Inspector Ross Wolf v BHP Steel

PROSECUTOR: Mr G. Phillips, Solicitor Carroll & O'Dea

LEGAL REPRESENTATIVES: DEFENDANT: Mr P.M. Hall QC Solicitors: Ms L. Constantine Blake Dawson Waldron

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: KAVANAGH J Date : Thursday 17 April 2003

IRC1173 of 2002 INSPECTOR ROSS WOLF v BHP STEEL (AIS) PTY LTD Prosecution under s15(1) of the Occupational Health and Safety Act 1983 JUDGMENT [2003] NSWIRComm 119

1 This prosecution is brought by Inspector Wolf of the WorkCover Authority of NSW against BHP Steel (AIS) Pty Limited under s15(1) of the Occupational Health and Safety Act 1983 (the Act). It is alleged the defendant failed: . . . to ensure the health, safety and welfare at work of all of the Defendant's employees, and in particular Mr Daniel Pardy and Mr Glen Leake in that the Defendant failed to provide or maintain a system of work that was safe and without risk to health.

The particulars of the charge were pleaded as follows: (a) As at the 21 April 2000, the Defendant did not require the positive isolation of the precipitator cells so as to ensure that employees of the Defendant were not exposed to risks to their health, safety and welfare. (b) On the 21 April 2000 the Defendant, BHP Steel (AIS) Pty Limited, being an employer at Port Kembla SteelWorks, contrary to s 15(1) of the Occupational Health and Safety Act 1983 (NSW) failed to ensure the health safety and welfare at work of all of its employees and in particular Mr Daniel Pardy and Mr Glen Leake in that the Defendant failed to provide or maintain a system of work that was safe and without risk to health. 2 Mr G. Phillips, solicitor, appeared for the prosecution. Mr P.M. Hall QC appeared for the defendant. An Agreed Statement of Facts was relied upon. The prosecutor also tendered a number of photographs of the site and a WorkCover Report.

3 It is agreed: 3. At all material times, the Defendant conducted business at its Port Kembla Steelworks and owned the scarfer machine and the electrostatic precipitators in the Slab Handling Department of the Port Kembla Steelworks. 4. At all material times, the Defendant employed Mr Daniel Pardy (Mr Pardy) and Mr Glenn Leake (Mr Leake) as operators in the Slab Handling Department at the Port Kembla Steelworks 5. As part of the operations within the Slab Handling Department, random slabs (approximately 5% to 10%) are oxidised by a scarfer machine to remove, or reveal, defects in the slab. 6. The scarfer machine removes approximately 2mm of material from each side of a slab by applying natural gas and oxygen at high pressure to the slab. High pressure water granulates the removed scale and blows it, and other waste (including dust), down a steel chute and into the W24 grids pit (the pit). Waste travels through grids located in the pit to a basin below the pit (with some waste caught by the grids). 7. A steel basket is at the end of the pit in which larger particles of the waste are placed by operators cleaning the pit. The basket is removed, from time to time, by a mobile crane positioned above the pit. The area from which the crane lifts the basket is covered by a steel check plate (hatch) which is situated directly above the pit. 8. The pit is linked to a dust extraction system, called an electrostatic precipitator (the precipitator), which collects and extracts dust by a system of high voltage electric charges and flushing water. The precipitator consists of 6 cells connected to the pit by a length of steel ducting. 9. Approximately 3 to 4 months prior to the incident involving Mr Pardy and Mr Leake on 21 April 2000, the Defendant commenced a program of upgrading the analogue control units in the precipitator cells to digital control units. The reason for the upgrade of the control units was to improve the efficiency of the precipitator cells as a digital system reacts to dust load fluctuations more quickly than an analogue system. 10. When operating, the precipitator produces ozone gas. However, when the scarfer machine is run out of line (that is, removed from its operating position), ozone gas should not be produced. 11. The smaller dust particles are drawn into the steel ducting and through the precipitator by an induced draft fan (ID fan). The ID fan also expels ozone gas produced by the precipitator and the cleaned gas. 12. Approximately 2 or 3 times a week (depending on the build up of waste), the pit is cleaned by operators to clear waste built up on the grids in the pit and to ensure that the waste water from the scarfer machine is able to flow into the basin below. 13. On 21 April 2000, Mr Leake decided to clean the pit. He was accompanied by another operator, Mr Pardy. Mr Pardy and Mr Leake were trained in cleaning the pit. 14. In accordance with the Defendant's isolating procedure for cleaning the grids at the pit (JI - PSH - CMS - GRIDS - 46) (the Grids 46 Procedure), Mr Pardy and Mr Leake with the assistance of an electrician isolated the scarfer machine by running it out of line, that is, removing it from its operating position. This involved isolating the Main Air (this is the air that drives the motors that move the scarfer machine) to prevent the machine coming back on line. The water pumps (SA & SB) that control the water pressure applied to the slab were also isolated. 15. Mr Pardy and Mr Leake arranged for the shift electrician to perform the electrical isolations in accordance with the Grids 46 Procedure. 16. The Grids 46 Procedure in place at the time provided that the ID fan should be switched off when the hatch is removed. However, the Grids 46 Procedure did not expressly refer to the operation of the ID fan when the hatch is in place. At the time of the incident, the hatch was in place as the basket was not required to be removed. 17. Initially Mr Leake asked for the ID fan to be isolated by an electrician. The electrician isolated the ID fan. Mr Pardy and Mr Leake sought clarification as to whether the ID fan should be isolated when the hatch was in place and consequently asked the electrician to switch the ID fan back on. The electrician switched the ID fan on by activating a switch in the electrical switch room. However, this action did not restart the ID fan as it also needed to be manually restarted by the scarfer operator in the control cabin (scarfer operators pulpit) once the power had been restored in the switch room. 18. Mr Pardy and Mr Leake checked the Grids 46 Procedure again to confirm that their actions were in accordance with the Grids 46 Procedure. 19. Mr Pardy and Mr Leake proceeded to the pit. Upon entering the pit they noticed a strong odour. However, they worked in the pit for approximately 30 minutes before Mr Pardy left the pit feeling ill. Mr Leake worked for a further 5 to 10 minutes until he also felt ill and left the pit. 20. Both Mr Pardy and Mr Leake were taken to the ambulance station. The ambulance staff cleared their return to work, however specified that they were to avoid dusty environments. 21. Immediately following the incident, the Defendant conducted atmospheric testing and monitored the air quality in the pit and in the steel ducting connecting the pit to the precipitator. The Defendant also restricted access to the pit to authorised personnel wearing breathing apparatus. 22. Further atmospheric testing was conducted at the pit under simulated conditions on 28 April 2000. An internal report dated 5 June 2000 was prepared which concluded that the level of ozone present may exceed Worksafe Australia peak levels. 23. Investigations following the incident revealed that: (a) contrary to the understanding of Mr Pardy and Mr Leake, the ID fan was not operating despite being switched back on by the electrician in the electrical switch room; and (b) contrary to the Defendant's understanding, cell number 4 of the precipitator continued to operate despite the scarfer machine being out of line. The investigations conducted by the Defendant after the incident revealed that precipitator cell number 4 was incorrectly wired during the upgrade program described in paragraph 9 above. 24. Following the incident a new standard operating procedure was put in place for the cleaning of the pit (SP - PSH - CMS - GRIDS - 34). The new procedure identifies the items to be isolated (after the scarfer machine is taken out of line) and expressly states: "Precipitator cells 1-6 must be isolated and the ID fan must be on for the duration of any work where operators are on W24 grids".

5 In consideration of penalty the Commission in Court Session must first assess the nature and quality, that is, the gravity of the offence. As was held in Lawrenson Diecasting Pty Limited v WorkCover Authority of New South Wales (Inspector James Swee Ch'ng) (1999) 90 IR 464 (at 474): . . . in our view it is important to reiterate that the primary factor to be considered when a judicial officer is determining the appropriate sentence to impose is the objective seriousness of the offence charged. In case of prosecutions under the OH&S Act, this proposition has often been expressed by saying that the 'true measure of penalty lies in the nature and quality of the offence' . . .

The Full Bench further stated (at 474): It has been observed on a number of occasions that subjective factors which mitigate the seriousness of the offence or exculpate the accused must be secondary to consideration of the nature and quality of the offence.

6 The Agreed Statement of Facts does not give the full history of this matter. The Court was greatly assisted by the affidavit evidence tendered by the defendant. Mr Hall, for the defendant, relied upon three affidavits from Mr Martin Cocca, Slab Handling Caster Area Department Co-Ordinator; Mr Graham Jamieson, Plant Maintenance Engineer and Mr Christopher Darling, Manager, Occupational Health, Safety and Risk, at Port Kembla Steelworks.

7 Their evidence reveals a number of relevant facts leading up to this incident. Some three to four months before the incident the defendant decided to upgrade six precipitators which were part of the machinery used in the Slab Handling Department. The upgrade was to utilise new digital technology which reacts to dust levels more quickly and efficiently than the older analogue technology. The defendant engaged an American specialist firm called PrecipTech Inc to provide the new technology and to supervise and direct the installation of it by the defendant's employees into precipitator cell No. 4. Precipitator No. 4 was the first of the six precipitator cells to be upgraded.

8 The emphasis in the early stage of the upgrade was to determine whether the technology worked. The first upgrade of the analogue control unit was installed in precipitator cell No. 4 as a prototype. However, the work on the prototype was performed without plans and without a work method being established prior to the work being done. As a result, a control circuit used to automatically switch off the precipitator cell when the scarfer machine was "taken out of line", meaning "not operating", was not attended to in the upgrade. The control circuit of precipitator cell No 4 therefore did not turn the precipitator cell off when it was supposed to and ozone gas continued to be produced.

9 After the prototype was developed the BHP engineers and electricians drew up a work method and plan for the subsequent installation of the digital system in the remaining five precipitator cells. It would appear in that Work Method the delinquent switch to the precipitators was identified and properly upgraded.

10 On the day of the incident, ozone gas was being produced and went into the waste pit. The system of work in operation was called the "Grids 46". It required an ID fan to be switched off by an electrician when a hatch was removed to the waste pit before employees entered the pit to clear it of clogged metal cut offs. However, on this day, the hatch was not removed. The two employees required to enter the pit to perform the cleaning duties realised, although the hatch remained closed, the ID fan needed to be turned on (to remove any gas). They asked the electricians to so do but the control room also had to enliven a switch for the ID fan and this was not done so the ID fan stayed off.

11 When the employees entered the pit, the ozone which had carried down into the pit was not cleared out by the ID fan and the employees were affected by the gas.

12 Ozone is a gas which is highly toxic. It is an irritant in both short term and long term exposure. It causes inflammation and congestion of the respiratory tract and, in the event of severe exposure, could produce pulmonary oedema, haemorrhage and death. A low exposure, however, does not necessarily provide complete protection. The nature of ozone is such that no exposure, however small, is theoretically without effect (see ILO Encyclopaedia of Occupational Health and Safety, 8 January 2001, "Ozone").

13 The above facts reveal the failure of the defendant on the day of the incident arose from two circumstances: ( a) the control switch on the precipitator cell subject to upgrade was wired incorrectly which resulted in the precipitator continuing to operate and produce ozone gas when the scarfer machine was taken out of line; and (b) although the scarfer machine operators thought they had activated the ID fan, the ID fan was in fact not operating and when they entered the pit the workers were exposed to the gas and its effects.

14 It is the "risk" to safety which must be assessed as defined in the particulars of the breach as pleaded. It is a serious offence where there is an obvious or foreseeable risk to safety against which appropriate measures were not taken, even though such measures were available and feasible (see Inspector Hannah v Wonar Pty Ltd (unreported, Fisher CJ, CT1214 of 1990, 30 June 1992 at 9; Lawrenson Diecasting Pty Limited v WorkCover Authority of New South Wales (Insp James Swee Ch'ng) (1999) 90 IR 464 at 476). An employer must have approved the method of doing the work either, expressly or implied (see Wilson's and Clyde CoalCo v English (1936) S.C. 883 per Lord Aitchinson at 904). Mr Hall QC for the defendant submitted in the present proceedings the evidence does not establish either a "practice" or a "system" had grown up or developed which contained the risk that materialised on 21 April 2000. Therefore, he submitted, the risk was not foreseeable.

15 There was in existence a system of work devised by the defendant for the work task in which these employees were engaged. It was called Grids 46. The defendant submits the appropriate system of work had been authorised and in its performance and the previous experience of the company they had not been alerted to the particular danger which constituted the breach (see Capral Aluminium Limited v WorkCover Authority of New South Wales (Inspector Mayo-Ramsay) (2000) 49 NSWLR 610; (1999-2000) 99 IR 29 [at 60]. To summarise, Mr Hall's submission, in this context was, the incident was the product of circumstances not foreseeable and unable to occur again and though a breach of the Act, the breach did not demonstrate a foreseeable failure of the defendant's system of work.

16 This submission, however, does not address the particularity relied upon in the breach as pleaded: that is, the design of the system failed to ensure the ID fan was always operating even if the hatch was closed. They were exposed to risk when the ID fan did not operate. The system of work did not address this circumstance. It was a breach by way of omission in the system. In such circumstances the employees were unable to safely perform their duties. Further the prototype for the Precipitator Cell No. 4 was designed "on the job" without a defined Work Method. A Work Method based on a plan identifying the machine and all its relevant parts, it can be inferred, would have acknowledged the existence of the switch which switch was overlooked and therefore not upgraded. When the plan was drawn up for the refinement of the other precipitator cells the switch was identified and adapted.

17 While one aspect of the breach revealed a design fault brought about by a failure to work from a work method, the other aspect of the breach revealed a failure of the system of work to ensure the ID fan always operated to remove gas from the pit. The defendant submits the breach: . . . arose from two independent circumstances both of which were highly idiosyncratic circumstances. The wiring fault did not manifest itself as a potential risk.

The incident . . . was a product of a combination of circumstances not foreseeable and unable to occur again and were not part of any 'system' or 'practice' .

I reject this submission. I find the combination of the lack of a Work Method for the development of the prototype and the failure of the system of work which allowed for a presumption the ID fan was operating created a circumstance where the risk to safety was most serious. The system in place for the performance of the Grids 46 task did not identify a circumstance where employees would enter the pit while the hatch was closed without the ID fan working. Yet they were required to do so on 21 April 2000. Further employees constructing a prototype without a work method is a direct system of work failure. The degree of risk is reflected in the consequent exposure of two employees to ozone gas. I accept the Grids 46 system of work may continue to be effective now it has been changed to ensure the circuits are all upgraded and the precipitator cells do not operate without a working ID fan.

18 The existence of settled procedures and instructions is a factor which may mitigate the seriousness of the offence under the Act: (see Warman International Ltd v WorkCover Authority of NSW (1998) 80 IR 326 at 342; WorkCover Authority of NSW v Broken Hill Proprietary Co Ltd (1998) 83 IR 427 at 429; Department of Mineral Resources of New South Wales (Chief Inspector B R McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 at 27); WorkCover Authority of NSW v Fernz Construction Materials Ltd (2000) 100 IR 23 at 33; and Inspector Barbosa v Newstart 150 Pty Ltd t/as Style Wise Interiors (2002) NSWIRComm 64 (7 May 2002) (Walton J, Vice-President at 71). The evidence revealed the defendant had in place a system of work and written procedure which identified hazards and actions necessary to ensure the safety of its employees when undertaking the task of cleaning in the pit. That system of work comprised the following:

(a) isolation of: (i) the air that drives the motors that move the scarfer machine; (ii) the low pressure water hood spray (iii) the water pumps that control water pressure applied to the slab; (iv) the ID fan when the hatch is removed; (b) prior to entering the pit, the Co-ordinator must be advised; (c) in the event that there is more than one operator entering the pit then multi-locking devices were required to be used at each isolation point.

Such a system however did not address the circumstances on the day of the incident when the hatch was not removed.

19 In this case the defendant company's acts and omissions created the risk. Their failure, that is, their acts or omissions, in not defining rigorous procedures made the risk to safety, if not foreseen, foreseeable. From evidence later considered in this judgment, the acts of the defendant to adjust the system of work by ensuring the ID fan worked in all circumstances and all switches were upgraded revealed appropriate measures were both available and feasible to allay the foreseeable risk which the failures related to the switch and fan revealed. I find there was a failure to provide a safe system of work on 21 April 2000.

20 I therefore find this was a serious breach of the Act.

21 A number of subjective features to the breach require consideration. The Full Bench in Lawrenson Diecasting cited (at 474) with approval, the passage in the judgment of Fisher CJ in Haynes v James Glass and Aluminium Pty Limited (unreported, CT91/772-775, 20 May 1994) where his Honour said: . . . While previous good industrial citizenship and the absence of prior convictions are proper considerations, their importance lies well behind the two primary aspects of the matter, namely the nature and quality of the offence and the clear policy of the Act in relation to the establishment of safe standards and the protection of the workforce.

22 I am satisfied the defendant has expressed contrition and this has been reflected in the concern it has shown for the individual employees. One employee has returned to pre-injury duties and the other, who has expressed a fear related to returning to work inside the pit, has had his work duties adjusted accordingly. Both employees are still in full time employment with the company. Their physical reaction to the exposure to ozone gas I accept was short term.

23 A level of deterrence must be factored into consideration as to penalty. In Fisher v Samaras Industries Pty Ltd (1996) 82 IR 384 (at 388), this principle was applied in the context of consideration of breaches under the Act where Hungerford J held: I . . . would only echo what I see to be the fundamental duty of the Court in this important area of public concern, that is, to ensure a level of penalty for a breach as will compel attention to occupational health and safety issues so that persons are not exposed to risks to their health and safety at the workplace. At the same time, the Court has a corresponding duty insofar as a defendant is concerned not to impose such a penalty as would be oppressively high. Again, I echo Cullen J in Walco (at pp 15-16) in referring to what was observed by Smithers J in Trade Practices Commission v Stihl Chainsaws (Australia) Pty Limited [1978] ATPR 40-091 at 17,896 as adopted by Forster J in Trade Practices Commission v Lois (Australia) Pty Ltd [1986] ATPR at 47,225, as follows: The penalty should constitute a real punishment proportionate to the deliberation upon which the defendant contravenes the provisions of the Act. It should be sufficiently high to have a deterrent quality, and it should be kept in mind that the Act operates in a commercial environment where deterrents of those minded to contravene its provisions is not likely to be achieved by penalties which are not realistic. It should reflect the will of Parliament that the commercial standards laid down in the Act must be observed, but not be so high as to be oppressive. These principles were recently cited by the Full Bench of the Commission in Court Session with approval in Capral Aluminium Limited v WorkCover Authority of NSW (Insp Mayo-Ramsay ) (2000) 49 NSWLR 610; (1999-2000) 99 IR 29 [at 74]) where it was said: the . . . Court should take in relation to the question of deterrence, both general and personal or specific, when sentencing an offender in relation to a serious breach of the legislation. It follows that both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Page v Walco Hoist Rentals Pty Limited (No. 2) [2000] NSWIRComm 39 at 40-43) we would expect such cases to be very rare . . .

24 The defendant has adjusted the system of work since the incident to ensure a similar incident cannot occur again. Those steps include: (a) amending the pit cleaning procedure to require positive isolation of the precipitator cells and to describe in greater detail the safety steps required to be undertaken, including: (i) the ID fan is locked in the "on" position to ensure that it is operating at all times; (ii) other precautions including precautions for lifting, the wearing of personal protective equipment and the use of hand rails when emptying the basket; and (b) the scarfer machine operators must now take a portable flagpole down to the pit to indicate that the ID fan is operating; and (c) a further indication is the simple addition of the hatchman's ribbon on a pole to ensure the air is circulating.

25 The defendant company has ensured the rectification of the wiring and the adoption of the new and comprehensive switching system eliminates the identified risk to safety as revealed by this breach. The additional supply of protective clothing and the use of handrails, eliminates other possible risks to safety which were identified when the defendant company examined its existing systems. The attitude of the defendant and its skill in improving safety procedures following the incident is relevant to the consideration of the element of specific deterrence (see Capral at 60). From an analysis of the tendered Occupational Health and Safety Policy and Procedure documents it is revealed audits are conducted regularly on all tasks performed in the defendant company's operation. The audit procedure is tiered, focused and technical. A systematic approach to safety is now adopted. I am persuaded BHP has in place a proactive occupational health and safety policy. It is a "live" policy which allows adjustments to procedures according to needs. There is a role for the individual employee to have input into site safety and to influence safety procedures. Hazards are identified and addressed and work methods are required for all tasks. General deterrence considerations however must allow the penalty to reflect the serious nature of the breach.

26 Other factors to the consideration of penalty are relevant. The defendant entered an early plea of guilty to the breach and co-operated with the WorkCover investigation. A discount in penalty is therefore proper given the utilitarian value of the early plea (see R v Thomson; R v Houlton (1999-2000) 49 NSWLR 383; (2000) 115 A Crim R 104).

27 A further issue was raised by the defendant company and must be given consideration in assessing penalty. The defendant submits this particular division of BHP which operates in the heavy industry area has never been prosecuted for any breach of the Occupational Health and Safety Act. Further, the Division has been operating since 1979. The defendant company invites the court, when considering penalty, to consider this fact. The industrial record of the defendant company reveals some 30 breaches of the Occupational Health and Safety Act, 1983. Evidence revealed the company has, with great vigour and expense, refined all its occupational health and safety procedures since 1996. It introduced rigorous training and re-training programmes for all employees. There have been 14 breaches of the Act since 1996 and only three have been brought before the Court. The other breaches have been dealt with by the Chief Industrial Magistrate. An examination of the industrial record tendered reveals two of the incidents after 1996 could be perceived as most serious. In mitigation I allow some credit acknowledging the Division's positive contribution to the improved safety record of the company.

28 I am persuaded the defendant company's thorough investigation into the incident, its pre-existing awareness of site safety and its refinement of its system of work since the incident are all matters which should reflect in the mitigation of penalty. Further, the defendant company is a responsible corporate citizen who provides significant employment within NSW and contributes especially to the quality of life for NSW citizens in the Wollongong/Port Kembla region. I take into account both the objective and subjective features of the case. I allow a discount of 25 per cent for the utilitarian value of the plea and a further discount for the subjective features of the breach.

30 The maximum penalty the defendant faces given its previous convictions under the Act and in accordance with the provisions of s51A of the Act is $825,000.

31 The defendant is fined in the sum of $120,000 with a moiety to the WorkCover Authority.

32 It has been agreed the defendant pay the respondent's costs at $11,000.

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