Inspector Seneviratne v Caltex Petroleum Distributors Pty Ltd

LEGISLATION CITED: Occupational Health and Safety Act 2000

Lawrenson Diecasting Pty Limited v WorkCover Authority of New South Wales (Inspector James Swee Ch'ng) (1999) 90 IR 464 Tyler v Sydney Electricity (1993) 47 IR 1 Fisher v Samaras Industries Pty Ltd (1996) 82 IR 384 Capral Aluminium Limited v WorkCover Authority of NSW (Insp Mayo-Ramsay) (2000) 49 NSWLR 610 Haynes v James Glass and Aluminium Pty Limited (unreported, Fisher CJ, CT91/772-775, 20 May 1994) CASES CITED: R v Thomson, R v Houlton (1999-2000) 49 NSWLR 383, (2000) 115 ACrimR 104 Markarian v The Queen [2005] HCA 25 Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (82 LGERA 21) (1993) 32 NSWLR 683

Prosecutor: Mr D.B. O'Neil of counsel Solicitors: Carroll & O'Dea LEGAL REPRESENTATIVES: Defendant: Mr S. J. Rushton SC Solicitors: Acuiti Legal

• 23 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

INSP SENEVIRATNE v CALTEX PETROLEUM DISTRIBUTORS PTY LTD Prosecution under s8(1) of the Occupational Health and Safety Act 2000

1 This prosecution is brought by Inspector Seneviratne of the WorkCover Authority of NSW against Caltex Petroleum Distributors Pty Limited (the defendant) and issued under the Occupational Health and Safety Act 2000 (the Act). 2 It is alleged the defendant breached s8(1) of the Act in that it: . . . . . DID FAIL , contrary to Section 8(1) of the 2000 Act to ensure the health, safety and welfare at work of all of the employees of the Defendant employer, and in particular, Lindsay Barry. The particulars of the charge are the defendant: . . . failed to provide and maintain a safe system of work in relation to the transfer of fuel from underground tanks into road tank trucks at the site such that employees were not exposed to the risk of fuel explosion during the transfer process, in particular by failing to ensure that: (i) the transfer of fuel was done by bottom-loading. (ii) the road tank trucks were properly purged of fuel prior to the transfer of fuel taking place. (iii) the transfer of fuel complied with the Dangerous Goods (General) Regulations 1999 (NSW) in particular, clauses 196 and 136. 3 The defendant pleaded guilty to the charge. 4 An agreed statement of facts was tendered which relevantly reads as follows: 3. At all material times, Qantas Airways Limited ("Qantas") leased the site from the Federal Airports Corporation. By declarations made pursuant to Airports (Transitional) Act 1996 (Cth), the SACL became the successor to the Federal Airports Corporation. The Lease commenced on 1 July 1992 for five years until 30 June 1997 when it continued on a monthly basis ("the Lease"). Qantas used the site for refuelling its mobile ground plant as well as for the storage and use of jet fuel, lead replacement petrol (LRP) and diesel fuel. 4. At all material times, SACL retained control over the site. In particular, SACL could issue rules to Qantas relating to the operation, safety, use and occupation of the Airport, including the site, as well as enter the site to maintain or repair the site, or to exercise the powers and authorities of the SACL under the Federal Airports Corporation Act 1986. 5. At all material times, Qantas was in control of the site and regularly removed fuel from the site. 6. At all material times, Qantas was an employer in the State of New South Wales and employed people to work at the site. 7. On or about 2 August 2002, Qantas contracted with Caltex Petroleum Distributors Pty Ltd (CPD), trading as Metropolitan Fuel Distributors to remove approximately 110,000 litres of LRP and 40,000 litres of diesel ("the fuel") from underground tanks at the site, and to transfer the fuel to a site owned by Caltex Australia Pty Ltd in Banksmeadow. 8. CPD were at all material times an employer in the State of New South Wales whose undertaking was to remove the fuel from the underground tanks at the site, being CPD's place of work at the time the fuel was being removed. 9. CPD in turn contracted with Kel Campbell Pty Limited ("Kel") for the provision of tankers and drivers required for the removal of the fuel. A standing contract existed between CPD and Kel dated 2 January 2002 ("the Contract") which provided that CPD could at any time issue a delivery advice to Kel for the collection and delivery of fuel product. As part of that contract, Kel agreed to ensure that deliveries were carried out in accordance with Australian Standard 1940 "Storage and Handling of Flammable and Combustible Liquids" and the "Ampol Driver Instruction Manual", as well as the AIP-CP8-1991 "Precautions Against Electrostatic Ignition During Tank Vehicle Loading", the Australian code for the transport of dangerous goods by road and rail (ADG Code) and the AIP-CP14-1995 "The Transport of Petroleum Products by Road". 10. On or about 31 May 2002, Greg Clay ("Clay"), an employee of CPD, attended the site for a visual assessment of access for vehicles and equipment required to do the job. 11. On or about 14 June 2002, Clay submitted a quote to Qantas for the transfer of approximately 110,000 litres of petrol and 40,000 litres of diesel from the underground tanks and the site to the Caltex terminal. The quote stated that CPD would provide dangerous goods approved road tankers, dangerous goods licensed road tanker drivers and dangerous goods approved personnel to operate equipment and facilitate safe transfer procedures. 12. On 2 August 2002, Adam Machon ("Machon"), employed by Qantas as a Senior Fuel Technical Officer, sent a fax to Clay accepting the quote and confirming the transfer date of 11 August 2002 and nominated John Calfas, an employee of Qantas, as the Qantas representative who would be at the site while the transfer process occurred. 13. Between 2 August and 11 August 2002, Machon had four telephone conversations with Clay regarding site access, timing of work and an overview of Qantas requirements for the fuel transfer. At all material times, Qantas did not have a written procedure for fuel removal from underground tanks at the site. Machon did not request to see any procedures developed by CPD regarding fuel removal it intended to take place on 11 August 2002. 14. On 5 August 2002, Steve Fox ("Fox"), an Operations Manager employed by CPD, faxed a copy of Machon's fax dated 2 August 2002 to Bevan Burns ("Burns"). Burns, employed by Kel, made verbal arrangements with Clay in accordance with the Contract to provide tanker vehicles for the fuel transfer. Burns stated that two tanker vehicles would be provided. 15. On 11 August 2002 ("the incident date"), the following people were present at the site being: a) John Calfas ("Calfas"), employee of Qantas; b) Greg Clay ("Clay"), employee of CPD; c) Bevan Burns ("Burns"), employee of Kel; d) Sean Riordan ("Riordan"), employee of Kel; e) Sean Gosper ("Gosper"), employee of CPD. f) The injured person, Lindsay Barry ("Barry"), an employee of CPD. 16. On 11 August 2002, the work being undertaken by employees of Qantas, CPD and Kel at the site in transferring the fuel was the undertaking of each company and the site was the place of work of each company. There was no nominated supervisor for the transfer of fuel process. 17. At the time of the incident, SACL had in place a procedure where any work at the site such as the transfer of fuel, should have been subject to their supervision and approval and documented in an Approved Works Plan. SACL failed to ensure this had occurred prior to the incident. CPD was not aware of SACL's procedure. 18. On 11 August 2002, between 5.00 am and 6.00 am, Barry arrived at the site and met Gosper and Clay. At approximately 5.30 am, Riordan arrived, driving tanker vehicle TVK-400, with tanker barrel N16327 attached to it, and was later joined by Burns. 19. Barry, Clay, Gosper, Burns and Riordan met Calfas outside Gate 27 of the airport at around 6.00 am. 20. At around 7.00 am, Barry and his colleagues began transferring LRP from the first underground tank at the site to tanker vehicle VBB-276. Gosper installed the connections from the underground tank opening to the tanker, bottom filling the tanker by pumping through the CPD rigid truck, UVE-487. Discussion between Burns, Clay and Barry took place regarding the slow flow rate of the fuel pumping into the tanker. The second tanker, TVK-400, was positioned for pumping LRP into the first tanker. Following further discussions, it was decided to bring two other tanker vehicles in order to assist with the expedition of the fuel transfer process. 21. Gosper, Burns and Riordan returned to the site at around 8.30 am with two road tanker vehicles. At around 9.00 am, the loading of petrol on the first tanker was completed and a new tanker was moved into its place to continue the transfer of petrol. Once the first underground petrol tank was empty, Gosper reconnected the new tanker to the second underground petrol tank and continued loading petrol. 22. At this time a decision was made by Burns to pump diesel from the underground diesel tank into another tanker being tanker TVK-400, using the CPD rigid, for pumping but to fill the tanker from the top and not the bottom. This decision was made as the pumping process was perceived to be too slow. 23. The CPD rigid was moved to the site alongside the tanker TVK-400. Another tanker being loaded with petrol at the time was approximately ten (10) metres away from tanker TVK-400. Gosper made the connections for diesel loading. 24. At around 11.00 am, Barry looked at the site glass on the side of tanker TVK-400 to check if compartments numbered 4 and 5 were empty. Barry then began top loading fuel from the underground tank containing diesel fuel to the tanker barrel attached to tanker TVK-400. He used the hose reel from the CPD rigid to transfer diesel through the open hatch on top of compartment five (5) in the barrel. 25. Barry climbed the tanker barrel while holding a hose, inserted the hose into the open hatch of number five (5) compartment and began filling it with diesel. Barry completed filling number five (5) compartment with diesel. He then inserted the hose reel into the open hatch of number four (4) compartment with a hose. Number four (4) compartment had contained petrol the previous day. 26. At approximately 11.28 am, while Barry was on top of the tanker barrel checking the progress of the pumping in number four (4) compartment, an explosion occurred and a flame came out of number four (4) compartment of the tanker barrel causing burn injuries to Barry. 27. At the time of the incident, Barry was wearing a nylon safety vest and had on his person a mobile phone. 28. It was found by the attending NSW Fire Brigade that one of the bonding straps between the tanker and the pumper truck in question, could have been pulled out of the clamp. 29. Barry was taken to hospital and later the Concord Hospital Burns Unit and treated for burns to his face and chest. Barry was off work for a number of weeks as a result of his injury. 30. At the time of the accident, CPD had a document entitled "Caltex Australia - Driver's Handbook" ("the Handbook"). The Handbook stated that: "Section Six - LOADING PROTECTIVE CLOTHING: The minimum requirement is long sleeved shirts, long trousers, nitrile or chemically resistant gloves, safety footwear and safety glasses. Long sleeved, long legged cotton coveralls may be authorised to be used as a suitable substitute garment, however, care must be taken to ensure they are removed in a safe zone after the loading operation is complete. … MIXED LOADS/SWITCH LOADING: When switch loading is carried out, i.e. loading a high flashpoint product such as kerosene or distillate into a compartment that previously carried a low flashpoint product such as petrol, it is important to ensure the low flashpoint product is completely drained from the compartment to be re-loaded It does not take a great deal of petrol residue in that compartment to contaminate the high flashpoint product carried next. … When switch loading, initial flow rates must be kept to a maximum of 1 metre per second, until the fill spear outlet or tank inlet is fully submerged. Excessive initial flow rates can cause turbulence in the incoming liquid and generate large charges of static electricity. These charges could be released as a spark with sufficient energy to ignite the vapour/air mixture inside the compartment if an object was introduced into the tank compartment or a fill spear was removed prior to the charges having enough time to dissipate. Always wait TWO minutes before you dip the compartment or introduce any other object into the compartment that you have just finished loading. If in doubt about switch loading procedure or compartment draining, consult your Supervisor prior to loading. … You must also make sure any residue from the previous load is completely removed so the compartment to be loaded is completely drain dry . SPLASH LOADING: Never splash load a vehicle through incorrectly positioning the vehicle at the loading rack. Reposition the vehicle before you start to load if the fuel spear is too far from the compartment entrance to afford vertical entry. Splash loading is a dangerous practice and could cause a loading rack fire. When loading by spear, make sure the bottom of the spear reaches and maintains metal contact with the bottom of the compartment being loaded and is also in contact with the rim of the tank hatch. If pre-set meters are not fitted on the loading arms, under no circumstances must you attempt to load with more than one arm at a time. Section Seven - DISCHARGING … CUSTOMER ACCESS TO TOP OF TANKER: Accessing the top of tankers to verify compartment dips is a hazardous practice and should not be necessary in most circumstances. 31 In addition, the Handbook detailed the risks of static electricity (section three). Barry was not familiar with the contents of the Handbook. 32 The Dangerous Goods (General) Regulation 1999 applicable at the time of the accident provides in Clause 196 that for the filling and emptying of tanks on vehicles the following: (1) In this clause , "fill" and "empty" mean, in relation to a tank, to place any quantity of dangerous goods into or to remove any quantity of dangerous goods from the tank, respectively. (2) A person must not fill a tank of, in or on a vehicle with dangerous goods of Class 3 or subsidiary risk 3 or empty any such goods from such a tank unless the requirements of this clause , the ADG Code and AS 2809 are observed. (3) Clamps used to effect earthing or electrical bonding must be applied as far as possible from sources of flammable vapour. (4) Except in or on approved premises, the filling must be done: (a) otherwise than through open hatches, and (b) by means of a liquid-tight connection between the fill pipe and the tank. (5) Subclause (2), in so far as it requires compliance with subclause (3), the ADG Code and AS 2809 , applies to and in respect of the filling of a tank with a combustible liquid if the tank has contained a flammable liquid and has not been examined by a competent person and found by him or her to be gas-free since flammable liquid was last present in it. 33 The Dangerous Goods (General) Regulation 1999 applicable at the time of the accident provides in Clause 136 (2) that: (2) For the purposes of section 9 (1) (c) of the Act, the prescribed manner and conditions of the keeping of the dangerous goods referred to in subclause (1) in the quantities prescribed by that subclause are that: (a) they are kept and handled in accordance with AS 1940 (The storage and handling of flammable and combustible liquids) , and (b) the provisions of Part 3 and clause 139 are observed in relation to them. 34 The Australian Standard 1940 referred to in Clause 136 (2) provides at Clause 8.3.2 that if Open-hatch filling is to be utilised it shall comply with: a) The flammable liquid transfer shall be through rigid piping extending to and in contact with the bottom of the vehicle tank department during the entire transfer operation. A hose shall not be used inside a vehicle compartment. 35 In addition, clause 8.2.7 provides as follows:- Flow rates - means shall be provided or procedures established to control the flow velocity into the compartment of a tank vehicle to less than 1 metre per second until a minimum level of 150mm has been reached. Maximum flow velocity thereafter shall not exceed 7 metres per second until filling is nearly completed, when the flow velocity shall again be reduced to minimise hydraulic shock when filling stops. 36 Clause 8.2.9 of the Australian Standard 1940 provides as follows:- Earthing and bonding. Means shall be provided to dissipate static electricity during filling operations in accordance with AS1020. 37 Clause 8.2.10 of the Australian Standard 1940 provides as follows:- Bond wire connection. The bond between the vehicle tank being filled and the filling facility shall be made by means of a flexible sheathed welding cable having a cross-sectional area of not less than 10mm squared (322 divided by .2) where equivalent, securely attached to the filling facility at one end and provided with a robust spring clip G clamp, plug and socket or equivalent specially designed for the purpose at the other end. Note:- 1. The size of the flexible sheathed welding cable above is unrelated to its resistance but is necessary to provide a robust flexible connection suitable for field use. 2. A flexible cable used to prevent over filling of the tank vehicle and containing a dedicated bond wire connected by a special plug and socket is an acceptable alternative. 3. The sheathing on a bond cable should be resistant to the product. 38 After the incident SACL, CPD, Kel and Qantas revised their system regarding the process to be undertaken for the removal of the remaining fill in the underground tanks at the site. Meetings between SACL, Qantas, and CPD determined that the process to pump out the remaining fuel at the site would be undertaken on 11 and 12 December 2002. Qantas and SACL required inductions for all contractors, the induction to be led by Qantas at the offices of SACL starting at 10.00am on the day of the job. SACL required a Works Plan Application to be submitted to them by 27 November 2002 for their approval from Qantas. SACL agreed for an exclusion zone to operate and agreed to close bays 36 and 37 for the duration of the work. A requirement that there would be only one tanker on site at any one time was also agreed. Qantas was to ensure that the work site was kept clean and stationary vehicles are cleaned prior to commencing pump out. 39 A new procedure for product removal from underground tanks was prepared by CPD and reviewed by Qantas and provided to SACL for their review, a copy of which is hereto attached and marked annexure "A". 40 On or about 9 December 2002 a completed "Approved Air Side Works Plan" issued by SACL set out the conditions for the removal of fuel from the site on Wednesday 11 December 2002 and Thursday 12 December 2002, a copy of which is hereto attached and marked annexure "B". 41 On 11 and 12 December 2002, the transfer of fuel process was undertaken by employees of CPD being Stephen Fox, Greg Clay, Shane Gosper. John Turnbull, an employee of Kel attended as well as another Kel employee, Mr G. Markham. In addition, representatives from Qantas supervised the process, being Hans Schurch and John Calfas. Representatives from SACL also supervised the process, being Owen Jarvis and Mark Farrar (SACL Aviation Safety and OHS Manager). 42 On 11 and 12 December 2002, all persons present during the transfer process were instructed to wear cotton drill shirts and pants, static free safety vests, eye wear, chemical resistant gloves, safety lace up steel cap boots and ear plugs. Mobile phones were not permitted to be used at the site. 43 On the occasion of removal of the remaining fuel, the discharge hose of the pump was connected to the bottom valve of the compartment on the road tanker to be filled, and no filling took place from the top of the tanker by way of an open hatch. 44 The Defendant investigated the causes of the accident, and in a report dated 14 August 2002 (Tab B of Exhibit "BD1" to the Affidavit of Barry Dunn) concluded: The most likely cause of the explosion and fire was a static spark emanating from the charged fuel in the explosive atmosphere of the compartment to which the diesel was being pumped. Compartment #4 had an explosive mixture due to the last load being unleaded petrol and the hatch was open to air. The filling of compartment #5 may have contributed to the static build up with the explosion occurring shortly after filling of compartment #4 commenced. The exact point of sparking is impossible to determine however the injured driver stated that the explosion occurred after he touched the top of the barrel. 45 The Prosecutor obtained a report dated 26 July 2004 from Dr Denis Barrett, consultant engineer, who also concluded that the cause of the explosion was as a result of ignition of petrol vapour that was present in number four (4) compartment of the tanker in question. In his report, Dr Barrett concluded that " bottom loading was the preferred and much safer procedure on this occasion ". 46 The Prosecutor also obtained a report dated 24 September 2004 from David Pearson, Senior Fire and Explosions Specialist, Testsafe Australia. In that report, Mr Pearson concluded that the most likely ignition source would be from an electrostatic discharge as a result of fuel pumping operations, or from the injured persons body or clothing. Mr Barry's mobile phone could not be excluded as a potential source of ignition. 5 This breach of the Act occurred in the transfer of fuel from underground tanks into road tank trucks at an area known as the GSE Fuel Farm Facility near Bay 37 of the Sydney International Airport (the site). Employees were exposed to the risk of fuel explosion during the transfer process. That risk was made manifest by an explosion causing injury to Mr Barry, an employee of the defendant and, on the day concerned, a driver for the defendant. In particular, the defendant failed to ensure the transfer of fuel was conducted by the "bottom loading" method; the road tank trucks were properly purged of fuel prior to the transfer of fuel taking place; and the procedure followed for the transfer of diesel fuel complied with the Dangerous Goods (General) Regulations 1999 (NSW), in particular, clauses 196 and 136. 6 The application for order was first returnable before the Court on 13 October 2004. On that early date, the defendant advised the Court that it would be entering a plea of guilty to the charge.

7 Mr D.B. O'Neil of counsel appeared for the prosecution in the hearing as to penalty. An Agreed Statement of Facts was relied upon. The prosecution also tendered a number of photographs of the site and a series of questions and answers taken during interviews conducted by the prosecutor with various persons on site at the time of the incident. 8 Mr S.J. Rushton SC appeared for the defendant. Mr Rushton relied upon an affidavit with exhibits of Mr Barry David Dunn, Senior Environment, Health & Safety Specialist Corporate Risk Manager for Caltex Australia Petroleum Pty Limited sworn 18 February 2005. 9 Through Mr Dunn, Mr Rushton also tendered, on behalf of the defendant, the following documents: Incident Investigation Report, General Guidelines for the Transport of Dangerous Goods, Depot Operations Guide, Professional Driver Handbook, Transport Driver Assessment Report, Caltex Vision, Values and Strategic Intents document, Safety Stand Down document, Position Description, Standard for Safety Induction document, Fundamentals of the Loss Prevention System and Loss Prevention System Handbook, Zero Driving Incidents Information for drivers, Basic EHS Staff Training Manual, Loss Prevention System Handbook, Retail EH&S Awareness document, and the Procedure for Product Removal from Underground Tanks and an Approved Airside Works Plan, the Depots Operations Guide, Ethics Document, and the company Human Resources Policy. The defendant had in place a comprehensive occupational health and safety procedure prior to the said incident. It has since amended those procedures to reflect the omissions this breach exposed especially for procedures with multi-corporate involvement.

CONSIDERATION 10 In consideration of penalty the Commission in Court Session must first assess the nature and quality of the offence, that is, the objective seriousness 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 . . . 11 This prosecution under s8(1) of the Act directs the Court's attention to the failure of the defendant to provide and maintain a safe system of work for fuel transfer. 12 As at 11 August 2002, Sydney Airport Corporation Limited (SACL) had the ability to issue rules to Qantas Airways Limited (Qantas), a lessee on site, relating to the operation, safety, use and occupation of, inter alia, "the site" at Sydney Airport relevantly where Qantas stored jet fuel, lead replacement petrol and diesel fuel. 13 As at 11 August 2002, SACL had in place a procedure where any work at the site such as the transfer of fuel, should have been subject to its supervision and approval and documented in an Approved Works Plan. SACL failed to ensure this had occurred prior to the incident. The defendant was not made aware of SACL's procedure. 14 On or about 2 August 2002, Qantas contracted with CPD, the defendant (t/as Metropolitan Fuel Distributors, NSW Registration No. T1120112) for the removal of fuel including diesel from underground tanks at the site. Qantas did not have a written procedure for fuel removal from underground tanks. 15 The defendant then contracted with Kel Campbell Pty Limited (Kel) for the provision of tankers and drivers needed to perform the task for the removal of fuel. Kel agreed to ensure that deliveries were carried out in accordance with Australian Standard 1940 "Storage and Handling of Flammable and Combustible Liquids" and the "Ampol Driver Instruction Manual", as well as the AIP-CP8-1991 "Precautions Against Electrostatic Ignition During Tank Vehicle Loading", the Australian Code for the Transport of Dangerous Goods by Road and Rail and the AIP-CP14 - 1995 "Transport of Petroleum Products by Road". 16 Mr Barry, an employee of the defendant, injured during the transfer process, possessed a Dangerous Goods Licence and an Australian Institute of Petroleum (AIP) "AIP Passport". The defendant's drivers all obtained a Dangerous Goods Licence through the completion of a New South Wales EPA Accredited Course which covers a number of topics, including the following: · Outline of legislation (including Australian Code for the Transport of Dangerous Goods by Road and Rail, the Road and Rail Transport (Dangerous Goods) Act 1997 (NSW) and Regulations); · The classification of dangerous goods; · Placarding of vehicles; · Safety equipment and transport procedures; · Completion of the AIP Driver Accreditation Training Course allows a driver of dangerous goods to enter any terminal owned and operated by a member of the Australian Institute of Petroleum. Completion of the AIP Course entitles an applicant to hold an AIP Passport. To maintain an AIP Passport, an applicant must pass a written test every three years (Mr. Dunn's Affidavit, paragraph 20). The AIP Course aims to train participants in the following competencies; · Identification and classification of dangerous goods; · The loading and unloading of dangerous goods; · The application of Occupational Health and Safety Guidelines; and · The control of ignition sources. 17 Mr Barry had also been given a copy of the Caltex Professional Driver Handbook (Handbook) which included instructions and guidance as to safe loading of petroleum products including the wearing of protective clothing, mixed loads/switch loading and warning of the risks of static electricity. However, the defendant does not dispute that Mr Barry was not, at the time, familiar with the contents of the Handbook. Mr Barry was also provided with safety glasses, gloves, steel cap boots (with acid resistant soles), eye protection, a high vis vest, and full cotton clothing. 18 Notwithstanding the defendant company's general commitment to occupational health and safety, it failed, as did other corporations involved in this most dangerous of industrial operations, to ensure a work method was devised for this particular, recognised dangerous task. 19 There was no risk assessment of the task of fuel transfer such that would have warned against diesel fuel being pumped into a tank before an assessment was made that the tanker had been thoroughly cleared of petrol. 20 Proper procedures for the transfer of fuel and the necessity for the bottom loading of tankers were not part of any work method. There was no work method prepared for the specific task. 21 The defendant had attended the site but only to assess the equipment required for the job and the access to the underground tanks for its vehicles. There was no written procedure in place, or even planned and access for, by any of the corporations involved, for the performance of this task. There was no nominated supervisor. 22 Evidence further revealed in the performance of this most potentially dangerous of industrial operations, ad hoc decisions were made on site without any, or any planned, assessment as to the effect of any such decision affecting the conduct of the fuel transfer. What procedures which were initially followed were dramatically altered during the conduct of the task on site. For example, it was determined, during the operation of transferring the fuel that the task was taking too long so further tankers were brought in by the defendant. The procedures which were being followed for the transfer of the diesel were then varied. When the extra trucks arrived, fuel was pumped from the underground tank into the bottom of a Caltex tanker before then being transferred by top loading to the Kel's tanker. The fuel was then transported to Caltex Banksmeadow. Mr Barry, an employee of the defendant, at the time of the explosion in which he suffered burns, was standing on top of Kel's tanker, assisting in the diesel fuel transfer by top loading. 23 On investigation it was revealed the diesel was being pumped into a part of the tanker that had, the day before, carried petrol. It had not been properly cleaned. The necessity to both bottom load the tankers and rigorous cleaning of tanks would have been identified as risks if any risk assessment for the fuel transfer had been conducted. The defendant conceded that one or more of the risks identified by the prosecution as outlined in the particulars caused the explosion on 11 August 2002. 24 This offence exposes the occupation heath and safety risks which particularly arise following the modern trend to contract out tasks and to have a multi-corporate involvement in such tasks. Major corporations, influential in the industrial productivity of this State, Sydney Airports Corporation, Qantas and Caltex with a smaller company, Kels, were involved in this co-operative venture. While each company may have had rigorous occupational, health and safety guidelines, reflected in specific risk assessments and associated work method statements for their regular operations, for this combined operation, in the dangerous task of fuel transfer, there was no co-ordinated approach which ensured a risk assessment was carried out and reflected in a planned safe, work method. 25 The breach exposes the need for corporate acknowledgement that when work is "multi corporate", the task must be risk assessed and safe work methods devised. There must be corporate co-ordination. In the public interest, it must be recognised, any multi corporate worksite requires co-ordination to ensure safe working. Under the Act, each corporate identity has an absolute obligation to ensure safe working. Safe working requires an assessment of risk to assist in devising appropriate work methods that are task specific which methods require the training of employees and the supervision of all procedures designed for the safe performance of the work. 26 This court is however, considering penalty given the obligations carried by the defendant. The defendant played a major role under the contract to assist in the fuel transfer. It had two workmen on site and brought onto the site a number of its tankers. There was a complete failure by the defendant to risk assess the task and, to devise a suitable work method for the performance of the task. A risk assessment would have recognised the risk of top loading, the need for the purging of tanks, and the work methods would have ensured proper procedures, and compliance with the appropriate regulations for the removal of the fuel which task is identified in the Road and Rail Transport (Dangerous Goods) Act 1997 (NSW). 27 Those failures ensured the defendant's employees on site were exposed to the relevant risk as pleaded - the risk of fuel explosion during the transfer process. The gravity of the risk was made manifest by the explosion which explosion caused injury to the defendant's employee, Mr Barry. The potential of the risk for both damage and injury at this airport site is almost beyond speculation. While the gravity of damage or injury arising from the breach does not of itself dictate the level of penalty, the occurrence of injury can reflect the degree of seriousness of the relevant detriment to safety. 28 The well acknowledged words of Hill J in Tyler v Sydney Electricity (1993) 47 IR 1 (at 5) are apposite: The gravity of the damage or injury actually resulting from the breach does not, of itself, dictate the amount of penalty. However, the gravity or otherwise of the potential risks flowing from the breach and its foreseeability are clearly relevant. 29 As to the foreseeability of the risk, the particulars relied upon as elements of the offence alleged three failures, which failures were each a breach of the basic procedures which should have been followed to ensure the safe transfer of the fuel. Allowing top loading of diesel into a tank still containing a residue of petrol was in breach of standards proclaimed in Regulations designed to ensure the safe removal of dangerous goods. I find there was an element of foreseeability to this offence. 30 I find this offence most serious. 31 A level of deterrence must be factored into consideration as to penalty. In Fisher v Samaras Industries Pty Ltd (1996) 82 IR 384, this principle was applied in the context of consideration of breaches under the Act where Hungerford J held (at 388): 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 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 . . . 32 In the present matter, the defendant's attitude to questions of workplace safety and steps taken to improve safety following the incident are commendable. Immediately following the incident, the defendant, with the other companies involved, identified each of the possible causes (direct or indirect) which may have induced the explosion. Positive steps were taken in respect of each of those matters to ensure that what occurred on 11 August 2002 would not occur again. Importantly, a rigorous risk assessment and the design of a work method recognising the identified risks was conducted before the fuel transfer task was completed. The defendant met its obligations to review its procedure. 33 The defendant has given further training to its drivers and, they have been retrained at the AIP Driver Accreditation Training Course. They have had all the required skills reviewed - switch loading; top loading/splash filling; build up of static electricity; prior loading and placarding; standing on top of tanker truck; faulty earthing straps; use of the hose within the compartment. 34 In addition to the specific initiatives and changes introduced by the defendant, its parent company, Caltex Australia Petroleum Pty Limited, has introduced a number of new initiatives to all its operations with fuels as part of its genuine commitment to ensure and maintain a safe working environment. 35 I accept the defendant has not manifested, by its commission of this offence, a continuing attitude of disobedience to the law or a likelihood that any offence of like kind will be committed in the future. The defendant is a first offender who has now in place proper safety practice and procedures which procedures ensure there should be no risk of re-occurrence. 36 Nonetheless elements both of general and specific deterrence are taken into account in my consideration as to penalty. Specific deterrence is necessary as the transfers of fuel is still an activity of the defendant. There must also be an element of general deterrence in the penalty to ensure the fundamental obligations for safe working under the Act are once again brought to the attention of employers. 37 In consideration of penalty, a number of subjective features to the offence have been placed before the Commission in Court Session. In Lawrenson Diecasting Pty Limited v WorkCover Authority of New South Wales (Inspector James Swee Ch'ng) said (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.

The Full Bench cited (at 474) with approval, the passage in the judgment of Fisher CJ in Haynes v James Glass and Aluminium Pty Limited (unreported, CT772-775 of 1991, 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. 38 The defendant generally has a commendable approach to occupational health and safety, and this is a matter which ought be taken into account as a factor in mitigation (Tyler v Sydney Electricity (1993) 47 IR 1 at 5). At all times, the defendant co-operated with the prosecutor in its investigation of the incident. It permitted access to staff, made earnest and open endeavours to ascertain the cause of this breach of the Act. At all times, the defendant provided relevant information to the prosecutor.

39 I also have regard to the contrition and remorse which has been expressed by the defendant through its officers and counsel and note the defendant took positive steps to assist Mr Barry and his family in recovery following the incident. 40 The defendant has been operating in this inherently dangerous industry from 2001 to 2005 and has not had recorded against it any prior breaches of the Act. The defendant employs in total 400 employees in New South Wales, 40 of whom worked in the branch concerned in the incident. I have satisfied myself that other related companies that may fall under the umbrella of the Caltex Australia Corporation (which include a company that has 16 offences recorded against it between 1960 and 1967 and a company that has two serious offences recorded) while related to the defendant, are not, for the purpose of penalty, prior convictions relevant to my consideration of penalty in this matter. 41 The company significantly contributes to the community especially in providing employment for a significant number of employees in New South Wales. 42 In R v Thomson; R v Houlton (2000) 49 NSWLR 383; (2000) 115 A Crim R 104, the Court of Criminal Appeal held the full benefit of discount should be given for the utilitarian value of an early plea of guilty. The Full Bench allowed up to 25 percent as a percentage discount for such a plea. However, in Markarian v The Queen [2005] HCA 25 (18 May 2005) (a judgment handed down by the High Court after this hearing as to penalty was concluded and judgment reserved) the High Court gave further consideration to the method of applying discount in any determination as to penalty. 43 Both parties were given opportunity to provide submissions as to the effect of Markarian on my consideration as to penalty. I have been assisted by those submissions. 44 Markarian confirms that the preferred approach in sentencing is one of "instinctive synthesis" rather than a "two staged approach" whereby "increments" or "decrements" are applied mathematically to a predetermined starting point. 45 The proper approach to sentencing as approved by the majority (Gleeson CJ and Gummow, Hayne and Callinan JJ) in Markarian was stated as follows: [27] Express legislative provisions apart, neither principle, nor any of the grounds of appellate review, dictates the particular path that a sentencer, passing sentence in a case where the penalty is not fixed by statute, must follow in reasoning to the conclusion that the sentence to be imposed should be fixed as it is. The judgment is a discretionary judgment and, as the bases for appellate review reveal, what is required is that the sentencer must take into account all relevant considerations (and only relevant considerations) in forming the conclusion reached. As has now been pointed out more than once, there is no single correct sentence ( Pearce v The Queen (1998) 194 CLR 610 at 624). And judges at first instance are to be allowed as much flexibility in sentencing as is consonant with consistency of approach and as accords with the statutory regime that applies ( Johnson v The Queen (2004) 78 ALJR 616 at 618, 624; 205 ALR 346 at 348,356).

and the sentencing process should reflect the general obligation on a judge to reveal his/her reasoning: [39] …Accessible reasoning is necessary in the interests of victims, of the parties, appeal courts, and the public.

Their Honours reasoned: [39] ... That is not to say that in a simple case, in which, for example, the circumstances of the crime have to be weighed against one or a small number of other important matters, indulgence in arithmetical deduction by the sentencing judges should be absolutely forbidden. An invitation to a sentencing judge to engage in a process of 'instinctive synthesis', as useful as shorthand terminology may on occasions be, is not desirable if no more is said or understood about what that means. The expression "instinctive synthesis" may then be understood to suggest an arcane process into the mysteries of which only judges can be initiated. The law strongly favours transparency. . . . There may be occasions when some indulgence in an arithmetical process will better serve these ends. . . . 46 Their Honours recognised the "instinctive synthesis" approach to sentencing gives rise to an inevitable tension between the need for transparency and adequate reasoning on the one hand, and the need to avoid a mathematical approach pursuant to which the sentencing Court engages in a "staged sentencing process" starting at the maximum penalty and then making deductions from it without adequately assessing (even in a provisional way) the sentence called for by the objective facts (Markarian, at [32]). 47 McHugh J in a separate judgment and in rejecting the two-tier approach commented: [51] By two-tier sentencing, I mean the method of sentencing by which a judge first determines a sentence by reference to the "objective circumstances" of the case. This is the first tier of the process. The judge then increases or reduces this hypothetical sentence incrementally or decrementally by reference to other factors, usually, but not always, personal to the accused. This is the second tier. By instinctive synthesis, I mean the method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case. Only at the end of the process does the judge determine the sentence. 48 In Markarian, McHugh J endorsed the instinctive synthesis approach to determine penalty saying: [84] . . .The synthesising task is conducted after a full and transparent articulation of the relevant considerations including an indication of the relative weight to be given to those considerations in the circumstances of the particular case. The instinctive synthesis approach does not prevent the use of adjectives or adverbs or indications that this or these factors makes or make the case more or less serious than other cases or are the critical features of the case. And judicial instinct does not operate in a vacuum of random selection. On the contrary, instinctive synthesis involves the exercise of a discretion controlled by judicial practice, appellate review, legislative indicators and public opinion. Statute, legal principle and community values all confine the scope in which instinct may operate. The judicial wisdom involved in the instinctive synthesis approach is therefore likely to lead to better outcomes than the pseudo-science of two-tier sentencing. At all events, I am not satisfied that two-tier sentencing is a better method or process than the instinctive synthesis method that has been the traditional approach of common law judges. and: [138] . . . . Specification, in a staged or sequential approach, of the degree of reduction of what would otherwise have been the penalty for a plea of guilty is, it seems, sometimes permissible (see joint reasons at [38]). So presumably is re-adjustment for any assistance to authorities. So indeed, by statutes in many parts of Australia, must now be specific reductions and adjustments expressed in terms of identified quantification or percentages. Even occasionally (albeit in unexplained circumstances) arithmetical indulgence will now, it seems, be overlooked. However, preferably that will happen only where the factors adjusted are comparatively few and the case is "simple" (see joint reasons at [39]). . . . [139] ... Australian judges must now express their obeisance to an "instinctive synthesis" as the explanation of their sentencing outcomes. It might be prudent for them to avoid mention of "two stages" or of mathematics. . . . 49 Spigelman CJ in R v Thomson correctly, given the consideration in Markarian, endorsed the "instinctive synthesis" approach to sentencing saying: [57] The instinctive synthesis approach is the correct general approach to sentencing. This does not, however, necessarily mean that there is no element which can be taken out and treated separately, although such elements ought be few in number and narrowly confined. As long as they are such, their separate treatment will not compromise the intuitive or instinctive character of the sentencing process considered as a whole. 50 Express legislative provisions may require a sentencer to explicitly deal with or take into account particular matters. Section 22 of the Crimes (Sentencing Procedure) Act 1999, requires a plea of guilty is one such matter. 51 In R v Sharma (2002) 54 NSWLR 300, the Court of Criminal Appeal sitting five Judges (Spigelman CJ, Mason P, Barr, Bell and McClellan JJ) concluded specifying the "discount" allowed for the utilitarian value of a plea of guilty was both consistent with s22 of the Crimes (Sentencing Procedure) Act 1999 and the "instinctive synthesis" approach to sentencing. 52 The defendant submitted the court ought give it the benefit of a 25 percent discount on the penalty as a consequence of the utilitarian value of its early plea of guilty. The prosecution concedes the High Court in Markarian does not criticise a specific allowance of up to 25 percent for a plea of guilty. 53 I do not, however, accept Markarian is authority for the proposition the court must categorise each case to determine if it is "simple" and therefore attracts a mathematical approach to any deductions allowed in the consideration as to penalty. 54 In this particular circumstance, I also take cognisance of the principle of sentencing as defined by Kirby P in Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority 82 LGERA 21; (1993) 32 NSWLR 683 (at 698) as a guide in my consideration of the appropriate penalty for this offence. His Honour stated: 1. While it is the function of the Court itself to assess the seriousness of the offence in question, the maximum penalty available for an offence reflects the "public expression" by parliament of the seriousness of the offence: R v H (1980) 3 A Crim R 53 at 65. Here, the maximum penalty is $125,000. Such a large penalty indicates the gravity of the offence as perceived by the community: . . .. The task of a court is to assess the relative seriousness of the offender's particular offence in relation to a worst case for which the maximum penalty is provided. Having determined the relative seriousness of the offence, the penalty to be imposed is that which approximately correlates upon the scale of penalty set by the legislature from zero to the maximum.

2. A maximum penalty is to be imposed where the case falls within the worst category of cases for which the penalty is prescribed. This is to be determined on the facts of the case. . . . However, "that does not mean that a lesser penalty must be imposed if it is possible to envisage a worse case; ingenuity can always conjure up a case of greater heinousness. A sentence which imposes the maximum penalty offends this principle only if the case is recognisably outside the worst category": Veen v The Queen (No 2) (1988) 164 CLR 465 at 478. 55 I take into account the gravity of the offence which I have determined as serious and the above relevant subjective features of the breach and the 25 per cent discount I allow for the utilitarian value of the plea. No reliance is placed by the defendant on the financial status of the company. 56 The maximum penalty for this offence was $525,000.

57 I find the defendant guilty. The defendant is fined in the sum of $240,000.00. There will be a moiety to the WorkCover Authority applied to the penalty. 58 The defendant shall pay the costs of the prosecutor. The defendant has agreed to pay the Prosecution's costs in the sum of $19,424.76 (inclusive of GST).

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