Fonterra has been found guilty for its role in a buttermilk stink scandal in the Taranaki town of Eltham.
The dairy company has been on trial in the Environment Court in New Plymouth this week over the stench, caused by discharging millions of litres of buttermilk at Eltham's wastewater plant in October 2013.
A foul smell plagued the town for several months afterwards and many residents complained about its detrimental effects on their health.
The Taranaki Regional Council laid a representative charge of discharging odorous compounds, covering the period 3 March to 16 May 2014, under the Resource Management Act.
In November last year, the South Taranaki District Council was fined $115,000 after admitting a similar charge over its role in the incident.
In his judgment, Judge Brian Dwyer said Fonterra's decision to dump "a monumental volume of a potentially odour-causing material into a disused pond" was a significant factor, and perhaps the most significant contributing factor, in the stench.
Judge Dwyer said the dairy company could not put all of the blame onto the district council, which runs the plant.
Fonterra will be sentenced on 3 August.
Dispute over responsibility
The court heard that Fonterra asked the South Taranaki District Council to help it dispose of eight million litres of excess milk in September 2013.
It then arranged a subsequent dumping, of three million litres of buttermilk waste and 150,000 litres of milk contaminated with oil waste, in the covered pond at the town's wastewater plant between 2 and 28 October.
The discharge was cut short as complaints about odour had already begun.
Fonterra's defence this week has relied primarily on the position that the district council was responsible for how the waste was handled once it accepted it.
The company's environment team leader at Whareroa, Michelle Dwyer, told the court that she had confidence that the district council had sought the right expert advice, and that it had the expertise to take the waste.
But Judge Dwyer found that, considering the amount and nature of the waste, Fonterra had done the bare minimum to check that the buttermilk would be handled properly.
"It would have been reasonably prudent to make some inquiry into the process."
Fonterra did not get its in-house experts to check over the district council's disposal plans before discharging the waste and did not do basic checks at the pond itself.
This meant the buttermilk discharge started while the pond's cover had holes in it and before the installation of a new circulation pump.
Judge Dwyer said there was nothing in the arrangement with the South Taranaki District Council that indicated it would take full responsibility for any potential odour from the buttermilk.
The decision to dump the waste at the plant in Eltham has already been a costly one for Fonterra and the district council.
The South Taranaki District Council was paid $33,000 for accepting the buttermilk but is now in the process of decommissioning the plant, at a cost of about $260,000.
Fonterra, meanwhile, has already paid more than $500,000 to help the council clean up the mess caused by dumping the buttermilk.