Inspector Maddaford (WorkCover Authority of NSW) v F.I.P. Pty Limited t/as FIP Brakes International

Systems of work 8There were a number of systems of work directed towards ensuring safety at the premises prior to the offence. These have been set out by Mr Katakouzinos in his affidavit. They included a maintenance job list system which involved production staff identifying a problem with a machine and writing the problem in the maintenance job list. The maintenance department would then act to fix the problem. There was also a system of monthly maintenance safety checks to be carried out on the major production machines in the factory, including blender 5. According to Mr Katakouzinos it became apparent to him following the accident that those maintenance checks were not always carried out on blender 5 on a monthly basis. Records of the monthly maintenance checklists were annexed to the affidavit of Mr Katakouzinos. They show that between the period in which the checks were conducted, between June and December 2007, the electrical limit switches on the access doors to blender 5 were working correctly, that is, they operated as a lockout device to stop the machine when the access doors were open. 9There was also a system in place at the premises for maintenance and production staff to complete potential hazards/incident report forms notifying management of any relevant matters. A system of weekly inspections of plant was also carried out by production staff. This system included inspection of the mix area where blender 5 was located. There was also provision in the inspection forms for the status of limit switches to be checked. Weekly production meetings were also held with production staff where safety matters were discussed. In addition, regular toolbox talks were held where safety issues were also discussed. Documentation which may be found in the records annexed to the affidavit of Mr Katakouzinos disclosed, however, that toolbox talk meetings were not held on a regular basis. Monthly meetings of the management team, which were attended by Katakouzinos, represented another forum in which safety discussions were held. Daily forklift assessments were carried out at the premises. FIP Brakes was also approved to ISO 9000 Quality Management. This required yearly audits in order to obtain certification. At the initiative of Mr Katakouzinos office staff at the premises wore Hi Viz work clothes. 10In 2007, the corporate defendant introduced a fortress captive key system to be utilised on blenders 1 to 4. The system, which was essentially a machine lockout procedure, made it impossible for the blenders to operate unless both access doors were closed. No such lockout device was fitted to blender 5. 11A number of production staff had undertaken Certificate III process manufacturing course, which addressed occupational health and safety issues. In addition, a consultancy, Benbow & Associates, carried out two-yearly occupational hygiene assessments at the premises. A system of 5S Housekeeping was also in place. This involved the premises being split into separate areas and various employees being responsible for keeping those designated areas clean, ensuring there was a place for all items and that those items were kept in the correct place when not in use. A system called "Kaizen" was also in use at the plant. It involved a process of continuous improvement of procedures at the premises. Relevant management and staff addressed particular work tasks at the premises with the aim of improving work processes, including safety. 12In February 2007, Mr Katakouzinos authorised CGU Safety and Risk Services (CGU) to carry out a risk radar assessment of the corporate defendant at its premises. Mr Katakouzinos, in his affidavit, said he was concerned about the findings of that assessment. As a result, in April 2007, he authorised FIP Brakes to contract John Owens Pty Limited (John Owens) to develop and commence implementation of a health, safety and environment management system (HSEMS). That work was carried out by Johns Owens between April and August 2007. Mr Katakouzinos approved the HSEMS. 13On 30 August 2007, John Owens carried out an audit of the HSEMS. Mr Katakouzinos recorded in his affidavit some relevant conclusions of the audit which were: (1)weekly departmental inspections which were due to start in June, had started in August; (2)safe operating procedures had been written for most tasks, but had not yet been implemented. 14Mr Katakouzinos called a meeting held on 4 September 2007 to address the matters in the audit report. Following discussions held during that meeting, Mr Katakouzinos said that he considered the HSEMS was being rolled out in a satisfactory manner. 15There were a number of serious deficiencies in the corporate defendant's systems in place at the premises in relation to blender 5. These systems reflect the particulars in the charges to which the defendants have pleaded guilty. They have been set out in detail in the Agreed Facts. A summary of those systems, extracted from the Agreed Facts, is provided below.

Failure to provide a safe system of work - Particular (a) 16A generic written machine lockout procedure known as WP-51 dated 11 February 2005 was devised at the premises, but not in use at the time of the accident. An operating procedure document relating to Pad Mixer 5 (an alternative name for blender 5) dated 6 January 2006 and known as WP-57 was in operation at the premises at the time of the accident. A written cleaning safety procedure in relation to blenders 1 to 4 (but not blender 5), known as WP-61, was also in force at the premises from 19 March 2007. A generic written electrical isolation/lockout/tag out/test procedure was in the process of being developed at the time of the accident. The procedures in force for cleaning blender 5 were developed by different employees, as a result of on-the-job training and experience.

Unsafe plant - Particular (b) 17The limit switches were located in the bottom corners of the hood which was immediately adjacent to the access doors. These switches were designed to operate by mechanical interaction with a circular cam fitted to the rear of the hinge rods for each of the doors. The switches were designed to open an electrical circuit in order to send an electrical signal to the PLC which resulted in the shutting off of electrical power to both motors of blender 5. This meant that when the limit switches were operating properly, if the access doors were open, the power to the electrical motors would be cut. 18At the time of the offences, the limit switch for the right-hand side access door was inoperable. This appeared to be the result of a number of factors. The switch casing had heavy physical damage, the roller plunger actuator assembly was jammed against the side of the casing, and the hinge pin was bent and damaged. External damage to the mounting box was visible. As a result of the condition of the limit switch, the right-hand access door could be fully raised while blender 5 remained operational. 19Although the limit switch for the left-hand side access door was operational, the alignment between the roller of the roller plunger shaft and the top flat surface of the left side cam was poor. The result was that the plunger shaft of the limit switch did not depress adequately when the access door was opened. The set up of the limit switch meant that it was possible to open the left side access door to an angle of 34 degrees before the limit switch operated. Moreover, the set up of the limit switch meant that its operation, even when the access door was open at an angle of 34 degrees, was intermittent and unreliable. 20Both limit switches showed evidence of previous attempts to repair broken conduit connection glands using an epoxy or stylastic material. The repairs had themselves broken down exposing wiring. As earlier mentioned, some eighteen months before the accident, blenders 1 to 4 were each fitted with the fortress captive key-operated electrical lockout device, together with locking barriers to the access doors. No such device or barrier was fitted to blender 5. A sliding metal pin mechanism had been installed on the left-hand side access door of blender 5. This mechanism was designed to secure that access door when in a vertical position (that is, keep it open). No such mechanism was installed on the right-hand side access door. At the time of the accident, however, the left-hand side access door was not secured by the sliding metal pin mechanism. When opened in a vertical position, the door was finely balanced and could easily fall shut. The instability of the left-hand side access door was caused by the modification of its handle to accommodate an adjacent machine. Mr Mando had apparently been aware for some years of the instability of the left side access door. A pinch bar had been placed between the dusthood and the handle of the left-hand side access door in an attempt to prevent that door falling shut. Mr Mando was aware that a pinch bar and other objects had been used for that purpose previously. 21Blenders 1 to 4 had been fitted with dedicated latches on their access doors, that operated to secure the doors when opened to their respective dusthoods. No such latches were fitted to blender 5. The programming of the PLC was such that when blender 5 was operating in automatic mode, although the electric motors had stopped (subject to the problems discussed above), when the left side access door was raised, they would immediately resume operation when that access door was lowered, that is, the motors would reactivate without the need for them to be manually reset at the main control panel.

Inspection and maintenance - Particular (c) 22FIP Brakes did not have in place at the premises a system for conducting pre-operational inspections of blender 5. Nor did it possess any operational or maintenance manuals or other documentation from the manufacturer of blender 5. Safety inspections of all production equipment at the premises were scheduled to be conducted by the maintenance department on a monthly basis. According to the Agreed Facts safety inspections of blender 5 were often missed. Inspections of blender 5 were scheduled towards the end of the monthly cycle of inspections. If the machine had not been inspected by the end of the month the cycle would begin again (that is, blender 5 would be "rolled over" without having a monthly maintenance check). In the period from July 2005 until March 2008, only 12 of 32 scheduled monthly inspections of blender 5 were carried out. Safety inspections were generally carried out during a period of 20 minutes during production staff lunch breaks. The last safety inspection of blender 5 which occurred prior to 19 March 2008 was conducted on 8 December 2007. 23Blender 5 was one of the machines listed on a proforma monthly/safety checklist. The checklist made specific reference to inspections of safety switches, cams/strikers, and contractors in the form of a table required to be completed and signed. There is no evidence of any such form having been completed. FIP Brakes had no system in place for auditing, inspection, and maintenance work of machines at the premises, including blender 5.

Supervision - Particular (d) 24At the time of the accident, Mr Chantaboury was working alone. Mr Mando had seen Mr Chantaboury cleaning blender 5 on previous occasions without taking any steps to electrically isolate the machine, other than opening the access doors.

Information, instruction and training - Particular (e) 25FIP Brakes had not provided systematic and consistent training to employees in relation to the procedures to be followed when cleaning blender 5, for example, in relation to isolation, tagging and lockout procedures. The training that had been provided consisted of on-the-job training by co-workers who had themselves been trained by other co-workers. This had the result that the employees gained different understandings of the procedures involved. Mr Chantaboury, for example, had trained Mr Mando to utilise a particular procedure for cleaning blender 5. The electrical isolation procedure adopted by Mr Mando when he cleaned blender 5 was merely to open the access doors. He had not been trained by Mr Chantaboury to undertake, and did not undertake, the steps for turning off and locking out the main isolator switch, turning off the two 415 vault powerpoint switches, and removing the power plugs for the two electric motors. Mr Mando had not seen procedures WP-51, WP-57, WP-61, or the generic written electrical isolation/lockout/tag out test procedure dated 2007. 26Albert Mamo (Mr Mamo), employed by FIP Brakes as a machine operator, had been trained in the procedure for cleaning blender 5 by a former charge-hand. Mr Mamo had trained other employees in that procedure. The electrical isolation procedure adopted by Mr Mamo when he cleaned blender 5 was to push the Emergency Stop Button, switch off the two 415 vault powerpoints, and remove the power plugs for the two electric motors. Mr Mamo had not seen procedures WP-51, WP-57, WP-61, or the generic written electrical isolation/lockout/tag out test procedure dated 2007. 27Boonchan Vongsy (Mr Vongsy), employed by FIP Brakes as a production charge-hand, had not received any training in relation to the procedure for cleaning blender 5. He developed his own procedure and trained staff supervised by him in that procedure. The electrical isolation procedure developed by Mr Vongsy was to push the Emergency Stop Button, turn off the main isolation switch, turn off the two 415 vault powerpoints, remove the power plugs for the two electric motors and open the access doors. Mr Vongsy had not seen procedures WP-51 and WP-57, nor the generic written electric isolation/lockout/tag out/test procedure devised some time in 2007. Mr Vongsy had been trained in the WP-61 procedure (which dealt with cleaning blenders 1 to 4). When workers under Mr Vongsy's supervision were required to clean blender 5, he would undertake the task of electrically isolating the machine. 28Mr Chantaboury was the worker usually assigned the task of cleaning blender 5. He had not been trained in the generic lockout procedure known as WP-51. At the time that procedure was developed, FIP Brakes made a decision that employees at Mr Chataboury's level would not be trained in the procedure. Instead, all charge-hands and maintenance staff were trained in the procedure. Mr Chantaboury also trained new employees of FIP Brakes in relation to the cleaning of blender 5. FIP Brakes maintained no training records for the task of cleaning the hopper. 29These matters attest to the number of serious deficiencies in the corporate defendant's systems and procedures with regard to the cleaning of blender 5. There were, however, as detailed in the affidavit of Mr Katakouzinos, a number of safety systems in place at the premises directed towards the safe operation and maintenance of the machines utilised at the premises. Many of these systems and procedures appeared to be effective, although a number of them, as earlier detailed, were not fully implemented at the premises. These systems and procedures in place at the time of the offence at the premises, insofar as they operated effectively to ensure safety, mitigate what was otherwise a very serious breach of the Act.

Other objective factors 30A number of steps or measures were available to the corporate defendant in relation to blender 5 to ensure its safe operation. These included ensuring that employees were provided with systematic and consistent training in relation to the procedure to be followed when cleaning blender 5, as well as the provision of written procedures for that task, and, ensuring that electrical limit switches on the hood access doors to blender 5 were functioning properly. Fitting blender 5 with a fortress captive key operated electrical lockout device and dedicated latches to secure its access doors to the dusthood was a further measure open to the defendant to be taken at any time. Any one of these measures would have ensured that the limit switches operated correctly as a lockout device and blender 5 would have been effectively isolated, at the time of the offences. 31FIP Brakes was also on notice prior to the offence that its occupational health and safety systems were lacking. The risk radar assessment prepared by CGU on 28 February 2007, for example, had identified that "No formal systems/procedures were in place" at the premises. The CGU report also noted, "[T]here have been issues identified with (lack of) machine guarding over the blenders". Machine guarding had been identified in the report as being an, "issue which needs addressing as a high priority". 32Given the serious deficiencies in the corporate defendant's systems for cleaning blender 5 and the dangerous and obvious hazards to which Mr Chantaboury was exposed by reason of those deficiencies, there was every prospect of grave, even fatal, consequences. 33The risk to safety (identified in the charges as the risk of being trapped, crushed, cut, impaled) was also reasonably foreseeable. The prosecution, in written submissions, helpfully set out a number of indicia (reflecting the particulars in both charges) which demonstrate the reasonable foreseeability of the risk. These are set out below: (a) FIP had not provided systematic and consistent training to employees in relation to the procedure to be followed when cleaning blender no. 5, in particular in relation to isolation, tagging and lockout procedures. The training that had been provided consisted of on-the-job training by co-workers/charge hands who had themselves been trained by other co-workers/charge hands. Different employees had different understandings of the procedures. (b) FIP had not issued any written procedure setting out the steps to be taken in the task of cleaning blender no. 5 or any isolation/tag out/lock out procedure for blender no. 5. (c) Such procedure(s) as existed for cleaning blender no. 5 were by way of understandings of different employees gained as a result of on the job training and experience. (d) The electrical limit switches on the hood access doors to blender no. 5, which were designed to shut off power to blender no. 5, were faulty. The limit switch for the right hand side access door was inoperable and as a result the right hand side access door could be fully raised and blender no. 5 remain operational. The alignment between the roller of the roller plunger shaft and the top flat surface of the left side cam was poor and the top surface of the left hand cam was worn such that the plunger shaft of the limit switch did not depress adequately upon the access door being opened. Furthermore, the set-up of the limit switch meant that it was possible to open the left side access door to an angle of 34 degrees before the switch operated. In addition, the set-up of the switch meant that its operation (even when the access door was open to an angle beyond 34 degrees) was intermittent and unreliable. (e) Blender no. 5 (unlike other blenders at FIP's premises) was not fitted with a "fortress" captive key operated electrical lock out device that would have made it impossible for blender no. 5 to operate unless both its access doors were closed. (f) Blender no. 5 (unlike other blenders at FIP's premises) did not have fitted to it dedicated latches to secure its access doors to the dust hood. (g) The programming of blender no. 5's PLC was such that when blender no. 5 was operating in automatic mode, although the electric motors would stop when the left side access door was raised, they would immediately resume operation when that access door was lowered. That is, the motors would reactivate without the need for them to be manually re-set at the main control panel. (h) FIP did not have in place any system for conducting pre-operational inspections of blender no. 5. (i) FIP had no system in place of auditing inspection and maintenance work conducted on machines at the premises, including blender no. 5.

Deterrence 34The offences are akin to the type of incidents regrettably encountered on too many occasions in this jurisdiction which involve risks to safety arising from unguarded machinery. Blender 5, at the time of the offences, was in an unguarded state in that the lockout devices, that is, the limit switches on the access doors, were not operating properly so that the power to the blender's electrical motors was not isolated when the doors were opened. The importance of deterring others from failing to ensure the safety of workers because of the presence of unguarded machinery has been recognised by legislators and courts as being of the utmost importance. I adopt here a statement to this effect by Walton J, Vice-President, in WorkCover Authority of New South Wales (Inspector Ankucic) v Crown in Right of the State of New South Wales (Department of Education and Training) [2001] NSWIRComm 313; (2001) 112 IR 1 at [41]: It scarcely needs to be said that the presence of unguarded machinery constitutes one of the most pernicious and infamous dangers to the health and safety of persons in the workplace. It is this very type of danger that prompted persistent and ongoing legislative attempts by governments to compel the correction of such obvious and serious faults in the systems and plant employed in the operations of employers. ... 35Specific deterrence also falls for application in relation to both defendants. A submission was made on behalf of Mr Katakouzinos that the principle has a reduced role in relation to the circumstances of his offence. The principal bases upon which the submission was developed were that Mr Katakouzinos did not know that blender 5 had been recommissioned; it was recommissioned only hours before the tragic accident; and, Mr Davis, on whom Mr Katakouzinos was entitled to rely, had not communicated to him that he had authorised the recommissioning of the blender. It was also said on behalf of Mr Katakouzinos that following the accident he had authorised a number of initiatives with a view to ensuring the safety of workers at the workplace and with a view to ensuring that no accidents of a similar nature could recur at those premises. These safety initiatives will be referred to in more detail later in these sentencing reasons. For present purposes, it is somewhat difficult for the Court to reconcile the submissions with the office held by Mr Katakouzinos within the corporate defendant, namely as its director and managing director, and with Mr Katakouzinos' plea of guilty to the same offence as that of the corporate defendant. It was an agreed fact that Mr Katakouzinos exercised overall control of the day-to-day operations of the corporate defendant and was ultimately responsible for ensuring the development of its occupational, health and safety programme. Any safety programmes or measures initiated by Mr Katakouzinos following the offences must be of equal benefit to the corporate defendant when considering the application of the principle. Based on these matters, the better view is that specific deterrence has equal application to both defendants. The Court will, accordingly, take into account in favour of both defendants, when applying the principle, the safety programmes initiated by Mr Katakouzinos following the offences. 36Neither defendant is adversely recorded. FIP Brakes therefore faces a maximum penalty of $550,000 and Mr Katakouzinos a maximum penalty of $55,000.

Subjective factors 37It was conceded by the prosecution that both defendants entered early pleas of guilty. The Court therefore proposes to award a discount of 25 per cent in relation to each offence as reflecting the utilitarian value of the respective pleas. Both defendants co-operated with the prosecutor's investigation of the matter. 38Mr Katakouzinos also initiated a number of safety reforms at the premises following the offences. These have been set out in detail in his affidavit. One such initiative, earlier referred to, was that blender 5 was immediately decommissioned following the fatality. In addition, a complete review of the safety of all machinery at the plant was undertaken which led to a number of safety upgrades being carried out. A substantial amount of capital expenditure was outlayed, for the upgrading and improvement of various plant and equipment at the premises. Mr Katakouzinos also authorised a number of safety measures, including the review and implementation of revised lockout, tag out, and maintenance procedures. In May 2008, an external auditor, Marsh Pty Limited, conducted an audit of the corporate defendant's HSEMS. The audit covered risk assessment training, a revamping of the safety representative system, including overseeing the election of new health and safety representatives in August 2008, and facilitating OHS consultation training for new safety representatives in September 2008. It also looked at facilitating a system of workplace inspections, as well as the development of safe operating procedures which addressed safe work processes in relation to the machinery and operations at the premises. 39At the initiative of Mr Katakouzinos, production toolbox meetings are now held on a regular basis with all production staff, and safety is a primary topic at those meetings. A Management Safety Committee was set up which meets regularly to discuss safety matters. Training records relating to staff are now being kept in a more integrated and complete form. A range of training programmes has been provided to staff covering occupational health and safety matters including induction, risk assessment, manual handling, and safe operating procedures. Weekly meetings of maintenance staff are now minuted. 40These initiatives, which are both impressive and comprehensive, when combined with the profound expression of remorse in the affidavit of Mr Katakouzinos, meet with the requirements of s 21A(3)(i) of the Crimes (Sentencing Procedure) Act 1999 being evidence of contrition expressed by both defendants which will be taken into account on penalty. 41The defendants also offered assistance to Mr Chantaboury's family. Mr Katakouzinos, in his affidavit, said that following Mr Chantaboury's death he visited his family and attended the funeral where he spoke at the request of the family. In addition, under the direction of Mr Katakouzinos, the corporate defendant fast-tracked payment of all employment entitlements to Mr Chantaboury's family and attempted to fast-track payment of all workers' compensation.

Respective roles 42It was contended on behalf of Mr Katakouzinos that his role in the circumstances of the offences was less than that of the corporate defendant. The submission was put on a similar basis to the submissions made in relation to the application of specific deterrence to both defendants. It was submitted that while the corporate defendant was seized with knowledge that blender 5 had been recommissioned, Mr Katakouzinos on the other hand, was not aware of that fact at the relevant time. Further, Mr Katakouzinos was entitled to rely on the chain of supervision in force at the premises. The evidence established that Mr Davis had authorised the recommissioning of the blender but had not informed Mr Katakouzinos, the person to whom he directly reported. The evidence also indicated that this authorisation had taken place only hours before the accident. 43The only qualitative difference the Court is able to identify within the confined framework of a comparison of respective roles is that the corporate defendant may be taken to have known through Mr Davis, as its production manager at the premises, that the blender had been recommissioned but Mr Katakouzinos did not know, (a fact established on the evidence). It may be concluded on the basis of this difference that the role of Mr Katakouzinos in the circumstances of the offences could be assessed as slightly less than the role of the corporate defendant, notwithstanding that Mr Katakouzinos had a high level of responsibility for safety matters at the premises. It should be added for completeness that there was no evidence before the Court to indicate that at the time of the offences other persons held the office of director within the corporate defendant. In a supplementary affidavit, Mr Katakouzinos referred to taking direction from Tony Carpani, a director of a different corporation, FIP Pty Ltd. There was no evidence concerning Mr Carpani's role, or whether he had any responsibilities or control in relation to the business affairs of the corporate defendant.

Costs 44In relation to costs, it was submitted on behalf of the defendants that only one of them should bear the burden of a costs order. This would avoid, it was said, any artificial separation of costs payable between the defendants and prevent any double counting. It was not explained how costs orders, if made in the usual terms, that is, against both defendants, could result in double counting. I see no reason therefore to depart from the usual orders. I propose to make orders requiring both defendants to pay the reasonable costs of the prosecution.

Orders 45In IRC 193 of 2010, the Court orders that F.I.P. Pty Limited t/as FIP Brakes International [ACN 006 694 720] is convicted of the offence and fined $117,000 with a moiety to the prosecutor. 46In IRC 194 of 2010, the Court orders that Chris Katakouzinos is convicted of the offence and fined $10,400 with a moiety to the prosecutor. 47In IRC 193 of 2010 and IRC 194 of 2010, the defendants are to pay the reasonable costs of the prosecutor as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 August 2011