PRINTER FRIENDLY VERSION

Environment, Resources and Development Court of South Australia

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THE COURT DELIVERED THE FOLLOWING JUDGMENT:

 1                Lochert Bros Pty Ltd (ACN 007 629 094) (“Lochert”) was charged on information as follows:

1.         Between 19 July 2006 and 5 December 2006, at Ramco in the State of South Australia the defendant, by polluting the environment, caused serious environmental harm.

Contrary to s 79(2) of the Environment Protection Act 1993.

This is a minor indictable offence.

Particulars

1.1       Between 19 July 2006 and 5 December 2006, the defendant was the occupier of property (“the property”) located at 15 Virgo Road, Ramco, being the land comprised in Certificate of Title, CT 5739/790, Deposited Plan 52427, Allotment 100, Waikerie, Ramco, Sec 706.

1.2       Between 19 July 2006 and 5 December 2006, a pollutant, namely diesel fuel, escaped or was discharged or emitted at the property, and polluted the environment.

1.3       The pollution of the environment caused serious environmental harm.

The Environment Protection Act 1993

2                The Environment Protection Act 1993 (“the Act”) provides, relevantly, as follows:

79—Causing serious environmental harm

(1)       A person who causes serious environmental harm by polluting the environment intentionally or recklessly and with the knowledge that environmental harm will or might result is guilty of an offence.

Penalty:

If the offender is a body corporate—$2,000,000.

If the offender is a natural person—$500,000 or Division 4 imprisonment or both.

(2)       A person who by polluting the environment causes serious environmental harm is guilty of an offence.

Penalty:

If the offender is a body corporate—$500,000.

If the offender is a natural person—$250,000.

(3)       If in proceedings for an offence against subsection (1) the court is not satisfied that the defendant is guilty of the offence charged but is satisfied that the defendant is guilty of an offence against subsection (2), the court may find the defendant guilty of the latter offence.

4—Responsibility for pollution

For the purposes of this Act, the occupier or person in charge of a place or vehicle at or from which a pollutant escapes or is discharged, emitted or deposited will be taken to have polluted the environment with the pollutant (but without affecting the liability of any other person in respect of the escape, discharge, emission or depositing of the pollutant).

124—General defence

(1)       It will be a defence in any criminal proceedings, or in any proceedings for the payment of an amount as a civil penalty, in respect of an alleged contravention of this Act, including—

(a)       proceedings against a body corporate or a natural person where conduct or a state of mind is imputed to the body or person under this Part; and

(b)       proceedings against an officer of a body corporate under this Part,

if it is proved that the alleged contravention did not result from any failure on the defendant's part to take all reasonable and practicable measures to prevent the contravention or contraventions of the same or a similar nature.

(2)       Without limiting the effect of subsection (1), the defence provided by that subsection includes the defence that the act or omission alleged to constitute the contravention was justified by the need to protect life, the environment or property in a situation of emergency and that the defendant was not guilty of any failure to take all reasonable and practicable measures to prevent or deal with such an emergency.

(3)       Where a body corporate or other employer seeks to establish the defence provided by this section by proving the establishment of proper workplace systems and procedures designed to prevent a contravention of this Act, that proof must be accompanied by proof—

(a)       that proper systems and procedures were also in place whereby any such contravention or risk of such contravention of this Act that came to the knowledge of a person at any level in the workforce was required to be reported promptly to the governing body of the body corporate or to the employer, or to a person or group with the right to report to the governing body or to the employer; and

(b)       that the governing body of the body corporate or the employer actively and effectively promoted and enforced compliance with this Act and with all such systems and procedures within all relevant areas of the workforce.

(4)       A person who would, but for the defence provided by this section, have contravened a provision of this Act is, despite that defence, to be taken to have contravened that provision for the purposes of—

(a)       any proceedings under section 104 in respect of the contravention; and

(b)       the issuing or enforcement of any clean-up order or clean-up authorisation under this Act in respect of the contravention; and

(c)        the making by a court of an order under section 133 in proceedings for an offence in respect of the contravention.

The Facts

3                In order for the defendant to be convicted of the offence charged, the prosecution must prove the facts constituting the elements of the offence beyond reasonable doubt.  At the beginning of the hearing, a statement of agreed facts was tendered.[1]  Witness statements, photographs, records of interview and documentary evidence were also tendered by agreement.[2]  The statement of agreed facts set out the following agreed facts:

1.         Lochert Bros Pty Ltd (ACN 007 629 094) (“Lochert”) operates a business, packaging, marketing and distributing citrus products, on behalf of a range of growers and suppliers.

2.         A part of that business involves transport operations, using prime movers to transport fruit from growers and suppliers, to transport fruit and juice to Adelaide and to port for export.

3.         Between 19 July 2006 and 5 December 2006, Lochert was the owner and occupier of land located at 15 Virgo Road, Ramco being the land comprised in Certificate of Title, CT 5739/790, Deposited Plan 52427, Allotment 100, Waikerie, Ramco, Sec 706.

4.         An above ground diesel fuel tank, bowser, and a connecting underground pipe (collectively “the fuel equipment”) was located on Lochert’s land.

5.         The fuel equipment:

a.         was installed on the land sometime between 1998 (with the exception of the bowser which was replaced in 2002); and

b.         was owned by the Shell Company of Australia at the time of the leak.

6.         The tank had a capacity of 13,000 litres approximately.

7.         The underground pipe joined the bowser and the tank and

a.         was about 1 metre in length.

b.         had a width of about 2 inches or 50 millimetres in diameter.

c.         was U-shaped, with two vertical pieces, one going up to the tank, the other to the bowser, both connected by an elbow join to the straight horizontal piece of pipe in between.

d.         was buried approximately 30 cms beneath the surface.

8.         The bowser:

a.         was located about 1 metre from the tank;

b.         was affixed to a concrete platform;

c.         was recalibrated on or about 25 July 2006, because there were anomalies in the stock records.

9.         Shell would respond to maintenance requests from Lochert in relation to the fuel equipment, by arranging for Gilbarco or a maintenance contractor to attend at the site of the fuel equipment, to investigate, and to attend to any repairs that were required.

10.       Shell paid all maintenance costs for the fuel equipment in respect of maintenance requests from Lochert answered by it, and invoices would be sent to Shell by Gilbarco or the relevant maintenance contractor.

11.       Shell did not have a maintenance schedule in respect of the fuel equipment, but arranged maintenance as and when notified of the need for maintenance work.

12.       The maintenance requests logged by Shell from Lochert for the fuel equipment are as stated in the spreadsheet of call centre case note records attached to the letter from Tanya Astbury, The Shell Company of Australia Limited, to Vic Gaffney, EPA, dated 30 July 2009, a copy of which is to be tendered in evidence.

13.       There was an arrangement between Lochert and Shell, pursuant to which Shell was the sole supplier of diesel fuel to the tank.

14.       Shell drivers deposited fuel into the tank when they passed by, at least once a week, so that Lochert had sufficient fuel for operational purposes.

15.       After completing the delivery, the driver would hand-deliver an invoice for the cost of the diesel fuel to the receptionist at Lochert’s office.

16.       As soon as diesel was deposited into the tank, Lochert became the owner of it.

17.       Lochert used the diesel fuel, on a day to day basis, for its vehicles and transport fleet.

18.       Lochert maintained records of diesel fuel usage from the bowser.

19.       This information would subsequently be included in an Excel spreadsheet, and this sheet would be used to provide a reconciliation of fuel usage for each vehicle.  The fuel usage would also be reconciled against records of opening fuel stock, closing fuel stock and what was delivered by Shell.

20.       On about 20 October 2006, on the compilation of a fuel stock reconciliation, Lochert became aware of large unexplained fuel discrepancies.

21.       Lochert decided, given the apparent unexplained fuel discrepancies, to conduct another reconciliation a month later, on about 20 November 2006.

22.       A reconciliation for the period from mid-October to mid-November was completed on 20 November 2006.

23.       Up until this point, Lochert had been relying on Shell’s invoices as being an accurate record of diesel deliveries, and had not independently verified the amounts of diesel that Shell was delivering to its tank.

24.       Lochert believed that either the diesel was not being delivered to its tank as claimed or that it was being stolen by Shell employees or others.

25.       From about 20 November 2006, to 5 December 2006, Lochert implemented security measures to prevent any further losses by what it had suspected was theft.  These included:

a.         On 23 November 2006, Lochert reported to the local police that diesel was being stolen;

b.         Shortly after this date, Lochert engaged Riverland Security to install surveillance cameras, and then using surveillance video to monitor the tank;

c.         On 27 and 28 November 2006, a facsimile from Robert Lochert to Shell Australia, dated 27 November 2006, was sent regarding a new fuel delivery arrangement, a copy of this facsimile together with a copy of a facsimile from Nicholas Baker to Michelle Saavedra dated 28 November 2006, is to be tendered in evidence;

d.         On about 27 November 2006, Lochert changed the process for fuel delivery, which involved Shell handing back the keys it held to access the fuel equipment, changing the locks on the equipment so that Shell drivers could no longer access it independently and an employee of Lochert being present when a Shell driver delivered fuel.  The Lochert employee held the keys to access the equipment, and would check the fuel dips taken by the driver before and after the delivery of fuel, and check the reading on the delivery truck.  The Lochert employee would then sign the fuel delivery sheet, and the time of delivery would be recorded;

e.         On or about 27 November 2006, Lochert obtained a recalibrated dipstick;

f.          On 1 December 2006 Lochert installed a sensor light near the bowser to illuminate the area during the night in the event someone approached it.

26.       On 5 December 2006, a Lochert employee, Mr Schiller, dug by the bowser and discovered a leak from the underground pipe which connected the diesel tank to the bowser pump.

27.       Mr Schiller dug dirt away from the pipe, exposed the pipe and saw a constant stream of diesel fuel running out of a hole in the pipe.

28.       The hole in the pipe was about a quarter inch in diameter.

29.       Mr Schiller made temporary repairs to the pipe by wrapping it with some rubber and cloth.

30.       Mr Schiller informed senior management at Lochert about the leak, and Lochert contacted Shell to request that it arrange for maintenance work to be carried out to repair the leaking pipe.

31.       When Shell was notified of the leak, it made arrangements for maintenance work to be conducted to repair the pipe.

32.       Shell arranged for a contractor, Gilbarco, to attend and repair the leaking pipe.

33.       The pipe was repaired by Gilbarco on 7 December 2006.

34.       Between 19 July 2006 and 5 December 2006 approximately 57,880 litres of diesel fuel leaked from a hole in the underground pipe into the surrounding soil.

35.       The reasonable costs and expenses that would be incurred in taking all reasonable and practicable measures to mitigate the environmental harm from the leaked diesel fuel and to make good resulting damage exceed $50,000.

36.       The pollution caused both potential and actual environmental harm as defined in the EP Act.

37.       The pollution caused is serious environmental harm for the purposes of the EP Act.

4                Two witnesses gave oral evidence in the prosecutor’s case:  Mr Baker, the Chief Financial Officer of Lochert, and Mr Schiller, the Maintenance Supervisor of Lochert. 

Mr Baker’s evidence

5                Mr Baker gave evidence that he began working at Lochert on 9 October 2006.  Mr Baker said that, in 2006, Lochert’s business was principally that of a citrus processor, packer and marketer.  However, as an adjunct to those activities, Lochert conducted a transport business which comprised a fleet of 7 semi-trailers.  This transport business supported the citrus business by bringing fruit from growers to the Lochert site and by delivering picked fruit to market in Adelaide and to Port Adelaide for export.  The transport business also provided a general freight service to the market separate from the citrus business.

6                Mr Baker said that he became aware of the arrangements at Lochert for the refuelling of the semi-trailers with diesel quite early in his employment with Lochert.  Mr Baker’s description of those arrangements was consistent with the facts set out in the Statement of Agreed Facts.

7                Mr Baker said that the diesel tank on the land at 15 Virgo Road, Ramco (“the land”) had a capacity of 13,000 litres.  The tank had a dipstick attached to a bung on the top of the tank.  The dipstick measured the amount of diesel in the tank at any given time, in litres.  When delivering diesel to the Lochert tank, a Shell tanker driver would first use the dipstick in the tank and record the level of diesel in the tank prior to the topping up of the tank on a delivery docket.  The driver would then pump into the tank the quantity of diesel the driver was required to deliver.  The bowser was padlocked, and the Shell drivers had a key to the padlock.  The delivery tanker meter would indicate to the driver the quantity being pumped from the tanker into the tank.  After pumping diesel into the Lochert tank, the driver would again use the tank dipstick and record the post delivery reading on the delivery docket.[3]

8                Each month, the delivery dockets would be summarised in a tax invoice from Shell to Lochert, requiring payment.[4]

9                In addition to the diesel tank, Lochert had an on-site underground petrol tank to which Shell would deliver unleaded petrol from time to time.  These deliveries were also recorded on the delivery dockets and billed via the tax invoices.

10             Employees of Lochert who required access to diesel were issued a key to the bowser padlock.  They were required to record the quantity of diesel taken by them from the tank, the registration number of the vehicle and the name, by writing on a sheet kept next to the bowser.  Lochert used the records generated in relation to the consumption of diesel for the making of claims to the Commonwealth diesel fuel grant scheme, among other things.  Pursuant to that scheme, the Commonwealth Government provides a rebate, calculated in cents per litre, in relation to heavy vehicles using diesel.  Claims against this scheme were made by Lochert via its business activity statements through the Australian Taxation Office.  Lochert had an internal accounting system for the quarterly reconciliation of diesel delivered with diesel consumed, which Mr Baker described in some detail.  The first quarterly reconciliation after Mr Baker commenced his employment with Lochert occurred on or about 20 October 2006.  That reconciliation also used the figures obtained by Mr Schiller, who took a reading of the quantity of diesel in the tank, using the dipstick, every month.

11             The reconciliation of diesel stock undertaken on or about 20 October 2006 showed a shortfall of approximately twelve and a half thousand litres of diesel (nearly an entire tankful).  In response to that, Mr Baker said that he and Mr David White, the former company accountant of Lochert, physically inspected the diesel tank.  Mr Baker saw a spattering of diesel near the bowser, but saw no evidence of a leak.  Mr Baker was informed that Shell had recalibrated the bowser some months before, and the theory was discussed among Mr Baker, Mr White and Mr Morton (then the CEO of Lochert) that the recalibration may have been performed inaccurately, leading to the discrepancy in the reconciliation.  They agreed to perform a further reconciliation in one month, rather than waiting for the next quarter.  The next reconciliation occurred between 20 and 22 November 2006.  It showed a shortfall of approximately 17,000 litres of diesel for the month.  The response to this further shortfall was a further superficial inspection of the tank.  Nothing untoward was detected.  A theory that diesel was being stolen emerged, and the police were notified on 23 November 2006.  Lochert engaged a security firm, and that firm installed two surveillance cameras on about 26 November 2006.  On Friday, 1 December 2006, a light was installed so that the video recordings made by the cameras at night could be more useful.

12             Lochert also communicated with Shell concerning the diesel shortfall.  The first communication was a telephone call by either Mr Baker or Mr Lochert on 24 November 2006.  Mr Baker then sent a fax on 27 November 2006 to Shell[5] advising that Lochert had detected “some anomalies in our fuel stock records during October 2006 (November under investigation”) and setting out a new procedure whereby Shell drivers would have to obtain the key to new padlocks on the diesel bowser from the Lochert officer whenever they delivered diesel and a Lochert staff member would oversee the dipstick readings and recordings.

13             Lochert also began recording the time of day at which fuel was taken from or delivered to the tank and instituted a system of checking the diesel stock by undertaking more frequent dipstick readings.

Mr Schiller’s evidence

14             Mr Schiller said, in evidence, that he has been employed at Lochert since 1999.  By 2006, he was the maintenance supervisor with responsibility for the maintenance of the packing plant and other equipment associated with the packing company.  Mr Schiller was not required to undertake any maintenance with respect to the diesel tank, but was required to take dipstick readings from the diesel tank from time to time.  Mr Schiller would also fuel vehicles such as forklifts from the diesel bowser from time to time.

15             Mr Schiller gave evidence that he was involved in the installation of the security lighting installed near the diesel bowser on Friday, 1 December 2006.  Mr Schiller dug the trench for the wiring for the security lighting.  That trench extended out from the bowser at an angle.  After the weekend following the installation of the security lighting, Mr Schiller was informed that more diesel had gone missing from the tank over the weekend.  On his own initiative, Mr Schiller did some digging near the bowser and found the pipe which went from the diesel tank to the bowser about “a foot” under the ground.  Mr Schiller observed a hole in the side of the pipe with fuel running out of it into the ground.  He stopped the leak by wrapping some rubber and cloth around the pipe, and alerted management.

16             It was Mr Schiller’e evidence that, when he dug the trench for the security light wiring, he had not seen or smelled anything which made him suspect that there was a leak, notwithstanding that the trench for the wiring was about “a foot” from the leak.

After the leak was detected

17             It was Mr Baker’s evidence that, following the detection of the leak, a detailed analysis of the diesel delivered and used from April 2006 to December 2006 was undertaken.  The analysis resulted in the deduction that approximately 60,000 litres of diesel had leaked from the pipe between the beginning of July and 5 December 2006.  The dollar value of 60,000 litres of fuel at the relevant time was calculated to be $74,100.[6]  I note that the agreed quantity in the Agreed Statement of Facts is 57,880 litres.

18             It is an agreed fact that the diesel tank, the diesel bowser and the pipe connecting the two (the diesel equipment) were all the property of Shell.  I find that Shell loaned the equipment to Lochert as part of the arrangement between the two entities.[7]  It is also an agreed fact that Lochert was the owner and occupier of the land upon which the diesel equipment were installed.  Once the diesel entered the diesel tank from the Shell tanker, it became the property of Lochert.

19             No documentary evidence was provided regarding the arrangements between Lochert and Shell for the maintenance of the diesel equipment.  The following exchange occurred in the cross-examination of Mr Baker by Mr Barclay:

Q                                 There was no arrangement between Lochert and Shell whereby you were responsible to repair the fuel equipment.

A                                 That’s correct.

Q                                 Nor could you have as you didn’t have any experience in the running or management of fuel equipment.

A                                 That’s correct.

Q                                 You had no ability to be able to replace a pipe, for example, on the fuel equipment.

A                                 That’s true.

Q                                 The arrangement was that you would ring Shell if there was a problem with the fuel equipment and Shell would come and fix their equipment.

A                                 Yes, that’s true.  Shell would arrange, as I understand it, for their contractor to come and do that.

Q                                 That was a company called Gilbarco.

A                                 Yes.

Q                                 You received no education about how to maintain that fuel equipment from Shell.

A                                 I certainly received none and as far as I’m aware the company received none.

Q                                 That’s what I mean, not so much you, but Lochert Bros never received any education about how to maintain the fuel equipment.

A                                 Not as far as I’m aware.

Q                                 There was never any advice given by Shell to Lochert Bros about how to maintain the fuel equipment that belonged to them.

A                                 Not as far as I’m aware.

Q                                 And that’s because they were responsible for the maintenance of that equipment.  Is that right.

A                                 That’s correct, that’s as I understand it.

20             An interview of Mr White, who was employed by Lochert as an accountant until mid-August 2006, by two EPA officers, was tendered in evidence by consent.  Mr White said that some minor maintenance of the diesel bowser would be performed by Lochert’s “maintenance block” from time to time.

21             I accept the evidence of Mr Baker, Mr Schiller and all of the evidence tendered by agreement including that of Mr White.

Section 4

22             Section 4 of the Act is quoted above.  It was argued on behalf of the defendant, Lochert, that s 4 removes the need for the prosecution to prove causation.  All the prosecution needs to do is prove that the defendant is “the occupier or person in charge of a place or vehicle” and that the pollutant has escaped, been discharged, emitted or deposited from that place or vehicle, and s 4 then deems that person to have caused the pollution for the purposes of the Act.  I agree that this is the effect of s 4.

23             It was further argued on behalf of Lochert that s 4 should be construed narrowly.  I agree with that proposition also.

24             The words “place” and “land” are defined in s 3 of the Act as follows:

“place” includes any land, water, premises or structure.

“land” means, according to context –

(a)       land as a physical entity, including land covered with water; or

(b)       any legal estate or interest in, or right in respect of, land.”

25             It was submitted on behalf of Lochert that, on the facts in this matter, the pollutant escaped from a “place” which is a structure (referring to the definition), namely the underground pipe which connected the diesel tank to the bowser.  The next question to be answered, it was submitted, is who is “the occupier or person in charge” of that pipe?

26             The Act provides, in s 3:

“occupier”, in relation to a place, includes a person with a right to occupy the place or a licence or any holder of a right to use or carry on operations at the place, but does not include a mortgagee in possession unless the mortgagee assumes active management of the place.

27             It was argued that this definition is inclusive but not exhaustive.  It was argued that, in order to be “an occupier or person in charge of a place” it is not necessary to have an interest in land.  It was argued that, as the entity with the sole right to deliver diesel to the tank, Shell had “a right to use or carry on operations at the place”;  the place being the pipe or the diesel equipment.  It was argued that whilst the diesel equipment owned by Shell occupied physical space on the land, it did so to the exclusion of Lochert’s rights of occupation.

28             The defendant’s submissions on this topic sought to persuade me that Shell was the exclusive occupier or person in charge of the pipe, specifically to the exclusion of Lochert, and that the pipe was the “place” from which the pollutant escaped or was discharged, emitted or deposited.

29             I reject the defendant’s contention that Shell was the exclusive “occupier or person in charge of a place … from which a pollutant escapes …”  Lochert was the owner and occupier of the land upon which the diesel equipment was installed.  The fact that equipment belonging to Shell was installed on that land did not derogate in any way from Lochert’s rights as owner and occupier.  In my opinion, the pipe was part of the land occupied by Lochert.  As the occupier of that land, Lochert is caught by s 4.

30             If,  however, the pipe is a “structure” for the purpose of the definition of “place”, then I would determine that Lochert was a person in charge of that pipe within the meaning of s 4 of the Act.  (Shell may also have been such a person).  This is demonstrated by the undisputed fact that it was Lochert’s obligation to identify any need for repair or maintenance and to initiate repairs and maintenance by communicating with Shell.  Lochert used all of the diesel equipment, including the pipe, on a daily basis, and exercised control over it by, for example, padlocking the bowser.  Further, Lochert, through Mr Schiller, actually identified and stopped the leak.  It could not reasonably be argued that Mr Schiller’s action in wrapping the pipe in rubber and cloth was done in contravention of any exclusive right belonging to Shell.  It should also be borne in mind that Lochert owned the diesel in the pipe.

31             Lochert was, at the relevant time, “the occupier or person in charge of a place … at which or from which a pollutant” escaped within the meaning of s 4 of the Act.

The Elements of the Offence

32             Section 79 of the Act is quoted above.  Lochert has been charged with an offence against s 79(2).  In contrast to s 79(1), s 79(2) does not require proof of a mental state.  It is an absolute offence.  I find that the land at 15 Virgo Road, Ramco was polluted by the escape into the land of 57,880 litres of diesel fuel.  The Act, in s 5, defines “serious environmental harm” to include environmental harm which:

“results in actual or potential loss or property damage of an amount, or amounts in aggregate, exceeding $50,000.”

33             It is an agreed fact in this matter, and I find, that the pollution caused by the diesel leak is serious environmental harm within the meaning of the Act.

34             I have determined that Lochert, as the occupier of the land is a person who has polluted the environment pursuant to s 4 of the Act.

35             The prosecution has proven all of the elements of the offence charged beyond a reasonable doubt.

Section 124

36             Section 124 of the Act is quoted above.  The defendant argued that a defence under s 124(1) has been made out.  In order to make out a defence pursuant to s 124(1), the defence must prove on the balance of probabilities that the alleged contravention of the Act:

“did not result from any failure on the defendant’s part to take all reasonable and practical measures to prevent the contravention or contraventions of the same or a similar nature”.

37             Mr Barclay argued that there could be no hard and fast test of what constitutes “all reasonable and practical measures”, but that this must be assessed in context.  I agree.  Mr Barclay pointed out that s 124(1) speaks of “reasonable and practical measures to prevent the contravention …”  It does not address itself to the time after the contravention.  I agree.  However, in this context, s 124(1) addresses itself to the time before the leak and the period from July to 5 December during which the diesel must have been constantly leaking.  Mr Barclay, in summary, argued that the measures taken by Lochert in the present context consisted “all reasonable and practical measures”.  Those measures were the move to monthly and then daily diesel stock reconciliations, the report to the police, the visual inspections of the diesel equipment, the installation of security cameras and a light and the tightening up of access to the fuel and record-keeping, together with the reporting of the loss of the diesel to Shell in the telephone call of 24 November 2006 and the fax of 27 November 2006.  Mr Barclay argued that it was Shell’s equipment, Shell was the diesel expert, and any regular maintenance program which was required should have been initiated by Shell.  Mr Barclay argued that Lochert could not be expected to know that diesel sinks in soil rather than rising to the surface and said that Shell had not offered any education to Lochert about what routine maintenance was required or how diesel behaves.

38             Mr Barclay accepted that the arrangement between Shell and Lochert was that Lochert was to initiate all repair and maintenance of the diesel equipment, and Shell was to undertake it.

39             Mr Jacobi argued that, as a company whose business activities included the operation of a fleet of prime movers which involved the acquisition and storage of a large quantity of valuable diesel, other measures would, in all the circumstances, have been reasonable and practicable.  Mr Jacobi argued that Lochert should have undertaken more reconciliations (which, he pointed out, involved a simple arithmetic calculation) more frequently than quarterly as a matter of course at all times and certainly more frequently as soon as the discrepancy was discovered.  Mr Jacobi argued that the performance of a diesel stock reconciliation over the course of a single daytime period, during which theft could have been excluded as a cause, would have been a reasonable and practical measure.  Mr Jacobi argued that Lochert could have informed Shell of the magnitude of the discrepancy months earlier than it did, and could have sought Shell’s assistance in identifying a cause.  Finally, Mr Jacobi argued, a more thorough examination of the diesel equipment than the superficial observation of it by Mr Baker and Mr Morton and other employees of Lochert could have taken place.  The assistance of the company who installed the diesel equipment (Gilbarco) could have been sought.

40             The pollution of the land by the leaking diesel began in July 2006 and continued until 5 December 2006.  Diesel was leaking into the ground during that entire period of time.  The capacity of the tank was 13,000 litres, and the quarterly reconciliation in October 2006 showed that about 12,500 litres was missing over the quarter  -  nearly an entire tankful.  It seems to me that at that stage, and at all subsequent stages, Lochert should have been more active in addressing the issue and more conscious of the possibility of a diesel leak causing environmental harm.  Quite simple reasonable and practical measures, as outlined by Mr Jacobi, were readily available to Lochert at that stage which would have prevented the continued leaking.  The sheer magnitude of the diesel being lost should have called into question the theory of theft.  Lochert fell below the standard of diligence expected of a company in its position.

41             I do not consider that the defence pursuant to s 124(1) of the Act is available to Lochert on the evidence.  On the evidence, serious environmental harm from pollution resulted from the failure of Lochert to undertake reasonable and practical measures to prevent the leaking of diesel from the diesel equipment.

Summary and conclusion

42             The prosecution has proven the commission of the offence against s 79(2) of the Act by Lochert as charged beyond a reasonable doubt.  The defence has failed to make out a defence pursuant to s 124(1).  I find Lochert Bros Pty Ltd guilty of the offence against s 79(2) of the Act.