Inspector Ken Kumar v David Aylmer Ritchie [2006] NSWIRComm 323 | Case summary

1 Owens Container Services Australia Pty Ltd ("Owens") occupied premises located at the corner of Carnarvon and Newton Streets, Auburn and at that site conducted a business involving the repair, cleaning and storage of shipping containers and tanks. Among the equipment used in this undertaking was a tank wash facility. On 15 January 2003, in operating this business a particular tank was located in the wash bay facility having previously contained resin solution. The task of cleaning that tank had commenced the day before when it was discovered that there was residual resin in the tank requiring further cleaning. On 15 January 2003, an employee of the company, John Howie, used a spray gun to spray an amount of methyl ethyl ketone (MEK) into the tank. MEK was regarded as a highly volatile and highly flammable substance and had been used as a cleaning agent at the site. After spraying the tank for about five minutes with MEK, the tank was left for between 20 to 30 minutes, when Mr Howie returned and decided to use a high pressure water spray gun to attempt to remove the residual resin. Shortly after other employees left the immediate vicinity, an explosion occurred that resulted in Mr Howie being propelled a distance of seven metres from the opening of the tank. Mr Howie sustained severe injuries and died shortly thereafter. 2 Investigation of this explosion was undertaken by the WorkCover Authority and in January 2005, proceedings were commenced against Owens (Container Services Australia Pty Ltd) alleging a breach of s 8(1) of the Occupational Health and Safety Act 2000. Separate proceedings were commenced against David Aylmer Ritchie and John Julian Rose as directors of the company for a breach of s 8(1) of the Act by operation of s 26(1) of the Act. In due course, the company entered a plea of guilty but the two directors, Mr Ritchie and Mr Rose, entered not guilty pleas. Arrangements were then made for the Court to hear the contested proceedings and at the conclusion of those proceedings, then deal with the plea of guilty entered by the company. During the course of the hearing, Mr Rose entered a plea of guilty. These related proceedings are reported as Inspector Ken Kumar v Owens Container Services Australia Pty Ltd [2006] NSWIRComm 324 and Inspector Ken Kumar v John Julian Rose [2006] NSWIRComm 325. 3 In relation to the charges brought against the directors, the Particulars were in identical terms and also reflected the Particulars of breach alleged against the company. The charges were particularised in the following manner: (a) At all material times Owens Container Services Australia Pty Ltd [ACN 065 914 472] ("Owens") was a body corporate with its registered office located at Level 1, 5 Prohasky Street, Port Melbourne, in the State of Victoria. (b) At all material times David Aylmer Ritchie and John Julian Rose were a directors of Owens. (c) At all material times Owens was an employer of persons in New South Wales. (d) At all material times Owens occupied premises located at the corner of Carnarvon and Newton Streets, Auburn in the State of the New South Wales ("the site"). (e) At all material times Owens conducted at the site a business involving the repair, cleaning and storage of shipping containers and tanks ("the business"). (f) At all material times Owens employed persons to conduct the business at the site. (g) At all material times in the conduct of the business, Owens operated a tank wash facility at the site. (h) At all material times in the conduct of cleaning activities in the tank wash facility at the site Owens required its employees to use, or failed to prevent its employees from using, methyl ethyl ketone ("MEK"), a highly volatile and highly flammable substance, as a cleaning agent. (i) Owens failed to provide safe system of work for the conduct of tank cleaning activities as part of the business at the site in that: (i) It failed to ensure that MEK or any other volatile and flammable substance was not used within the confined space of a tank at a temperature above its flash point at a point when potential sources of ignition were brought into or were present in the vicinity of the open hatch of the tank. (ii) It failed to control the conditions permitting the ignition of MEK or any other volatile and flammable substance at the tank wash bay facility at the site in that it failed to ensure the presence of a sufficiently oxygen-depleted atmosphere in the vicinity of MEK or any other volatile and flammable substance so as to prevent the risk of ignition. (iii) It failed to ensure that employees were not located above or near the hatch of the tank at the time the tanks were being cleaned. (j) Owens failed to ensure that plant provided for use by its employees at work was safe and without risk to health in that: (i) It failed to ensure that the tank wash bay facility was earthed so as to prevent the possibility of ignition of MEK or any other volatile and flammable substance used for the purpose of cleaning tanks. (ii) It failed to ensure that the tank wash bay facility provided means to effect the earthing of tanks present in the said facility so as to prevent the possibility of ignition of MEK or any other volatile and flammable substance used for the purpose of cleaning tanks. (k) Owens failed to provide adequate information, instruction and training to its employees working in the tank wash bay facility so as to ensure their health and safety. (l) Owens failed to provide such supervision as was necessary to ensure the health and safety of its employees working in the tank wash bay facility. (m) Owens failed to provide or ensure the use by employees of such footwear as was necessary for the safe performance of work activities involving the use of materials or substances liable to ignition and/or explosion. (n) As a result of the abovementioned failures, employees of Owens including John Howie, Francis James, Willie Mataiti and John Kaleopa were placed at risk of injury 4 At the commencement of the hearing, it was announced that the parties had reached agreement on the facts and that the defendants accepted that there was a breach of s 8(1) of the Act by the company. The practical effect of this agreement was that the Agreed Statement of Facts effectively made out the prosecution case for breach of s 8(1) with the defendants then pursuing defences available to them in accordance with the provisions of s 26(1) of the Act. The Agreed Statement of Facts appears as an annexure to this judgment. 5 The evidence for the defendants in each case commenced with both Mr Ritchie and Mr Rose giving oral evidence. Mr Ritchie was a resident of Auckland, New Zealand and was currently the Chief Executive Officer of a software company unrelated to Owens. He had held this position for approximately two years, having become the Chief Executive Officer of the Owens Group in October 2001 and ceasing that employment in November 2003 as a result of a takeover of the business. Mr Ritchie described the Owens Group as a public company, itself owning 30 companies and operating in New Zealand, Australia, the United States of America, Fiji, Delhi and Papua New Guinea. Owens Group employed approximately 1600 staff and, while he was Chief Executive Officer, he resided in New Zealand and worked there. Prior to taking up that appointment, Mr Ritchie had spent approximately 21 years with Shell International working in the oil industry. He had no prior experience with the operation of cleaning containers or IS0 tanks. 6 During his employment with Shell around the world, it was Mr Ritchie's view that occupational health and safety was of significant importance having regard to Shell's participation in the oil industry and the nature of that industry. In approximately 1994, he had attended a managing safety course in London, a course occupying three days and dealing with occupational health and safety training. He estimated that every three to five years he undertook additional occupational health and safety training. The 1994 course was a detailed course for managers in Shell dealing with, amongst other things, implementing occupational health and safety audit programmes, reading occupational health and safety trends and interpreting those trends. While he could not recall specifically the content of other courses, they were regularly undertaken and were mostly of a day's duration. 7 Mr Ritchie gave detailed evidence of the roles he performed in various locations for Shell including periods in the retail division dealing with distributors and franchisees, including the operation of a large fleet of trucks throughout Australia servicing a large number of service stations outside the capital cities. The significance of this experience was that occupational health and safety was a significant feature of the role he performed having regard to the nature of the product being handled and transferred between terminals, depots and individual service stations. Mr Ritchie set up a safety audit programme, had received reports, had determined actions required and had set occupational health and safety targets. 8 Within Shell there were logistics managers who had an occupational health and safety role and also a full-time occupational health and safety officer. There was an involvement in occupational health and safety audits and he prepared occupational health and safety communications with the assistance of other specialists. 9 When Mr Ritchie joined the Owens Group in 2001 he described the Group as operating in the road transport, international movement, customs clearance/shipping and perishable air and sea freight business. There was also an industrial equipment hire division in New Zealand and a project freight management division operating in the Pacific Islands and Australia. There was a division dealing with container servicing and maintenance. In his position as Chief Executive Officer, he was responsible for the entire business and 1600 employees. There were 13 operating divisions and he received reports from each Division as well as reports from the Chief Executive Officer and the Human Resources Manager. 10 As a result of a restructure undertaken by Mr Ritchie, the number of divisions was reduced to seven with Owens Container Services Australia Pty Ltd being part of the Container Division. Julian Rose was responsible for that Division and reported directly to Mr Ritchie. There were others in that Container Division who reported directly to Mr Rose. The Container Division itself comprised some eight to ten businesses. 11 The restructuring of the business was the reason for Mr Ritchie's recruitment. The Group sold off its industrial equipment hire business, acquired four or five freight companies, sold off two or three other divisions and bought into other areas establishing a new core business. As Chief Executive Officer, Mr Ritchie dealt with brokers, analysts, major shareholders, banks, customers, suppliers and global partners as well as the media. The day-to-day operation of the divisions was managed by the General Manager of each division relying upon people with many years' experience and expertise. As Chief Executive Officer, Mr Ritchie reported to the Board all of which were non-executive directors. 12 The various businesses of the Group were visited by Mr Ritchie in his role as Chief Executive Officer and he spent between half a day to one day a month dealing with the container services business of the Group operating in Australia, New Zealand and Fiji. About one-third of that time was spent dealing with the Australian business. There were five container parks in the business, three in Melbourne, one in Brisbane and one in Sydney. The Sydney operation was conducted at the Race facility. Mr Ritchie said he visited Australia every two months and spent two to three days in Australia on each visit. On each visit he would attempt to go to two cities but would be dealing with the other businesses as well as the container business. He had visited the Race facility two to three times for approximately a half to one hour. 13 General Managers such as Mr Rose were relied upon to inform Mr Ritchie about what was happening in each aspect of the business. After commencing with the Owens Group, Mr Ritchie had investigated occupational health and safety in the Group, had talked to General Managers and others, had considered safety audits and he was informed what was happening on the ground. He spent the first two to three months trying to understand the nature of the business and learned about the occupational health and safety system, the people running the system, the use of audits, site meetings and the understanding of regulatory provisions. 14 The Human Resources Manager looked at occupational health and safety in all divisions: Mr Ritchie met with the Human Resources Manager on average two to three times a week, dealing with occupational health and safety and other matters. There were monthly reports received from the heads of each division and there was a monthly meeting of the Executive Committee. The monthly reports and the Executive Meetings, at Mr Ritchie's initiative, had a specific requirement to deal with occupational health and safety issues. Occupational health and safety became a specific agenda item for the Executive Committee. 15 Occupational health and safety matters were covered in the reports to the Executive Committee and through this process Mr Ritchie was able to pick up items from Managers and their reports concerning incidents, safety audits and the safety regulation of the divisions. There were regular workplace audits to ensure workplace safety and that the Group as a whole was meeting regulatory requirements. Mr Ritchie set up a cross-functional group to deal with the management of occupational health and safety across the business, something not undertaken prior to his appointment as Chief Executive Officer. There were assessments by New Zealand authorities of a number of Divisions and some of those Divisions had obtained the highest rating in recognition of having achieved best safety practice. 16 Each month, Mr Ritchie reported directly to the Board with a report being prepared with the assistance of the Company Secretary. That report dealt with occupational health and safety and relied on reports from the Divisions and discussion with Divisional General Managers. He was not, however, personally involved in the occupational health and safety of particular businesses because he regarded himself as lacking the specialist knowledge and expertise to undertake that role. That experience, knowledge and expertise was held by the General Managers of Divisions who had their own specialists who knew the industry and best practice in that industry. From time to time, Mr Ritchie would also attend the meetings of senior management from each Division in order to obtain a view of the particular aspect of the business, to show a willingness to be involved and to participate in their discussions. 17 In relation to the tank washing procedures of the container services company, Mr Ritchie said he had no general knowledge of these procedures and no knowledge of cleaning methods or cleaning agents. That knowledge was held by the people involved in the particular business employed especially in field depots and was knowledge also held by management. Mr Ritchie had no personal knowledge of the substance MEK and had not heard of it as at 15 January 2003. In particular, he was not (on site or) in Australia on the day of the explosion. 18 In relation to the overall business of the Owens Group, Mr Ritchie said that there were some 80 offices throughout the world. He estimated that he spent between 20 to 30 per cent of his time each year dealing with brokers and analysts and approximately another 20 to 30 per cent of his time dealing with suppliers, partners and customers. He had become a director of over 10 of the companies owned by the Group. In 2002, the Owens Group had organised a presentation for the Australian and New Zealand parts of the business, dealing with the vision and values of the company. As part of that presentation, a booklet was produced for employees dealing with the behaviour, culture and values of the company. That booklet also addressed occupational health and safety. 19 Mr Ritchie regarded occupational health and safety as a critical part of the management and the running of the company. As Chief Executive Officer, management of occupational health and safety was taken seriously and he had taken steps to achieve his expectations in having a high level of occupational health and safety in the operation of the various businesses that formed part of the Group. When he had arrived as Chief Executive Officer of the Group, he reviewed the occupational health and safety policy then in existence and Division occupational health and safety policies had cascaded from the Group policy. In his involvement with budgets, he had addressed occupational health and safety costs and targets but, in budgetary considerations, he could not recall denying or refusing any occupational health and safety expenditure for any part of the business. In relation to occupational health and safety training within the Group, this was conducted through safety conferences in each Division with training as a part of the exercise as well as using aids such as videos and posters. 20 Once or twice a year there would be General Managers' conferences with a Division where they would review and discuss the performance, budgets and other goals as well as occupational health and safety. From time to time, Mr Ritchie attended these conferences and noted that each site had an occupational health and safety officer. 21 Beside external auditing by both a New Zealand Authority and a commercial provider, there was an induction process for all new employees although Mr Ritchie was not aware of the details. The General Manager and the Human Resources Manager at Divisional level were involved in those inductions. In relation to safety audits, while Mr Ritchie was not given the results of each particular audit, they were reported upon and, if issues were identified, there would be a discussion with the local General Manager to resolve those issues. 22 In relation to his knowledge of occupational health and safety legislation in each country, Mr Ritchie stated that he knew that there were differences but did not know the details. There were individuals within the Divisions who were aware of the company's obligations including the General Managers and specialist staff. In the Container Division, John Rose was that person together with other specialists. 23 In cross-examination, Mr Ritchie accepted that in January 2003 he had the authority to give directions to people employed at Owens Container Services: he was a Director of that company and had authority to make recommendations to that company. He had been in that position since October 2001. 24 Mr Rose reported directly to Mr Ritchie, being the Business Manager of the Australian Container business. The company's human resources people, including Sharyn Lee Woods, reported to Mr Rose but did not report directly to Mr Ritchie. Ms Woods operated across the whole of the container business and her duties were not confined to Australia. Mr Ritchie was not aware of Ms Woods' qualifications or occupational health and safety qualifications but was aware that she was very experienced. He did not know whether Mr Rose had any occupational health and safety qualifications but he was aware that Mr Rose had 20 years' experience in the container logistics area. He had been told this by the Chairman and Mr Rose's colleagues, and may well have been told that by Mr Rose himself. He may have asked Mr Rose about his occupational health and safety qualifications but if he did so, he could recall what he was told. Mr Ritchie did not know of Ms Woods' capacity to undertake safety audits prior to January 2003 but was aware that she did undertake such audits. He had no recollection of Ms Woods reporting to him about a November 2002 audit and he was unaware whether Mr Rose conducted safety audits. He could not say who conducted safety audits at the Race site. 25 Mr Howie reported to Mr Rose. Mr Ritchie did not know if he had performed safety audits but expected him to do so in his position as a Manager. Mr Ritchie did not undertake safety audits himself. However, each site had a safety officer and there were 80 company sites. At the Race site, Mr Ritchie could not say who was the safety officer. 26 It was the duty of safety officers to run safety meetings and to meet with the Manager in relation to safety audits. Mr Ritchie agreed that safety officers needed to be trained to perform their duties. He made sure safety officers were trained by implementing policy and working through each business to see if training was in place. Mr Ritchie did not recall giving any specific direction about safety officer training stating that he was not involved in that detail but expected it to be undertaken lower down the line. The training of safety officers was assumed by Mr Ritchie because it was in line with company policy. 27 Everyone was expected to have a position description, and while each site was different, Mr Ritchie expected that there would be a position description for safety officers which would reflect the difference in sites and the performance of other roles. Mr Ritchie was unaware of Mr Sylva being appointed a safety officer in October 2002, or that, by January 2003, he had not been trained in that role. There was no specific detail to ensure people were trained but the company had specialists who knew the requirements. 28 It was expected that monthly reports would highlight any issue about safety. Mr Ritchie did not recall there being reports of any serious incidents in March/April 2002 at the Race site. When shown a document, Mr Ritchie said he had no recall of such incidents and that he expected them to be dealt with in the General Manager's monthly report and that Mr Rose would therefore mention it. He expected to be informed about problems and he may now not remember the details. 29 In July 2002, there was an Owens conference over three days. Mr Ritchie had not attended for the whole three days. He could not recall seeing the minutes of the conference and could not recall if a concern about the wash area had been raised with him. He expected significant matters to be reported to him and, if so reported, he would ask about the detail and then address the issue. Mr Ritchie did not recall a review of the tank wash process in mid-August 2002. 30 When asked what he had done to ensure that Mr Rose performed the duties expected of him, Mr Ritchie said that objectives were set, he reported monthly, there were discussions. Otherwise he would rely on Mr Rose's say so - he was a senior Manager. Mr Ritchie was unable to recall if there were any questions raised with Mr Rose in relation to audits of the container business, he knew that Ms Woods and others were performing safety audits. She had experience permitting her to perform safety audits. Mr Ritchie did not know what knowledge she possessed of dangerous goods and he would be surprised if she did not have such knowledge. He did not recall if Ms Woods had received any risk assessment training. Ms Woods' safety audits were validated by other Depot Managers, specialists and external audits. Mr Ritchie expected other audits would come up with a result or defect and that, in a sense, validated what had been done. He did not know the frequency of safety audits undertaken by Ms Woods. Mr Ritchie did not know if Ms Woods had wash bay system expertise and did not ask her about that in 2002. 31 Safety systems at the Race site were assessed by management, including external sources. Mr Ritchie had made no enquiries about the substances being used at the site and did not know if they were volatile or inflammable substances the plant being used in the operation. He had no specific knowledge of the training being given, was not aware of the level of instruction provided at the Race site, or the level of supervision of Mr Howie. Mr Ritchie agreed that, when he relied upon reports, he was relying on what others thought and said, and the assumptions he made on receiving those reports. 32 Mr Ritchie had no recollection of asking Mr Rose for Mr Howie's training record and would not have done so unless some special issue arose. It was Mr Ritchie's expectation that people were recruited for their capacity to perform the role to be undertaken. Mr Ritchie accepted that Mr Sylva had no occupational health and safety training and did not know of the training undertaken by the other 80 safety officers but he expected the company policy to be followed. There was nothing put in place to draw to his attention any defects in training and he assumed that policies would be followed. 33 Occupational health and safety management was reviewed via the reporting process and by Mr Ritchie speaking directly with people, including the holding of on-site discussions. He relied on the specialist knowledge of others to review the wash bay safety given his absence of knowledge of how it operated. His knowledge was in management techniques and he was not a specialist in the series of industries in which Owens were involved. Mr Ritchie said that asking questions was the practical way he reviewed occupational health and safety. He was not aware of people smoking around the Race site, he expected policies to be followed and expected that there would be a "no smoking policy" on the site: apart from that, he was not sure what else he could do. He knew the tanks at that site had been used to hold hazardous material and were to be cleaned, so he expected a "no smoking" policy. He was not aware if there was any policy on the requirement to use harnesses at that site. Mr Ritchie relied on specialists to identify and resolve safety dangers. He was not aware of any document identifying dangers at the Race site and he did not direct such a document to be prepared. Mr Ritchie did not require risk assessments to be given to him for review. He accepted that, if that was done, he could then address the risk identified. 34 Mr Ritchie was aware that, at the Race site, work was performed in confined spaces and was not aware of the training for that work. He was not aware of the training available for dangerous goods work. He believed that any safety issues would come to attention under the system in operation and he could not recall any such incidents relating to the Race site coming to attention prior to 15 January 2003. He had visited the Race site on one, two or three occasions. 35 In 2003, John Julian Rose had been employed by Owens and was the Divisional General Manager responsible for a network of container parks situated in New Zealand, Australia and Fiji. As at January 2003, he was responsible for 16 parks and 33 sites. In his position, he had no day-to-day role at the sites but was a Director of Owens as well as 13 other companies. 36 In performing his duties, Mr Rose spent a good time travelling, flying to New Zealand every two to three weeks. His daily activities were not confined to the container business and there were other company interests in which he was involved. There were many meetings during 2003 because the company was looking at restructuring, selling part of the container business and considering other ventures. Mr Rose reported to Mr Ritchie, and Alan Crandles reported to Mr Rose as the Australian Manager of the container parks. Lance Swain was the New Zealand Manager of container parks and reported to him, as did Mr Thompson who was the Container Manager. Ms Woods also reported to him in her role as Occupational Health and Safety Human Resources Manager. At the end of 2002, Mr Howie reported to Mr Rose in relation to a limited number of matters, namely, regarding the future of the Race site since there was only one year left on the lease and the question was whether it should be renewed, whether the site should be moved, whether they should explore a possible joint venture or whether to sell that part of the business. Mr Rose and Mr Howie worked closely on these matters but, in relation to operational matters, Mr Howie reported to Mr Crandles. 37 Mr Crandles had overall responsibility for the container business as well as other businesses. There were some 400 employees for whom Mr Rose was responsible and in January 2003, he lived and worked in Melbourne. He was not at the Race site or in New South Wales on the day of the incident involving Mr Howie. 38 In the first half of 2002, following a Directors' meeting in Sydney, there was a familiarisation tour of the Race facility. Mr Rose had participated in that tour and believed he had visited the site twice in 2002. Since 1987, he had been involved with container parks and that is when he started with the Container Division. There was a small park at that time in Auckland. Mr Rose said he had very little knowledge of tank washing as at 2003: the Hyde Park business had been purchased and was doing this work but Mr Rose had no knowledge of the cleaning operation or of the agents used in that operation. There was an experienced manager at Hyde Park and all the knowledge of the operation in the company came from this manager. Mr Rose also regarded David Nicholson as an experienced Manager in the tank washing area. Mr Rose had no knowledge of MEK and had not heard that term in 2003. The involvement in tank cleaning commenced in1997/1998 in Melbourne with the purchase of the Hyde Park facility which that was followed by the Brisbane tank cleaning business that operated from 2000. Brisbane was operated by Mr Howie and Brendan Greatrex. 39 As at January 2003, risks in cleaning work were identified based upon the experience and methods of Hyde Park that had provided the benchmark for future cleaning sites. Mr Rose said that the systems for cleaning and the methods, including training, had come from Hyde Park and the method and agents for cleaning had their origins in that site but he was unaware of their history. Training was undertaken at Hyde Park as it was regarded as the premier park with expertise and skills available and was no one else in Australia who could provide that expertise and skill. Training was organised by the Park Manager and the Hyde Park Manager. Mr Howie managed the Sydney and Brisbane facilities and organised training with the Hyde Park Manager, David Nicholson. 40 There were various occupational health and safety courses available for employees and Ms Woods facilitated the training. Supervisors were trained under the overall training programme, both external and internal and the nature of supervision depended on the size of the Park. Supervision was provided by the General Manager at the smaller parks while at larger parks, supervision was provided by other managers. 41 Mr Rose had known Mr Howie since the mid-1980s and regarded him as experienced in the container park industry. He had managed a New Zealand site for three years before being engaged by Owens. Mr Rose was not aware of Mr Howie's experience in tank cleaning but Mr Howie had been in Brisbane for approximately two years and had returned to Sydney and managed both those sites using supervisors. 42 Mr Howie had built the tank cleaning facility in Brisbane with Mr Greatrex as supervisor, himself being experienced in the business and being responsible for the day-to-day running of the facility. Mr Howie had built the Race facility starting with equipment that had been imported to Australia by another business. Mr Howie was on the occupational health and safety committee and was committed to safety. He was also a member of the Senior Committee Australasia which was a group comprised of Mr Rose, Ms Woods, Mr Howie and two country Managers. This Committee met once or twice a year and had an overview of occupational health and safety policy and training. 43 In January 2003, the company had an occupational health and safety policy in operation and, according to Mr Rose, the audit system was the means by which the company was able to seek compliance with that policy. He had been committed to safety for many years. When Ms Woods was made responsible for occupational health and safety on a full-time basis, the message was clear to employees in the ranks as to the company's views. There was an occupational health and safety culture with safety committees operating at each park. Mr Rose had no formal occupational health and safety training although he had attended workshops and seminars and the safety course on LPG. He was not able to recall the content of the courses and attended probably four safety seminars. He knew of occupational health and safety legislation but that was about all and, while he generally knew of statutory obligations, he could not recall the detail over the provisions although he was generally aware of those obligations. 44 In January 2003, Mr Rose regarded everybody in Owens as having a responsibility for occupational health and safety. In the country parks the responsibilities were with the Manager. Ms Woods was responsible for occupational health and safety, working with the country Managers dealing with this shared responsibility. Depot Managers also had occupational health and safety responsibilities and were to ensure that employees adhered to the company policy. There was an occupational health and safety budget that had increased over the years and last year it amounted to approximately $500,000 although Mr Rose could not give a breakdown of that figure. 45 The first occupational health and safety policy adopted by the company was in operation in 1994/1995. There had been constant changes to that policy and it was version 4 that was in operation in January 2003. Earlier versions had been prepared by Ms Woods. Mr Rose had been involved in the preparation of the policy by reviewing drafts and discussing the contents with Ms Woods and the country Managers. There had been considerable changes, especially brought about by legislation, and the policy was in a constant process of being updated. There had been four or five versions of the policy over a period of eight years and the policy had been updated by Ms Woods. The function of site occupational health and safety officers was to ensure that the policy was adhered to and that was obtained through chairing the monthly meetings of the occupational health and safety committee. 46 The audit system ensured that the policy was being adhered to and an audit was usually conducted six monthly and at least annually. The audits were conducted by Ms Woods with assistance from the country Managers. The last external audit had been conducted in 2001. Mr Rose did not review the results of the audits and they were passed to depot and country Managers to correct any problems that had been identified. If that required capital expenditure, Mr Rose would become involved. If there had been no action taken to remedy a defect, Mr Rose was to be advised and he then undertook a review of why corrective action had not been taken and oversee the action required. Mr Rose remembered only one occasion where he was called to review an audit report because corrective action had not been taken. An external audit had been called in to attend to that problem. 47 In 1998, the first formal inductions had been carried out for the company and there was an Inductions Manual. Mr Rose could not recall who put the first Manual together. Ms Woods had reviewed it since its introduction. Mr Rose examined drafts and the final form of that document and he had final say over its contents. The Induction Manual in operation in 2003 was in evidence and was said to be part of the occupational health and safety policy of the company. 48 In 2003, the company's plans for occupational health and safety were to get a "tertiary level" accreditation by the end of March 2003. Ms Woods was responsible for that programme and its progress, with country and depot Managers also being involved. 49 The Owens Group conducted occupational health and safety conferences and did so at two levels: the first was a senior management overview held yearly or two yearly; the second level was for occupational health and safety officers at each site and those conferences were held twice a year. Ms Woods co-ordinated those conferences and kept the records. There was another level of conference involving all depot Managers with occupational health and safety being only one of the issues discussed at those conferences. The Australian country Manager reported to Mr Rose in writing each month and they would then meet and discuss the report, including the subject of occupational health and safety. This discussion was facilitated by them both being placed in the same office. The reports contained details of accidents, lost time injuries or the following-up of safety audits noting matters that had been attended to and those that needed action. Mr Rose's reports to Mr Ritchie also dealt with some occupational health and safety matters and they would discuss those matters from time to time. Mr Rose was a member of the Executive Committee that met monthly and it also discussed occupational health and safety. 50 In cross-examination, Mr Rose said that he had never completely read the occupational health and safety legislation and did not have an in-depth appreciation of its terms. He understood the company's obligation to employees was to provide a safe working environment. He did not understand that to mean that the company had to make sure or guarantee that environment, but rather that there were sufficient procedures and a, identification of hazards with the staff understanding what they were doing. He understood a Director's responsibility was to make sure the company complied with the law, including occupational health and safety legislation. 51 When asked what steps he took to ensure compliance with the Occupational Health and Safety Act 2000, Mr Rose said he had set up procedures and systems which involved training, occupational health and safety policy, safety audits and the responsibility of Managers to assist. He accepted that he had authority to direct employees to comply with occupational health and safety rules or policies and that he could make recommendations about those rules and policies to the Board. 52 Mr Rose took no personal steps to ensure that staff were trained in their positions. There were other people to deal with that subject who were under his direction. He did not assume that people were being trained in their positions because there were reports to him and audits conducted about these matters. He took no personal steps to ensure staff were trained in occupational health and safety because there was a system set up to ensure people had training. A framework had been set up by which he could ensure that these safety policies were adhered to, including training. 53 The country Managers reported to him on occupational health and safety training and the steps taken in that regard and Ms Woods worked through safety issues with the country managers. Mr Rose spoke with Ms Woods and the country Managers about the progress in training and could not recall any question or issue he raised about an employee's occupational health and safety training with Ms Woods. He had not asked at any time to see documents certifying that an employee had been given occupational health and safety training and assumed the training was given, including training in the position occupied by that person. There were 400 employees and Mr Rose said he had no idea of the level of actual training achieved in their positions or in safety. He received reports and did not go outside their terms to make enquiries about the level of training actually received by any employee. When asked if he knew the level of training Mr Howie had achieved, Mr Rose said that Mr Howie had been performing this work for 20 years but he did not know if he had any specific training. He knew nothing about Mr Howie's training prior to 2003. 54 Mr Sylva was appointed at the Race facility as occupational health and safety officer but Mr Rose was not aware that he had not been trained for the position. There was nothing that Mr Rose had put in place that would alert him to such a fact. When asked how he could ensure that the system worked if he did not ask questions of the country Managers, Mr Rose said that he was able to achieve it through reports. There was no report identifying Mr Howie as having no training. He accepted that it was a failure of the system if Mr Sylva was appointed the occupational health and safety officer when he had no training for the position, and he accepted there was nothing in place to bring that to his attention. The company policy required a person to be trained for the position before being appointed to it. 55 Mr Rose was not aware of a safety audit of the Race facility conducted in 2002. There was no part of the system that brought to his attention any failures disclosed by a safety audit. The last external safety audit had been conducted in 2001 and he regarded that as being more comprehensive than the yearly internal audit of the company: Mr Rose thought that the external audit was geared to the company's insurances and therefore covered a wider range of matters. There had been no external audit of the wash bay at the Race facility. 56 The wash bay equipment had been set up by Mr Howie at the Race facility and was identical to the Brisbane equipment. John Connolly, Mr Nicholson and Mr Howie had worked through the setup of that facility. Mr Rose had not required anyone, at the point that the facility became operational, to assess its safety. He had not specifically asked that of Mr Crandles or of anyone else. He had not asked anyone to report on the potential dangers of the wash bay facility. He was not aware that a serious failing of the wash bay facility was that it could not be effectively earthed and he only more recently became aware of that fact. He was unaware of the consequences of that fact. 57 Mr Rose knew that one person doing safety audits was Ms Woods because she was responsible for both occupational health and safety and human resources. He had direct dealings with Ms Woods and spoke to her frequently. He was not aware of her qualifications to conduct safety audits nor had he asked her about her qualifications. He was not aware of the qualifications of Mr Crandles or John Rawlings to conduct safety audits. He was aware that Ms Woods had attended a number of safety courses and was not aware of her level of competence or her qualifications to conduct safety audits. He had made no enquiry about their qualifications in this regard but trusted that they had such qualifications and had assumed that company policy was followed. He had not conducted safety audits himself because he was not trained. In relation to the cleaning operations at the Race facility, Mr Rose said he was not aware of dangerous goods being used in the operation. He was not aware what materials were being used at that facility in the cleaning and had made no enquiries about it. He did not know whether they were using flammable or combustible substances at Race and did not ask anyone how and with what substance the tanks were being washed. Mr Rose said he relied on the staff to ensure that they complied with occupational health and safety requirements. 58 It was accepted by Mr Rose that he had to satisfy himself and ensure that the staff complied with occupational health and safety laws but he had no knowledge of how the wash bay operated other than in very general terms, and had no detailed knowledge of the products used and how they were used. Mr Rose accepted that he could find out if the company was complying with occupational health and safety laws by requesting on particular training and the substance being used at various sites but that had not been done. It could also be achieved by reports dealing with the use of dangerous substances at facilities but that had also not been done. It was assumed that others were looking at these matters and Mr Rose did not call for a risk assessment of the wash bay plant so he could review it and eliminate risk in that operation. No such risk assessment was ever undertaken in relation to the wash bay and no one had conducted such an assessment. 59 The Race facility was a mirror image of the Brisbane facility using the same procedures as adopted at the Hyde Park facility, including risk assessments. Mr Rose assumed that those procedures applied at Race. He believed that risk assessments were conducted at the Brisbane facility although he did not see such an assessment or call for it or have a process in place for him to receive it. The Hyde Park procedures were adopted from the existing procedures when the facility was purchased which included the risk assessment procedure. Mr Rose accepted that the risk assessment would look at earthing. He also accepted that, if a document showed that earthing could not be achieved at the Race facility and he knew that, he would consider how and where to build the facility so that it could be earthed. 60 Mr Howie reported on day-to-day issues if required, to Mr Crandles who operated out of Melbourne. Mr Howie was a senior Depot Manager. Mr Rose agreed that employees did not always do what was required of them but there was no mechanism to check if Mr Howie was doing what was required of him in the performance of his duties. He agreed that a procedure was needed and that there was a need to ensure that the procedure was complied with: there was no system to ensure that Mr Howie complied with the procedures on a day-to-day basis or if anyone else complied. There was no daily monitoring of the facilities and Mr Rose said he did not know how to do that and that he may have to use external sources to do so. He had no discussions with Mr Crandles or Ms Woods about ensuring that the systems were adhered to at the Race facility nor did he have that discussion with Mr Nicholson or anybody else. 61 Mr Rose said that Managers were responsible for ensuring compliance with safety policy and the safety audit was conducted to see if the policy had been complied with. He had looked at the audit forms used to see if they were appropriate and if they asked the right questions, and he did this to the limit of his knowledge. Some audit forms had shown defects in the system or at the facility and Mr Rose was still unaware if those defects had been rectified. There was a timeframe in which Mr Rose was to be alerted if these discovered defects were not addressed. At the start of a timeframe, he relied on Ms Woods or the country Managers to bring such defects to his attention. He needed those people to inform him of such matters. 62 Mr Crandles had conducted an audit of the Race facility in 2002 but Mr Rose had no conversation with him or with Ms Woods about that audit He had not seen Ms Woods' report to Mr Nicholson regarding the 2002 audit. Mr Rose did not know whether Ms Woods conducted an audit or assessment of the wash bay facility at Race by relying on what Mr Howie told her of the level of safety delivered by the procedures in operation. When asked if there was anything that permitted Ms Woods to independently assess safety at Race, Mr Rose said that she would use Mr Nicholson for that purpose, not Mr Howie, because the Depot Manager was not to be used for assessing his or her Depot. Before January 2003, Mr Rose had not required Mr Nicholson to go to the Race facility to assess it nor was he aware of Mr Crandles requiring Mr Nicholson to do so. Mr Rose was not aware of any issue about the process at the Race facility that arose in 2002. He primarily relied on Ms Woods and Mr Crandles for occupational health and safety advice. 63 When shown a number of safe working method statements, Mr Rose said he could not recall seeing them before. He was not aware that those documents had been prepared by an external group, the Brief Group, engaged by Owens' solicitors after the accident on 15 January 2003. 64 Until late 2003, Mr Rose remained as the Divisional General Manager when the Division was taken over. The wash bay at Race was wound down and closed in September 2003 and after the accident not much tank work was performed at that site. He gave responsibility to Mr Nicholson to do what was necessary to bring about changes to the wash bay system at the Race facility after the accident. There were several meetings about the future of the Race facility after the accident. Mr Rose could not recall what changes were introduced. However, the WorkCover Authority had issued notices instructing the company what should be done. Mr Rose had to be sure that those notices were complied with so that the facility could work again. He could not recall what changes were made or if and how the facility was earthed. 65 Mr Rose had no knowledge of wash bay procedures. He had not required any assessment to be conducted of wash bay procedures at the Race facility. That took place at the Hyde Park facility on its purchase in the 1990s. Mr Rose saw risk assessments of the systems of work at the Melbourne site but could not recall whether they identified a lack of earthing or dangerous substances as being an issue. The Hyde Park facility cleaned more dangerous product than the Race facility. Mr Rose knew that the cleaning of tanks could be dangerous which he knew when the Hyde Park facility was purchased. He regarded the work as being performed broadly in the same way at each of the facilities, and that the tanks were cleaned with solvent and steam but he did not know the detail. He assumed that there were dangers associated with the work but made no enquiry about the Race facility and whether it was different to the Hyde Park facility in the 1990s. 66 The Brisbane and Race facilities were operated as an extension of the Hyde Park facility and used the same client base. 67 Mr Nicholson was not involved with work outside the tank cleaning operation and Mr Howie did not report to Mr Nicholson on a day-to-day basis, he reported to Mr Crandles. In relation to the tanks, Mr Nicholson was a point of contact rather than a line report. Neither Mr Nicholson nor Mr Howie reported to Mr Rose. Mr Nicholson was the Manager of the Hyde Park facility and Mr Howie managed the Race facility. The Hyde Park facility was on a larger scale that the Race facility. Mr Nicholson was not required to supervise or train Mr Howie. 68 In January 2003, Mr Nicholson was employed by Owens as the Manager of the Hyde Park facility. He reported to the Australian Manager, Mr Crandles. As at January 2003, he had 18 months' experience in the industry and had 18 months' experience of tank cleaning with Hyde Park, and 10 years' experience prior to that. He had known Mr Howie during this 18 months and was aware of his experience. 69 As at January 2003, Mr Nicholson said that the cleaning of tanks at the Hyde Park facility was performed by reference to written washing procedures and the method varied depending on what substance had been held in the tank. He had written the procedures and added detail to them over time. Those procedures were written with the assistance of the wash Manager who had over 10 years' experience at the Hyde Park facility and also with the assistance of the wash bay staff. The procedures were prepared in about mid-2002 and dealt with flammable and dangerous products. There were procedures for MEK, acetone, resin solution, kerosene and styrene. 70 The wash procedures generally discussed with Mr Howie when he telephoned with an issue. Mr Nicholson and Mr Howie would discuss how the issue was to be approached which sometimes involved input from the wash Manager. The wash procedures were generally set out on one A4 size page. Mr Nicholson could not recall sending a copy of those procedures to Mr Howie or to the Race facility, or whether Mr Howie had asked for them. He had given those procedures to a Daniel Winter who was employed at the Race facility and who had come to the Hyde Park facility to be trained in the wash procedures during 2002. There were then some wash procedures in operation dealing with flammable and toxic items. The procedures were placed on a shared computer drive for use by Hyde Park employees and all those employees, all of whom were able to gain access to that material. He was not aware at the time whether employees at the Race facility could again access that material. 71 In May 2003, Mr Nicholson prepared further procedures and, although they were different from those existing prior to 15 January 2003, the content was basically the same but were now more understandable. In each of the procedures, he added a heading of "risk", describing the risks associated with the use of each type of substance, also adding in most of them an instruction to inform a superintendent if there was too much residue. 72 At the Hyde Park facility, the Wash Manager Chinh Nguyen, conducted the training over one or two weeks. The training was "hands-on" and was otherwise documented, including induction at the Hyde Park facility. The Wash Manager and supervisor worked with Mr Winter in 2002 while they performed actual cleaning work on tanks which was part of his training. When each section was completed, a document setting out the content of that section was signed and given to Mr Winter on completion. 73 Mr Nicholson had discussed the substance MEK with Mr Howie on a couple of occasions, the first occurring in mid-2002. The Race facility was starting to wash resin tanks previously washed for the same client in Melbourne. Mr Howie had called about the process to be used and the best way to clean the tanks containing resin. Mr Nicholson and the Wash Manager had spoken to him on the telephone and took him through the steps in the procedure used at Hyde Park. That procedure involved using a styrene product but Mr Howie had raised the issue of using MEK because it was better and cheaper. Both Mr Nicholson and the Wash Manager told him not to use MEK because it was not as effective and that it was much more dangerous because it had a lower flash point. Mr Nicholson was aware of an accident in a chemical company in Melbourne using MEK involving welders performing work on a tank that had contained the substance which had exploded. 74 On the second occasion, Mr Nicholson talked with Mr Howie about resin in tanks and setting tanks up for the wash process. Mr Howie was trying to locate reasonable quantities of styrene and Mr Nicholson gave him a contact. Mr Howie said that he was able to get a plentiful supply of MEK but Mr Nicholson told him not to use it. 75 Prior to 15 January 2003, MEK had not been mentioned in the written procedures as a solvent to be used in the cleaning process because styrene was considered safer to use and handle. 76 At Hyde Park, the wash tanks had been earthed prior to 15 January 2003. Ignition sources had been controlled by having a no smoking and having equipment that was "intrinsically safe". A computer programme was purchased by Hyde Park that was a very detailed chemical software package. The programme contained all MSD sheets, data and information for chemicals, handling instructions, risk factors and nominated the properties of the various chemicals. Mr Nicholson had discussed this programme with employees from Race prior to January 2003 and, in particular, at the Safety Meeting held in 2002. There, he had spoken to Mr Howie and possibly Ms Woods and told them of the programme and how useful it was for all of them. Ross Pavey, the IT Manager, had put the programme on computer services for other parts of the business. 77 There were regular safety meetings within the Group attended by occupational health and safety officers, area Managers and the General Manager: Mr Nicholson and Mr Howie attended such meetings. Each business unit had an occupational health and safety committee and meetings of the committee were chaired by the safety officer who was otherwise active in ensuring a proper safety culture in each business unit. At area conferences, there was a sharing of information between depots. 78 In mid-2002, an external company had undertaken a risk assessment at Hyde Park. Mr Nicholson saw the results of that assessment which were widely discussed within Hyde Park. Any issues raised were acted upon and capital expenditure required was discussed with the Australian Manager, Mr Crandles. There was a request for funding for dealing with risks of working at heights as an example of a response to the assessment. In 2002, there was an internal and external safety audit conducted: Mr Nicholson and Ms Woods performed the internal audit and the results were produced and discussed with Mr Crandles. 79 At Hyde Park there were trained safety officers who had either a certificate or recognition from Worksafe Victoria. Site safety committee minutes were kept by the Chairman of the committee and distributed to all staff. Ms Woods was the occupational health and safety manager and Mr Nicholson had dealings with her through networking and discussions about motivating the workforce in relation to safety and ensuring safety. 80 During 2002, within the company, plans were made to reach a level of safety accreditation nominated by the New Zealand Authority. The scheme was not the same as in Australia but the company was working towards achieving the New Zealand level for safety on its Australian sites and to attain best practice. It was planned to achieve the highest level of accreditation, the tertiary level, by early 2003. By December 2002, all Divisions were to have all inductions signed off and other matters to be satisfied, and that progress was to be reviewed at the meeting set down to take place on 16 January 2003. 81 Before 15 January 2003, Mr Nicholson audited other sites, namely, two Melbourne sites. He supervised the two managers of those sites and, together with Ms Woods, checked those sites. 82 In cross-examination, Mr Nicholson accepted that before 15 January 2003, although he had visited the site on four occasions for a day on each occasion, he had never worked at the Race facility and had not performed an audit at that site. Mr Howie reported to Mr Rose in part. They had worked together for many years and spoke to each frequently. Mr Howie's monthly reports went to Mr Crandles who reported to Mr Rose. Mr Nicholson did not know of Mr Howie's work in any detail. 83 The work procedures developed at Hyde Park were developed over a period of two to three months commencing from mid-2002. When Mr Nicholson was developing wash procedures, he did not know what Mr Howie was doing at the Race facility about developing wash procedures. There was some talk between them but the Race facility was doing only a few tanks a day, while at Hyde Park they were washing 50 tanks a day. Mr Nicholson did not know if Mr Howie had seen the Hyde Park procedures that he had developed for washing nor did he know if other employees from the Race facility had seen those procedures or what procedures were being used at the Race site. 84 Mr Nicholson said that the early wash procedures were difficult for people to use and he was planning to do away with them when the new wash procedures were introduced. The standard wash procedures were introduced in March 2002 and were modified in November 2002. After the accident at the Race site, he had gone to the facility and, at the request of police and the WorkCover Authority, had handed over what he found at the site that appeared to be standard operating practices for the washing of tanks. He had not been familiar with these documents prior to the accident nor had he seen them the accident. He was not aware whether copies of the March 2002 standard wash procedure documents applying at Hyde Park were in existence at the Race site at the date of the accident. When he was spoken to by Inspector Kumar on 15 May 2003, he was unable to say what procedures were used at the Race site prior to 15 January 2003. He had been asked what procedures applied at Race before the date of the incident. However, the staff were silent regarding process and procedures and no staff knew of them or could tell him of them. He had not been able to find the wash procedures he had put together for Hyde Park at the Race site after January 2003. To his knowledge, the Hyde Park procedures were not at Race. After the accident, Mr Nicholson implemented the Hyde Park procedures at the Race site. The tanks at the Race site could not be earthed prior to 15 January 2003: he addressed that issue after he arrived. He had originally believed that the wash bay was earthed but subsequent information from the Inspector indicated that there was no earthing of the tanks. Mr Nicholson then added greater earthing capability at the site. 85 As the Manager of Hyde Park, Mr Nicholson had not been trained in occupational health and safety by way of formal education: he had undertaken informal training through conferences, team training, visiting sites and seeing risks, and addressing them. A risk assessment had been conducted at the Race site after 15 January 2003 by an external contractor and he had assisted in that assessment. He had no formal training in risk assessment. Mr Crandles had never spoken to him nor had anybody else from the company spoken about his ability to conduct risk assessment. If he needed to find out about matters, he would raise them at conferences or contact others or use outside bodies. 86 When Mr Nicholson arrived at the Race site after the accident, he did not know the level of training of the Race safety officer. He later found out that the safety officer had no formal training although he had attended an occupational health and safety conference and site inspections and knew how things worked. Mr Nicholson could not recall whether he arranged formal training for the Race safety officer after 15 January 2003. 87 Ms Sharyn Woods had been employed by Owens Containers Ltd since 1989 and was the Australasian Occupational Health and Safety and Human Resources Manager for the company. She worked out of the Auckland headquarters of the company where Mr Rose was located. The company was associated with Owens. In her role she was involved with managers of container sites. 88 Ms Woods had been involved in preparing a safety policy for Owens and a new policy was introduced in December 2002. That document was placed on the files of all depots for them to be accessed and to conduct inductions. The policy was displayed at all sites and, prior to 15 January 2003, she had seen it displayed at the Race facility. Training in relation to the occupational health and safety policy of the company was covered in induction which induction was to apply at all sites. 89 The safety policy of the company was reviewed by the senior committee and the management conference where there was participation by safety officers and Managers as well as Depot Managers. The senior committee comprised of Mr Rose, the Operations Manager, Ms Woods and a New Zealand or Australian Manager and two Park Managers. That committee met as required, usually met after a conference. Its purpose was to ensure that the policies were up-to-date or in need of review because of legislative changes. 90 Within the policy there was an inspection check sheet which was to be used by safety officers at each Park to ensure that the system was in place. If she was visiting a Park or going to a new area she would use the check sheet. Conferences for site safety officers started in 2002 and there was a reference to the inspection check sheet at that conference. It was recognised that each depot was different, especially in Australia, and the check sheet allowed officers of the company to add or delete items as necessary. After the safety audit, the check sheet was used to see what the officers were doing at that site and to pick up areas needing revision. Prior to January 2003, Mr Howie and Mr Sylva had participated in a Race site audit. 91 At each site, the Depot Manager was responsible for induction, safety officer at each site being responsible for training. An induction checklist, once completed, was signed and placed on a person's personal file and, after training by the safety officer, a document in recognition of that training would also be placed on an employee's file. Re-inductions had commenced in 1999; the documents used were the same as for inductions, were prepared by the safety officers and were placed on a person's employment file. Re-induction was introduced to take people out of their "comfort zone" and to prevent them from becoming too relaxed about the existing system. Re-induction took about one to one and a half hours, while the original induction was conducted over two to three days. 92 Under the company safety policy, there was a section dealing with hazardous substances management and it was the responsibility of Depot Managers to ensure adherence to that policy. A hazardous substances register was to be maintained by the Depot Manager and the safety officer. Their duty to do so arose through their job description requiring them to comply with the safety policy. The standard form of register was placed on the computer server and all Depot Managers and safety officers had access to it. 93 Depot Managers and safety officers were responsible for hazard identification and control. It was part of their function, because of their job description requiring them to comply with the company's occupational health and safety policy. The Induction Manual was received by all employees and was also on the computer server for access. There was also a checklist to be completed during induction by the person performing that task. A new employee was to acknowledge the undertaking of induction. That approach was in use in 2000 and when, completed the document was placed on an employee's personal file which was the responsibility of the person performing the induction. In 2001 and 2002, there were two in-house videos also used for safety induction. 94 There were regular meetings of Depot Managers: Ms Woods had attended such meetings including a meeting held in July 2002. At that meeting, Mr Rose said that Australian sites were not up to the New Zealand safety standard and Depot Managers were told that Ms Woods would take over the safety role in Australia until the level of safety was improved to the New Zealand standard. The programme proposed that the primary level would be achieved in about one year, although some depots would be advanced and would be at that level within six months. 95 There was also a proposed review of the tank wash procedures because there was a new tank site established in Sydney in February 2002 and another due in Auckland. The review was to take place over the next few months after the July 2002 meeting. In August 2002, there was another safety conference which was attended by Depot Managers and safety officers. Mr Howie attended but no one else from Race attended. During that conference, Mr Howie participated in an audit of a depot as arranged for the conference and completed a checklist: these documents were gathered and there was discussion as to who had picked up what items using the checklist. There was also discussion about the tank wash procedures, their review and the need to put them into a formal document separate from the company's safety policy. In addition, there was an ongoing self audit to be conducted monthly by each depot. Audits and checklists were used at the November 2002 meeting attended by safety officers and Depot Managers. Mr Sylva, the safety office from the Race site, was present. 96 There were audits conducted of the Race site some performed by Ms Woods and an external source also conducted an audit. She had attended the Race site in July 2002 and November 2002. The first visit was not a formal audit but merely to look at the tank wash. She had discussions with Mr Howie and Mr Rose about the need for help from those already involved in the wash process. Ms Woods had been directed to undertake the visit by Mr Rose and, in discussions after the visit, it was decided that Mr Nicholson should be brought into discussions about the development of the Race site. 97 A formal audit was performed in November 2002 and was conducted in the presence of Mr Howie, Mr Sylva and Mr Mataiti the foreman. After the audit was concluded, a document was sent to Mr Howie and Mr Sylva for them to identify any further issues. 98 At the proposed 16 January 2003 conference, a review of training videos and case studies were to be considered. The Depot Managers were to report on whether or not they had achieved the primary level of safety as programmed and required by Mr Rose. The conference, however, was cancelled because of the death of Mr Howie. 99 Ms Woods often discussed occupational health and safety with Mr Howie, probably on a weekly basis, dealing with issues about training staff and obtaining assistance because the site was not at the same level as other depots. The Hyde Park people had attended the Race site to provide training. Ms Woods had been told that by Mr Howie and could not remember when that occurred but it was after the July 2002 audit. 100 In cross-examination, Ms Woods said that she had visited the Race facility in July 2002 and November 2002 (when a formal audit was conducted) and was also at the site on one, two or more occasions that year. In July 2002, the informal audit occupied one and a half to two hours and in November 2002 the formal audit occupied half a day. She spoke to some staff in July 2002 and to most of the staff in November 2002. 101 Mr Sylva had replaced Mr Connolly who had resigned for reasons which were unknown to Ms Woods. She did not know who appointed Mr Sylva the safety officer and was it was not until the November 2002 conference in Melbourne that she was aware of his appointment although she was the person responsible for occupational health and safety. There were a number of sites in Australia and New Zealand and some sites had more than one safety officer. Each of them was her responsibility. Ms Woods had occupational health and safety responsibility for Owens Containers in Australia and New Zealand. 102 Ms Woods did not know what Mr Sylva's qualifications were or what qualified him for the occupational health and safety role. She accepted that it was a serious flaw that the system allowed a person to be appointed as safety officer for even a short period of time without safety training. There was nothing to alert Ms Woods that Mr Sylva was not trained in safety apart from the regular meetings. She accepted that it was a serious problem if there was no occupational health and safety committee at the Race facility. At the end of November 2002, she was aware that there was no safety committee at the Race facility. She had been told that there was a committee but no Minutes had been forwarded. Ms Woods did not know for how long the Race facility had been without a safety committee but in November 2002 the site was in the process of setting up the committee. Ms Woods said that she was alarmed that there was no safety committee in operation at the site. 103 After 30 November 2002, Ms Woods visited the Race site on 16 January 2003. In the intervening period, she asked Mr Sylva half a dozen times on the telephone whether the safety committee had been set up and asked to be provided with the Minutes of its meetings but none were provided. She spoke to the Manager, Mr Howie, several times on unknown dates but without a satisfactory result. She spoke to Mr Crandles of her concerns. There were other concerns at the Race site from 2002 - staff there did not appear to know how to perform an audit: as far as she was aware, from early 2002, there were no monthly self audits performed. There were some documents dealing with these failures but the sale of the business made those documents difficult to obtain. Ms Woods had reported to Mr Crandles about the Race site before Mr Howie returned to it. There was an email in December 2002 to Mr Crandles, and an earlier report, that Race safety was below standard throughout 2002. 104 During the November 2002 audit, Ms Woods had shown Mr Howie how to use the checklist for the purposes of audit. Ms Woods said she had no formal qualifications for conducting audits and had no training in dangerous goods or training in their storage, handling or use. She did not know if Mr Howie had training in dangerous goods. She assumed he did because of the way he spoke. She knew how to read a material safety data sheet but she did not ask Mr Howie if he knew how to read those sheets although they were on site. 105 Ms Woods had not spoken to the staff at the Race site about the tank wash and she was not qualified to audit the tank wash operation. She did not know anything about whether the tank was earthed to prevent an explosion. She could have arranged for this to be done by someone who knew the process. She had a telephone conversation that resulted in Mr Nicholson being involved in the process. Ms Woods was shown a document that appeared to her to be an informal audit of the Race facility that stated under the heading "Concerns for Safety" that all chemicals likely to be found in the tanks needed to be documented. She was aware that was the system in operation at Hyde Park and she had seen the documents that identified the chemicals contained in the tanks and the procedures for handling them. 106 In relation to the informal July 2002 audit, Ms Woods had been asked by Mr Rose to visit the Race facility. Her informal audit identified a number of concerns with the audit document which she passed on to Mr Rose and discussed it with Mr Rose, Mr Nicholson and Mr Crandles regarding the need to introduce processes at that facility. Ms Woods did not discuss her report at that time with Mr Howie. Ms Woods did nothing further. Later, in the period between July 2002 and November 2002, she spoke to Mr Howie and Mr Crandles about her concerns. In that period, Ms Woods visited the Race site again to complete job descriptions and the standard contracts for employees. On that occasion, no audits were conducted nor did she take time to see if the concerns that had arisen in July 2002 had been addressed. She did not require anyone to prepare a written report to identify what had been done since the concerns were raised. As Mr Crandles and Mr Nicholson were assisting Mr Howie with the tank wash facility in relation to training and procedures, she expected that they would deal with the matters that had been raised. She did not follow them up at that time, although she did so in November 2002 when she performed the second audit. 107 The November 2002 audit was sent to the Depot Safety Manager, the Depot Manager and Mr Crandles. Prior to 15 January 2003, Ms Woods had telephone conversations with Mr Howie and Mr Sylva about that audit but had no other involvement with the issues identified in the November 2002 audit. Ms Woods relied on the Depot Manager and the Australian Manager to take steps to ensure that the matters identified in July 2002 and November 2002 had been addressed. 108 As well as having responsibility for occupational health and safety, Ms Woods said she was also the Human Resources Manager for Owens. In her view, each Depot Manager was responsible for ensuring occupational health and safety matters were dealt with and complied with and her role was to give them the tools to work with to achieve those ends. She regarded it as part of her role to chase up Mr Rose, for example, at the regular conferences to ensure something had been done about the concerns she had raised. Mr Rose had given a direction that Australia was to be brought up to the primary level and the 2003 conference would have shown that the Race facility was not achieving that level. 109 The safety officers had the responsibility for explaining health and safety regulations to employees. They conducted meetings, ensured that staff were using the correct personal protective equipment on site and generally were responsible for anything to do with health and safety on site. The induction videos dealt with a number of issues but did not deal with tank washing. A video had not been produced at the stage of tank washing, and was not produced prior to the sale of the company in September 2003. Ms Woods could not recall if the video spoke of strict safety practices to be adhered to in relation to dangerous goods without specifying what those strict safety practices were. 110 The December 2002 safety policy was issued in 2002 through the computer file server: the document was printed at each site and in 2003 there was an audit to see if the policy had been put in place which was done as part of the main annual audit. Re-induction of staff in this new policy was to commence sometime in 2003. Ms Woods checked in March 2003 to see if the policy was in use at all depots and she also looked at personnel files to see if induction had taken place in relation to the new policy. Ms Woods was unable to explain why Mr Howie's personnel file showed he had received no training: it was a file that she had not held, it would have been held at head office. One possibility was that no one had ever audited that file. 111 A Depot Manager was able to conduct an audit of his own depot which was considered appropriate although, in hindsight, Ms Woods doubted the appropriateness of that approach. There were some policy and training procedures in place at the Race site in November 2002, some formal and some informal. There were documents that came from Hyde Park that carried the Hyde Park logo. Mr Howie had put together some handwritten notes for the Race procedures and had employed his daughter to help compile those procedures. The procedures included wash tank procedures. 112 The Depot Managers were to conduct hazards identification and Ms Woods expected that they would have been through various courses to identify "significant hazards". She was not sure if Mr Howie had been through those courses. At the Race facility, the significant hazard control plan was constituted by some handwritten notes but she could not recall what hazards had been identified and had not read all of the notes. She had not seen any formal hazard analysis nor any formal documents on hazards at the Race site. Professional advice was not obtained in relation to the Race site. At Hyde Park, Mr Nicholson had produced the procedures and he was working with Mr Howie to introduce them at the Race site. That was not been complete as at 15 January 2003. 113 The policy requirements to cover step-by-step the procedures for performing those tasks were only in the process of being introduced at Race - they were not fully in place but only partially in place at the end of November 2002. No one had performed an audit or a risk assessment on those task procedures at the Race facility. That was the responsibility of the Depot Manager and the safety officer. 114 Ms Woods discussed her concerns about safety at the Race site with Mr Crandles during 2002 and he indicated that he shared her concerns. She briefly discussed her concerns with Mr Rose in July 2002. He did not say he shared the concerns but asked for a plan to bring the depots up to the required level. There were a number of senior Managers who regularly visited and walked around the Race site. Some of those people shared her concerns and others, such as Mr Nicholson, did not go into detail with her about her concerns. Despite these concerns, there were only two audits conducted during 2002 and, to Ms Woods' knowledge, there was no safety audit conducted in relation to the wash facility. 115 During the course of the proceedings, Mr Rose entered a guilty plea to the charges brought against him. The sentencing hearing for Mr Rose was then arranged to take place at the same time as the sentencing hearing for the company in relation to the same incident. After Mr Rose had changed his plea the matter proceeded only in relation to Mr Ritchie. THE SUBMISSIONS 116 The essence of Mr Ritchie's case is that, in his position as Chief Executive Officer of the Owens Group, involving as it did a number of companies operating in a number of cities and countries, he was required to rely upon the expertise of Divisional Managers and site Managers to deal with the detail of occupational health and safety. Thus, he was far too remote to be able to effectively be in a position to influence the conduct of the corporation in relation to its contravention of s 8(1) of the Act. The Owens Group owned approximately 30 companies with staff located in approximately 80 worksites and totalling approximately 1600 in number. In his position as Chief Executive Officer, Mr Ritchie was responsible for all the businesses within the Owens Group and was also a director of in excess of 10 companies within that Group He lived and principally worked in Auckland, New Zealand and was an accountant by training and experience. He spent approximately 20 to 30 per cent of his time dealing with financially related issues and approximately 20 to 30 of his time liaising with customers and suppliers. As Chief Executive Officer much of his time was spent dealing with external parties, including brokers, analysts, major shareholders financial institutions, the media, customers and suppliers. There was a reporting structure involving seven Divisions. As Chief Executive Officer, Mr Ritchie did not manage the day-to-day operations of the Group but relied on the General Manager of each Division and persons who reported to the General Manager. 117 The Divisional General Manager of the Container Division was John Rose. The Container Divisions comprised eight companies within the group operating in Australia, New Zealand and Fiji, employing approximately 400 employees. The Australian operations were spread across five container parks in Sydney, Melbourne and Brisbane. The day-to-day management of the Container Division was divided geographically, with Mr Crandles as the Australian country Manager and Mr Swain as the New Zealand country Manager. 118 Owens was just one of the companies owned by the Owens Group and was just one of the companies in the Container Divisions of the Group. While Mr Ritchie was the Chief Executive Officer he spent a half day to one day a month devoted to the Container Division and only about one-third of that time was devoted to the Australian operations of the Containers Division. Mr Ritchie spent two to three days every two months in Australia, although he did not confine his attention to the Containers Division but attended to all businesses based in Australia. He had visited the Race Park container site on two or three occasions with each visit likely to be around half and hour to one hour's duration. 119 Mr Ritchie relied on Mr Rose for the management of the Container Divisions in Australia. Prior to joining the Owens Group, he had no knowledge or experience in the management of container parks or the cleaning of ISO tanks. As at 15 January 2003, he had no knowledge of or experience in cleaning methods for tank washing or cleaning agents to be used in tank washers. 120 On 15 January 2003, Mr Ritchie had no knowledge of MEK and had not heard of it at that time and, in addition, he was not at the Race site and was not even in Australia. 121 Prior to joining the Owens Group, Mr Ritchie had substantial exposure to occupational health and safety through his work for the Shell group of companies. He had undertaken a three day managing safety course and other safety training courses occupying approximately one day. Within two or three months of joining the Owens Group, Mr Ritchie conducted an investigation into occupational health and safety within the Group. That investigation involved discussion with General Managers of the Divisions and showed the safety system in place, including the people directly involved in occupational health and safety, the conduct of audits and the holding of site meetings. 122 As Chief Executive Officer, Mr Ritchie was not personally involved in the management of occupational health and safety issues in a particular Division because of his lack of expertise and specialist knowledge but, instead, relied upon specialists employed in each Division such as Mr Rose, Ms Woods, Mr Howie and Mr Nicholson. He worked with the Human Resources Manager in relation to occupational health and safety across all Divisions in the Group. He received formal monthly reports from the General Manager for each Division and required that occupational health and safety be a specific topic dealt with by such reports. The monthly reports were discussed with each of the general Managers of the Divisions. Mr Ritchie had made occupational health and safety a specific agenda item for discussion at the Executive Committee meetings that were held monthly involving each General Manager of the Divisions. In reporting to the Board of the Group each month Mr Ritchie reported on occupational health and safety but in doing so relied upon the reports he received directly. From time to time he attended meetings of senior management of a Division and at those times the issues discussed included occupational health and safety. 123 In recognition that occupational health and safety was a critical part of the management of the business and an important focus, Mr Ritchie reviewed the occupational health and safety systems and attempted to portray himself as a person within the Group who was interested and took seriously the occupational health and safety obligations of the businesses. There were a number of initiatives, including the road show, which involved occupational health and safety. Mr Ritchie also had the practice of visiting a business site within the Group and making enquiries while on such a visit concerning occupational health and safety issues at that site. The Owens Group had an extensive occupational health and safety system with a safety policy for each Division, a senior management occupational health and safety committee for the Container Division, the creation of an induction and re-induction process, the establishment of safety committees on sites, the appointment of safety officers at sites, the conduct of safety conferences for senior Managers and safety officers and the provision of safety training for management and staff. In addition, there were safety videos particularly directed to the work of the business and more general commercially available videos, the use of safety posters, the preparation of inspection check sheets, the creation of a hazard register, a hazard identification programme, the conduct of regular internal and external auditing of sites within the businesses and the participation in the accreditation scheme in operation in New Zealand. 124 While Mr Ritchie was Chief Executive Officer, the risks associated with cleaning methods and cleaning agents used with ISO tanks were identified by the Hyde Park facility where there was an accumulation of experience over many years. Hyde Park had developed a prescribed method and prescribed cleaning agents for cleaning the tanks and trained employees of the Container Division in those processes. The Hyde Park personnel were consulted regularly by other facilities within the Division over cleaning methods and Mr Howie consulted Mr Nicholson and Mr Nguyen, the Wash Manager, in the use of MEK as a cleaning agent: Mr Nicholson had warned him against using such an agent as it was considered dangerous, having a lower flash point and being heavier than air vapour. The wash procedures that had been developed since 2002 were available via a computer server which was accessible to employees of Hyde Park. Mr Winter, from the Race site, had been trained in these procedures during 2002 at Hyde Park. By July 2002, following a preliminary investigation of the wash bay facility by Ms Woods, a committee was formed by the Container Division to assist in the formulation of tank wash procedures for the site. Advice was to be obtained from those experienced in this area, including Mr Nicholson and Mr Greatrex who had been involved in the Brisbane tank wash facilities. In August 2002, at a safety conference for Managers of the Container Division, the wash procedures for the Hyde Park facility were discussed in anticipation of them being used generally. By September 2002, the wash procedures for a number of substances including MEK and resin solution were available on the computer and were accessible to employees at Race. On 26 September 2002, those procedures were printed at Race from the computer server. 125 Mr Ritchie had also overseen the push for each business within the Group to achieve the tertiary level of accreditation under the New Zealand scheme or to that standard by March 2003. There was a management scheme to achieve that goal which was monitored during the monthly reports to Mr Ritchie and during Executive Committee meetings. In addition, the Container Division had an occupational health and safety Manager who worked with each country Manager, such as Mr Crandles for Australia. Mr Ritchie could not recall an instance of declining safety expenditure within the business of the Group. The extent of Mr Ritchie's participation was limited, however, by the breadth of the activities for which he was responsible within the Group and the consequential limitation on his time in being able to deal with each business within the Group. 126 It was then submitted that this evidence had to be considered against the proper construction of s 26 of the Act. Section 26 of the Act did not itself create an offence but deemed a director of a corporation to have committed the same offence as the corporation. The defences contained in s 28 of the Act were unavailable to a director prosecuted under s 26 of the Act. The defences under s 26(1)(a) & (b) were to be established on the balance of probability. 127 In relation to the defence contained in s 26(1)(a), it was submitted that each director had the right or ability to influence the conduct of a corporation. A director was the directing mind of a corporation. Both directors and persons concerned in the management of the corporation were entitled to avail themselves of this defence. 128 The defence applied to directors in widely differing circumstances, varying from directors of large corporations to directors of small businesses. In larger public corporations, non-executive directors participated in strategic decisions but played no role in the day-to-day operational affairs of the company. In small private corporations, it was not unusual for directors to have a hands-on role participating in the day-to-day activities of the company. The defence was therefore to operate in all such circumstances and in the "real" world. Directors would therefore have a varying degree of influence in each corporation and Parliament must have intended that directors availing themselves of this defence would be subject to an examination in a realistic and practical way of the degree of actual influence exercised by that director. The degree of influence actually exercised by a director would depend on the particular functions performed by the director for the corporation. 129 For the defendant, it was submitted that, in considering the operation of the defence available under s 26(1)(a) of the Act, the phrase "position to influence the conduct of the corporation" ought not be assessed with regard to the theoretical scope of the influence of a director. If that approach was adopted the defence would be unavailable for every director - a position that could not have been intended by Parliament. This defence also required consideration of the particular contravention by the corporation. 130 On the approach adopted by the defendant, a director would have a defence if he or she was not, by virtue of the actual functions performed, in a position to influence, realistically and practically, the conduct of the corporation in respect of a particular contravention. Thus, directors of small corporations with a hands-on role who are physically involved in the work at the time of the contravention by the corporation and directing the manner in which the work was undertaken will be able to exercise real and practical influence over the corporation in respect of the particular contravention. However, some directors, especially with nominal or non-executive roles, would have no real or practical influence over the corporation in respect of a particular contravention. This defence was to apply equally to directors and persons concerned in the management of the corporation. There will be in any business a number of managers who theoretically have a capacity to influence the conduct of the corporation in relation to its contravention of the Act, yet they will occupy positions that have nothing to do with the formulation and enforcement of safety policy. Logically, the same approach must be available when considering the position of a director: Parliament had not indicated that these two classes were to be treated differently. 131 In applying this approach to Mr Ritchie, he had a defence if he was able to establish that, because of the functions that he actually performed for Owens, he was not in a position to influence, in a real and practical way, the conduct of that company concerning the cleaning agents used, the systems of work followed, the plant provided, the information, instruction and training supplied or the footwear worn in the cleaning of ISO tanks at the site. 132 Mr Ritchie was able to establish that defence because of the nature of his role at the apex of a management system within the Owens Group where specific powers and functions (especially in relation to safety) were devolved to experts in the area. The evidence established the remoteness of his role and his lack of hands-on involvement in the detail of occupational health and safety in the tank washing process. The scope of his functions as Chief Executive Officer and his remoteness from the day-to-day operation of the tank washing process resulted in Mr Ritchie not being in a position to influence the conduct of the corporation in respect of this contravention. While it might be said that Mr Ritchie had the authority and capacity for controlling employees at the site and the way they performed work and had the ability to make recommendations to the Owens Group or Owens on the way in which the work was to be undertaken, in actuality, that authority and capacity was theoretical and did not reflect upon his role in the company. If this theoretical approach was adopted then every director, in theory, would have capacity to influence the conduct of the company in relation to any contravention of the Act and the defence would be rendered nugatory. 133 While asserting the strength of the case under s 26(1)(a), it was submitted in the alternative that a defence was available to Mr Ritchie under s 26(1)(b), namely, that, being in the position of director, he had used all due diligence to prevent the contravention by the corporation. 134 While noting the absence of decided cases in this jurisdiction on the meaning and scope of this provision, it was suggested that it may not be appropriate to apply judgments made by other courts in relation to other legislation regarding due diligence by corporations where, in this legislation, the focus was on the director. While appropriate weight was to be given to the word "all" appearing in the phrase "all due diligence" appropriate weight also had to be given to the word "due". The word "due", in this context, meant "right; proper; adequate; (Australian Oxford Dictionary, 2nd ed). The presence of the word "due" meant that absolute or perfect diligence was not required. The use of that word also meant that consideration must be given to the circumstances of a director or person concerned in the management of the corporation, including the particular functions performed by that director. 135 As with the defence under s 26(1)(a), the defence under sub-section (b) must recognise the context in which it operates, namely, the variety of workplaces, the multitude of industries and the range of corporate structures that exist within New South Wales. This defence must also operate in a realistic and practical way. 136 A director will have a defence if he or she, realistically and practically, took all proper and adequate steps to prevent the contravention by the corporation. 137 On much the same analysis as applied to the defence under s 26(1)(a), it was submitted that Mr Ritchie had exercised all due diligence to prevent this contravention by the corporation. While Mr Ritchie was remote in the hierarchy, he had an involvement in occupational health and safety for the entire Group and used reporting by his specialists in the field to keep informed of safety matters. In particular, Mr Ritchie reviewed specific reports on occupational health and safety issues and discussed those issues with his direct reports. He acted appropriately in requiring or expecting the General Managers Divisions would raise exceptional safety matters, particularly given his role and the breadth of his responsibilities. It was submitted that Mr Ritchie had an appropriate involvement in occupational health and safety given his overall role, including his participation from time to time in meetings with a senior Manager of a Division within the Owens Group where issues of occupational health and safety were discussed, as well as his own personal enquiries when visiting a site within the Group and other involvements such as participation in the road show. Mr Ritchie, it was submitted, was entitled to rely on specialists in relation to operational matters such as Mr Rose, Mr Crandles, Mr Howie and Mr Nicholson, particularly given their experience in the management of container parks and their role in establishing and operating tank wash facilities for the Container Division. Mr Ritchie was also entitled to rely on specialists in relation to occupational health and safety matters such as Ms Woods, particularly given her experience in safety management and her involvement in the establishment and auditing of safety systems. He was also entitled to rely on the safety systems in place including the induction and re-induction process, the provision of safety training to management and staff, the creation of hazard registers and a hazard identification programme and the development of work procedures and the conduct of regular auditing. 138 In relation to cross-examination of Mr Ritchie concerning his failure to make enquiries of details concerning safety (such as the experience of Ms Woods to enable her to conduct safety audits, the training of safety officers and the training records of Mr Howie), it had to be realised that it was not practical for him to undertake that level of enquiry nor was it necessary to undertake that level of enquiry in order to establish a defence under s 26(1)(b). Specialist management was to implement policies and Mr Ritchie acted on the expectation that the policies were being implemented. It is in this sense that Mr Ritchie used all due diligence to prevent this contravention by the corporation. 139 It was further submitted that there was something unrealistic about the level of enquiry that a person exercising the role of Mr Ritchie should have to undertake in order to comply with the provisions of the Act and to avoid coming in breach of the Act as a director. Considering the size of the business, these types of enquiries might be made involving numerous employees at a number of sites in a number of countries and cities. These enquiries would multiply according to the nature of the business, that business's particular safety risks as well as the general risks associated with the operation of the business. It was submitted that Parliament could not have intended that a director of a corporation would have to make such detailed enquiries in order to make out the defences available under s 26(1). Ultimately, the position was that there were systems in place and those systems were being managed at a senior and specialist level within this company and within the Group. 140 The essence of the prosecutor's response to the defences raised by the defendant was that effect had to be given to the terms of the legislation - in every sense, both practical and legal, Mr Ritchie had the authority and capacity to influence the conduct of the company in relation to its contravention of s 8(1) of the Act. Attention was also drawn to the incongruity of the defendant seeking to take advantage of both defences provided by s 26(1), primarily arguing that he was not in a position to influence the conduct of the company in relation to its contravention of the provision and, in the alternative, being in such position he used all due diligence to prevent the contravention by the company. It was submitted that the contradiction exposed by that approach on behalf of the defendant was indicative of the flawed defence case. 141 The defences found in s 26(1)(a) and (b) required the Court to consider the contravention, thus focusing attention upon the particulars of the charge against the defendant, Mr Ritchie, and the corporation. Section 26 acknowledged that corporations could only act through natural persons who control the corporation, namely, directors and managers. It was for that reason that directors and managers were to be presumed complicit in the offence committed by the corporation. It was submitted that s 26 recognised that there would be more than one natural person who would be behind the corporation and who would be responsible for the conduct of the corporation: the section directed that focus to those natural persons within a corporation who bore responsibility for the corporation's conduct and who had power to direct the corporation both generally and specifically. 142 The defences themselves may have some bearing on the nature of the duty of the director or manager - the defences at least imply that, in order for a director to escape liability under the Act, that director must exercise all due diligence while the director is in the position to influence the conduct of the corporation. The nature of the director's duty might therefore be created by s 26, in that the section itself creates the consequence of failing to exercise due diligence. 143 The prosecutor accepted the defendant's concession that each director of a corporation had the ability to influence the conduct of the corporation but disagreed with the defendant's suggestion that the legislative intention that the defence available under s 26(1)(a) was intended to apply equally and identically to both directors and persons concerned in the management of a corporation. It was suggested to be obvious, that not necessarily every person concerned in the management of the corporation would be able to influence the conduct of the corporation and much would depend upon the managerial position occupied by the person and his position in the hierarchy of the corporation. Once those factors were identified, it would be for the particular defendant to show that, by reason of the position occupied, he could do nothing to influence the corporation's conduct giving rise to the contravention. This was demonstrated by Morrison v Powercoal Pty Ltd and anor (2004) 137 IR 253 where it was difficult to see how the mine manager could possibly be seen to have been in any relevant position to influence the corporation other than in respect of the mine of which he was the manager. His ability to influence the corporation was defined by his contractual and statutory role as a mine manager. 144 It was submitted that the position for a director was no different to that of a person concerned in the management of the corporation, except that a director would generally always have his powers defined in the broadest possible way by s 198A of the Corporations Act 2001 providing that "the business of a company is to be managed by or under the direction of the directors", and by the director's duties as defined by the general law. Both a director and a person concerned in the management of a corporation had to displace the presumptive position as to liability for a contravention by a corporation. The presumptive position could not be displaced by a subjective re-definition of the statutory powers reposed in directors. For example, in Morrison, the mine manager could not escape the effect of the provisions of the Coal Mines Regulations Act that conferred power on him for all aspects of the operations of the particular mine. 145 In the case of both a director and other managers, the question of whether or not they could exert relevant influence would be determined objectively. To do otherwise would effectively allow those who are in management and who hold positions as directors to avoid liability under the Act by defining their role so as to exclude anything that might make them liable under the Act. The test was not one that directed attention to what the defendant described as "actual functions performed" but looked to the position occupied and the power available to that person in that position to exert influence over the corporation. 146 The prosecutor did not shrink from the proposition that the statutory powers of directors as well as their general law obligations would generally make it more difficult for a director to take the benefit of the defence under s 26(1)(a) but that did not leave the words in the section without any work to perform in the case of a director. There were said to be many reasons, objectively, why a director might not be able to influence the conduct of a corporation at a given time: the director might be a minority voice on the board unable to influence any decision, or may have been incapacitated at the time that influence may have been exercised to avoid the contravention. There may be other examples that illustrated in a practical way that, once the defence was applied objectively, it had work to do in the case of both directors and persons concerned in the management of a corporation. 147 The error alleged in the defendant's approach was said to be exposed by the possibility that directors could organise their duties so that none of them were responsible for occupational health and safety and thus all directors would be completely absolved of liability under the Act. The defendant's reference to the real world also operated against its proposition - effect should be given to the legislative intention that the persons who have power to direct control and drive a corporation in the real world by exerting influence over its conduct are complicit in that corporation's offences and must ensure that the statutory objective that people at work have their safety secured by making sure that the corporation complies with the Act. The Act puts such directors under pain of penalty if they do not exert their influence to secure the corporation's observance of the Act. 148 There was no room to look for a "degree" of influence - once a director was in a position to exert influence, the defence did not apply. Similarly, to focus upon the existence of a "hands-on" role or lack of such a role, the size of the corporation and on non-executive directors simply ignored the words of the Act and mistook the true duties, obligations and powers of directors. 149 The use of the word "influence" in the section, while it might encompass the concepts of "power" or to "direct", is a much wider term including the notion of being in a position to bring about action as a result of being in a particular position. The use of this word indicated a legislative intention that the defence was to have limited application and was to be construed as being confined to circumstances where a director or person in the management of a corporation was powerless to do anything at all to prevent a corporation from contravening the Act. 150 In his evidence, the defendant had conceded that he was in a position to influence the corporation's compliance with the Act: he spoke of reviewing the way occupational health and safety was managed by talking to people and through reporting. It was submitted that the relevant facts leading to a finding that the defendant was in a position to influence the conduct of the corporation in the contravention of the Act were: (a) the defendant was responsible for all of the companies in the Owens Group at least partly due to his role as Chief Executive Officer; (b) the defendant worked specifically on matters concerned with the corporate defendant at least one day a month; (c) the defendant visited the site where the contravention occurred on several occasions; (d) the person responsible for the relevant part of the corporation, Mr Rose, reported to the defendant; (e) the defendant had experience, training and qualifications in occupational health and safety; (f) the defendant informed himself by way of meetings and reports about occupational health and safety matters within the corporation; (g) the defendant had the power to direct employees at the particular site where the risk arose; (h) the defendant had the ability to make recommendations to the Board about how work was to be undertaken; (i) the defendant had the capacity to ensure he had appropriately qualified and trained people in place, albeit that he did not take that opportunity and preferred to make assumptions about what was done in that respect; (j) the defendant had the capacity to ask questions and find out whether people were qualified to do their jobs and whether they were in fact doing their jobs, but made no such enquiry; (k) the defendant's evidence about the steps he put in place to implement the occupational health and safety policy were contrary to the suggestion he could exert no influence; and (l) the defendant was at all times a director of the corporation and had power to give directions as to how work was to be performed.

The prosecutor is an Inspector duly appointed under Division 1 of Part 5 of the Occupational Health and Safety Act 2000 and empowered under Section 106(1)(c) of the said Act to institute proceedings in this matter. 2. Owens Container Services Australia Pty Limited [ACN 065 914 472] is a body corporate and can be sued by its corporate name.
At all material times the defendant was a director of the company. 4. At all material times the company was an employer and employed (amongst other people) John Howie, Francis James, Willie Mataiti and John Kaleopa. 5. At all material times the company occupied premises located at the corner of Carnarvon and Newton Streets, Auburn in the State of New South Wales ("the site"). The site was known as Race Container Park. 6. At all material times the company conducted at the site a business involving the repair, cleaning and storage of shipping containers and tanks ("the business"). 7. At all material times in the conduct of the business, the company operated an International Shipping Organization ('ISO") tank wash bay facility at the site. 8. The company was one of a group of companies known as the Owens Group which operated a series of ISO tank washing facilities in Australia, New Zealand and Fiji. In Australia, such tank washing facilities were operated in Sydney, Melbourne and Brisbane. The companies in the Owens Group operated interdependently of one another. The company within the Owens Group that operated the tank washing facility in Melbourne was Hyde Park Tank Container Holdings Pty Ltd. The company owned Hyde Park Tank Container Holdings Pty Ltd. The Melbourne facility was known as Hyde Park. 9. The company commenced operation of a tank wash bay facility as part of the business at the site in February 2002. 10. Mr Howie was employed as the depot manager for the company at the site. The company had employed Mr Howie since about 1994. He had worked as the depot manager at the site for about two years before his death. His duties were to manage the site. This involved him in running and overviewing the company's operations at the site, ensuring that the site ran smoothly, that trucks were loaded correctly, that the wash bay ran smoothly and that accounts were up to date. 11. The tank wash bay facility at the site occupied an area approximately 15 metres long by 6.5 metres wide. The facility comprised a steel frame structure that permitted the placement of 5 ISO tanks at any one time. The bank of tanks was straddled by a gantry, which was accessed by a set of stairs. This gantry constituted a working platform and was located at a height of 3.03 metres above the ground. Attached to the gantry were various pipes and conduits that conveyed steam and electrical cabling. Also attached to the gantry were various couplings designed for permitting the attachment of devices operated by means of steam and electricity that were used in the tank cleaning process. Located adjacent to the tank washing facility was a shipping container in which was located a boiler which produced steam to be used in the tank washing process. 12. On 14 and 15 January 2003, ISO Tank CTC 9197636 ("tank 9197636") was in the tank wash bay at the site. Prior to being forwarded to the company for cleaning tank 9197636 had contained resin solution. 13. On 14 January 2003, Mr James, who was employed as a labourer and who undertook cleaning tasks in the wash bay facility, began the cleaning process in relation to tank 9197636. Mr James had been employed by the company since about June 2002, had undertaken container cleaning since about August 2002 and was 18 years of age at the time. 14. Mr James began the task of cleaning tank 9197636 by reviewing the paper work relating to the tank and identifying the contents of the tank, the category of wash required and PPE to be worn. Mr James saw from the paper work that the container had previously contained resin solution. Mr James then went to the tank and opened its manhole hatch to ascertain the amount of resin residue that was present. He then drained the residue into 25-litre plastic drums. Once the residue was drained Mr James used a gernie high-pressure water spray gun to clean the top of the tank of dust. He then set up the spinner plate over the manhole cover and inserted the spinner. Mr James then commenced a cold water and detergent wash of the tank. When the cold wash was completed he commenced a hot water, steam and detergent wash. When this was completed Mr James withdrew the spinner and its attachment plate and inserted a flexible air duct connected to an industrial air fan. The fan was activated and the tank was cleared of steam and dried. The duct and fan were removed and the tank allowed to cool. 15. Mr James then inspected the tank by placing an aluminium ladder through the manhole and entering the tank to conduct an inspection. Mr James estimates that he was inside the tank inspecting it for about a minute. Mr James found that there was still some residual resin in the tank. He formed the view it required further cleaning. After talking to Mr Howie, Mr James brought a 200-litre drum of methyl ethyl ketone ("MEK") to the tank. Mr Howie then used a spray gun to spray an amount of MEK from the said drum into the tank. This took about 5 minutes. Mr James was present while Mr Howie did this. About 20 or 30 minutes later Mr James decanted the residue MEK from the bottom outlet valve of the tank and then washed the tank using detergent. Mr James conducted another inspection of the inside of the tank. On this occasion he did not enter the tank. Mr James saw that there was still some residual resin inside the tank. He told Mr Howie about the resin that was still in the tank. No further cleaning of the tank took place on 14 January 2003. 16. The next day Mr James and Mr Howie resumed cleaning of tank 9197636. Mr James again obtained a 200-litre drum of MEK and took it to the tank. Mr Howie proceeded to again spray the inside of the tank with MEK for about 5 minutes. Mr James was present throughout. About 20 or 30 minutes later Mr Howie returned to the tank. Mr Howie asked Mr James to put on some personal protective equipment and go into the tank by means of a ladder for the purpose of using the gernie high-pressure water spray gun to remove the residual resin. Mr Howie then changed his mind. Mr Howie told Mr James that due to the danger involved he would undertake the task himself. 17. Mr Howie walked along the platform on the tank towards the walkway. Mr Kaleopa passed a gernie high-pressure pressure water spray gun to Mr Howie. Mr Howie then received a call on a two-way radio carried by him. Mr Kaleopa and Mr James then left the immediate vicinity of Mr Howie. A short time later an explosion was heard. A number of people including Mr James and Mr Kaleopa saw Mr Howie being propelled into the air to a point about 7 metres from the opening of the tank. Mr Howie sustained severe injuries and died a short time later. 18. The method for cleaning resin from an ISO tank at Hyde Park involved the insertion of a "spinner" through the man-hole of the tank and the securing of the spinner by positioning it on a stand affixed to a metal plate positioned within the manhole opening. A solvent, styrene monomer, was then fed through a line into the tank with the concurrent introduction of low-pressure steam. After that high-pressure steam would be introduced together with detergent and high pressure cleaning undertaken. At the conclusion of the high pressure cleaning the steam would be cut off and the tank allowed to cool. The tank would then be inspected. If any resin residue remained inside the tank the same process would be repeated. If resin residue were unable to be removed by this method of cleaning, its removal by mechanical means buffing with emery paper and an air-operated buffing tool would be undertaken. 19. A pre-requisite to the performance of the method of cleaning work set out above was the (electrical) earthing of the tank. This was to be achieved by attaching an earthing lead/ static line to the tank. 20. As at 15 January 2003 a document existed at the site entitled "Race Container Park Wash Procedures & Product Matrix". This document records 15 separate cleaning procedures for tanks identified by alphabetical letters commencing at "A" and finishing at "P". This document was similar to a document created and followed at Hyde Park. It was originally titled "Hyde Park Wash Procedures & Product Matrix". The documents are identical with the exception that they had different cover pages. 21. The cleaning procedure recorded for resin solution is identified with the letter "F". Procedure F nominates five steps to be undertaken as follows: solvent spray, steam preheat, hot water detergent wash, hot water rinse and hot air blow dry. 22. The Race Container Park Wash Procedures & Product Matrix document identifies solvents as 1 of 3 categories of cleaning agents. It specifically nominates resin as an example of a product requiring pre-cleaning. Under the heading "What to do when - the product is dried onto tank surface" it states "(t)he dried on remains have to be made soft before cleaning. Spray on suitable solvent and allow reaction time." The document makes no reference to the ignition/ explosion risks associated with the use of flammable solvents, especially in a confined space, or the need to control possible ignition sources of flammable solvents including the control of static electricity. It instances acetone as a solvent to be used in tank cleaning operations where streaking within the tank is found. 23. The company had produced a document setting out standard operating procedures for the cleaning of tanks entitled "Procedures on Tanks -Race Container Park". This document did not identify any product-specific cleaning techniques to be used in respect of ISO tanks. In particular, this document did not identify the cleaning technique to be used in respect of an ISO tank containing resin. The document did not refer to the need to earth tanks before commencing cleaning operations. 24. A material safety data sheet ("MSDS") in respect of polyester sheeting resin produced by the company to the police investigating the death of Mr Howie bears a handwritten annotation "cat 3 wash". The MSDS states: Fire/ Explosion Hazard Flash Point: 31 C Explosive air-vapour mixture may form. Explosive when mixed with oxidising substances. Earth and bund all transfer equipment. Keep away from heat, naked flames or sparks … … The MSDS was kept in the main office at the site, the office of the wash bay supervisor on the site and some in the wash bay area. 25. Mr James knew only 3 tank-cleaning procedures. These procedures were known to him as wash categories 1, 2 and 3. Mr James understood a category 1 wash to involve the use of hot water, detergent and steam. He understood a category 2 wash to be identical to a category 1 wash except that it lasted longer and might have involved some subsequent scrubbing of the interior of the tank. A category 3 wash was understood by Mr James to be identical to categories 1 and 2 except that it lasted longer again and might have involved scrubbing or buffing of the interior of the tank. In respect of category 2 and 3 washes, Mr James would notify either John Howie or Mr Mataiti, the site supervisor who was not at work at the time of Mr Howie's death, if he discovered the presence inside the tank of residual product. Mr Howie or Mr Mataiti would then make a decision as to whether a gernie high-pressure water spray gun and/ or solvents would be used to remove the residue. 26. Mr James' understanding and experience was that a tank containing resin solution would be categorised as requiring a category 2 or 3 wash. 27. Mr Willie Mataiti was the supervisor of the company's tank wash facility and reported to Mr Howie. Mr Mataiti was on scheduled leave on 15 January 2003. Three tank-cleaning procedures were known to Mr Mataiti being wash categories 1, 2 and 3. Mr Mataiti understood a category 1 wash to require no decanting of product residue and involve the spinner applying high-pressure hot or cold water together with detergent. He understood a category 2 wash to require the decanting of product residue with the balance of the wash procedure being identical to category 1. A category 3 wash was understood by Mr Mataiti to require multiple washes, entry into the tank and possible scrubbing with a scourer and cleaning chemicals. 28. When interviewed on 20 March 2003, Mr Mataiti outlined the procedure he knew and would use for the cleaning of a tank containing resin solution as involving an initial rinse with cold water applied with a garden hose, then a wash with cold water and detergent applied through the spinner followed by a wash with hot water and detergent also applied through the spinner. 29. Mr John Kaleopa was employed by the company as a labourer and as at 15 January 2003 had been employed for a period of about 3½ weeks. Mr Kaleopa's duties included the cleaning of ISO tanks. He had received hands-on training from Mr Howie, Mr Mataiti and Mr James and was still undergoing training as at 15 January 2003. Mr Kaleopa was provided with some safety training on commencement of his work, spread over a week, including induction training and instruction concerning the MSDS. 30. Mr Kaleopa's understanding and experience of the procedures employed for cleaning ISO tanks was that a solvent with explosive characteristics would be manually sprayed into the tank (if the tank was not used for food products) and then left for a period of time to dissolve any residue product. The solvent was then drained. Thereafter the tank would be washed with the spinner apparatus and steam. Three tank-cleaning procedures were known to Mr Kaleopa being wash categories 1, 2 & 3. He understood a category 1 wash to involve an internal scrub, a steam wash and then buffing. A category 2 wash as understood by Mr Kaleopa was identical to a category 1 wash with the exception that less buffing was involved. He understood a category 3 wash to involve a scrub and wash. 31. MEK was regularly used as a solvent in the conduct of the company's ISO tank cleaning operations at the site. Mr Mataiti was aware of the use of MEK since approximately September 2002 at the site. He was aware that Mr Howie and Mr James were using it. Mr Richard Sylva, the company's occupational health and safety officer at the site was aware that Mr Howie used MEK. 32. MEK is a highly volatile and highly flammable substance. MEK was not used at Hyde Park for cleaning. A MSDS concerning MEK in the possession of the company as at 15 January 2003 states as follows: Liquid and vapour are highly flammable Severe fire hazard when exposed to heat, flame and/ or oxidisers Vapour forms an explosive mixture with air Severe explosion hazard, in the form of vapour, when exposed to flame or spark Vapour may travel a considerable distance to source of ignition. Heating may cause expansion/ decomposition with violent rupture of containers … 33. Mr Howie informed both Mr James and Mr Kaleopa that MEK was highly explosive and flammable. Mr Howie informed Mr Kaleopa that when using MEK he should ensure that "there was no spark from any machinery used close by". Mr Howie verbally warned Mr James not to smoke while using MEK. 34. The work procedures prescribed by the company for the cleaning of ISO container tanks in the wash bay facility provided, amongst other things, for the use of acetone to act as a solvent where streaking was observed within the tanks. The use of acetone presents similar problems to those arising in relation to the use of MEK as acetone is also highly flammable and highly volatile. Both MEK and acetone form explosive mixtures with air at ambient temperatures. The safe use of such substances in confined spaces requires both the exclusion of potential sources of ignition and the control of the surrounding atmosphere by way of flooding the confined space with an inert gas to ensure oxygen-depletion. 35. A gernie high-pressure water spray gun was regularly used in the conduct of the company's tank cleaning operations. Such a device had been used since the company began tank-cleaning operations in February 2002. 36. Investigations have indicated that there were present at the tank wash bay facility at the site on 15 January 2003 a variety of potential ignition sources of the MEK present in tank 9197636. These potential sources of ignition included: a. static electrical discharge from the flow of water from the Gernie high-pressure water spray gun. The Gernie operates at a pressure of 2500 pound per square inch. b. static electrical discharge from the nozzle of the Gernie high-pressure water spray gun; [when placed on or near the top of the tank] c. a static electrical discharge from Mr Howie given the highly insulating footwear being worn by him; d. a spark caused by a stray current to which, as a result of its inadequate earthing, tank 9197636 was susceptible; e. a spark from the flint contained in a cigarette lighter that was subsequently found inside the tank. It was well-known that Mr Howie was a heavy smoker; and f. a spark from possible metal-to-metal contact between the said cigarette lighter and the inside of the tank. 37. Australian/New Zealand Standard AS/ NZS 1020: 1995 The control of undesirable static electricity ("AS/ NZS 1020") published 5 March 1995 states: Static often causes the inadvertent ignition of flammable mixtures . (Clause 1.2) Section 6 of AS/ NZS 1020 deals with the issue of static electricity in liquids. It states: Liquids can become electrostatically charged while flowing past the walls of pipes or vessels, while impinging upon obstacles, during jet or propeller mixing, and when released as a spray ." (Clause 6.1.1)

Inspector Ken Kumar v David Aylmer Ritchie

At a glance

Court

Decision date

Before

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Judgment (26 paragraphs)

Parties

Cases Cited (8)

Cited By (17)