WorkCover Authority of New South Wales (Insp Lacey) v George Weston Foods Ltd.

Matter No IRC97/5076 WorkCover Authority of NSW (Insp Lacey) v George Weston Foods Ltd. Prosecution under s15(1) of the Occupational Health and Safety Act 1983.

Matter No IRC97/5077 WorkCover Authority of NSW (Insp Lacey) v George Weston Foods Ltd. Prosecution under s15(1) of the Occupational Health and Safety Act 1983.

Matter No IRC97/5078 WorkCover Authority of NSW (Insp Lacey) v George Weston Foods Ltd. Prosecution under s15(1) of the Occupational Health and Safety Act 1983. JUDGMENT Re PENALTY

1 In contested proceedings George Weston Foods Ltd ("George Weston"), on 26 March 1999 ( Maidment J ), was convicted of three offences under s.15(1) of the Occupational Health & Safety Act 1983 ("the Act"). Each charge followed upon a fatal accident which occurred on 2 June 1996.

2 The offences arose from the failure to adequately supervise contractors, failure to provide and maintain a safe system of work and failure to maintain a safe place of work.

3 In these proceedings concerning penalty Mr McCann , Senior Litigation Lawyer, appeared for WorkCover Authority ("WCA"), Mr Hodgkinson of counsel for George Weston.

4 An agreed statement of facts is as follows: (1) The Informant is and was at all material times an Inspector duly appointed and empowered by section 48 of the Occupational Health and Safety Act, 1983, to institute the within proceedings.

(2) At all material times, the Defendant, George Weston Foods Limited (ACN 008 429 632) was a company duly incorporated whose registered address is at Level 20, Tower A, Zenith Centre, 821 Pacific Highway, Chatswood, in the State of New South Wales.

(3) At all material times, the Defendant had several distinct business units operating on the Enfield site at 1 Braidwood Street, Enfield ("Enfield site") as follows: · Weston Cereal Industries Divisional Office; · Specialised Fleet Services; · N B Love Starches ("Starches") now known as Weston Bioproducts; · Weston Milling; · Weston Food Laboratories; and · Millmaster Feeds. (4) At all material times, the Defendant employed William Mitchell as a shift supervisor.

(5) On 29 May 1996, Mr Wayne Burns, Engineering Manager of Weston Milling, contracted with Silo Developments Pty Ltd ("Silo") (contractors who regularly perform services for the Defendant at the Enfield site) to perform cleaning work on the outside of two silos ("the Work"). The silos were used by Weston Milling to store offal.

(6) Silo had regularly performed silo cleaning work for the Defendant at the Enfield site for a number of years. Silo held itself out, to industry and the Defendant, as possessing the necessary expertise to perform specialised cleaning services, including, but not limited to the Work.

(7) The Work involved the silos being washed by a high pressure water hose. As part of its contract with Silo, the Defendant specified that the water run off was not to be discharged into storm water drains but into the sewer discharge system. Silo was required to implement a system in consultation with the Defendant's contract plumber, McGuirk Plumbing Services Pty Ltd, whereby the run off was discharged into the sewer discharge system.

(8) Silo sub-contracted the Work to Abalsco Pty Ltd ("Abalsco"). The Work was contracted to occur on Saturday, 1 June 1996.

(9) On 30 May 1996, Mr Warren Martin, Director and employee of Abalsco consulted Mr Ruben McGuirk of McGuirk Plumbing Services Pty Ltd to ascertain the most appropriate system to ensure the water run off was not discharged into the storm water drain but into the sewer discharge system. Mr McGuirk advised that they should pump the run off water from the site to the sewer discharge system via the "sampling and gauging" pit. This pit was on site and was covered by a pit shed. The pit shed was used as a sampling and gauging pit to allow sampling and flow rate measurements of the sewer discharge flow from the site.

(a) The said shed was of aluminium construction measuring 1425mm long, 1680mm wide and 1900 mm in height at its roof apex. Access to the shed was via two sliding doors at the western side of the structure.

(b) Artificial lighting within the windowless shed was supplied by a twin tube fluorescent 18 watt overhead light fixed centrally to the ceiling. This was connected by plug to a 4 outlet Kambrook power board fixed to the northern wall of the structure. The power board was itself connected by plug to a Clipsal 240 volt 10 amp outlet.

(c) At the north eastern corner of the shed a refrigerator unit 600mm x 600mm x 750mm in height was located. This unit was powered by a plug outlet connected to the power board and was associated with the Defendant's effluent monitoring system.

(d) Adjacent to the power board on the northern wall of the structure was a digital flow meter located in a wall mounted box 250mm wide x 300 mm high x 120mm in depth. This was also powered from the powerboard by plug connection.

(e) Located in the floor of the said shed in front of the refrigerator unit and digital metre was a vertical sided brick lined pit connected to a sewerage outfall system at the premises. This pit was 650mm wide x 950mm long x 2400mm in depth to the surface of the water in the bottom thereof. An elevated metal splash tray was located inside the pit, slightly offset to the centre thereof, suspended by legs set into the base of same. Metal rungs were set into the wall of the pit at the south eastern corner providing access to the base.

(f) An aluminium chequer plate pit cover measuring 1200mm long x 850mm wide by 8mm thick was positioned over the opening of the pit. (11) On 2 June 1996, Brad Martin and Bruce Williams, employees of Abalsco, and Warren Martin, attended the Enfield site to carry out the Work, the Defendant was not advised by Silo or Abalsco that the Work was to be performed on 2 June 1996 instead of the date originally planned being 1 June 1996. Nor was the Defendant advised as to proposed system to be used by Abalsco to perform the work. At all times Silo remained responsible for the Work and the supervision of the Work.

(12) On the said date, Bruce Williams was directed to position the pump discharge hose into the said pit. Accordingly, Williams removed the cover from the pit, leaving it leaning against the eastern wall of the shed and located the end of the discharge hose into the pit. He also plugged the electric powered pumps power supply extension lead into the Kambrook powerboard fixed to the wall of the shed after disconnecting the electricity supply to the overhead light in the shed.

(13) On the said date, following the positioning of the pump, with its inlet hose in a roadside storm water pit, the Work was performed by the Abalsco's (sic) employees and Warren Martin until approximately 4.45pm.

(14) On the said date, the Defendant had a system of work in place at the Enfield site requiring readings to be taken from the flow meter in the said shed at approximately 1.00pm, 9.00pm and 4.00am. The system of work utilised for taking these readings was for an employee to enter the shed at approximately those times, to stand on the metal cover over the said pit, and read the information from the wall mounted meter. To enable this to be done, the overhead light in the said shed was left on continuously.

(15) At approximately 1.30pm on the said date, Robert Tolton, a trainee plant foreman, employed by the Defendant, entered the said shed to take a meter reading. He noticed the open pit and the pump discharge hose in place, and took a reading by positioning himself with one foot inside the shed.

(16) On the said date, Hans Hefer, a Director of Silo, went to the said premises to check on the progress of the Work. At that time, the pump was set up and operating Mr Hefer checked the set up and considered it satisfactory. He directed that a truck be parked over the open roadside pit in which the pump inlet hose was located, to prevent access to that pit. He did not check the location of the outlet hose or enter the pit shed, but did enquire as to why water was being pumped into the shed. The Defendant was not advised that Mr Hefer had not checked the outlet hose or the shed.

(17) Upon completion of the Work on the said date, Brad Martin, an employee of Abalsco, disconnected the pump extension lead from the powerboard inside the said shed and removed the pump outlet hose from the pit. The overhead light power supply plug was not reconnected to the powerboard, nor was the cover of the pit lowered into position. Brad Martin then left the said shed with the pit uncovered and the light inoperative, closing the doors behind him. Neither Silo not Mr Hefer made any checks following the completion of the Work. The Defendant was not made aware that there had not been any checks by Silo or Mr Hefer following the completion of the Work.

(18) On 2 June 1996, at approximately 9.40 pm in the course of his employment with the Defendant at the said premises, William Mitchell entered the said shed to take a waste meter reading. The Shed was unlit at the time as its internal overhead light had been disconnected form the power supply outlet by Abalsco. In the course of his duties, he fell into the open pit in the floor of the same, striking his head and landing in approximately 530mm of water at the base of same. He was fatally injured as a result.

(19) Neither Silo, Abalsco or Warren Martin had warned or informed the Defendant that the shed had been left with an unfenced pit in its floor, and an inoperative internal light, upon cessation of the Work for the day.

(20) As at the said date the Defendant maintained a written system of work for the performance of contract works at the said premise, entitled "Safety Requirements for Contractors". This document, inter alia, required:

(a) A contractor and any sub-contractor on site to ensure that excavations, floor openings and hazardous areas were properly protected with barriers and warning signs.

(b) Each contractor on site to acquaint his sub-contractors with the necessary safety regulations and to oversee all work activities of the sub-contractor.

(21) In or about the middle of 1994, Silo prepared and signed a Safety Policy Manual in respect to works they were performing for the Defendant in respect to the "silo construction capital works".

(22) On 20 February 1995, Silo confirmed in writing that it had read and understood the document "Safety Requirements for Contractors". This document also stated the following:

(a) "The contractor further agrees to inspect, survey and approve work sites before commencing work."

(23) Prior to the said date, Hans Hefer, Brad Martin, Bruce Williams and Warren Martin, had undergone induction training in the Defendant's site safety requirements. 5 The hazardous situation arose from the failure by George Weston to regulate and be aware of the activities of on-site contractors and from its failure to have the pit lid ordinarily kept secure.

6 Mr Hodgkinson brought evidence from Robert Eldred Arnold, the Divisional Manager, Quality Systems and Continuous Improvement at Weston Cereal Industries, a Division of George Weston. Mr Arnold is responsible for the quality systems, best practice, occupational health & safety and human resources.

7 George Weston employs some 7,000 persons in Australasia at more than sixty six sites in the bread, milling, starch, baked food, meat, dairy and cleaning product industries. At the Enfield site five separate business units, including Starches, operate. Some 250 employees are on the site of whom about 20 are presently engaged in Starches. The site operates around the clock.

8 Mr Mitchell had been employed by Starches as a Shift Supervisor.

9 Immediately after the accident Starches was closed down and trauma counselling offered to Mr Mitchell's family and to company and contractor's employees. The site was closed again on the day of the funeral and coach transport to the service was provided by George Weston as was financial assistance to the family including air transport for Mr Mitchell's mother from the Phillipines.

10 Remedial steps were immediately taken to secure safety in the Pit Shed and later a new Pit Shed was installed with the measuring equipment on the outside thus removing the necessity of meter reading personnel entering it. A review of all pits was undertaken. In June 1997 the Starches operation at Enfield was scaled down and transferred to Altona, the Pit Shed removed and the pit cover replaced. Access to the site is now limited and activity logs are kept.

11 Mr Arnold gave evidence as to improved workplace safety arrangements which have been put in place throughout its Australasian operations and at the Enfield site. The arrangements which are sophisticated and impressive, are too wide ranging for me to deal with in detail. Included in them is the appointment of Robert Williams as Compliance and Regulatory Affairs Manager for George Weston, a new position created specifically to bring an increased focus and attention upon all areas of legal compliance including OH&S. He reports directly to the Group General Manager Legal and Compliance who reports directly to the Chief Executive Officer. Mr Williams attended these proceedings.

12 Mr Hodgkinson sought to minimise the culpability of George Weston on the basis that the contractor and sub contractor concerned were contractually charged with the responsibility to ensure the safety of their activities. I am not persuaded that, in this case, such a submission has merit. The reality is that George Weston had failed to ensure that the pit cover was secure and was unaware of the activities of the sub contractor. The remedy was simple as all that it required was that the cover be locked and access to the lock key restricted. I note the additional safeguards which were implemented such as ensuring a continuous light source within the Pit Shed.

13 In other proceedings in this Court arising from the same accident in which Abalsco Pty Ltd and Warren Martin had each pleaded guilty to an offence under s.16(1) of the Act the Court said: At the time of this accident the maximum penalty available against the company was $500,000 and that against Mr W Martin was $50,000. These are substantial penalties and reflect community concern as to the frequency and severity of workplace accidents. The nature of the corporate defendant is that it was and is, in reality, the alter ego of Mr W Martin, thus any penalty imposed upon the company is, in effect, a penalty imposed upon Mr W Martin. As the company is of such a nature and bearing in mind its limited resources, this seems to me to be a circumstance in which it is appropriate, in assessing a penalty upon the company, to treat it as though it is an individual. So viewed a penalty of $50,000 would be appropriate in the worst case of culpability.

14 A penalty of $17,000 was imposed upon Abalsco Pty Ltd and no penalty was imposed upon Mr Martin on the basis that otherwise in effect a double penalty would be imposed upon him.

15 In contested proceedings Silo Developments Pty Ltd was convicted of an offence under s.16(1) of the Act also arising from the same accident, the principal of that company was Hans Hefer. In imposing a penalty of $19,000 upon the company this Court said: WCA argues that Silo Developments should not be treated as the alter ego of Mr Hefer on the basis that it is an ongoing concern and utilises sub-contractors. However, for reasons similar to those in the Abalsco matter it does seem to me to be appropriate to treat Silo Developments as being the alter ego of Mr Hefer bearing in mind the facts of this matter. Although it uses sub-contractors and is involved from time to time in contracts which provide a substantial turnover, the fact is that it lacks substantial assets and has provided Mr Hefer with a modest income. The evidence is that the company is used for administrative reasons. The general principles relating to sentencing which were applied in the Abalsco matter are applicable in the present case.

16 Mr McCann relied upon s.51A of the Act which allows for a penalty of up to $750,000 to be imposed in this case on account of the prior convictions of George Weston which have in each case been dealt with by either the Chief Industrial Magistrate or by a local court. They include 6 convictions since 1996 for offences under ss.15 and 16 with penalties ranging from $2,500 to $15,000, the actual dates of those offences is not before this Court.

17 He drew my attention to decisions as to parity and as to totality and submitted that the simple remedial steps which were subsequently taken by George Weston would had avoided this tragedy.

18 Mr Hodgkinson also relied upon the principle of parity.

19 It seems to me that the principle of parity is difficult to apply in the circumstances of this case in which the penalties imposed upon the contractor and sub contractor corporations were diminished on account of the acceptance of the alter ego arguments which are not presently applicable. Additionally, the penalties also reflected the limited financial circumstances of the corporate offenders.

20 Mr Hodgkinson relied upon the fact that, prior to the accident, George Weston had in place a system directed at ensuring the adoption of safe practices by contractors on the site. He accepted that the system had proved inadequate but submitted that its existence manifested the corporate concern George Weston had and has for workplace safety. He also relies upon the fact that this was a one-off situation which will not be repeated. That proposition arises from the fact that this was the only occasion upon which the pit, which no longer exists, was used for waste water removal during a silo cleaning operation. The facts also disclose an unfortunate sequence of unpredictable events which resulted in Mr B Martin being unaware of either the existence of the pit lid or of the disconnection of the light source by Mr Williams.

21 The following factors weigh in favour of George Weston:

a) It had in place a system to regulate the activities of contractors, unfortunately however, it placed too much reliance upon the expectation of the adoption of appropriate procedures by contractors. b) It reacted appropriately to the accident by way of remedial action and displayed corporate contrition. c) It has improved its safety systems such that they appear to be of the highest standard, those systems are the subject of continuous monitoring with the aim of constant improvement. d) It co-operated in the expedition of the prosecution by way of agreeing to a significant amount of factual material upon which WCA relied.

22 On the other hand George Weston does not have a good record, the remedial steps were simple and lids on pits should be secured.

23 This is obviously a serious matter, it resulted in a fatality. The accident, however, did arise from a set of extraordinary circumstances which could not have been anticipated by George Weston. Too much faith was placed upon the safety procedures adopted by the contractor and sub contractor.

24 In each case the maximum available penalty is $750,000 as a consequence of the provisions of s.51A of the Act. To the extent that there may be a discretion as to whether or not the maximum penalty of $500,000 which ordinarily would apply might be exceeded it is my view that the circumstances of these offences coupled with the previous convictions warrants the higher penalty of $750,000 being the appropriate maximum.

25 The critical particulars of each offence are as follows: IRC97/5076: FAILURE TO ADEQUATELY SUPERVISE CONTRACTORS (e) The defendant failed to provide such supervision as may be necessary to ensure the health and safety at work of its employees, in that it: (i) Failed to adequately supervise contractors performing silo cleaning works at its premises to ensure the shed was kept in a safe condition while such works proceeded and was not left in an unsafe condition with an open pit in the floor and an inoperative internal light, upon cessation of cleaning works for the day. IRC97/5077: FAILURE TO PROVIDE AND MAINTAIN A SAFE SYSTEM OF WORK (e) The defendant failed to provide or maintain a system of work that was safe and without risks to health in that it: (i) Failed to provide or maintain a system of work for the performance of works by contractors at its premises that ensured that a safety inspection of those portions of the premises which may be affected by contractors activities was carried out by it upon cessation of those works for the day, to ensure the premises were not left in an unsafe condition by the contractors. IRC97/5078: FAILURE TO MAINTAIN A SAFE PLACE OF WORK (e) The defendant failed to maintain the pit shed in a condition that was safe and without risks to health, in that it: i) Failed to ensure that the cover to the pit in the floor of the shed was maintained in position, securely fixed over the pit, and the shed kept adequately illuminated to prevent risk of employees entering the shed falling into the pit.

26 As it can be seen a close similarity exists between matters 5076 & 5077 both of which arise from the failure to control the activities of on-site contractors. I consider 5078 to be in a somewhat different category as it raises the more general issue of the site containing a pit the lid of which was not ordinarily kept secure. In my view the following penalties are appropriate.

27 In 97/5076 & 97/5077, $70,000 each, in 97/5078 $90,000.

28 In applying the principle of totality I reach the view that the total penalty should be $120,000 with a moiety and costs to WCA.

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