Consideration
71 In accordance with the principles for sentencing, I shall firstly consider the objective seriousness of the offence.
72 The maximum penalty for the offence charged against the defendant is $550,000.
73 Having regard to the charges laid against the defendant, the statement of agreed facts and the evidence and submissions of the prosecutor and the defendant, I consider the detriment to the safety occasioned by the defendant in this matter to be as follows:
1. The defendant failed to identify, and thereby failed to advise, the contractor, Z & F Welding, (and its employees) at the point of engagement (including at the tendering stage) or at any later stage, up to and including the performance of work associated with the incident, that the waste oil tank contained materials other than waste oil which were differently constituted to waste oil (including C1 materials as disclosed in the evidence) so as to substantially increase the volatility of such materials and the risk of ignition and explosion in the circumstances of the work contracted to perform.
2. The defendant failed to adopt a procedure as to the receival and storage of waste oils and other materials stored nearby which would ensure that the contents of the waste oil tank would not be contaminated by such other materials as would increase significantly the risk of ignition and explosion (in the circumstances where the defendant would require welding work to be performed upon the waste oil tank).
3. The deficiency related both to the procedure adopted per se and the defendant's failure to properly supervise the work of its contractor in carrying out the existing procedures properly. The defendant failed to lay down procedures by which "hot work" (as described in the evidence in the proceedings) might be performed safely.
74 As to the first of these considerations, I consider that it was incumbent upon the defendant to properly investigate the contents of the tank so as to ascertain whether there were aspects of the contents which it should bring to the attention of the contractor as representing an additional or unusual danger in carrying out the welding work.
75 It was particularly necessary for the defendant to take this step as it knew that there were impurities in the tank (resulting from deposits by the public from time to time) and further, that C1 materials were stored nearby to the waste oil tank (thereby representing a risk of inadvertent or mistaken deposit of those materials in the waste oil tank). This consideration also needs to be viewed in the light of the acknowledged inadequate storage control system operated by the defendant (which I will discuss shortly). It should be noted that there was a not insubstantial quantity of C1 type material found in the waste oil tank upon investigation after the incident.
76 I agree with the submission put by the prosecutor that whilst the defendant did not know specifically the requirements for the performance of "hot work", the defendant did know that welding activity was to be undertaken on the tank where some impurities other than waste oil were located.
77 It is simply not the point, as was argued by the defendant, that the defendant may have relied upon the expert opinion of a contractor (namely Z & F Welding) when that contractor was not advised of the true nature of the work to be performed at the Belrose premises. The contractor was advised incorrectly as to the contents of the tank and not advised as to the potential danger arising from the impurities in that tank. The contractor was, therefore, not sufficiently provided with information which may have enabled the contractor to form an appropriate judgement, based on its expert knowledge and skills. Nor, in my view, was there any sufficient or adequate inquiry made of the contractor by the defendant to ascertain the contractor's suitability for the performance of the work associated with the welding of the waste oil tank.
78 It should be noted that many aspects of the foregoing description of the detriments to safety occasioned by the defendant in relation to the incident were recognised in the internal investigation undertaken by the defendant after the incident which then resulted in the introduction of preventative measures by the defendant. The findings of the investigation were, as I understand it, identified to the prosecutor at an early time. These are actions taken by the defendant after the incident which will be taken into account in favour of the defendant in the assessment of penalty in this matter.
79 Mr Crow submitted that this was not a case where there was an absence of any safety system by the defendant. He pointed to the procedure prescribed by the defendant for the receipt and storage of waste oil and to the procedure adopted by the defendant in the engagement of contractors.
80 I would firstly observe in this respect that the procedures adopted by the defendant in relation to the storage of C1 and C2 materials, does tend to indicate that the defendant recognised the need to separate such materials so as to control a known and perceived danger at this workplace. The adoption of a procedure by the defendant to attempt to isolate C1 materials and ensure that checks were undertaken as to the materials poured into the tank (such checks being assigned to its contractor Heggies), indicates that the defendant was aware of the dangers associated with the incorrect storage of such materials.
81 However, the adoption of such procedures, as Mr Crow submitted, does demonstrate that the danger was not left unchecked by the defendant. It had introduced a procedure for dealing with the receipt and storage of materials.
82 The existence of a settled safety procedure and instructions is a factor which may mitigate the seriousness of the offence: Warman International Limited v WorkCover Authority of NSW (1998) 80 IR 326 at 342; WorkCover Authority of NSW (Inspector Riley) v Broken Hill Proprietary Company Limited (1998) 83 IR 427 at 429; and Department of Mineral Resources of NSW (Inspector McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 at 25. However, the system for the receipt and storage of waste materials was, as recognised by the defendant in its internal investigation, the preventative measures taken by it after the incident and ultimately, in the admissions made by it during these proceedings, insufficient in all the circumstances. The Act requires that procedures adopted by the defendant must include searching for and identifying all possible risks and instituting safety measures to guard against those risks: WorkCover Authority of NSW (Inspector Kelsy) v University of Sydney (unreported, Matter No. CT1280 of 1995, 2 April 1997) at 21.
83 It was submitted for the defendant, that the defendant did not have any knowledge of welding techniques or the welding trade and relied upon the expertise of the contractor as to the carrying out of the work associated with the incident. The defendant made a similar submission in relation to its reliance upon Heggies, albeit that in that case, it had relied upon Heggies to properly carry out a procedure as to the receival and storage of materials specified by it. I have some difficulty with this submission.
84 I shall turn firstly to consider the contractor Heggies. Mr Crow acknowledged, in submissions in this matter, that the defendant had placed too much reliance upon its contractors. This is, in my view, an appropriate concession. The implementation of safety procedures does not remove from the defendant a need to ensure that such procedures are both appropriate in all the circumstances and properly implemented. I note my observations in WorkCover Authority of NSW (Inspector Ankucic) v McDonald's Australia Limited & Another ( at 447):
In light of these findings, this case does not demand more extensive comments in relation to the delegation of duties to third parties. However, I would express my doubt that an argument such as that raised by the defendants would normally result in the very substantial reduction in penalty sought by the defendants. I do not consider that a person who has control of non-domestic premises made available as a place of work or control of plant provided for use or operation at work and who fails to ensure that the premises or plant are safe could escape the bulk of their culpability under s17 of the Act by seeking to delegate responsibility for maintenance to third parties. In many instances it would be quite proper to contract third parties to conduct maintenance, for example. However, some responsibility will normally remain to consider what services should be provided and, so far as possible, to ensure that the services were performed adequately. At the very least, the defendants in this case were involved to that extent, although for the reasons I have given, there was not sufficient fulfilment of their obligations under the section.
85 In my view, those observations are applicable to proceedings brought under s16 of the Act and thereby are applicable in the present circumstances where the defendant has placed reliance upon contractors to implement safety procedures and failed to ensure that such procedures are properly adhered to by the contractor.
86 Further, in WorkCover Authority of NSW (Inspector Egan) v Atco Controls Pty Limited (1998) 82 IR 80 at 85, Hill J made observations as to the obligations falling upon employers under s16 of the Act with which I respectfully concur (and which are applicable in the present case):
This case is yet another illustration of the need for employers to exercise abundant caution, maintain constant vigilance and take all practicable precautions to ensure safety in the workplace. It is essential that the approach should be a pro-active and not a re-active one; employers should be on the offensive to search for, detect and eliminate, so far as is reasonably practicable, any possible areas of risk to safety, health and welfare which may exist or occur from time to time in the workplace.
87 Further, it is clear that the procedure adopted by the defendant in relation to the receipt and storage of materials was, in itself, inadequate. This much was acknowledged by the defendant during these proceedings and further demonstrated by the steps taken by the defendant after the incident. Whilst the response by the defendant after the incident was laudable, the actions taken by it were such as to reveal the steps which may have been taken by the defendant to actually prevent the incident: Department of Mineral Resources v Kembla Coal and Coke at 27. Thus, after the incident, the defendant treated all waste disposable facilities as containing flammable substances. Procedures were introduced which prevented the public from placing waste oil directly in the storage tank by locking the waste oil receival area and only allowing access to the disposal point by the contracting partners' employees. It should be noted that with the pre-existing system, the public could potentially have access to the waste oil tank and thereby place flammable material within that tank (as obviously occurred prior to the incident). The previous system, whilst providing for the locking of the waste oil tank, nonetheless created a real potential for such deposits to occur, in circumstances where flammable materials were stored nearby. There were simply inadequate checks and controls placed upon the material which the public was depositing in or about the waste oil tank.
88 In my view, the steps which the defendant may have taken to avoid this incident were relevantly simple and straightforward. That consideration is relevant to assessing the seriousness of the offence in this case: see WorkCover Authority of NSW v ACI Operations Pty Limited (unreported, Schmidt J, Matter No. CT1025 of 1993, 25 February 1994).
89 The defendant's submissions as to its reliance upon contractors is more tenuous with respect to the welding contractor. The defendant's submission that it relied upon the skills and knowledge of that contractor must be assessed against the failure by the defendant to properly inform the contractor of risks associated with the work of welding the tank.
90 Whilst I am prepared to allow for some modest reduction for the defendant in assessing the gravity of the offence having regard to the failure of the welding contractor to accept the defendant's invitation to empty the tank, the defendant nonetheless failed to provide the specialist welding contractor with such information as may have been appropriate for that contractor to properly make a decision as to the safe performance of work (including information as would have properly allowed the contractor to judge whether the tank should or should not have been emptied).
91 Thus, the defendant's reliance upon contractors is a factor which will be taken into account in assessing the gravity of the offence, but, for the foregoing reasons, would only constitute a modest reduction in relation to the assessment of the gravity of the offence.
92 Mr Crow submitted that whilst the risk to safety in this matter was not completely unforeseeable, the failure of Techsource to identify the risk indicated that it was neither obvious nor readily foreseeable.
93 I do not accept this contention on two bases.
94 Firstly, it would appear to me that the detriments to safety in this matter were reasonably foreseeable. I discussed the proper test for foreseeability in Department of Mineral Resources v Kembla Coal and Coke (at 27). For present purposes, it is sufficient to note that the standard of foreseeability is objective, but it is not necessary that the precise causal circumstances of exposure to the risk and the consequent accident were reasonably foreseeable: Shannon v Comalco Aluminium Limited (1986) 19 IR 358 at 364 and WorkCover Authority of NSW v University of Sydney .
95 The defendant did know, in fact, that impurities were contained within the waste oil tank. It was reasonably foreseeable, having regard to the location for the storage of both C1 and C2 materials and the limitations upon the checks involved in the receipt and storage of waste oil, that impurities of a flammable nature may have found their way into the waste oil tank. In any event, as earlier observed, there was a known potential danger which should have alerted the defendant to the need to properly examine the contents of the waste oil tank before engaging a contractor to perform welding work on that storage vessel. It was reasonably foreseeable, in the absence of making such checks or actually requiring the contractor to empty the tank, that, having regard to the circumstances of the storage of waste oil, the contractor may have been required to work upon the tank in the presence of vapours which were flammable during welding.
96 The failure of Techsource to identify the deficiencies in the procedures adopted in the receival and storage of waste oil may indicate a deficiency in the work undertaken by Techsource. This conclusion does not excuse the defendant for similar reasons to those earlier discussed in relation to the defendant's reliance upon contractors. However, the defendant should be given some allowance for having obtained the safety survey and thereby showing a desire to effect an appropriate safe system of work. Further, some modest allowance should also be made for any failure or defect in the advice given to it.
97 This same consideration does not apply, in my view, in relation to the actual work performed in relation to the incident. Techsource recommended the removal of the ladder, which it may be presumed involved some welding work. However, Techsource was not asked to specifically advise upon whether the method chosen by the defendant to so cause the ladder to be moved was safe, nor as to appropriate procedures to be adopted in carrying out such work (subject to the contents of the tank).
98 Upon the principles laid down in Capral Aluminium , I consider that the elements of both general and specific deterrence must play a role in the determination of sentence in this case. As to general deterrence, I simply note the judgment in Capral Aluminium, as earlier cited, and the acceptance by the defendant that this would be an appropriate matter to take into consideration in this matter. Whilst I consider that the elements of specific deterrence are reduced by virtue of the prior steps taken by the defendant before (including the engagement of Techsource to conduct a safety survey) and after the incident, specific deterrence is still relevant in these proceedings, primarily because of the failure of the defendant to take proper steps to ascertain the nature of the contents of the waste oil tank before engaging the contractors. This is a significant omission in the defendant taking appropriate steps to ensure the safety of work practices carried out by contractors at its premises and indicates the need for vigilance to search out, identify and rectify such safety problems. It is also a significant factor given the general use of contractors by the defendant in its operations.
99 In view of the foregoing considerations, and giving due allowance to the defendant as to the factors raised by it as to the objective seriousness of the offence (including its reliance upon contractors), I have formed the view that the offence was a serious one. In coming to that conclusion, I have also had regard to the nature of the incident, the potential for death or very serious injury and the actual injuries sustained by employees of the contractors. I have applied in this respect the principles recently stated in Capral Aluminium as follows (at 94):
We consider that the limited injuries suffered by Mr Stafford must be seen in the context of that evidence and also in light of the principles which have been laid down in relation to the relationship between the seriousness of injuries suffered, or which may have been suffered, and the gravity of the offence. We consider that the relevant principle can be stated in this way. The gravity of the consequences of an accident, such as the damage or injury, does not, of itself, dictate the seriousness of the offence or the amount of penalty. However, a breach where there was every prospect of serious consequences might be assessed on a different basis to a breach unlikely to have such consequences. The occurrence of death or serious injury may manifest the degree of seriousness of the relevant detriment to safety: Tyler v Sydney Electricity (1993) 47 IR 1 at 5; Inspector Hannah v Wonar Pty Limited (unreported, Fisher CJ, CT90/1214, 30 June 1992) at 9; Watson v Southern Asphalters Pty Limited (1996) 83 IR 446 at 456; Wong v Melinda Group Pty Limited (1998) 82 IR 118 at 131; WorkCover Authority of New South Wales v Albury City Council (1999) 90 IR 397 at 408 - 409; Lawrenson Diecasting Pty Limited at 476; WorkCover Authority of New