Drew James May 7 2003 Defendants Escape Penalty for Oil Discharge HWL Ebsworth Lawyers | Shipping & Transport - Australia Drew James Shipping & Transport Facts Decision Penalty Costs In Anthony Patrick Morrison v Harold Anthony Peacock and Anthony Patrick Morrison v Roslyndale Shipping Company Pty Ltd(1) the defendants, the ship's master and shipowner, were each charged with an offence against the Marine Pollution Act 1987. The charges alleged that on December 1 1996, in the lagoon at Lord Howe Island, a discharge of oil occurred from the ship Sitka II into New South Wales waters in breach of Section 8(1) of the act. FactsOn December 1 1996 the Sitka II was moored at the jetty at Lord Howe Island. It was unloading a cargo of road base bags and was thus utilizing a crane that was situated on the ship. The crane was standing on a plinth and a hydraulic hose fitted to the crane ruptured, causing hydraulic oil to discharge under pressure. About 15 litres of oil escaped. Most of it ran onto the deck of the ship, but about five litres of oil escaped over the ship's side into the water. The first mate shut down the hydraulic pump and the authorities were notified. A clean-up operation was carried out under the auspices of the Marine Administration Board at Lord Howe Island, and the five litres of spill was cleaned up in approximately two hours.DecisionThe case progressed unusually. The defendants initially pleaded not guilty and the trial took place over three days in December 1998 and three days in May 1999. On August 6 1999 Justice Pearlman delivered the judgment of the court. The defendants had relied on the statutory defence set out in Section 8(2)(b) of the Marine Pollution Act (as it then stood). This provided that Section 8(1) (under which the defendants were charged) does not apply to the discharge of oil or an oily mixture from a ship: "8(2)(b) if the oil or oily mixture, as the case may be, escaped from the ship in consequence of damage, other than intentional damage, to the ship or its equipment, and all reasonable precautions were taken after the occurrence of the damage or the discovery of the discharge for the purpose of preventing or minimizing the escape of oil or oily mixture, as the case may be."A crucial issue of public importance was raised by the case: whether the word 'damage' in Section 8(2)(b) includes fair wear and tear. After referring to previous decisions of the Land and Environment Court, Pearlman decided that the word 'damage' includes fair wear and tear. She thus held that the defendants had made out their defence. The prosecutor then asked Pearlman to state a case to the Court of Criminal Appeal. The Court of Criminal Appeal delivered its judgment on October 30 2000, in which it answered the questions raised in the stated case by upholding Pearlman's decision and, in particular, by adopting the construction of the word 'damage' preferred by Pearlman.On August 10 2001 the prosecutor applied for special leave to appeal to the High Court. Special leave was granted and the matter came before the High Court on April 9 2002. The judgment of the High Court was delivered on October 9 2002. The High Court answered the question differently to Pearlman and the Court of Criminal Appeal, holding that: "In that section 'damage' means a sudden change in the condition of the ship or its equipment that was the instantaneous consequence of some event where the event was external or internal to the ship or its equipment."PenaltyIn light of the judgment of the High Court the defendants withdrew their defence and entered guilty pleas. Therefore, the only matters for the court's consideration were questions of the appropriate penalty and costs. The defendants each made an application under Section 10 of the Crimes (Sentencing Procedure) Act 1999. They also submitted that no order should be made as to the costs of the proceedings in the Land and Environment Court. Section 10 of the Crimes (Sentencing Procedure) Act 1999 relevantly provides as follows: "10(1) Without proceeding to conviction, a court that finds a person guilty of an offence may make either of the following orders: (a) an order directing that the relevant charge be dismissed... (3) In deciding whether to make an order referred to in Subsection (1), the court is to have regard to the following factors: (a) the person's character, antecedents, age, health and mental condition; (b) the trivial nature of the offence; (c) the extenuating circumstances in which the offence was committed; (d) any other matter that the court thinks proper to consider." Pearlman did not consider that the offence of discharging polluting material into water was of a trivial nature, but she took into account that the offence was minor in the circumstances. She then found that there were extenuating circumstances. First, the shipowner had engaged experts in Australia to carry out work on the crane, experts in Auckland to assemble and fit it, and an expert from Bureau Veritas to test its operation, and the master knew it had done so. It was reasonable in those circumstances for both the defendants to believe that the crane and its components would operate without mishap. Second, the crane was installed only six months prior to the incident and had been used during that period without damage. There was evidence showing that it had been used for a period of approximately 60 hours without mishap. Further, visual inspection of the hoses at the point where the hose ruptured was physically possible only by using a torch and by peering up into the plinth. Even then it was not certain to reveal the abrasion and chafing of the one hose which led to the actual rupture because eight hoses were located in that position. Pearlman made a positive finding of fact that the defendants had no actual knowledge that the hose would probably rupture when the crane was being used, as well as reason to believe that no such thing would occur. Neither of the defendants could have done anything to avert the event that occurred. That event was the rupture of the hose at the base where the steel casing entered the plinth. This was not a case of want of precaution or any other omissions on the part of either the master or the owner. They did what had to be done in relation to the installation and operation of the crane. They could not have been under any notion that it would not operate as it was expected to do. Third, she took into account the master's antecedents. He was at sea from 1978 to 1992. He then spent four years managing a stevedoring operation offshore and in 1996 became the master of the Sitka II. He had no prior convictions for any marine pollution offences. Nor did the other defendant, the owner of the ship. For all those reasons Pearlman thought it appropriate to apply Section 10 in relation to both defendants. CostsPearlman then turned to the question of costs. When the High Court granted special leave to the prosecution to appeal, it did so on the condition that the prosecutor would pay the costs of the defendants in the Court of Criminal Appeal and in the High Court. That was not a surprising condition, considering that the reason that the High Court granted special leave depended upon the broad public interest in the question of law that was at stake. Pearlman held that the reality of the case was that the defendants made out their defence. They made it out in circumstances where the High Court has ultimately said that it could not stand because it was based on a wrong interpretation of the law. But the defendants did not come to the court with a defence based on any wild or unarguable interpretation of the law. There were two other decisions in the court which came to the same conclusion that Pearlman had reached. Ultimately that conclusion was supported by three judges of the Court of Criminal Appeal. Even though it was wrong and the defence could not be sustained, it was appropriate that those circumstances be taken into account. Accordingly, she held that the court should make no order as to costs. For further information on this topic please contact Drew James at Ebsworth & Ebsworth by telephone (+61 2 9234 2366) or by fax (+61 2 9235 3606) or by email ([email protected]). Endnotes(1) Land and Environment Court of New South Wales, March 4 2003, Justice Pearlman.