34 The defendant maintained a standard hazard register that was kept on the computer server. In 2000, the Race site occupational health and safety officer undertook hazard identification and, during Ms Woods' reviews and audits in July and November 2002, she examined those records and instructed both Mr Howie and Mr Sylva to update the hazard identification records being kept at Race.
35 The defendant provided written instructions on safe working methods to its employees and these were in operation prior to the accident. Work Instructions for tank cleaning had been developed at the Hyde Park site and were sent to the Race site. The instructions at the Race site dealt with cleaning tanks from a number of specific clients, working in the survey area, working in the wash bay area, fork hoist procedures and the use of cones when working in particular areas. The Hyde Park site had developed some wash procedures prior to the accident that were supplied to other depots in Australia, including the Race site. Those procedures arose out of discussions during a conference of Depot Managers in July 2002 and was further discussed at an occupational health and safety conference for Depot Managers in August 2002. Ms Woods also dealt with written procedures for working in confined spaces that had been developed at Hyde Park and were present at the Race site prior to the accident. There were also instructional videos dealing with working in confined spaces and that had been shown to Depot Managers during 2002, including Mr Howie. Depot Managers' conferences were a critical part of the safety management system and safety was always a part of the agenda. Such conferences were held two or three times a year and were of two or three days' duration: the occupational health and safety discussions could range from two hours to a whole day. Apart from Depot Managers conferences there were also occupational health and safety conferences and training sessions which Mr Howie and other Depot Managers attended. These conferences were held on average twice a year and usually lasted two days. Ms Woods would deliver presentations to those conferences on occupational health and safety issues and aspects of improvement to the safety management system of the defendant.
36 The defendant had a senior occupational health and safety committee comprising of Mr Rose with one or other of the Australian or New Zealand country managers, either two Australian Depot Managers or two New Zealand Depot Managers, other senior officers (such as Operations Managers) and Ms Woods. This committee met during the course of Depot Managers' conferences and occupational health and safety conferences attended by Depot Managers. Each Depot also had an occupational health and safety officer as part of the safety management system. The duties of that person were to assist the Depot Manager in implementing the occupational health and safety management system, organising and chairing regular safety committee meetings and attending occupational health and safety training. At the time of the incident the occupational health and safety officer at the Race site was Mr Sylva. Ms Woods had discussed occupational health and safety matters with Mr Sylva and had enquired whether safety meetings were being held at the site and how Mr Sylva was progressing with the list of safety issues at the Depot that Ms Woods had identified in November 2002 as requiring action. Ms Woods understood after Mr Sylva's appointment while the occupational health and safety committee meetings were being held the previous occupational health and safety officer was not keeping Minutes. That had become clear to Ms Woods in her November audit of the Race site.
37 In the July 2002 occupational health and safety conference, Mr Rose told Depot Managers that the Australian depots had to achieve the same safety accreditation that the New Zealand depots had achieved under the regulation of the workers compensation system. How this was to be achieved was discussed at the conference. Those discussions included staff training and depot auditing. It was Mr Rose's direction that the initial level be achieved by March 2003. Ms Woods understood this requirement to be part of the wider push from senior managers of the Group to improve the standard of occupational health and safety throughout the companies within the Group. Ms Woods had organised the Depot Managers' conference for mid-January 2003 where the progress of the Australian Depots in achieving accreditation was to be discussed. Because of the death of Mr Howie, that conference did not proceed.
38 Prior to the accident, Mr Rose gave Ms Woods the responsibility of improving the occupational health and safety management system for the Australian Depots by March 2003 and she had developed a programme to that end in 2002. Depot Managers were required to directly supervise the implementation of the safety management system so that procedures were kept up to date and followed and safety meetings were being regularly held. The defendant had paid for Ms Woods to attend professional development courses prior to the accident such as a May 2001 two day safety conference held in Australia which included a session on Australian safety legal issues.
39 The defendant used audits to identify ways to improve its safety management system and ensure compliance with that system. In 1999 the occupational health and safety officer at Race had carried out a safety audit and had produced an audit report. In 2000, a safety audit was conducted and a report produced and in 2001 Ms Woods conducted two audits of the Race site. In July 2002, at the request of Mr Rose, Ms Woods conducted a review of the tank cleaning operations at Race.
40 In August 2002, Ms Woods assisted in organising an occupational health and safety conference in Christchurch, New Zealand during which Depot Managers were taken to a container park to receive training in safety auditing. All Depot Managers were required to attend and Mr Howie attended. The training was hands-on and involved Depot Managers conducting an audit of the Park and then convening to discuss the results of their audits so that they could gain knowledge and insight from seeing the results of each others audit. In November 2002, Ms Woods conducted training in Melbourne for the Australian safety officers including training in the completion of workplace inspection check sheets. After completing this training, safety officers were required to complete monthly audits at their depots. In late 2002, Ms Woods conducted another audit of the Race site that involved walking through each area of the depot and discussing relevant issues but as she did not have specialist knowledge of the tank wash operations, she was unable to audit this aspect of the site.
41 In late November 2002, at the request of Mr Howie, Ms Woods trained Mr Sylva and Mr Mataiti in the use of the Owens workplace inspection sheets, used for monthly audits. After that training Ms Woods prepared a report for Mr Sylva and Mr Howie identifying matters requiring a follow-up. Ms Woods was due to return to the Race site in March 2003 to verify that the check sheets were being used. She had discussed with Mr Crandles the use of either Mr Nicholson from Melbourne or Mr Greatrex from Brisbane to conduct the final audit because they were Depot Managers having expertise in relation to tank washing.
42 From time to time the defendant also arranged for independent safety reviews to be conducted at the Race site. Such reviews were conducted in October 1999 and March 2001 and involved other sites including the Race site. After these external audits, Mr Rose directed the conduct of a full risk management audit by the then Health and Safety officer for Owens transport. In March 2001, a full report of the health and safety management review was provided to the defendant.
43 Prior to the accident the defendant used a number of strategies to communicate safety issues to their employees, including the issuing of statements that were required to be acknowledged in writing concerning particular safety obligations, the proper display at depots of critical safety procedures, the provision of safety signage and posters at depots and the provision of access to a library of safety videos. In the course of her visits to the Race site, Ms Woods had a number of meetings with Mr Howie and she was able to monitor the adherence to and implementation of changes to the safety management system of that site. She regularly discussed with Mr Howie his progress in implementing the safety management system at Race and during 2002, on average, spent two hours every week assisting Race with safety issues. A number of matters were discussed including safety gear, working at heights, the use of harnesses, personal protection equipment, attendance at training, confined spaces training and induction. Ms Woods referred Mr Howie to the Hyde Park personnel and the computer programme dealing with chemicals in relation to the use and storage of chemicals and the content of work procedures and took this course because those matters involved specialist knowledge which the people at Hyde Park possessed or through which Mr Howie could inform himself by using the computer programme. The computer system allowed each site to access and print off material safety data sheets. After the accident, a ban was reinforced on the use of MEK as a cleaning agent. This was achieved by way of written notice from a senior Manager to all depots within a fortnight of the accident. In 2003, there was a specific health and safety conference for Depot Managers and health and safety officers from Australia and New Zealand where the incident was discussed as well as how it could be prevented from occurring in the future.
SUBMISSIONS
44 The prosecutor drew attention to the number of defects in the safety system to which the defendant had pleaded guilty. The use of volatile and flammable substances in confined spaces was not limited to MEK. In this case there was a lack of appropriate earthing, there was a failure in relation to the provision of information, instruction and training, there was a failure of supervision and there was a failure to provide appropriate personal protective equipment. The Agreed Statement of Facts referred to specialist reports identifying how the explosion could have been avoided. Three matters were identified as appearing to directly contribute to Mr Howie's death, namely:
i. That a flammable solvent (MEK) was used within the confined space of the ISO tank at a temperature above its flashpoint.
ii. That potential sources of ignition were brought into the vicinity of the open hatch on the ISO tank, and
iii. That Mr Howie was physically located above the hatch at the moment of the explosion. An expert report noted that excluding any one of these three contributing causes would have averted this tragedy. It was considered that a safe operating procedure for the routine cleaning of ISO tanks would be expected to address at least two of these three contributing factors.
Examples of safe procedures were provided as follows:
(1) If a flammable solvent was to be used at a temperature above its flashpoint, then all potential sources of ignition would need to be excluded, and these cleaning operations would need to be conducted remotely.
(2) If the operator was to be present during the cleaning process, then all sources of ignition would need to be excluded and the flashpoint temperature of the solvent should not be exceeded.
(3) If the operator was to be present during the cleaning process, and a solvent was to be used at a temperature above its flashpoint, then all sources of ignition should be excluded and the tank should be sufficiently purged of oxygen with an inert gas prior to the introduction of the solvent. This purge would need to be maintained while ever there was a flammable solvent within the tank. It was concluded that the most likely fuel involved in the explosion was the MEK.
45 It was noted that Ms Woods had concerns about safety at the Race site and that there had been no auditing of the wash facility at that site. No risk assessment had been conducted and for a long period of time there were real concerns about the site: there was lots of talk but nothing much was done by the defendant to address the issues that had been identified. The nature of the risk was extreme - the clear possibility was that employees could be fatally injured and that was the potential risk that the defendant had to address.
46 The risk of using the substance MEK appeared to be well know to Mr Nicholson and Mr Nguyen at the Hyde Park facility and they had discussed its dangers with Mr Howie. Despite this level of knowledge, nothing was put in place to guard against or prohibit the use of MEK or similar products and MEK was stored at the Race site. The material safety data sheet showed that the substance was obviously extremely dangerous and volatile - therefore the risk was reasonably clear and obvious.
47 The remedial steps taken were to earth the facility, to engage in retraining, to ban the use of MEK as a solvent and to enforce the safety policies. None of these steps were difficult to take and were readily available. The breach constituted a serious offence that was at the higher end of the scale.
48 In relation to the defendant company, it was accepted that the absence of prior convictions meant that the maximum penalty that could be imposed was $550,000. Here, there were some subjective factors including the fact that the company had entered its guilty plea at a reasonably early stage.
49 For the defendant, it was submitted that the offence had to be considered against a factual background that showed that the company had an extensive safety system and training but unfortunately the Race operation had become somewhat out of kilter with the other wash bay facilities. In particular, the methods used at the Hyde Park facility were safe - the containers were earthed, MEK was not used as a cleaning agent and pressurised steam was used in combination with the cleaning agent. These steps had not been followed at Race although Mr Howie was a very experienced operator who had been warned of the dangers of using MEK. The Hyde Park procedures were available on the company's computer server and had been downloaded at the Race site. After the accident the company wound down operations at the site and by the end of September 2003 had ceased all operations at the site. Since November 2004, Owens had not operated a business including a tank cleaning operation.
50 It was emphasised on behalf of the defendant that this was not a situation where it had failed to perceive an obvious risk - the risk was perceived and responses were prepared but those responses, regrettably, were not followed on 15 January 2003. The Hyde Park procedures were known and available and while MEK was not prohibited, its dangers were known and were known to Mr Howie.
51 The defendant laid emphasis on its existing system, prior to the accident involving Mr Howie, where the safety management system was administered by a health and safety manager, where there was a group and company occupational health and safety policy, where there was an occupational health and safety toolbox designed to assist in managing risks at each site, where there were employee inductions and re-inductions and an induction manual in operation, where there was an awareness plan for identifying occupational health and training needs and the preparation envisaged of a hazard register. In addition, there was the preparation of work instruction and wash procedures for the cleaning of tanks, the provision of practical safety training at Depot Manager conferences and occupational health and safety officer conferences and general safety conferences, an established senior occupational health and safety committee, the appointment of safety officers at its site, the requirement for there to be regular safety committee meetings at each site, the use of internal, external audits on a periodic basis and the plan to achieve occupational health and safety accreditation levels specified within New Zealand. This system was not static and was regularly reviewed.
52 After the accident, senior and experienced officers of the company were sent to Sydney and took control of the Race site. The defendant banned the use of MEK as a cleaning agent and revised its work procedures for tank cleaning. In February 2003 the safe work method statement was introduced requiring wash bay operators to wear proper safety boots and cotton clothing rather than wool to minimise static. Under the terms of this document there was to be no smoking in the wash tank area. The operators were not to take mobile telephones or other items capable of creating an ignition source into the wash tank area, the wash bay supervisor was to observe adherence to the procedure by approving and closing out each ISO tank work permit form, the bay operator and supervisor were to inspect the earthing of the tanks, where the operator and the supervisor were to ensure that appropriate personal and protective equipment was worn, where the wash bay supervisor was to approve the opening of the tank and where the wash tank operator was not to proceed unless a safe work platform was in place. It was submitted that these steps addressed some of the concerns arising from the accident. In addition, the defendant installed earthing leads in the wash tank area of the site and provided training in the revised procedures at the site and working in confined spaces.
53 In relation to specific deterrence, the defendant pointed out that it had not operated a business since November 2004 and no longer conducted tank cleaning operations in Australia and had no intention of resuming tank cleaning operations. In those circumstances it was submitted that this was a case where specific deterrence had no role in the assessment of the penalty. The defendant should also be given credit for the considerable steps taken after the accident to address the risk to safety that it exposed. The defendant had arranged for a review of its operations generally, not confined to the tank cleaning operations, to be conducted at the site and that led to the implementation of a number of further changes at the site. The evidence of Ms Woods identified the elements of the safety system in place while the affidavit of Mr Nicholson dealt with the work instructions existing prior to the incident and how they had been developed. Consideration of all of these matters in the context of a maximum fine of $550,000 allowed the conclusion that this was an offence within the mid-range.
54 In relation to subjective factors, the defendant had entered a guilty plea at the third mention and prior to the setting down of the matter for hearing. This was to be considered an early plea and one deserving of the maximum discount. The defendant did not have a prior conviction and was unlikely to re-offend given that it no longer conducted tank cleaning operations and had no intention to resume such an operation. The defendant had co-operated with the WorkCover Authority, the New South Wales police and New South Wales Fire Brigade. It had a good safety record in light of the size of its undertaking and the fact that it had been in operation since 1987 employing between 200 to 250 people in Australia. The evidence showed that the defendant otherwise had a commitment to occupational health and safety and had expressed genuine and sincere regret at the occurrence at the accident and the death of Mr Howie. Assistance was given by the defendant to Mr Howie's family.
DELIBERATION
55 In assessing the objective seriousness of this offence, it is appropriate to have regard to the particulars of the charge to which the defendant company has pleaded guilty. The use of the highly volatile MEK as a cleaning agent, the failure to ensure that MEK and other volatile and flammable substance was not used within confined spaces of a tank at a temperature above its flashpoint at a time when potential sources of ignition were brought into or were present in the vicinity of the open hatch of the tank, the failure to control conditions permitting the ignition of MEK or other volatile flammable substances at the tank wash bay facility at the site, the failure to ensure that employees were not located above or near the hatch of the tank at the time the tanks were being cleaned, the failure to ensure that the tank wash bay facility was earthed so as to prevent the possibility of ignition of MEK and other volatile and flammable substances used in the cleaning of tanks, the failure to ensure that the tank wash facility provided means to effect the earthing of tanks present so as to prevent the possibility of emission of MEK or other volatile and flammable substances, the failure to provide adequate information, instruction and training to employees working in the tank wash bay facilities so as to ensure their health and safety, the failure to provide supervision as necessary to ensure the health and safety of employees working at the tank wash bay facility and the failure to provide or ensure the use by employees of such footwear as was necessary for the safe performance of work when using materials of substances liable to ignite or explode, demonstrate the widespread nature of the failures exposed in the defendant's safety system. I accept the prosecutor's submission that having regard to the steps taken after the accident to address these issues and having regard to the finding of the expert report as to the means to overcome the risk, these steps were not difficult to take. I also accept the prosecutor's submission that the risk was "reasonably foreseeable", a suitably restrained submission but one well founded on the evidence. The combination of a variety of failures in the defendant's safety system, the reasonable foreseeability of the risks that were posed and the simple steps that could have been taken to avoid those risks mark this breach as a serious offence.
56 The defendant called extensive evidence as to the resources made available to establish and review the defendant's safety policy and on their face those systems, involving video training aids, manuals, internal and external audits, certainly gave the appearance of a comprehensive and effective safety system. The flaws in that system, however, were clearly exposed by the incident in which Mr Howie lost his life. It is difficult to understand how the Race facility had largely escaped direct intervention in relation to its work practices. Despite internal and external audits, the evidence suggests that MEK was being used for a considerable period of time at the site and was being stored at the site. Although the Hyde Park facility had produced work procedures, these were not adopted as the mandatory standard for all facilities even though those procedures were made available by way of information to other sites. There is nothing in the evidence that satisfactorily answers the query why such a step was not taken. Nor does the evidence provide a satisfactory explanation why Mr Sylva was appointed as the safety officer at the site without having any training in that area, although that was a requirement of the defendant's policy. There was nothing in the system of safety and its enforcement that would bring such a position to the attention of Ms Woods, Mr Crandles or Mr Rose. There appears to have been an acceptance that Mr Howie's long experience in the container industry and his involvement with tank wash facilities meant that he had formal safety qualifications in this specialist area, yet there was nothing in his file to support such an assumption. The total absence of earthing also escaped detection under the system of internal and external auditing: Ms Woods accepted that she did not have the expertise to audit this part of the operation and having regard to the chemicals used, closer attention needed to be paid to the special nature of this work.
57 General deterrence has an important role in the setting of a penalty for offences under the Act. This case provides yet another example of significant resources being made available to establish a safe system but assumptions about the operation of that system left it significantly flawed in certain areas of its operation. I do not regard the defendant's system as being merely a paper system but it derived its form from a Group policy dealing with a number of undertakings having regard to the wide corporate interests of the Owens Group and that fact may have masked the need for particular steps to be taken in relation to the creation and continuance of an effective safety system for the operation of the tank wash facility section of the business.
58 The special circumstances of this case supports the defendant's submission that there is no real role for specific deterrence in relation to this offence. I accept the evidence that this particular facility was allowed to wind down over a number of months until closed in September 2003 and that since late 2004, the defendant has not continued in business and has no intention of doing so and, in particular, in the future will not be operating a business in the speciality of tank wash operations.
59 As to subjective factors, I accept that the defendant acted promptly and entered a plea of guilty at an early stage of the proceedings. The defendant is entitled to the full benefit of that early plea and a discount of 25 per cent shall therefore be allowed on the penalty. I accept the defendant's submission that in light of the sale of the business and its intention not to enter into any business including the specialised business of tank cleaning, that it is therefore unlikely to offend in the same way again. The defendant has been in operation since 1987, with a large workforce who were employed in an industry where there were a number of workplace risks, quite apart from the special risks attending the operation of the tank wash facilities. The defendant has no prior convictions and in the circumstances that is properly to be considered as a good safety record. The defendant co-operated with the authorities, including the WorkCover Authority, demonstrated its contrition not only by its early plea but also in the assistance offered to Mr Howie's family and its public statement of regret of the occurrence of this accident and the loss of Mr Howie's life.
60 I accept that the defendant had a significant safety system in operation although demonstrated to be flawed in relation to the operation of the Race facility. Prompt steps were taken to address the risks exposed by this accident and a variety of measures on a wider scale were adopted by the defendant to ensure the effectiveness of its safety system. All these matters are worthy of consideration in mitigating the penalty.
ORDERS
61 After considering all of the above matters, the Court makes the following orders:
1. The defendant is found guilty of a breach of s 8(1) of the Occupational Health and Safety Act 2000 as particularised in Matter No IRC 151 of 2005, to which it has pleaded guilty.
2. The defendant is to pay a penalty of $160,000, with half that sum to be paid to the prosecutor by way of moiety.
3. The defendant is to pay the costs of the prosecutor in a sum agreed or, in the absence of agreement, as ordered by the Court.