Defendant's evidence
13Mr M Shume of counsel, who appeared for the defendant, read an affidavit of Mr Mark Diacono, who is the Operations Manager for the defendant. He was required for cross-examination.
14Mr Diacono detailed the defendant's operation and history. The defendant was first established in 1984. At the time of the incident, the defendant employed 13 persons. He also set out his background and qualifications.
15Mr Diacono's evidence was that the defendant had an 80 tonne Hydraulic Press ("the 80 tonne Press") and the Koitec KS 150 Power Press.
16The Press was purchased second hand from a company in Melbourne in the State of Victoria. He installed the Press and in the process became aware that there was a need for a number of sensors to be installed into the Press so that it could work safely producing parts automatically. These included an input sensor; an output sensor; two ejection cylinders and two lift cylinders. He arranged for an organisation known as the Press Shop Automation to attend the site to install a de-coiler.
17At the time that the Press was installed, it did not have any of the sensors referred to above, nor did it have a safety fence around the Press. An electrician was commissioned to install the safety circuitry of the safety fence which surrounded and was connected to the automated Press. The safety fence had two Trojan interlock safety switches installed on two gates. By the time the defendant had completed commissioning of the Press, Mr Diacono was satisfied that standard parts could be made without an operator having to stand inside the safety fence.
18Mr Diacono explained how the Press operated and what he described as the "cutting of blanks". The Press removed the need to purchase blanks for the production of standard parts. The defendant purchased pre-cut blanks from external suppliers for the production of all specials that were produced on the 80 tonne Press.
19In or around late 2005 and June 2006, Mr Diacono was asked by the Director of the defendant, Mr Stephen John Eddowes, whether it was possible to cut the blanks on the Press, instead of purchasing pre-cut blanks for the production of specials on the 80 tonne Press.
20Initially, Mr Diacono cut blanks on the Press in manual mode. He subsequently trained Mr Zohab in the process of cutting blanks.
21Mr Zohab worked from inside the safety fence, using a pendant control to manually feed in the lengths of metal into the rear of the die set of the Press. Once the galvanised coil was fed into the rear of the die set, the guillotine part of the die would cut the blank, which would then be removed manually. The Press could not cycle while ever there was a blank in position, as it was necessary for a new length of galvanised coil to be fed in, and this could only be achieved by using the pendant control in "jog to length mode".
22Mr Diacono investigated and identified how he could automate the cutting of blanks. This occurred on or around June 2006.
23Mr Diacono gave evidence in respect of the production of parts by the respective presses which was controlled by Mr Gilbert Baillache, the Operations Manager. He would complete a document known as the Daily Production Sheets on a daily basis. This document identified each of the machines used to make parts on the factory floor. Mr Diacono analysed the Production Sheets for the work carried out on the 6, 8, 9, 20 and 21 March 2007, including one additional undated sheet. His conclusion was that based on the production records for 6, 8 and 9 March 2007, it was not possible for Mr Zohab to have modified the Press in the manner required to produce item 8013 on the Press prior to the day of the incident. In his opinion, Mr Zohab did not make 8013 900 open items on the Press prior to the date of the incident. This was because he said the modifications to the Press would have prevented any standard parts from being ejected. The modification prevented the Press from being operated automatically.
24Mr Diacono said that the company purchased what was known as a spare tongue actuator for use on the Press. This device allowed the Press to be operated so that the blades of the guillotine within the die were properly aligned. Prior to the use of the actuator, guillotine blades had been damaged while being aligned from outside the safety fence. Mr Diacono, initially, was the only person allowed to use the actuator. When it was not used, it was kept in a drawer in his desk. Mr Zohab was permitted to use the actuator after he completed his training to change the tooling on the Press. On two occasions, he saw that the actuator had been removed from his desk and was on the safety fence. On each occasion, he spoke with Mr Baillache and told him the practice was not allowed and was not to continue. Mr Baillache addressed the workforce immediately and advised them that they were not permitted to use the actuator.
25Mr Zohab commenced employment with the defendant on 7 July 2006 as a general hand. He subsequently became the main operator of the Press. Mr Diacono detailed the training which was provided to Mr Zohab. This included training on safety using the Press from outside the safety fence, training on using the spare tongue actuator and training in setting cylinders and how to set the tool for cutting blanks both in manual and automatic mode. Mr Zohab was also trained in carrying out risk assessments on the Press. This included completion of the "Total Preventative Maintenance ("TPM") sheets" which was conducted every fortnight. Examples of TPM sheets completed by Mr Zohab were annexed to the affidavit.
26As part of the instructions provided to Mr Zohab, it was made clear to him that he was to contact Mr Diacono regarding any maintenance on the Press, or if he had any concerns in relation to how the Press was operating. He formed the view that Mr Zohab was a very good technician who had the ability to solve problems. During the commissioning of the press, Mr Diacono developed and implemented a number of Standard Operating Procedures ("SOPs") in relation to the Press. These procedures were:
The Safe Loading of Coil onto De-coiler/Straightener;
Standard Operating Procedure 150 tonne Uncoiler/Straightener;
Standard Operating Procedure 150 ton press Die Changes and Set Ups; and
Standard Operating Procedure 150 ton press.
27These procedures were used in the training of workers, including Mr Zohab and were displayed at the front of the Press above the Control Panel. In addition to training in respect of the machine, Mr Zohab received an induction when he commenced with the defendant, including risk assessments, SOPs and maintenance checklists, participation and training provided during toolbox sessions and on the job training in relation to a number of different machines.
28Mr Diacono stated that the Press was also fitted with a sign which warned operators not to place themselves between the dies and not to operate the Press until proper point co-operation guards on safety devices had been provided.
29Mr Diacono's evidence was that on 29 March 2007, Mr Zohab was operating the Press and manufacturing open end steel channel pieces that were to be used for shelf supports. The specifications of these channel pieces were not standard and could not be made on the Press using its normal tooling in automatic operation. His evidence was that the modifications made to the Press were not known to management, or himself, until after the incident. They were not authorised and could only have occurred in the hours immediately prior to the incident. He was informed by one of the floor employees that Mr Zohab had requested that certain reo bars be welded to the machine. The modifications enabled the Press to be operated with the interlocked safety gate open. The practical effect of the modifications was that the safety systems were overridden.
30Mr Diacono's evidence was that the majority of the modifications were made by Mr Zohab on the morning of the incident.
31Mr Diacono stated that as Mr Zohab was a trained operator, he needed little supervision. He said the modifications that Mr Zohab made to the Press were so out of character, they were not possible to predict. He said he basically broke every safety rule that he had been taught.
32Mr Vanatubucala Cakacakatale was the workshop floor supervisor. He spent the majority of his time on the workshop floor. Mr Baillache walked the floor on an hourly basis. However, on the morning of the incident, he was unable to walk the floor. Mr Diacono said it would not have been unusual for a supervisor to see Mr Zohab on the inside of the fence. His job required him to change die tooling and coils. However, he acknowledged it would have been unusual for the Press to be operated from inside the safety fence.
33Mr Diacono detailed the steps taken following the incident. This included workers being retrained in the operation of the Press, including the requirement only to operate the Press from outside the perimeter safety fence. A memorandum was also sent to all staff reiterating the requirements for the operation of the Press, including a reminder that modifications to safety devices were not permitted. A copy of the memorandum was annexed to the affidavit.
34On the advice of WorkCover, a pendant control was attached to the perimeter fence so that it could not be used to operate the Press from within the safety fence. The spare tongue actuator was allocated to Mr Diacono and he was the only person authorised to use it.
35Mr Diacono set out the systems in place at the time of the incident. His evidence was prior to the incident, in addition to its internal systems, the defendant also relied upon audits conducted by external persons in assessing the development and implementation of its safety system. When the business was purchased in 1998, Mr Eddowes engaged the expertise of external consultants, P J Ellis to undertake an audit of the various plant that formed part of the business at the time. Issues identified in the audit were addressed and rectified.
36After purchasing the business, when Mr Eddowes became aware of the lack of safety systems and processes in the business, he joined the Australian Industry Group ("AIG") to obtain information to support the development of the defendant's safety management systems. He remains a member of that organisation.
37The defendant undertook a further site wide audit and assessment of its safety management systems in September 2006 using a Safety Assessment Checklist provided by, and with the assistance of, AIG.
38Mr Diacono also referred to the information and instruction provided to employees. This included a commitment to maintaining the health and wellbeing of staff and visitors by including health and safety as a consideration in all activities and including and maintaining hazard management systems. A safety policy was developed by Mr Diacono after attending a course at AIG.
39The Safety Policy was supported by other policies, such as tool management and SOPs in respect of welding, grinding and wrapping machines. Site safety rules were also in place for all employees and visitors.
40Mr Diacono detailed the training that was provided to employees, including Mr Zohab. This included induction training, training in relevant standard operating procedures, and refresher training with toolbox talks. On occasions, workers would lead the toolbox talks and take other workers through a risk assessment of the plant discussing the risks and hazards associated with the plant and the controls which were to be used. Risk assessments were also undertaken in relation to various production plant used by the defendant.
41Documented systems of work were also developed and implemented. This included a fortnightly inspection program of plant. A maintenance checklist plan was also performed fortnightly on the Press. Prior to the incident, the checklist was last performed on 13 March 2007 by Mr Zohab with remedial action being required in the form of the replacement of the contractor and timers by Mr Diacono on 19 March 2007.
42In addition, management regularly walked the factory floor, speaking with workers and gaining a first hand knowledge that safety initiatives were being implemented by the workers.
43Mr Diacono gave evidence of the assistance that the defendant provided to Mr Zohab. It endeavoured to assist him in returning to work and made several offers to him. Its commitment to return Mr Zohab to work extended to the purchase of a new high reach forklift which only required minimum movement to operate. However, ultimately, Mr Zohab's rehabilitation officer advised that Mr Zohab would be unlikely to return to work.
44Mr Eddowes kept in contact with Mr Zohab until he was told by Mr Zohab's solicitors not to contact him any further. The defendant continued to pay Mr Zohab until 27 October 2010.
45The defendant continues to have a safety policy and safety management systems in place. SOPs, risk assessments, internal and external safety audits and toolbox talks are conducted on a weekly basis, with the defendant remaining committed to continually training its workforce.
46On behalf of the defendant, Mr Diacono was authorised to express its sincere regret and remorse for the injuries suffered by Mr Zohab, the impact of Mr Zohab's injury on his family, the placing at risk to Mr Zohab's health and safety, and for the breach of the OHS Act.
47Mr Diacono said the defendant's management and staff remain deeply affected by the incident. The defendant accepted its responsibility for the incident.
48Mr Diacono stated that the defendant trades in a manufacturing industry and has come under significant stress in the past three years. The stress arises as a result of the weak demand and the high Australian dollar, which has increased the competition from cheap Chinese imports. In order to compete, the defendant has reduced its price by 25 per cent, reducing profit margins to break even.
49The defendant's tax returns for the years ending 2010 and 2011, were annexed to the affidavit. The defendant made a profit of $33,507 for the year ending 2010. It made a loss of $8747 for the year ending 2011. For the year ending 2012, the defendant is in a break even position.
50Mr Diacono stated that he had spoken to Mr Eddowes specifically regarding the defendant's financial position. The assets of the defendant, if liquidated, were valued at between $200,000 and $400,000. He said the reason he had estimated this range was because the defendant had been attempting to sell two welding machines, which to purchase new, would cost $2M, plus seven wire straighteners that would cost $35,000 each. The only offer it has received over the past 12 months in respect of the sale of this equipment was an offer of $15,000 for the seven wire straighteners.
51The defendant has also been attempting to sell surplus stock for a period of 18 months, without success.
52The defendant, in the past 18 months, has downsized his business and made several people redundant. It reduced production capacity by 50 per cent. Mr Diacono estimated the value of machinery, if it could be sold, would be approximately $50,000 - $100,000. He estimated the value of stock, if it could be sold, to be approximately also $50,000 - $100,000. Current debtors to the defendant are approximately $50,000. However, he said it was unlikely the defendant would be able to recover all of this sum.
53The defendant currently has $50,000 in the bank. It owes $200,000 to suppliers and has employee entitlements and liabilities of $200,000.
54Mr Diacono observed that any significant penalty imposed against the defendant had the real prospect of putting the company out of business. He said Mr Eddowes had a real commitment to keeping the company going and believed over time it would be able to trade its way to a more significant profit.
55During cross-examination, Mr Diacono gave evidence about the size of the factory floor and the location of the Press. It was Mr Diacono's evidence that products characterised as 8013 900, could not be manufactured up until the day of the incident on the Koitec 150 Press. He agreed that this product could have been manufactured on the Press after the modifications were made. It was suggested to Mr Diacono that this product could not have been made on the 80 tonne Press, because it did not have a counter. His evidence was that the 80 tonne Press did not have a coil feed, but it did have a counter. He said there was no counter on the de-coiler on the150 tonne Press, however, it had an electronic counter fitted to it. His evidence was that the reference to "set counter to zero at the start of each coil" could be relevant to both the 80 tonne Press or the Koitec 150 tonne Press, because there is a counter on both.
56Mr Diacono was shown photographs of product which were flat at one end and then cut off at the other end and tubular in the middle and asked whether that was the product that Mr Zohab was making on the day. Mr Diacono's evidence was that this was not the product. He agreed that the product Mr Zohab was making on the day looked like product 8013. Mr Diacono was also questioned about the time that it would have taken to make the modifications to the machine, including the use of welding equipment which would have resulted in noise and sparks occurring.
57His evidence was that he did not ask Tran, the welder, when he carried out the work on the Press. Although he spoke to him after the incident, his evidence was that it had been a traumatic morning and he did not ask him about the modifications to the Press. He agreed that the machine was not being used in accordance with the Australian Standard.
58His said that the business was much the same as a fabrication shop with it not being unusual for grinding and welding to be taking place in the workplace.
59Mr Shume also tendered an extract of the transcript of proceedings of matter No IRC 380 of 2009 (pages 128 - 148). This matter related to a prosecution brought pursuant to s 8(1) by virtue of s 26(1) of the OHS Act against Stephen John Eddowes. Mr Eddowes pleaded not guilty to the breach. The prosecution was ultimately withdrawn.
60The transcript contained the evidence of James Neill Lawson, who was an inspector of WorkCover at the time of the incident. His evidence was that when the machine was set up as it was on the day of the incident, it produced a single-ended piece of equipment. The first demonstration on the Press after the incident produced a double-ended piece of equipment when the Press was running in full automatic mode. His evidence was that the way the machine was set up on the day of the incident was dangerous. He said even an operator with limited experience of a few weeks on the Press would have understood that the way the machine was set up on the day of the incident was obviously dangerous.