At all material times the defendant was a company registered in New South Wales.
The defendant was engaged by TJN Construction Group Pty Ltd ('TJN') to perform waterproofing works at residential premises located at 37 Battle Boulevard in Seaforth, New South Wales ('the site').
Waterproofing works were to be performed at the site to five balconies, three internal bathrooms and an internal laundry.
At all material times, the defendant engaged these persons in the following roles:
1. Mr Maurice Yap as a Working Director.
2. Mr Darcy Yap as a Working Director.
3. Mr Danny Paul-Jaulin Liebherherr Conway ('Mr Conway') as a subcontracted sole trader and licensed waterproofing technician.
4. Mr Jared Lloyd ('Mr Lloyd') as a Second Year Apprentice.
Mr Conway and Mr Lloyd were 22 and 21 years of age at the time of the incident.
[2]
The waterproofing works
The defendant commenced works at the site on around 16 November 2020.
Waterproofing works were generally performed by the defendant in the following way:
1. The substrate floor is cleaned and prepared using a grinder;
2. Adhesive is applied to the substrate floor and to the back of membrane sheets (which are left to partially dry);
3. Once the adhesive is dry, the membrane is bonded to the substrate floor;
4. A hot air welding tool is used to bond the laps of the adjoining membrane and to detail any areas.
The following products were used in the process described above:
1. Ardex APM 1000 membrane sheets ('membrane sheets'). The membrane sheets were designed to be used as an external waterproofing membrane.
2. Ardex WA 98 Butynol and WeldTec Adhesive 20L ('adhesive'). The adhesive is described on its product sheet as being a high-performance roofing contact adhesive developed for bonding butyl rubber sheeting to roofing substrates.
3. Ardex WA 98 Solvent ('solvent').
The adhesive is a hazardous chemical for the purposes of the Work Health and Safety Regulation 2017 (NSW) ('WHS Regulation'). The label on the adhesive's container conveyed the following information:
1. The product must be kept well away from heat, sparks and open flames and be kept closed when not in use;
2. "Safety data: Wear protective gloves, clothing, eye and face protection. Keep away from heat/sparks/open flames/hot surfaces … Ensure adequate ventilation during mixing and application";
3. "Danger gives off highly flammable vapour. Keep well away from heat, sparks and open flame. Keep closed when not in use"
The Safety Data Sheet ('SDS') for the adhesive provided as follows:
1. The use of a quantity of material in an unventilated or confined space may result in increased exposure and an irritating atmosphere developing. Before starting, consider control of exposure by mechanical ventilation;
2. The "Hazard statements" included that the adhesive is highly flammable in liquid and vapour form;
3. The "Precautionary statements" included that the adhesive should be kept away from heat/sparks/open flames/hot surfaces and should be used only outdoors or in well-ventilated areas;
4. Under the heading "Firefighting measures", the SDS provided that the vapour may travel a considerable distance to a source of ignition;
5. Under the heading "Handling and storage" the SDS provided: "Do NOT cut, drill, grind, weld or perform other similar operations on or near open containers, wear protective clothing when a risk of exposure occurs; and use in a well-ventilated area";
6. Under the heading "Exposure controls/personal protection" the SDS contained symbols of gloves, protective clothing, foot protection and a half-faced respirator;
7. In respect of "Eye and face protection", the SDS recommended use of safety glasses with side shields or chemical goggles; and
8. In respect of hand/feet, body and other protection the SDS recommended wearing chemical protective gloves, safety footwear or gumboots (e.g. rubber), overalls, PVC apron, PVC protective suit if exposure severe.
The waterproofing work required the use of a Leister Triac ST 1600w hot air tool ('the hot air tool'). The manual for the hot air tool stipulated that incorrect use of the hot air tool can present a fire or explosion hazard when used near combustible substances. The safety instructions for the hot air tool provided as follows:
"Danger of fire and explosion: There are risk of fire and explosion of the hot air blowers are used improperly, particularly in the vicinity of flammable materials and explosive gases. Do not point the hot air flow at the same point for a long period of time. Heat can reach flammable materials that are not in view."
The defendant had a Makita Blower to provide mechanical ventilation on the day of the incident.
[3]
The incident
On 2 December 2020, Mr Conway and Mr Lloyd were on the site carrying on the waterproofing works. Neither Maurice Yap nor Darcy Yap were on site.
TJN informed Mr Conway and Mr Lloyd that the internal laundry was ready for waterproofing. There was no natural ventilation in the laundry and the batteries were flat on the Makita Blower. Although it was intended that the Makita Blower be used as mechanical ventilation, its batteries were charging at the time of the incident.
Prior to the incident, the hot air tool was plugged into a powerpack on the ground outside the laundry door. It was set to maximum and was heating up to produce hot air up to approximately 700° degrees Celsius.
It is an agreed fact that both Mr Conway and Mr Lloyd were wearing shorts, shirts, knee pads, face masks, socks and work boots. Neither worker was wearing appropriate personal protective equipment ('PPE'). Although the defendant had provided Mr Lloyd with a respirator, he was not wearing it at the time of the incident. The defendant relied on Mr Conway to supply his own PPE.
Mr Conway and Mr Lloyd decanted the adhesive into pails and then entered the laundry. They started by applying the adhesive to the floor and to the membrane sheet using paint rollers and brushes.
Approximately 10 minutes after Mr Conway and Mr Lloyd had started work, an explosion occurred and the laundry was set on fire. The adhesive that had been decanted in the pails was projected onto the walls of the laundry and onto Mr Conway and Mr Lloyd. The flames travelled outside the laundry, also igniting a container of solvent.
Mr Conway and Mr Lloyd were able to escape the laundry. They ran upstairs to a hose at the front of the house and applied water to their skin. Emergency services attended and treated Mr Conway and Mr Lloyd. They were both subsequently airlifted to the Burns Unit at the Royal North Shore Hospital.
Mr Conway suffered 58% Total Body Surface Area ('TBSA') burns, including to all four of his limbs, chest, back, abdomen and face. Mr Conway required nine debridement and skin grafting operations as well as treatment for pain management. Mr Conway was discharged from hospital on 27 January 2021. As at 5 March 2021, Mr Conway had not returned to any form of work.
Mr Lloyd suffered between 30 and 39% TBSA burns, including to all four of his limbs, chest, back, abdomen and face. Mr Lloyd required five debridement and skin grafting operations. Mr Lloyd also suffered from fevers with bacterial infection of his skin, blood loss and haematopoiesis. Mr Lloyd was discharged from hospital on 25 December 2020. As at 2 February 2021, Mr Lloyd was certified as having no capacity for work due to his severe burn injuries.
[4]
Post-incident investigations
NSW Fire & Rescue determined that the probable cause of the fire was the ignition of flammable vapours from the adhesive by the use of the hot air tool in a poorly ventilated area.
A technical report by SafeWork NSW on the incident concluded:
1. The key risk was the release of large amounts of flammable vapour from the adhesive;
2. The vapour created an explosive atmosphere which could also have been ignited by other sources including static electricity discharge, hot surfaces and electrical arcs;
3. The "hazardous area" would have extended to the entire internal area of the laundry and approximately 5 metres from the laundry door;
4. The electrical equipment (on the ground outside the door) was within the hazardous area;
5. The hot air tool, which was operating in the range of between 40° and 700° degrees Celsius, was capable of producing "auto-ignition" of the flammable vapours from temperatures above 540° degrees Celsius (the auto-ignition temperature is the lowest ambient temperature at which the chemical vapours will spontaneously combust without an ignition source).
[5]
Relevant legislation and guidance material
Clause 51(1) of the WHS Regulation provides that a person conducting a business or undertaking ('PCBU') must manage risks to health and safety associated with a hazardous atmosphere at the workplace in accordance with Part 3.1. An atmosphere is flammable if the concentration of flammable gas, vapour, mist or fumes exceeds 5% of the Lower Explosive Limit ('LEL') for the gas, vapour, mist or fumes: cl 51(2)(c) of the WHS Regulation.
The LEL of the adhesive is 1% which means that only small concentrations of the vapour are required to create an explosive atmosphere.
Clause 52 of the WHS Regulation provides that a PCBU at a workplace must manage risks to health and safety associated with an ignition source in a hazardous atmosphere at the workplace, in accordance with Part 3.1 of the WHS Regulation.
Clause 355 of the WHS Regulation provides that a PCBU at a workplace must, if there is a possibility of fire or explosion in a hazardous area being caused by an ignition source being introduced into the area, ensure that the ignition source is not introduced into the area (from outside or within the space).
Prior to the incident, the Code of Practice Managing Risks of Hazardous Chemicals in the Workplace, July 2014 (SafeWork NSW) ('Hazardous Chemicals Code') was published and was available to the defendant. The Hazardous Chemicals Code relevantly provided:
1. A PCBU must obtain the SDS for a hazardous chemical from the manufacturer, importer or supplier no later than when the chemical is first supplied at the workplace or as soon as practicable after it is first supplied but before it is used at the workplace: cl 344 of the WHS Regulation;
2. Important hazard information to note from SDSs includes physicochemical properties such as flashpoint, fire point and explosive limits;
3. In many circumstances, a risk assessment will be the best way to determine the measures that should be implemented to control risks. It will help to identify which workers are at risk of exposure, determine what sources and processes are causing the risk, identify what type of control measures should be implemented and check the effectiveness of existing controls;
4. A basic risk assessment consists of reviewing the label and the SDS of the hazardous chemicals and assessing the risks involved in their use; deciding whether the hazardous chemicals in the workplace are already controlled with existing controls, as recommended in the SDS or other reliable sources, or whether further control measures are needed.
5. Physiochemical risks arise mainly from hazardous chemicals where they come into contact with other things such as ignition sources;
6. Fire and explosion can result in catastrophic consequences, causing serious injuries or death or workers, as well as significant damage to property. They occur when the following three primary elements come together (commonly referred to as the fire triangle):
1. a source of fuel (a flammable or combustible substance);
2. a source of oxygen (usually in the air); and
3. an ignition source (a source of energy sufficient to cause ignition);
1. When identifying hazards, PCBUs should have identified all of the sources of fuel in the workplace that could contribute to fire and explosion risks. Fuels that present the highest risk are those hazardous chemicals that are flammable (for example, flammable solids, liquids or gasses, including their vapours and fumes);
2. Ignition sources can be any energy source that has the potential to ignite fuel and can be categorised into three broad types: flames, sparks and heat;
3. PCBUs must identify any ignition source in the workplace that has the potential to ignite a flammable material;
4. Depending on vapour density, some gasses can flow across surfaces in a similar way to liquids, rather than dissipating quickly. For example, vapours which have a density greater than air can move along the floor and spread to adjacent work areas where ignition sources may be present, thereby creating a significant risk in those areas;
5. The effects of an explosion can be exacerbated where the fuel and air mixture is contained, for example in a tank, duct or pipework, as well as in larger structures like silos, rooms or buildings;
6. PCBUs must always aim to eliminate the hazard and associated risk at first. If this is not reasonably practicable, the risk must be minimised by using one or more of the following approaches: substitution, isolation and implementation of engineering controls. If a risk remains, it must be minimised by implementing administrative controls, so far as is reasonably practicable. Any remaining risk must be minimised with suitable PPE;
7. Substitution is the replacement of a hazardous chemical with a chemical that is less hazardous and presents lower risks, for example substituting a highly flammable liquid with one that is less flammable;
8. Engineering controls include mechanical devices that eliminate or minimise the generation of chemicals, suppress or contain chemicals, or limit the area of contamination. Examples of engineering controls include use of exhaust ventilation;
9. Administrative controls include written policies and work procedures (for example Safe Work Method Statements ('SWMS');
10. If PPE is to be used at a workplace, the PCBU must ensure that the equipment is: selected to minimise risk to health and safety; suitable for the nature of the work and any hazard associated with the work; used or worn by the worker, so far as reasonably practicable: cl 44 of the WHS Regulation;
11. PPE includes overalls, aprons, footwear, gloves, chemical resistant glasses, face shields and respirators;
12. Key control measures for managing risks of fire and explosion include:
1. using intrinsically safe equipment;
2. using ventilation to avoid the creation of a hazardous atmosphere;
3. substituting flammable materials for ones that are less flammable or combustible;
4. eliminating ignition sources from hazardous areas (this may include establishing a hot work permit system);
1. The auto-ignition temperature of the hazardous chemical should be considered as some hazardous chemicals may ignite spontaneously above certain temperatures;
2. A hazardous area is a three-dimensional space in which a hazardous atmosphere exists. In relation to hazardous chemicals, a hazardous atmosphere is one in which a flammable substance, such as fuel, is present in combination with air or other sources of oxygen and which would ignite to cause a fire or explosion if an ignition source was introduced. Hazardous areas generally exist around flammable materials, for example those present in tanks, drums or containers;
3. Accumulation of vapours creates the potential for a hazardous area to exist. Vapour emissions can be minimised by providing extraction ventilation for all sources of vapour;
4. Maintenance of control measures may involve regular inspections of control measures and supervision to ensure workers are using the control measure properly;
5. Information, training, instruction, and supervision must be provided not only to workers but to other persons at the workplace such as visitors. Information, training and instruction should include the following:
1. the nature of the hazardous chemicals involved and the risks to the worker;
2. the control measures implemented, how to use and maintain them correctly;
3. the arrangements in place to deal with an emergency;
4. the selection, use, maintenance and storage of any PPE required to control the risks;
5. the labelling of containers of hazardous chemicals, the information that each part of the label provides and why the information is being provided;
6. the availability of SDS for all hazardous chemicals;
7. how to access the SDS and information that each part of the SDS provides;
8. the work practices and procedures to be followed in the use and handling of hazardous chemicals;
9. The extent of emergency procedures required will depend on the size and complexity of the workplace, types and quantities of hazardous chemicals and processes involved when the goods are in use;
10. Emergency equipment and safety equipment must be located so it is readily accessible for all workers if an emergency arises. Examples of emergency equipment that may be required include fire extinguishers and a reliable water supply;
The Hazardous Chemicals Code contains a risk assessment checklist (Appendix G) and examples of common fuel and oxygen sources (Appendix H).
It is an agreed fact that the defendant did not conduct (or conduct an adequate) risk assessment identifying the risks associated with the waterproofing work.
The risk to be managed was the proliferation of flammable vapour in internal areas which, unless controlled, could result in spontaneous combustion and explosion in the presence of ignition sources.
It is agreed that the defendant did not identify the control measures to avert the risk, such as substituting the adhesive for an alternative product or developing and implementing a safe method of work for the waterproofing. It is agreed that suitable water-based alternatives, such as Ardex CA750 were available. A basic risk assessment would have enabled the defendant to identify the hazard of flammable vapours and consider whether the adhesive was appropriate in circumstances where the waterproofing work was to be performed in an area of low or inadequate ventilation.
It is agreed that if the risk could not be eliminated by substituting the adhesive, the defendant could have developed and implemented a safe method of work by:
1. Requiring that Mr Conway and Mr Lloyd wear adequate PPE;
2. Confirming that, prior to the application of the adhesive, no possible sources of ignition existed in proximity to the work area;
3. Ensuring that appropriate mechanical ventilation was used in internal areas;
4. Only using the hot air tool only once the sheet membrane had been adhered to the substrate floor and all hazardous chemicals had been removed, at least 20 minutes after the application of the adhesive.
It is agreed that the SDS was not available to Mr Conway and Mr Lloyd.
The defendant did not have any documented SWMSs prior to the incident, nor did it provide its workers with information, training and instruction about the hazardous chemicals they were using and the appropriate control measures they needed to employ whilst doing so. The defendant did not verify that Mr Conway was aware of the hazards and risks associated with the adhesive, who had only undertaken the installation of waterproofing membrane on less than ten occasions prior to the incident, which was under the supervision of his father who was a licensed waterproofing technician.
Although the defendant arranged for its employees to receive training from Ardex, it did not include information about the safe use and selection of its products.
The defendant did not ensure that there was adequate first aid resources and fire extinguishers on the site. The only sources of running water was a hose near the front of the house and not in proximity to the laundry.
It is agreed the defendant did not provide adequate supervision on the day of the incident to ensure that they complied with a safe method of work for the waterproofing works.
[6]
Systems of work after the incident
After the incident, the defendant made the following changes to its systems of work:
1. Implemented a documented work health and safety management system, including a SWMS template and a toolbox talk form.
2. Developed a SWMS, specifying the following control measures:
1. There were to be no sources of ignition within 3 metres of a work area;
2. The hot air tool was to be turned off when not in use and hot welding was not to take place for at least 20 minutes following the application of adhesive;
3. For internal works, ducted extraction fans were to be used; and
4. Workers were required to use appropriate PPE.
1. Furnished its company vehicles with first aid kits.
2. Arranged for its workforce to be trained and certified in first aid.
3. Implemented a practise of considering SDSs for all new products it used.
4. Purchased new mechanical ventilation equipment.
5. Purchased new PPE.
[7]
The defendant's duty
The defendant had a duty under s 19(1) of the WHS Act to ensure the health and safety of its workers, so far as reasonably practicable. The duty requires the identification of risks in the workplace, so far as is reasonably practicable. The duty requires the identification of risks in the workplace and the adoption of measures to eliminate or minimise them, so far as is reasonably practicable: Kirk v Industrial Commission of New South Wales [2010] HCA 1 at [34]. The duty is positive, nondelegable and requires duty holders to search for, detect and eliminate, so far as is reasonably practicable, risks to safety.
[8]
The risk
The risk relevant to this offence is described in Annexure "A" to the Amended Summons ('AS') in the following terms:
"8. The risk was the risk of workers, in particular Mr Lloyd and Mr Conway, suffering serious injury or death as a result of an explosion and/or fire when using hazardous flammable chemicals to undertake waterproofing work."
[9]
The defendant's failures to comply with the duty under section 19(1) of the Act
The defendant failed to ensure, so far as is reasonably practicable one or more of the following reasonably practicable measures to control the risk are set out at paragraph 9 (a) - (i) of the AS. In summary the measures relate to:
1. Undertaking a risk assessment (AS paragraph 9(a));
2. Requiring its workers to use an available water-based non-flammable adhesive when undertaking waterproofing works in areas with inadequate natural ventilation, such as the laundry. This was an elimination measure in that it replaced the adhesive with a chemical that was non-hazardous thereby removing the source of fuel for explosion and fire (AS paragraph 9(b); Agreed Statement of Facts ('ASOF') at [39]);
3. If the defendant was to use the flammable adhesive, implementing a safe system of work to enable work to be undertaken in internal rooms which included:
1. Prohibiting use of the substance unless mechanical ventilation was used, such as intrinsically safe portable fan;
2. Ensuring any possible sources of ignition were removed from the working area; and
3. Ensuring workers were wearing appropriate PPE, such the PPE recommended to be used in the SDS.
1. Directing that the hot air tool not be used until the membrane sheets had been adhered to the substrate and all chemicals have been removed from the work area; and at least 20 minutes after application of the adhesive (AS paragraph 9(c)- (d));
2. Developing and implementing a SWMS for the work that identified the risks associated with using the adhesive and set out the control measures (AS paragraph 9(e)). A SWMS was required as the work was "high risk construction work" within the meaning of s 291(1) of the WHS Regulation;
3. Providing information, instruction, and training to workers about:
The nature of the hazardous chemicals used and the risks to workers and the control measures to be implemented;
The arrangements in place to deal with emergencies;
The selection, use and maintenance of adequate PPE;
The availability of SDSs for the chemicals and how to access them; and
The work practices and procedures to be followed in the use of the hazardous chemicals (AS paragraph 9(f)).
1. Providing adequate PPE to workers, and requiring them to wear it at all times, such as the PPE referred to in the SDS for the adhesive (AS paragraph 9(g));
2. Providing supervision, or adequate supervision, to workers to ensure control measures for the risk were implemented and maintained (AS paragraph 9(h)); and
3. Verifying there was adequate first aid and emergency resources on site, such as first aid kits and fire extinguishers (AS paragraph 9(i)).
[10]
Victim Impact Statement
Mr Conway prepared a Victim Impact Statement ('VIS') which was tendered, and which I read.
The effect of the horrendous burns that Mr Conway sustained as a consequence of the explosion are devastating and continuing.
Mr Conway describes his life as now living a nightmare as his capacity to do most things is significantly limited by the physical injuries he has suffered and a large drop in his levels of energy.
He has trouble falling asleep, his sleep is broken, and he regularly feels exhausted upon waking. He can no longer go to the gym or even enjoy the outdoors as Mr Conway needs air conditioning to sleep and is very wary of direct sunlight due to his burns. Sunlight on his skin irritates his skin and he feels like hot pins and needles are being plunged into his skin.
Mr Conway and his wife are suffering financially and worry greatly for the future and if they have children, how they will cope.
Mr Conway is acutely embarrassed about how is looks due to the disfiguration caused by the burns and the treatment he has undergone and continues to undertake. People stare at him regularly and he has lost contact with many friends.
His skin requires heavy moisturiser to sooth the discomfort caused by the burns, he has no sweat pores which can cause him to overheat, and he is constantly wiping his face to stop dripping sweat on the floor. He needs to drink excessive amounts of water to keep up with the dreadful process.
The scarring has caused significant limitation to various parts of his body, and his life is exhausting and extremely difficult every single day. He is triggered by the smell of fire even that of a BBQ which leads to significant depression. He states in the VIS:
"I can keep going on with how the burns have affected my life and how depresses it has gotten me. I have to wipe away tears, hold back anger. I am left with a difficult and ugly life …. This short writing just scratches the surface of the emotions that I go through on a daily and weekly basis and the physical struggles I have to deal with. I had a normal life before all this and now my life sucks. I am so lucky to have an amazing wife, family and friends to help me through all of this. If I didn't, I am not sure if I would be alive today whether that is due to the severe burns injury taking my life, or myself taking my own life."
It is impossible for me to understand the suffering that Mr Conway has been through and continues to suffer intensely every day. It must be unimaginable, and I feel very honoured to have read the VIS and I thank Mr Conway for the bravery he has shown in preparing it, which must have been extremely difficult. I wish Mr Conway and his wife a change for the better in their circumstances, and some relief from this tragic accident and its consequences moving forward.
[11]
Sentencing
The penalty to be imposed must be one which will give overall effect to the policy of the WHS Act, in particular, ensuring the safety, health and welfare of workers and others on workplace premises. I have had regard to the principle contained within the WHS Act that workers should be given the highest level of protection against harm to their health, safety and welfare from hazards and risks arising from work: s 3 of the WHS Act.
The Court is to be guided by the provisions of the Crimes (Sentencing Procedure) Act 1999 (NSW) ('Sentencing Act') which include:
1. Section 3A which sets out the purpose of sentencing;
2. Section 21A which sets out the aggravating, mitigating and other factors in sentencing; and
3. Section 22 which provides that a guilty plea is to be taken into account on sentence, as is the time when the plea was effectively indicated or entered.
The Court is to approach a sentencing exercise on the basis of it being one of "instinctive synthesis": Markarian v The Queen (2005) 228 CLR 357.
The approach to sentencing has been identified by Russell SC DCJ in SafeWork NSW v HCM Building Pty Ltd [2019] NSWDC 632 at [109] in this way:
"The court must identify all the factors that are relevant to the sentence, discuss their significance and then make a value judgment as to what is the appropriate sentence given all the factors of the case: Muldrock v The Queen [2011] HCA 39; [2011] 244 CLR 120. This approach to sentencing, known as the "instinctive synthesis" approach, involves the making of a global judgement without any attempt to state precisely how any given factor has influenced the judgement."
[12]
Objective seriousness of the offence
The primary consideration requires a determination of the objective seriousness of the offence. The High Court made this clear in Muldrock v The Queen (2011) 244 CLR 120 at [27]:
"…The objective seriousness of an offence is to be assessed without reference to matters personal to a particular offender or class of offenders. It is to be determined wholly by reference to the nature of offending."
The duty of the defendant requires that it ensure the health and safety of workers as far as reasonably practicable. This duty is not delegable, and the duty requires the identification of risks in the workplace and an assessment of measures to address such risks.
The gravity of the offence is determined by the extent of the duty holder's failure to ensure, so far as was reasonably practicable, that its workers were not exposed to risks to their safety: Orbit Drilling v The Queen (2012) 35 VR 399 at [62] (Maxwell P, Bongiorno JA and Kyrou AJA); Veen v R (No 2) (1988) 164 CLR 465.
The objective degree of foreseeability is a matter for the Court to have regard to when considering the gravity of the offence: Capral Aluminium Ltd v WorkCover Authority (NSW) (2000) 49 NSWLR 610 ('Capral Aluminium') at [81].
An offence will be serious 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: Morrison v Powercoal Pty Ltd (No 3) (2005) 147 IR 117.
Subjective factors should not be permitted to produce a sentence which fails to adequately reflect the seriousness of the offence: WorkCover Authority (NSW) v Profab Industries Pty Ltd (2000) 49 NSWLR 700 at [31]. Subjective factors play a subsidiary role: Lawrenson Diecasting Pty Ltd v WorkCover Authority (NSW) (1999) 90 IR 464, 474-5.
The Court of Criminal Appeal examined the sentencing process with regard to the WHS Act in the matter of Nash v Silver City Drilling (NSW) Pty Ltd [2017] NSWCCA 96 ('Nash v Silver City'). His Honour Justice Basten, under the heading 'Assessment of Risk' said at [34]:
"The sentencing judge commenced his consideration with the proposition that '[g]reater culpability attaches to the failure to guard against an event the occurrence of which is probable rather than an event the occurrence of which is extremely unlikely.' However, the truth of that proposition depends upon other considerations, including (a) the potential consequences of the risk, which may be mild or catastrophic, (b) the availability of steps to lessen, minimise or remove the risk and (c) whether such steps are complex and burdensome or only mildly inconvenient. Relative culpability depends upon an assessment of all those factors."
His Honour further observed at [42]:
"The culpability of the respondent is not necessarily to be determined by the remoteness of the risk occurring, nor by a step-by-step assessment of the various elements. Culpability will turn upon an overall evaluation of various factors, which may pull in different directions. Culpability in this case is reasonably high because, even if the pressure event of the force which occurred might not be expected to occur often, the seriousness of the foreseeable resultant harm is extreme and the steps to be taken to avoid it, which were not even assessed, were straightforward and involved only minor inconvenience and a little, if any, cost. That assessment will involve both objective considerations and a consideration of what the respondent's responsible officers knew or ought to have known."
I accept that s 3A of the Sentencing Act is generally regarded as a codification of the common law principles of sentencing: R v MA [2004] NSWCCA 92. The purposes of punishment in the section are constrained by the sentencing principles that exist under the common law such as the principles of proportionality and totality: R v MMK [2006] NSWCCA 272.
The Court is obliged to make an assessment of where on the scale of criminality the offence lies referable to the maximum penalty prescribed by the legislature: R v Cage [2006] NSWCCA 304 at [17]-[18] (Latham J).
Where there was an obvious or foreseeable risk to safety against which appropriate measures were not taken, in circumstances where such measures were available and feasible, it will be a serious offence: WorkCover Authority (NSW) v Sarjame Storage Pty Ltd [2015] NSWDC 151 at [37] (Kearns DCJ).
The objective seriousness of an offence under s 32 of the WHS Act is considered in the context of the gradation of offences contained in ss 31-32 of the WHS Act: Nash v Silver City at [54]-[56]. The matters relevant to objective seriousness for a s 32 offence include:
1. The potential consequences of the risk. Consequences may range from mild to catastrophic. Offending will be more serious where the potential injuries are severe, regardless of whether they are likely to materialize: Nash v Silver City [34];
2. The availability of steps to eliminate or minimise the risk: Nash v Silver City [34];
3. Whether those steps are complex, burdensome or mildly inconvenient. If mitigating steps could easily have been taken, the offending will be more serious: Nash v Silver City [34] and [53];
4. Whether the risk was known or ought reasonably have been known to or identified by the offender;
5. Whether the risk was an obvious or clear one; and
6. The vulnerability of the workers exposed to the risk: SafeWork NSW v Grandcity Constructions Pty Ltd [2018] NSWDC 398 at [55] (Russell SC DCJ).
However, I accept that it is the risk that I am assessing the seriousness of, and not the manifestation of it. At [53] in Nash v Silver City, Basten JA dealt with the proper approach to considering the objective seriousness of offences under the WHS Act, saying:
"It is important to note that the risk to be assessed is not the risk of the consequence, to the extent that a worker is in fact injured, but is the risk arising from failure to take reasonably practicable steps to avoid the injury occurring. To discount the seriousness of the risk by reference to the unlikelihood of the injury occurring is apt to lead to error. The conduct in question is the failure to respond to a risk of injury, conduct which will be more serious, the more serious the potential injuries, whether or not they are likely to materialise. The objective seriousness of the conduct will also be affected by the ease with which mitigation steps could have been taken."
The following matters are relevant to determining the culpability of the defendant:
1. The risk was obvious and ought to have been known to the defendant. The risks associated with use of the adhesive were set out on the product label and the SDS; The gravity of the risk was significant. The potential consequences of the risk were catastrophic;
2. The defendant accepts that the degree of foreseeability of the risk was high and the gravity of the potential risk to health and safety was serious;
3. The defendant's pre-incident systems of work were wholly inadequate for managing the risk. There were no risk assessments or documented work procedures and an absence of information about safety hazards provided to the workers. The defendant almost entirely relied upon the experience of Mr Conway and Mr Lloyd to undertake the work in a safe manner, other than providing a respirator to Mr Lloyd and tools and equipment to complete the works. Although Mr Conway was a licenced waterproofing technical, he had limited experience installing waterproof membrane sheets (ASF at [44]);
4. There were simple, straight forward, and available steps which could have been taken to avoid the risk. The Hazardous Chemicals Code (TB Tab 14) set out available measures, such as: undertaking a risk assessment; substituting the adhesive with an available non-hazardous chemical; developing and implementing work procedures; providing appropriate PPE; providing information, instruction and training to workers; providing readily available emergency equipment, etc. In this matter, even a basic risk assessment could have been undertaken consisting of a review of the product label and SDS and deciding whether the chemicals were controlled by existing controls or additional controls were required (ASF at [37]);
5. The defendant accepts that the control measures at paragraph 9 of the Amended Summons were reasonably practicable;
6. I accept that a distinction ought be drawn between a defendant who did not have or implement any system of work or control measures to manage the risk at all, and this defendant who had systems in place but there were inadequate.
7. There was no great burden or inconvenience in these steps being implemented. The defendant took remedial measures quickly after the incident;
8. The injuries sustained by Mr Conway and Mr Lloyd were significant and permanent. Both workers suffered extensive burn injuries (Mr Conway 58% TBSA, Mr Lloyd 30-39% TBSA). Both workers spent considerable stints in hospital post-incident;
9. Mr Lloyd was vulnerable by reason of his youth and inexperience, coupled with the inadequate nature of the information and training provided to him by the defendant;
10. Incidents involving explosions caused by flammable vapours being ignited by sparks or sources of heat sadly are common in this Court. Many of the prosecutions arise from incidents which have resulted in workers suffering serious burns which have long term effects: SafeWork NSW v Plasser Australia Pty Ltd [2021] NSWDC 441; SafeWork NSW v JPS Car Wash Management Pty Ltd [2021] NSWDC 148; SafeWork NSW v SRS Star Management Pty Ltd; SafeWork NSW v Sarjeet Sidhu [2021] NSWDC 148; SafeWork NSW v MMP Industrial Pty Ltd [2019] NSWDC 854; SafeWork NSW v CRS NSW Pty Ltd; and SafeWork NSW v JA Investment Group Pty Ltd [2021] NSWDC 569 (22 October 2021).
As a consequence of the matters set out above, I am of the view that this is an objectively serious offence. The seriousness of the foreseeable harm to a worker was significant, and the steps available to avoid the risk were straightforward and available to the defendant. The parties agree, as do I, that the offence falls within the mid-range of objective seriousness.
[13]
Deterrence
In fixing a penalty in relation to these offences, an important objective feature is the need for specific and general deterrence. This is enshrined in s 3A(b) of the Sentencing Act.
General deterrence is a significant factor when safety obligations are breached. The fundamental duty of the Court to ensure a level of penalty for a breach will compel attention to work health and safety issues so that persons are not exposed to risks to their health and safety at the workplace: Fisher v Samaras Industries Pty Ltd (1996) 82 IR 384 at 388 (Hungerford J).
When examining matters of deterrence, both specific and general deterrence apply: R v Miria [2009] NSWCCA 68.
The Court of Criminal Appeal in Bulga Underground Operations v Nash (2016) 93 NSWLR 338 ('Bulga') at [177]-[180] reaffirmed the principle that both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process, unless there are exceptional circumstances which would allow a Court to depart from this rule, citing with approval the decision of the Full Bench of the Industrial Court of NSW in Capral Aluminium at [74]-[75] which said:
"[74] … It follows that both aspects of deterrence [specific and general] 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 Ltd (No 2) [2000] NSWIRComm 39 at [40]-[43]), we would expect such cases to be very rare and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted.
…
[75] … Even where an offender demonstrates good character or a commitment to rehabilitation, the court may be obliged to have regard to the need for general deterrence: see R v Thompson (1975) 11 SASR 217 at 222. This is particularly so where the offence in question is prevalent in society and represents a serious threat to the community. The need for general deterrence in relation to serious offences under the Act is undeniable."
General deterrence must be a significant feature of the sentence imposed upon the defendants. It can be appropriately used to direct the industry's attention to the consequences of inattention and the need for greater concentration on the potential risks of death or serious injury associated with working in the water proofing industry and the building industry generally.
The requirement to comply with the expectation of the community, that both large and small employers will comply with safety requirements, means that employers must take the obligations imposed by the WHS Act very seriously.
However, whilst general deterrence is a matter that I must consider in the sentencing process, it is not a factor to dominate the exercise of sentencing discretion to the exclusion of all other factors.
In relation to specific deterrence, the attitude of the defendant to questions of workplace safety and any steps taken to improve the safety of its worksites following a breach of a duty are relevant, as is the propensity for the defendant to reoffend.
After the incident the defendant took the following steps to improve its systems and control measures including the following;
1. A documented SWMS for waterproofing works dated 14 December 2020 was prepared;
2. New mechanical ventilation equipment for use in performing waterproofing works and the ventilation of hazardous and flammable chemical vapours;
3. A WHS folder for the defendant's works which includes the SWMS and Technical Data Sheets and Material Safety Data Sheets for materials, chemicals and other substances used on work sites, with a copy of the WHS folder held by each Managing Director of the defendant;
4. Training and certification in first aid for employees of the defendant;
5. Provision and maintenance of emergency safety and first aid kits located in the defendant's company vehicles;
6. PPE for waterproofing works;
7. Regular visits to work sites by the Managing Directors;
8. Regular toolbox talks with employees and other workers of the defendant;
9. Proactive talks and consultation with employees and other workers of the defendant regarding WHS hazards, risks and control measures;
10. Professional WHS advice and support from S3 Safety Group Pty Ltd with the development of a documented WHS management system, and tailoring that system to be fit for purpose;
11. Engaging specialist solicitors to deliver training to the management of the defendant regarding duties, obligations and compliance with the WHS Act.
I accept that the prospects of rehabilitation of the defendant are good, however, the need for an element of specific deterrence is still necessary in these circumstances.
[14]
Aggravating factor
The injury, emotional harm, loss or damage caused by the offence was substantial: s 21A(2)(g) of the Sentencing Act. In order for this aggravating factor to be established, I must be satisfied beyond reasonable doubt that the harm was greater or more deleterious than may ordinarily be expected for the offence in question: R v Youkhana [2004] NSWCCA 412 at [26] (Hidden J, McColl JA and Levine J agreeing). I am so satisfied.
The defendant's offending conduct exposed persons to a grave risk of death: s 21A(2)(ib) of the Sentencing Act, which is conceded by the defendant. It seems to me that it was rather a matter of good fortune as opposed to good management that Mr Conway and Mr Lloyd survived the incident.
[15]
Mitigating factors
In Haynes v CI & D Manufacturing (No 2), Callaghan v CI & D Industries Pty Limited (No 2) (1995) 60 IR 455 at 456-457 the Full Bench held the following:
"We think that having regard to the specific nature of the legislation, the past record upon which the both the prosecution and the defendants should rely must be intimately bound to the nature of the offences which the Court is considering, namely industrial safety, health and welfare. We add one comment on the question of the previous record, and that is that the Court should attempt to ensure the accuracy of the record and have objective regard to it in relation to the industrial enterprise and the extent of its operations. We consider that the extent of the operations of the defendant enterprises is to be taken into consideration when coming to conclusions having regard to the past record.
Human experience indicates that the larger the number of industrial transactions a company is involved in the larger the number of industrial accidents which occur as a matter of statistical expectation. The safety record of very large company with some prior convictions may, on analysis, be better than that of a small company with fewer such convictions. However, we again emphasise that in the context of the OHS Act the record is only one of the factors to be taken into account in assessing penalty and the essential inquiry must remain the circumstances of the breach in question."
The defendant has not been subject to any prior convictions under work health and safety law: s 21A(3)(e) of the Sentencing Act.
I accept that the defendant is a corporate citizen of good character and has made charitable donations as an active contributor to and sponsor of its Jehovah's Witness community: s 21A(3)(f) of the Sentencing Act.
I accept the defendant is unlikely to reoffend: s 21A(3)(g) of the Sentencing Act.
I accept that the defendant has good prospects of rehabilitation: s 21A(3)(h) of the Sentencing Act.
I accept that the defendant has demonstrated its remorse by providing evidence that it has accepted responsibility for the offence and has acknowledged the injury, loss and damage caused by the offence: s 21A(3)(i) of the Sentencing Act.
The defendant co-operated with SafeWork NSW during its investigations: s21A(3)(m) of the Sentencing Act.
The defendant entered a plea of guilty very early, which of itself demonstrates remorse, and the prosecutor submits it is open to me to find that the defendant is entitled to the maximum discount on that basis. Thus, I will allow a deduction of 25% for the utilitarian value of the plea in accordance with the principles set out in R v Thomson & Houlton (2000) 49 NSWLR 383 and ss 21A(3)(k) and 22 of the Sentencing Act.
[16]
Capacity to pay
Section 6 of the Fines Act 1996 (NSW) ('Fines Act') provides as follows:
"6 Consideration of an accused's means to pay
In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider:
(a) Such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and
(b) Such other matters as, in the opinion of the court, are relevant to the fixing of that amount."
The onus is on the offender to satisfy the Court on the balance of probabilities as to the truth of such evidence and its relevance to the fixing of penalty: McColl v John Watson Building Services Pty Ltd (2004) 137 IR 310 at [24].
The offender's capacity to pay is relevant but not decisive: Jahandideh v R [2014] NSWCCA 178 at [16] (Rothman J, Hoeben CJ at CL agreeing).
In Inspector Beacham v J & L Marble Pty Ltd [2009] NSWIRComm 100, Staff J said at [57]-[58]:
"The principles to be applied in respect of an application under s 6 of the Fines Act were discussed by Walton J, Vice-President in WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284 are as follows:
"[83] The financial means of the defendant was a matter that was submitted in mitigation of penalty. In this regard I would adopt what I stated in Department of Mineral Resources v A M Hoipo & Sons (at par 50):
It is proper, nonetheless, to have regard to the financial position and means of the defendant when considering the question of penalty: see Ferguson v Nelmac Pty Ltd (1999) 94 IR 188 at 209. The purpose of a fine is primarily to punish the offender. The burden which will be imposed by virtue of a fine at a particular level will, to some extent, depend upon the financial circumstances and resources of that offender. As a result, the amount and method of payment of a fine will need to take into account, as far as practicable, the financial resources and income of the defendant: see R v Sgroi (1989) 40 A Crim R 197 at 200-201.
[84] This approach was subsequently adopted in Manpac Industries where the Full Bench of this Court stated (at pars 81-82):
... Section 6 of the Fines Act 1996 provides that in exercising a discretion to fix the amount of any fine a court is required to consider the means of the accused and such other matters as are relevant to the fixing of that amount. That statutory injunction, of course, has long been recognised as an appropriate part of the sentencing process: see, for instance, Warman International (80 IR at 339); WorkCover Authority (NSW) (Inspector Dowling) v Overtop Pty Ltd (1998) 86 IR 319 at 333; and Profab Industries (49 NSWLR at 714; 100 IR at 76).
However, and given the primacy of the objective seriousness of an offence in determining an appropriate sentence, the financial situation of a defendant, in our view, needs to be carefully scrutinised. In Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 at 209 - 210, Wright J, President observed:
... Whilst I accept that the imposition of heavy fines would be a burden on the defendant and its financial resources and that consideration should be given appropriate weight on the question of penalty, it does not necessarily result in the Court not imposing a heavy penalty …
When viewed in the context of the statutory mandate in s 15 the offences were very serious and provided proper weight is given to the subjective considerations and insofar as deterrence is concerned some tempering thereof, the penalty should reflect the objective seriousness of the offence ...
[85] I would reiterate what the Court stated in WorkCover Authority (NSW) (Inspector Ankucic) v Lyndhurst Trading Co Pty Ltd (2000) 95 IR 462 at 476:
Where the means of the defendant to pay any fine is raised, the proper course will be to assess the appropriate amount of the fine having regard to the gravity of the offence charged and then reduce the fine to take into account the defendant's means and impecuniosity: see R v Rahme (1989) 43 A Crim R 81 at 86.''
In Unity Pty Limited v SafeWork NSW [2018] NSWCCA 266 at [79] the Court of Criminal Appeal said:
"First, and more generally, questions of specific deterrence should take into account the size and scope of the operations of the defendant; a fine which may be crippling to a small business may have virtually no impact on the financial operations of a large corporation. The maximum penalty for the offence is undoubtedly set having regard to such a factor. Secondly, the Court is required to have regard to 'the means' of the defendant, pursuant to s 6 of the Fines Act 1996."
I accept this authority is relevant to these proceedings. The company consisted of 4 family members and has endured some financial hardship, and could not be described as a "large corporation".
The Full Bench of the Industrial Relations Commission of NSW observed in Inspector Fraser v Karabelas (No 2) [2011] NSWIRComm 153, citing Rahme v R (1989) 43 A Crim R 81 that:
"It is well established that a court should first arrive at a penalty and then review it on the basis of any case properly made out by a defendant of a lack of capacity to pay a substantial penalty or any penalty."
It follows that the question of capacity to pay and, hence, the exercise of the discretion under s 6 of the Fines Act should be considered after the Court has determined the appropriate fine(s).
I accept that the principles which are then applicable to the exercise of the discretion conferred by s 6 of the Fines Act are as follows:
1. the financial position and means of a defendant should be taken into account when determining the fine to be imposed;
2. the defendant bears both the evidentiary onus and the onus of proof, on the civil standard, in relation to satisfying the Court that it does not have the capacity to meet a fine;
3. it is for the defendant to place detailed financial information that fully discloses his financial circumstances to the Court so that a proper assessment of his capacity to pay can be undertaken;
4. it is for the prosecutor to check the information provided by the defendant and to assist the Court in relation to the assessment of the defendant's capacity to pay; and
5. in any event, notwithstanding the capacity of a defendant to pay a fine, the penalty to be imposed must reflect the objective seriousness of the offence: Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 at [209]-[210]; McColl v John Watson Building Services Pty Ltd (2004) 137 IR 310 at [24]-[25]; SafeWork NSW v Harris Holdings NSW Pty Ltd [2017] NSWDC 299; SafeWork NSW v Harry Zizikas [2017] NSWDC 299 at [134]-[141]; SafeWork NSW v Cosentino Australia Pty Ltd [2018] NSWDC 182 at [23]-[24].
The defendant submits that the affidavits of Maurice and Darcy demonstrate that the defendant's capacity to pay a fine is limited for the following reasons:
1. The defendant has been operating at a financial loss;
2. The defendant has substantial liabilities, including repayment of JobKeeper benefits;
3. The defendant relies on its fixed assets to generate income and if they had to be sold that would impact it's solvency;
4. The Managing Directors and Mrs Yap have very modest personal incomes and assets, and their liabilities are not insubstantial, and thus they have a limited ability to pay a fine on behalf of the defendant.
Profit and Loss statements indicate that the defendant made a modest profit in the year ending June 2021 and has recorded a loss for the following two years.
Further, the defendant asserts that if I were to impose a substantial fine on the defendant, it is likely to have a crippling effect on the defendant such that it may collapse and need to be would up, with devastating personal consequences for the Managing Directors and Mrs Yap, which I accept.
The issuing of costs against a defendant in both criminal and civil proceedings is not punitive, but rather compensatory to the prosecution: Latoudis v Casey (1990) 170 CLR 534 at 543 (Mason CJ). However, given the objective seriousness of the offending and the requirement for general deterrence, the fine must be such that it satisfies these sentencing considerations.
On the basis of the totality of the documents before me, I will allow the defendants some leniency.
The Court is entitled to take into account the fact that the defendant will be liable to pay the prosecutor's costs when considering any monetary penalty to be imposed on the defendants, particularly in circumstances where there is evidence of a limited capacity to pay a fine, and I have done so. Costs payable to the prosecutor are the 'normal' rule as the prosecutor has been successful, although there can be exceptions: see for example, Bulga.
The Court can also have regard to the defendant's own costs that it will have to bear as a consequence of a breach of the WHS Act, and I have done so: Environmental Protection Authority v Barnes [2006] NSWCCA 246 at [78].
[17]
Penalty
I make the following orders:
1. The defendant is convicted.
2. The appropriate fine for the offence is $600,000.00 and that will be reduced by 25% to reflect the plea of guilty, leaving a fine of $450,000.00.
3. In exercising my discretion under s 6 of the Fines Act 1996 (NSW), that fine will be reduced by 1/3rd.
4. Accordingly, I order the defendant to pay a fine of $300,000.00,
5. Pursuant to s 122(2) of the Fines Act 1996 (NSW), 50% of the fine imposed is to be paid to the prosecutor.
6. Pursuant to s 257B of the Criminal Procedure Act 1986 (NSW), the defendant is to pay the prosecutor's costs, as agreed or assessed.
[18]
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Decision last updated: 01 September 2023