lived because the clean up was prompt and effective. Further, the amount of product which was lost to the environment was small. The extent of the harm would be characterised as belonging at the low end of the scale. (ii) The one error of judgement on the part of the defendant (the failure to turn off the pump immediately on seeing that the two tanks 3S and 4S were not full) can only be criticised with the benefit of hindsight. The employees assumed that the tanks had not been fully loaded at White Bay. However, they immediately and urgently took steps to ascertain whether their assumption was accurate. Further, albeit wrong in hindsight, the assumption was neither unreasonable nor incredible. There had never before, in the ten year history of the operation at the site, been any problem with the valves of tanks not intended to be pumped being open. (iii) Despite the fact that the whole of the resultant harm was reasonably foreseeable, the incident was caused by a combination of unique circumstances. (iv) The defendant accepts that it had control over the causes of the offence. (d) The defendant reacted and continued to act promptly and effectively in all respects of the incident to ensure that there would be no recurrence. The defendant's activity is not solely for private profit. It is beneficial for the environment and sustainable energy use. Indeed, the defendant places the highest importance on its environmental performance. (e) The defendant has no prior convictions. The incident, given regard to the defendant's unblemished record, was an "uncharacteristic aberration": Camilleri's Stock Feeds at 700. The defendant's remorse and contrition are evidenced by the plea of guilty at the first opportunity it had to do so, its full cooperation with the prosecutor, the letter to the Court from its general manager and the presence in Court of its general manager and operations manager. (f) The defendant has already expended considerable time and money on making sure it meets its obligations and own high standards. (g) Axer is distinguishable from the present case because the spilled product is much less toxic and had far less an impact than the substance spilled in Axer. Likewise, in Environment Protection Authority v Excel Fuels Pty Limited [2002] NSWLEC 160, the product was diesel fuel and the harm included the death of hundreds of worms, and in Environment Protection Authority v Timber Industries Limited [2000] NSWLEC 39, the substance was highly toxic to aquatic organisms, rendering these cases distinguishable from the present matter. Lastly, Environmental Protection Authority v Mobil Oil Australia Pty Ltd [2000] NSWLEC 43 is also distinguishable from the present case because that case involved a spill of aviator fuel which had significant impact on ground water and soil. Considerations on penalty 26 Section 241(1) of the PEO Act sets out a number of matters which the Court is required to take into consideration in imposing a penalty for an offence against the Act. Section 241(1)(a): The extent of the harm caused or likely to be caused to the environment by the commission of the offence. 27 The majority of the spilled substance was recovered in the prompt clean – up process, thereby minimising the impact on the environment. Notwithstanding that the lost spilled substance directly altered the environment in that it entered the water at Duck River and penetrated the adjacent mangrove forest, it seems that the toxicity level of the substance is low (despite it being characterised as a "hydrocarbon"), rendering the actual harm merely visual and transient. No further actual impact of the spill can be identified with certainty (R v Olbrich (1999) 199 CLR 270 at 281). Again, the likelihood of harm to ducks and other birds in the area is minimal due to the fact that ducks observed in the area on 5 June 2002 did not appear to be oiled. Likewise, there were no appreciable numbers of dead mangrove seedlings and there were no dead fish or oiled birds in the area. Lastly, there was no detriment to oysters nearby. Section 241(1)(b): The practical measures that may be taken to prevent, control, abate or mitigate that harm. 28 Notwithstanding that the defendant had carried out an industrial activity at the site for 40 years without incident, and that the Court now has the benefit of hindsight, it is clear that the preventative methods employed by the defendant prior to the incident were inadequate. Despite the defendant's work instructions, its accreditation under ISO 9001, its environmental policies, emergency documents, responsible care initiatives and the pre-existing bund wall, the incident nevertheless occurred. There are several measures, (set out in para 48 of the statement of agreed facts), that the defendant could have employed so as to avoid such an incident. Further, as was conceded by the defendant, the failure to stop pumping when it was discovered that compartment 3S was almost empty and compartment 4S was half empty, was a serious error of judgement on the part of the defendant's employees. 29 Immediately following the incident, as noted above, the defendant undertook an effective clean–up of the spilled substance which served to limit its dispersion. This process involved the placement of booms across Duck River to contain the product, cloths to block the stormwater drain and absorbent mats to soak up the product. Sand was also applied on top of the absorbent material. The amount of product not recovered during this process was relatively small. 30 The defendant, also in response to the incident, has taken many steps to prevent a recurrence and improve its environmental performance. During the weeks following the incident a number of procedural changes to the defendant's operations were developed and implemented. This involved identifying further detail to be incorporated into the defendant's working procedures and revising its barge unloading and loading procedures to reflect the need for improvements that were identified in the initial reports following the incident. Several engineering changes to the defendant's operation were also made in the weeks following the incident. Such changes will complement the audible and visual alarms that will soon be fitted to all storage tanks at the defendant's premises. These alarms are designed to provide warning of a possible overfill situation, thus markedly reducing the risk of a similar incident in the future. Section 241(1)(c): The extent to which the persons 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. 31 As submitted by the defendant, the commission of the offence, itself, may not have been foreseeable by the defendant. The defendant, as previously noted, had undertaken the activity for 40 years without incident. Also, notwithstanding there were signs that the barge was not loaded as usual, a unique set of circumstances gave rise to the commission of the offence, such combination of conditions being less foreseeable than may often be the case with similar offences. The harm caused or likely to be caused to the environment by the commission of the offence, that is the alteration of the water and shoreline and the effect upon fish, ducks and other birds in the area, however, was most certainly foreseeable by the defendant, given its commission of the offence. It is to be expected that a spill of a liquid substance like LZ4980A would cause the substance to float on the surface of the water, coat plants, penetrate the soil on the shoreline and affect, in some way, despite its low toxicity, anything with which it comes into contact. Section 241(1)(d): The extent to which the person who committed the offence had control over the causes that gave rise to the offence. 32 At all the relevant times the defendant had control over the causes that gave rise to the commission of the offence. Its employees unloaded the product from the barge into tank 66, such action, of course, resulting in the pollution of Duck River. Even if the defendant was not responsible for the suction valves on two of the barge's compartments not being fully closed, it was within the defendant's control to ensure that the spill did not occur by, for example, inspecting the barge and tanks before and during the pumping process; a precaution the defendant neglected to take. Section 241(1)(e): Whether, in committing the offence, the person was complying with orders from an employer or supervising employee. 33 This is not relevant in the present case. 34 By virtue of s 241(2) of the PEO Act, the Court may also take into consideration other matters that it considers relevant to the imposition of a penalty for such an offence under s 120(2). Such matters are addressed in the following paragraphs, in light of the applicable purpose of sentencing set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 ("The Sentencing Act"). 35 Factors relevant to the determination of penalty pursuant to s 21A of the Sentencing Act include that the damage caused by the offence was not substantial (s 21A(3)(a)), the fact that the offender does not have any record of previous convictions (s 21A(3)(e)), that the offender is a person of good character (s 21A(3)(f)) and that the offender is unlikely to re-offend (s 21A(3)(g)). 36 I note that the defendant entered an early plea of guilty. Pursuant to s 22(a) of the Sentencing Act, such plea must be taken into account in determining penalty. The utilitarian value of a plea of guilty to the criminal justice system should generally be assessed in the range of 10 to 25 percent discount on sentence: R v Thompson (2000) 49 NSWLR 383 at 410. It follows that the earlier the plea, the greater the utilitarian value. The defendant's plea was entered in the period in which it must be considered early (Thomson v R, Cameron v The Queen (2002) 187 ALR 65 at 84; (2002) 76 ALJR 382 at 386 and 396), warranting, therefore, a full discount of 25 percent. 37 The defendant cooperated fully with the prosecutor's investigation of the incident both during and after the event. This assistance allowed for the production of a statement of agreed facts, reducing the prosecutor's effort and the Court's time in resolving this matter. I take this co-operation into account in the formulation of penalty pursuant to ss 22A(1) and 23(1) of the Sentencing Act. Likewise, the fact that the defendant demonstrates contrition in this matter is another factor I consider in favour of the defendant (Ryan v The Queen (2001) 206 CLR 267). 38 As a producer of chemicals, systems and services which reduce environmental hazards and health exposure in industrial operations, having no prior convictions, it seems that the defendant is generally a responsible business operator. Further, the fact that the defendant's product is beneficial to the environment and sustainable energy use is also noted in the formulation of penalty (Camilleri's at 701). 39 As to the issue of deterrence, in the present matter there is little need for a specific deterrent in determining penalty. The defendant never intended the resultant pollution to occur, and has since taken steps to prevent a recurrence. Further, the defendant affected prompt and effective action to remedy the offence (Environment Protection Authority v Supreme Poultry & Chickens Pty Ltd & Anor [2001] NSWLEC 215 at [23]). Such remedial action is outlined in pars [14], [15], [21], [29] and [30] above. However, general deterrence must be a component of the penalty imposed upon the defendant so as to reinforce the point that it is the prevention of water pollution and control of industrial activities that is required by s 120(2). Such a reading of the provision's requirements does not offend Brennan J's statement in Walden v Hensler at 570. As was said in Axer: "business must be arranged and precautions taken so as to ensure that pollution will not occur" (per Mahoney JA at 359). 40 Finally, the fact that a breach of s 120(2) of the PEO Act is a strict liability offence must be considered. The nature of the offender is not a factor in determining guilt. The words used in the provision are clear. A person must not pollute any waters. The primary element is the absolute prohibition contained in the Act (Environment Protection Authority v Tenterfield Shire Council (2000) 112 LGERA 173 at 182). As stated in Axer, precautions must be taken to ensure that waters are not polluted. Notwithstanding that the defendant did not intend to pollute Duck River, the actions of the defendant resulted in the commission of that offence. 41 It is thus appropriate that a penalty be imposed, albeit at the lower end of the scale. It seems that a penalty representing 10 percent of the maximum is appropriate, which should be discounted by a further 35 percent for the various mitigating factors including the early plea of guilty (R v Thomson at 419), resulting in a penalty of $16,000. Orders 42 The formal orders of the Court are: 1. The defendant is convicted of the offence as charged. 2. The defendant must pay a penalty in the sum of $16,000. 3. By consent, the defendant must pay the prosecutor's costs in the sum of $20,000. 4. Exhibit 1 may be returned. I hereby certify that the preceding 42 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd. Associate Dated: 19 December 2003 ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.