The owners of Bay of Plenty dairy farm face a hefty fine after admitting illegally discharging effluent from a storage pond which ended up flowing into a nearby stream.

Hedley Farms Ltd was due to be sentenced in the Environment Court at Tauranga on Monday in relation to a charge of discharging a contaminant into or on to land where it may enter a waterway.

The charge attracts a maximum fine of $600,000.

But after hearing lengthy legal arguments from the prosecution and defence lawyers Judge David Kirkpatrick reserved his decision.

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The Bay of Plenty Regional Council prosecution stems from a council officer's routine inspection at the Otara Rd farm south of Ōpōtiki on September 26 last year.

During the visit, the inspector discovered dairy effluent had discharged over the top of a storage pond wall and flowed about 8m over land to the nearby Mill Stream.

Mill Stream flows through the farm and joins the Waioeka River about 3.5km downstream from the discharge point.

Waioeka River is a valuable regional ecosystem area for a variety of indigenous fish species, such as short-finned and long-finned eel, and also a significant trout habitat.

The farm's effluent irrigator was not operating at the time of the inspection.

The council officer asked the farm worker to stop the discharge, and the worker used a front-end loader to create a bund near the end of the storage pond embankment.

When the first council officer and two other council staff investigated further, they also found signs of historical overflows from the pond's low point, the court heard.

The council issued Hedley Farms Ltd with an abatement notice on October 4, 2017.

The regional council's prosecutor Victoria Brewer argued that the effluent discharge was the result of "recklessness" on the part of the defendant.

Brewer also told Judge David Kirkpatrick that this was not just a "one-off" discharge incident as there had been early compliance issues at the farm.

A starting point for sentence must be a fine of $60,000 given the gravity of the offending and in light of previous compliance issues before discounts for any mitigating factors.

Hedley Farms lawyer Neil Beadle argued the council's starting point was a "stretch too far" and described the offending as "accident' which had resulted from carelessness.

Beadle pointed out that the farm owners had been absent from the property when the September 26 discharge took place and they took significant remedial steps.