Workcover Authority of New South Wales (Inspector McKenzie) v Waste Recycling & Processing Services of New South Wales

PROSECUTOR: Mr J Millar of Counsel SOLICITOR: Mr N Correy Moray & Agnew Solicitors LEGAL REPRESENTATIVES: DEFENDANT: Mr R Crow of Counsel SOLICITOR: Mr A Gooch Mallesons Stephen Jaques

JUDGMENT:

• 43 -
• 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

WORKCOVER AUTHORITY OF NEW SOUTH WALES (INSPECTOR MCKENZIE) V WASTE RECYCLING AND PROCESSING SERVICES OF NEW SOUTH WALES.

Prosecution under s16(1) of the Occupational Health and Safety Act 1983.

1 This matter is a prosecution by Angus MacKenzie, as an Inspector of the WorkCover Authority of New South Wales ("the prosecutor"), of the Waste Recycling & Processing Service of New South Wales ("the defendant") for a breach of s16(1) of the Occupational Health and Safety Act 1983 ("the Act"). 2 The prosecution arose from burn injuries sustained by Zeljko Brescic and Robert Suman on 24 December 1996 at factory premises known as the Waste Transfer Station, Crozier Road, Belrose ("the Belrose premises"). The defendant carried on waste recycling and processing operations and had contracted with Z & F Welding Pty Limited ("Z & F Welding") to carry out certain welding work at the defendant's various premises, in particular the Belrose premises. These welding works were being carried out to implement recommendations made as a result of a safety survey conducted by the consulting arm of the WorkCover Authority of New South Wales, WorkCover Techsource. This safety survey was conducted at all the defendant's work sites, at the request of the defendant, in an effort to ensure the health and safety of the defendant's workforce. 3 In relation to the Belrose premises this safety survey, amongst other things, recommended the location of an access ladder on a storage tank, the "Waste Oil Tank" (hereinafter "the tank"). 4 On 24 December 1996, employees of Z & F Welding, Zeljko Brescic and Robert Suman, were in the process of removing and reattaching the access ladder on the waste oil storage tank. Having removed the ladder using an angle grinder and an oxyacetylene torch, Mr Brescic, whilst using an arc welder to reattach the ladder, 'struck an arc' on a metal platform about a metre and a half from the side of the tank. Vapour in the tank ignited and an explosion resulted. I shall refer to this occurrence as "the incident". 5 Two summonses were initially issued against the defendant alleging offences arising from this incident, however, one of these prosecutions was discontinued prior to hearing. With respect to the summons presently under consideration, being Matter No. IRC6712 of 1998, the defendant has entered a guilty plea. 6 The charge contained within the summons alleged that: On 24 December 1996 at the Waste Transfer Station, Crozier Road, Belrose in the state of New South Wales, the defendant being an employer did fail to ensure that persons not in its employment, in particular, Zeljko Brescic and Robert Suman, were not exposed to risks to their health and safety arising from the conduct of its undertaking while they were at its place of work contrary to section 16(1) of the Occupational Health & Safety Act, 1983.

7 The particulars of the charge were as follows: 1. At all material times the defendant was an employer. 2. The defendant conducted its waste recycling and processing operation at various locations including its factory premises known as the Waste Transfer Station, Crozier Road, Belrose ("the premises") upon which premises was a storage tank known as the "Waste Oil Tank". 3. At all material times Z & F Welding Pty Limited had contracted with the defendant to carry out certain welding works at the defendant's premises, which included the transfer of an access ladder on the said tank to a different position on the said storage tank. 4. At all material times Z & F Welding Pty Limited had contracted with the defendant to carry out certain welding works at the defendant's premises. 5. At all material time the aforesaid Zeljko Brescic and Robert Suman were employees of Z & F Welding Pty Limited. 6. The substances placed into the said "Waste Oil Tank" were used oils and other flammable liquids which included thinners, kerosene, petrol and sump oil. 7. The said employees of Z & F Welding Pty Limited were not informed that the contents of the "Waste Oil Tank" included thinners , kerosene, petrol and sump oil. 8. Zeljko Brescic, in carrying out the work to transfer the said ladder, was using an arc welding machine on or in the vicinity of the said "Waste Oil Tank" which caused it to explode and burst into flames. 9. Zeljko Brescic and Robert Suman sustained serious burn injury when the explosion and fire occurred. 10. On the said date at the said place the defendant failed to ensure that the persons aforesaid not in its employment were not exposed to risks to their health and safety arising from the conduct of its undertaking at its place of work in that it failed to provide a system of work for the carrying out of hot work in a hazardous area that was safe and without risk to health. 11. On the said date at the said place the defendant failed to ensure that the persons aforesaid not in its employment were not exposed to risks to their health and safety arising from the conduct of its undertaking in that it failed to maintain a system of work for the carrying out of hot work in a hazardous area which was safe and without risks to health. 12. On the said date the defendant being the owner of a storage tank on its factory premises which contained flammable substances and which was subjected to a welding or cutting operation involving the application of heat to it without beforehand removing the flammable substances from it contrary to section 43(4) of the Factories, Shops and Industries Act, 1962. 13. The defendant failed to ensure that persons not in its employment were exposed to risks to their health and safety arising from the conduct of its undertaking whilst they were at its place of work in that hot work was carried out in a hazardous area at its place of work in a manner contrary to Australian Standard AS 1674-1 - 1990 "Safety in Welding and Allied Processes".

Statement of Agreed Facts 8 A statement of agreed facts was admitted into evidence by consent in the following terms: 1 The informant is and was at all material times an Inspector duly appointed and empowered by section 48 of the Occupational Health & Safety Act, 1983, to institute the within proceedings. 2 At all material times the defendant, Waste Recycling & Processing Service Of New South Wales was a statutory body corporate constituted under section 7 of the Waste Disposal Act, 1970 situate at Level 4, 821 Pacific Highway, Chatswood in the state of New South Wales. 3 At all material times the defendant conducted its waste recycling and processing operation at various locations, which are operated by contracting partners of the defendant, including its factory premises known as the Waste Transfer Station at Crozier Road, Belrose. 4 At all material times the defendant had entered into an agreement with Heggies Bulk Haul Limited ("Heggies") to perform the day to day operations of the Waste Transfer Station. The defendant does not employ any employees at the Waste Transfer Station. 5 The arrangement between the defendant and Heggies required Heggies to operate the site, to supply manpower and operate the machinery owned by Heggies, which included a backhoe and a sweeper. 6 The defendant contracted to the consulting arm of the WorkCover Authority of New South Wales, WorkCover Techsource, to provide a safety survey. WorkCover Techsource recommended a number of tasks, including the removal and reattachment of an access ladder to a waste oil storage tank. 7 The defendant sought tenders from specialist welding contractors to undertake welding tasks at the Transfer Station. As a result of this process, and prior to 24 December 1996 the defendant had entered an agreement with Z & F Welding Pty Limited ("Z & F Welding") to perform certain welding works at the Waste Transfer Station, which included the transfer of an access ladder on a storage tank known as the "Waste Oil Tank" to a different position, but on the same tank. 8 At approximately 7.30am on 24 December 1996 Zeljko Brescic and Robert Suman, who were employees of Z & F Welding sustained serious burn injuries when the Waste Oil Tank exploded. 9 WorkCover Inspectors Raymond and Apps attended the site on 24 December 1996. A copy of their factual inspection is attached. 10 The Waste Oil Tank was situated in the recycling area known as the Undercroft Area, the area being approximately 15 metres x 80 metres with concrete walls on three sides. The tank was located on a metal platform that was several metres above ground level, below the floor level where the public were required to leave their rubbish. There was a grate located on the level that the public had access to. This grate was used to pour waste oil which was then passed through pipes to the Waste Oil Tank. 11 Brescic who is a boilermaker and welder by trade arrived at the Waste Transfer Station after Suman had cut off the ladder with an angle grinder and an oxy acetylene torch and moved it to the position where it was to be affixed. 12 Brescic climbed the ladder to the platform where the Waste Oil Tank was located. He struck an arc on the platform about a metre and a half from the side of the tank, vapour in the Waste Oil Tank ignited and an explosion occurred. 13 Murray Russell, a project engineer employed by the defendant, was responsible for managing this capital works on the defendant's premises, which included the transfer of the ladder. He negotiated the contract with Z & F Welding. No discussion had occurred between the Defendant and Z & F Welding regarding the need to carry out the work on the Waste Oil Tank in compliance with "hot work procedures", nor was he aware of "hot work procedures" or permits required to perform such work. 14 Neither the defendant nor Z & F Welding were aware that the Waste Oil Tank contained a mixture of hydrocarbon oil and hydrocarbons of medium volatility. 15 The defendant does not have any prior convictions under the Occupational Health & Safety Act, 1983. 16 The defendant failed to ensure that persons not in its employment were not exposed to risks to their health and safety at its place of work contrary to section 16(1) of the Occupational Health & Safety Act, 1983. The Verdict 9 Having regard to the summons in this matter, the particulars of the offence and the statement of agreed facts, I accept the plea of guilty of the defendant and I enter a verdict accordingly.

Evidence for the Prosecutor 10 The prosecutor tendered some documents, materials and statements, amplifying the information contained in the statement of agreed facts as follows: a) a factual inspection report completed by Robert Apps, Assistant Principal Inspector with the WorkCover Authority; b) thirty-one photographs taken by K Raymond, a WorkCover Inspector, of the Belrose premises and the aftermath of the incident; c) an analyst's certificate on the material contained within the tank, completed by NSW Health; d) a copy of the Standards Australia publication titled "Safety in welding and allied processes"; e) various statements taken by Robert Apps, in relation to the incident, including statements by the injured workers Robert Suman (dated 12/2/97) and Zeljko Brescic (dated 22/4/97), John Littler, a Senior Technical Officer with the defendant (dated 31/10/97), Edward Kerewaro, Site Manager for Heggies Bulkhaul Ltd at the Belrose premises (dated 21/5/97) and Murray Russell, a Project Engineer with the defendant (dated 30/4/97).

Evidence for the Defendant 11 The defendant relied upon the affidavit of Murray Russell, filed on 10 March 2000. This affidavit contained information as to the background of the defendant company, its functions, places of business and like matters. Mr Russell gave evidence as to the safety survey the defendant had obtained from WorkCover Techsource ("the survey"), the recommendations made as a result of the survey, the tendering process that was followed in relation to the work done by Z & F Welding, the incident (in summary form), a subsequent internal investigation conducted by the defendant in relation to the incident, the results of that investigation and preventative measures that had been taken by the defendant to ensure there were no similar occurrences. Annexed to this affidavit were various documents, including: a) a report of a safety survey conducted by Techsource, dated August 1995; b) an incident report compiled as a result of the internal investigation conducted by the defendants into the incident, dated 12 January 1997; c) outlines of various policies, procedures and materials related to the preventative measures that had been taken by the defendant in response to the incident and the defendant's internal investigation. 12 I shall now turn to consider some particular aspects of the evidence and, where appropriate, set out extracts from that evidence. In doing so, I note that the Court has reviewed the entirety of the evidence and extracted certain components for convenience in order to assist in the subsequent discussion concerning the question of sentence.

The Safety Survey and Recommendations 13 Mr Russell gave evidence of a safety survey conducted at each of the defendant's work sites, carried out by WorkCover Techsource, at the request of the defendant. Certain recommendations were made by Techsource as a result of that survey. Mr Russell deposed to the fact that all but one of these recommendations had been implemented and that this residual matter had been scheduled for completion at the time of the incident. 14 A copy of the report produced in response to the safety survey was annexed to Mr Russell's affidavit. The recommendations made in that report, in relation to the tank, were relevantly in the following terms (with the addition of notations which appeared with the photographs referred to in the recommendations): WASTE OIL TANK AND PLATFORM The following hazards were observed: a) The access ladder requires a turning bar, so you are forced to face the ladder when descending. Photograph Number 28 [The comments appearing under Photo 28 are "Photograph No 28 Turning bar required on ladder"] Category A2 Reference AS 1657. Fixed Platforms, Walkways, Stairways, and Ladders-Deign Construction and Installation b) There is a fall hazard on the platform above the tank. The rails need to be extended. Category A2 Reference AS 1657. Fixed Platforms, Walkways, Stairways, and Ladders-Deign Construction and Installation c) The access ladder to the platform above the tank is too close to the railing and offers no protection if the climber were to fall back. The ladder needs to be moved to the opposite side of the tank Photograph Number 29 [The comments appearing under photo 29 are "Photograph No 29 Ladder to waste oil is in hazardous position. Ladder should be moved"] Category A1 Reference AS 1657. Fixed Platforms, Walkways, Stairways, and Ladders-Deign Construction and Installation

The Tendering Process 15 In his affidavit, Mr Russell gave the following evidence as to the processes of the defendant in arranging contractors to perform work at their sites and the tendering process for the particular work associated with the incident: 20. The standard procedure of Waste Service NSW, where work to be undertaken is to cost more than $50,000 to complete, is for a brief to be put together setting out a detailed specification of the work, safety procedures to be followed, and other detailed information necessary for an open tender procedure. Where the work is to cost less than $50,000, the standard procedure is to obtain three quotes. 21. As this package of work was to cost less than $50,000 to complete, a brief was not prepared. I obtained three quotations for the work. Generally, contractors are selected for quotation on the basis of previous work performed or from prior work history. In this case, one contractor was selected because it had performed welding for Waste Service NSW at the Lidcombe Liquid Waste Plant. This was the only contractor of which I was aware, that had a prior work history with Waste Service NSW. I selected another contractor because it had been engaged by my previous employer and I knew it to be a reliable contractor. Z & F Welding Pty Limited ("Z & F") was selected out of the Sydney yellow pages on the basis of the information provided in their advertisement. 22. I organised a site visit for each contractor. Each visit took about one hour. During the visits I showed them the work to be performed. On the basis of this site visit, and any further information requested by the contractor, the contractors then provided a quotation for the work. ... 24. As I had not previously engaged Z & F, I asked Mr Brescic a number of questions concerning his general experience in welding. Although I do not recall the details of the whole of the conversation which ensued, I do recall that words to the following effect were said: MR: "This is the waste oil tank. It does not contain pure oil. The oil comes from householders. There may be some impurities in there."

ZB: "I've had lots of experience doing this type of work before. I have worked on gas pipelines before and this sized job should not be a problem."

MR: "If the tank needs to be pumped out, then Waste Service will pay for the tank to be pumped out. Do you need the oil tank pumped out?"

ZB: "I don't need to have it done." I made similar remarks to each of the three contractors who visited the site. To each I said that Waste Service NSW would pay for the cost of removing any fluid in the waste oil tank. This comment was made so that this would not be a cost to be factored into the quote from any of the contractors, and in this way it would be simpler to compare the quotations and to take into account any unusual specifications requested by any of the contractors. 25. I mentioned the possibility of impurities in the tank because I expected car sump oil to contain grit and dirt, and I was also aware that vegetable oil had been mistakenly put in a waste oil tank in the past. 26. Of the three contractors who submitted quotes, I selected Z & F as they had stated that they had worked on similar items such as gas pipelines and they provided the lowest cost quote. At the time, I considered that they may have provided the lowest cost quote because Z & F did not have the same overheads and costs as the other larger contractors, and that they were keener for the work. 16 In cross-examination, Mr Russell gave the following evidence in relation to the selection of the contractor to carry out the work associated with the incident: Q. Did you have any further discussion with Mr Brescic apart from what is recorded here about his expertise? A. The discussion with Mr Brescic regarding the expertise was fairly brief. He was reasonably light-hearted about the fact that this work was within the work that he would generally perform and he tended to brush it off. Q. Because of that tendency, did you pursue it with him? A. No, he seemed fairly confident and relaxed that there was no problem with this type of work and that he had performed this style of work in the past. Q. Did you make any enquiry of him as to the safety requirements that might apply to this work and whether he would ensure that they were complied with? A. Only to the extent of asking him whether he needed the tank pumped out at the time. Q. In par. 26 you make reference to, it seems, how you selected this particular contractor, that is what you are really discussing there, isn't it? A. Yes, that is correct. Q. That is that they had done work on what you call similar items such as gas pipelines and they provided the lowest cost quote? A. Yes.

Q. Also I take it it was no part of your assessment of an appropriate contractor to have regard to safety considerations and measures that might be taken by the contractor to ensure that safety requirements were complied with?

A. Could you just repeat that question? Q. I take it from the absence of this in par.26 that it was no part of your concern when selecting this particular contractor to find out whether the contractor - what measures the contractor would take to ensure safety requirements were complied with? A. It was not Waste Services' procedure at the time to specifically identify safety hazards associated with a job such as that.

Ascertainment and Provision of Information concerning the Contents of the Waste Oil Tank 17 The statement of Mr Brescic, signed and dated 22 April 1997, provided the following: Q. What information and instructions were you given for the job? A. All they told me was "Change these ladders from one side to the other". There were no special warnings or instructions given. Q. Were you told what was in the tank? A. No. Q. Did you ask what was in the tank? A. No. I thought it was a diesel tank to fill up trucks. I've worked on hundreds of diesel tanks with no problems.

Q. Was there any written instructions or advice given to you by Waste Services prior to the commencement of the job? A. They sent me a fax about what had to be done, about 5 different jobs on the site. I have this fax at home. 18 Further, as earlier noted in this judgment, Mr Russell, in his affidavit (filed 10 March 2000), stated that the tank did not contain pure oil and that there were "some impurities" within it. 19 Further, in his affidavit, Mr Russell stated: 38. Any recycled product contained in the waste oil tank, and the associated profit from the recycled product, is owned by Heggies. 39. As the Belrose Waste Management Centre is operated by Heggies, and Heggies employees are tasked with supervising the receiving of waste oil from the public, Waste Service NSW is unaware of the exact nature of the material contained in the waste oil tank.

20 In the statement of Mr Russell, given on 30 April 1997, he gave the following answers: Q19 Did waste Recycling & processing Service do an assessment regarding any possible hazards or risks in carrying out this work? A Not a formal assessment. The fact that it was an oil tank was made aware to the contractor in order to gain the benefit of their experience in such works. Q20 Is it documented? A No. ... Q28 Did Mr Brescic and his employer undergo any induction program on that day. Or at any other time? A Not a formal induction, however, he was advised of a number of general safety rules related to his movements on site. ... Q31 Do you have a contractor management program or procedures this site? A It is not formalised that I am aware of. Q32 If it is not formalised what does it involve? A I will forward a written response. Q33 Did you give any instructions to Mr Brescic on how the work should be done? A Our requirements were based on the end product rather than the method of work. Considering Mr Brescic's experience in such work it was necessary to rely on his expertise. ... Q50 Were any arrangements made to make the tank safe for welding by the Waste Management Service? A Due to a lack of expertise regarding this type of work it was necessary for Waste Service to rely on the expertise and experience of the contractor. During the quotation phase of the work, each contractor, including Z&F was asked to detail any works required by Waste Service prior to their starting work. As none were detailed by any of the three contractors no special arrangements were made. As Bill Brescic advised of extensive experience working on gas pipelines, it was expected that he must have included for any specific requirements in his price. Q51 Was this documented in the quotation phase? A I believe that this was a verbal request however if it is documented it will be included in the internal investigation report. ... Q53 Was the tank emptied, purged and ventilated prior to welding? A. Not that I am aware of. Q54 What was Mr Brescic told about the tank's contents? A He was advised that it contained waste oil as received from residential customers.

... Q59 How do you know what was put in the tank? A It has always been referred to as a waste oil tank. Through my knowledge of site operations I am aware of the fact that it is used to dispose of waste oil. Q60 Did anyone tell you what was in the tank? A I don't recall any specific instruction however it is discussed on a general basis with Waste Service staff from time to time throughout my employment. Q61 Did you tell Bill Brescic that the tank contained possible flammable liquids? A I was not aware of this fact at the time of discussion with Bill Brescic so he was not informed.

21 In cross-examination, Mr Russell gave the following evidence: Q. Would you agree with me that from the conversation you set out in par.24 that you really did not know what the tank contained? A. We did not have a detailed chemical analysis, if that is what you are asking. Q. Well, any chemical analysis? A. There wasn't a chemical analysis done of the contents of that tank. Q. While you were employed by Waste Services, which I think commenced in 1996, had you ever known there to be any analysis carried out on the contents of the tank? A. Not that I am aware of prior to that accident. Q. Isn't it the case that you really did not know what was in that tank, that you just made an assumption when you told Mr Brescic what you say you told him in par.24? A. I would say that we didn't know in detail what was in that tank. Q. You simply made an assumption about its contents, didn't you? A. The tank is established as a waste oil acceptance facility. On that basis it was assumed that the contents were waste oil. Q. And no testing was carried out from time to time to ascertain whether that assumption was correct, would you agree with that? A. The control of the contents of the tank is limited by the acceptance of those contents by a waste recycler. I guess it could be assumed that if the material was extremely polluted with substance other than waste oil that it would have not been accepted, that was, to the best of my knowledge, the control of that tank at that time.

Content of the Waste Oil Tank 22 The evidence also demonstrated that there were facilities for the public to deposit other waste materials for recycling, including mineral turpentine, kerosene and paint thinners, adjacent to the area where the waste oils were to be deposited. 23 Mr Russell gave the following evidence in cross-examination: Q. Could you have a look at this document? (Documents shown). It is photograph No. 14 which is part of Ex.2, your Honour. That sign there was displayed at the premises at the time of this incident, wasn't it? A. Yes it was. Q. And do you agree that that invites the public to deposit kerosene at the site? A. It does. That is a different facility to the waste oil tank that is under discussion. Q. So kerosene that might be deposited in response to the indication on that sign would not find its way into this tank, is that what you say? A. It shouldn't. Q. Was there some system in place at the time to ensure that it wouldn't? A. Not that I am aware of. Q. What I suggest to you is, apart from making an assumption that is all you could do because you could simply not know what the contents of the tank were at the time, could you? A. What was the question? Q. You simply - you had to make an assumption about the contents of this tank because there was no way you could have known with any certainty what it contained at the time of this incident, would there? A. That's true. 24 In re-examination, Mr Russell gave the following evidence: CROW: Q. (Photographs 15 and 16 from Ex. 2 shown) Do you have a photograph there with a heading Photo No. 15 and Photo No. 16? A. Photo No. 15. Q. Do you see in the foreground a sign hanging from the roof with the words "sump oil" on it? A. Yes. Q. To the right of it and a bit further away another sign which is too far away to read the writing on it? A. Yes. Q. Does that appear though to you to be the same sign as the sign you were shown in photo No. 14? A. Yes it does. Q. And over the page on photo No. 16 there is a closer version of the sump oil sign? A. Yes. Q. Do those photographs confirm in your mind that the receiver place for sump oil was different from the receiver place for kerosene at the Belrose Recycling Plant? A. Yes. Q. Was it the case that the contracting party Heggies was contracted to supervise the receipt of these liquids or chemicals? A. Yes, that's true. Q. And to the best of your knowledge were employees of Heggies supervising disposal of oil and other chemicals into the respective receiver points? A. To the best of my knowledge, yes. Q. Was it your understanding that they were performing some sort of check of what was going into which receiver point? A. Yes.

25 The certificate completed by NSW Health, analysing samples of the remaining contents of the tank following the incident was in the following terms:

I, Phillip James MAYNARD, hereby certify as follows:

3. These items have been examined with the assistance of trained personnel and with the following results:

Item Results of Examination 1. Metal tin labelled in part, "Sample of oil collected from tray beneath tank...." and containing 1.3 litres of black, non-aqueous, flammable liquid. The liquid was found to be a hydrocarbon oil contained approximately 2% petrol plus hydrocarbons of medium volatility

2. Glass jar labelled in part, "Sample of liquid from can labelled 'BP Zoom' ..." and containing 1mL of pink, non-aqueous, flammable liquid. The liquid was found to be petrol.

26 An analysis of the material in the tank completed by OilCheck Pty Ltd, annexed to the affidavit of Mr Russell, indicated that the material left in the tank after the explosion was approximately 53% lubrication oil, with the remainder composed of contaminants such as petrol, kerosene and diesel, and that it had a flash point of only 44 degrees celsius. 27 Further, the letter of opinion from Mr Bruce M Johnson, an Inspector with the Fire Investigation unit of the New South Wales Fire Department, stated:

10. In my opinion the fire and explosion was caused by the ignition of hydro-carbon vapours accumulated around the cylinder, by the arc from welding being carried out adjacent to the storage cylinder.

Arrangement between Heggies Bulkhaul and the Defendant 28 In his record of interview, Edward Kerewaro stated: Q. What is the working arrangement between Heggies Bulkhaul Ltd and Waste Services NSW at the Belrose Waste transfer station? A. Heggies operate the site under the umbrella control of Waste Services. They maintain all the building and plant and the only equipment we look after is our own machinery which we operate. Waste Services have in the past been pretty up front and let me know when they arrange for any contractors to work at the site. Q. Is there any documentation in respect of those working arrangements at the site? A. No. Not that I am aware of.

29 Mr Kerewaro stated the defendant had been making the arrangements with Z & F Welding, that he had been informed about two weeks prior to the date of the incident that Z & F Welding would be doing work on the site, but that he was not informed as to what dates or exactly what work Z & F Welding would be required to perform when on site. His evidence as to the supervision of the dumping of oils was as follows: Q. Who is responsible for the supervision of contractors carrying out work on site? A. Waste Services have a site manager who supervises this site and others however he commenced holidays on the Monday prior to the accident. ... Q. What procedures are in place to ensure that contractors working on site are informed of safety issues and possible hazards? A. I am not aware of any involving Heggies and I presume this is carried out by the site manager from Waste Services as they control the site and engage the contractors. ... Q. Who is the owner of the storage tank, ladder and supporting platform that was damaged at the site at the time of the accident? A. Waste Services. Q. What type of liquids are stored in the tank? A. Householders waste engine oil. Q. Who is responsible for monitoring what is put into the tank? A. The labourer up top just checks it by sight before he tips it into the chute relying on what the customer tells him. Q. What are the procedures for filling and emptying the storage tank involved in the accident? A. Heggies operators tip the oil down the chute into the tank but have nothing to do with emptying the tank. Other contractors are engaged by Waste Services to carry out this duty and were doing this prior to Heggies working on the site. These contractors just come when it suits them and we are not given any advance notice of when they are due. ... Q. What instruction and training had been given to the operator employed by Heggies Bulkhaul Ltd to tip the waste liquids into the chute? A. The operator was verbally instructed of what material goes in the appropriate chute and this is also explained on the notice board above the area. He is also instructed to visually check the content of the liquid containers before tipping the contents into the chute.

30 In the statement of Mr Littler, who at the time of the incident was a Senior Technical Officer and is now Centre Manager, the following evidence was given: Q. Who is responsible for organising work to be carried out by contractors at the various sites? A. That would depend upon what the work was. Under normal contract Waste Service was responsible for major refurbishment, the operators for their own equipment, minor repairs and any repairs as a result of damage caused due to their operation. They also have care and control of the site. Q. Who organised the contract work at the Belrose site? A. Depending upon the nature of the work if technical expertise was needed it may be through internal or external personnel, if of environmental nature different personnel may be required either internal or external. In summary it depends on the nature of the work in general. In regard to the particular incident at Belrose this resulted from an audit done by WorkCover which itemised certain needs at various sites which were carried out in a progressive manner and this particular one was delegated to Murray Russell who organised the quotes and the contractors. ... Q. What risk assessments do Waste Recycling and Processing Service of NSW require when contractual work is to be done at their sites? A. That would depend on the type of work to be carried out, and if the expertise was not available internally we would seek the advice of external experts. Depending on the type of work that would depend on the joint consultation of the parties involved. ... Q. What is the working arrangement with the partnership and who is in control of the site? A. Heggies were in control of the landfill and transfer station which required them to have their own site manager. Q. Who supervises the activities of non-employees such as contractors on site? A. This would depend on the nature of the contracted work at the time. ... Q. Who owns the tank that Z & F Welding were working on at the time of the accident? A. Waste Service NSW. Q. Who was the supervisor of the area where the tank was located at the time of the accident? A. It is clearly stated in our normal contracts that the operating partner has care and control of the site.

31 In the statement of Mr Russell of 30 April 1997, the following evidence was given: Q24 Was Mr Brescic given any instruction about who he should report to on site? A. He was advised to check at the Weigh Bridge each morning so that the operating partner was aware that he was working on site. As he was working directly for Waste Services he was not required to report directly to the Heggies Site Manager unless there was some way that the two companies work would impact on each other. Q25 Was Heggies Bulkhaul Pty Ltd the site operating partners you mentioned? A. Yes ... Q44 Who is the supervisor of the area where the tank is located? A. To my knowledge the Heggies Site Manager is the supervisor of the entire site including the waste oil tank. I am not fully aware of the various contractual obligations associated with it. ... Q46 What systems were in place to monitor what is put into the tank? A. Heggies, as the site operator, monitor what is put into the tank. I am not fully aware of the details of this system. Q47. Who is responsible for supervising what goes into the tank? A. Heggies would be the best people to advise on this.

32 In his affidavit Mr Russell asserted that: 38. Any recycled product contained in the waste oil tank, and the associated profit from the recycled product, is owned by Heggies. 39. As the Belrose Waste management Centre is operated by Heggies, and Heggies employees are tasked with supervising the receiving of waste oil from the public, Waste Service NSW is unaware of the exact nature of the material contained in the waste oil tank.

Investigation by the Defendant 33 Annexed to the affidavit of Mr Russell was a report titled "Belrose Waste Oil Tank Explosion 24/12/96 Incident Report" ("the report"). According to this document, it was produced as the result of an internal investigation following the incident. 34 The report detailed various facts relating to the incident, the investigative methods used by the defendant in producing this incident report and the findings of the investigation and preventative measures that may be taken as a result of the investigation. The report also contained the conclusions and recommendations of the investigating officer. 35 The report identified a number of areas that the defendant considered may have contributed to the incident. These are discussed under the heading "Discussion of the Findings", in the following terms: There are a number of areas that may have contributed to the accident. It will not be known how significant a contribution each of these factors actually made until the Police and WorkCover release their findings, however each is discussed in detail below: Procurement of Services The procedure followed for the procurement of the services of Z & F Welding, while considered adequate, could have been more thorough. In future the procedure for procurement of services would be expected to include: - Request for references from previous work - Supply of insurance particulars - Supply of certificates of competence related to work being done Hot Work Procedure It would appear that the method of work undertaken by Z & F Welding was inadequate. The minimum precaution expected would be to ventilate the tank until the flammable vapour concentration was below 5% of the LEL. A more thorough procedure would have emptied the tank, flushed it and filled it with water. Alternatively, the tank could be purged with Nitrogen and the atmosphere monitored prior to and during welding. It would appear that none of these procedures were followed. More detail on the actual procedures used will be available when the injured workers are fit to be interviewed by WorkCover. Site Supervision Direct supervision of Z & F Welding by Waste Service was not carried out as they were considered to be competent specialist contractors. In order to fully ensure the safety of contractors working for Waste Service in the future it would be expected that written work procedures would be in place before work commenced, possibly formalised by the issue of a Safe Work Permit or Hot Work Procedures. This may involve the development of standard Waste Service work procedures that must be followed by contractors. Another method would be to request such a procedure from the contractor if a standard procedure was not available for the work being performed. The actual methods used for this type of supervision would need to be investigated in more detail before it was satisfactorily implemented. Supervision of Waste Oil Disposal

The existing installation of waste oil tanks at the various Waste Management Centres are not designed for the storage of C1 type materials. They are intended to store waste sump oil (C2 type material). It would appear that there are a variety of materials finding their way into the tanks, not pure oil. There are a number of implications from this.

The site procedure for waste oil disposal is for the public to give their container of oil to the Contracting Partner who inspects the contents and, if suitable, pours it into the waste oil tank. The layout of the station is such that the inlet point to the waste oil tank can be accessed by anybody in the transfer station. As a result of this, without proper supervision, it is possible for a member of the public to dispose of material other than oil by simply pouring it down the tank inlet.

At present, if the material is unsuitable for storage in the waste oil tank, the container is set aside for special disposal. Following the Belrose explosion, an inspection of the Transfer Station building revealed three small drums of mower fuel that had been set aside for special disposal, illustrating that this procedure is currently being used with some success, albeit that storage of these items does not meet the requirements of AS1940.

It should be noted that the inlet to the waste oil tank is fitted with a lid which must be kept locked to fully ensure that only waste oil is poured into the tank. If there is any failing in the supervision by Contracting Partners, it may be possible for a member of the public to pour unsuitable material into the tank, unknown to site staff. Furthermore, waste oil contaminated by some amount of other material may not be detected by site staff and still find its way into the waste oil tank.

Test results obtained on the material spilt from the waste oil tank at Belrose suggest contamination levels in the order of 45 to 50% even after a significant portion of volatile material was burned off. A summary of the test results is attached in Appendix C. These test results confirm that the material stored in the waste oil tank at Belrose prior to the explosion was Class C1 material.

It will be necessary to review the operation of our sites related to the handling, storage and disposal of waste oil in light of these findings.

There are a number of preventive measures that should be implemented as discussed above. These include: · Review of procedures to procuring contracting services, · Review of procedures related to the supervision of contractors working on Waste Services sites, · Review of handling and disposal methods of waste oil at all Waste Services sites.

A discussion paper related to the first two items listed above is currently being prepared by Virinder Singh. A Management Review Meeting has been held at the Lidcombe Liquid Waste Plant on 9/1/97 to discuss the implementation of work procedures with subsequent investigation of the ICI standard procedures. The third item, related to handling and disposal of waste oil, is currently under investigation by John Saul. This investigation has involved the trial use of an off the shelf disposal system and the commissioning of a flammable goods consultant to report on all fuel and oil storages on Waste Services sites.

Given the ongoing nature of employing contractors for work on our sites, it is recommended that the reviews discussed above are completed as soon as possible. It is recommended that any modification to procedures required following these reviews are implemented without delay.

Recommendations concerning the Emergency Response Plan are covered in the previous section.

It is recommended that this report be reviewed on receipt of the WorkCover investigation and report.

Changes in Procedures Introduced by the Defendant after the Incident 36 The defendant introduced a number of changes to its procedures and practices after the incident which were described in the affidavit of Mr Russell as "preventative measures". He described these measures as consisting of two components as follows: (a) procedures for engaging, supervising and ensuring the safety of contractors at Waste Management Centres owned by Waste Service NSW; and (b) measures implemented by Waste Service NSW to ensure the safe receival and disposal of waste oil at the Waste Management Centres.

37 As to the first of these measures, the defendant introduced for contractors a three tier safety approach which included an induction program and training program as to safety procedures and requirements. The three tier safety approach required contractors to submit a "job environment and safety analysis" before the commencement of any work on a non-complex capital project and a safety plan for more comprehensive and complex capital works. The three tier approach also involved the defendant developing an "auditable occupational health and safety risk management system". The training program involved training as to hazardous substances, emergency response plans, accident and investigation and other matters relating to occupational health and safety. 38 Further, as to measures associated with contractors, the defendant required its employees who engaged contractors to undertake a training course on the management of occupational health and safety for contractors (which course was run by the National Safety Council of Australia). The defendant also improved reporting systems and introduced quality management monthly meetings. 39 There was a substantial change in the procedure adopted by the defendant in relation to the receival and treatment of waste oil. Waste oil tanks are managed under the new scheme on the basis that the defendant will assume that such vessels contain flammable substances. Further, a number of additional measures were introduced, including:

(a) Preventing 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. Those employees were to engage checks to ensure the content of the material to be dumped;

(b) A consultant was engaged by the defendant to review the handling and storage requirements for all flammable and hazardous substances brought onto the defendant's sites;

(c) The defendant upgraded all of its waste oil storage facilities and made modifications to the waste oil storage tanks at all its centres, including the provision of emergency venting, overfill protection, exhaust fans, improved access and bunking of tanks (all of which comply with the Australian Standard AS1940-1993 entitled "The Storage and Handling of Flammable and Combustible Liquids").

Submissions for the Prosecutor 40 The submissions put by Mr Millar of counsel, for the prosecutor, were to the following effect:

The defendant had pleaded guilty and had no prior convictions; these being factors that are relevant when considering the penalty to be imposed.

The evidence of Mr Russell indicated that the defendant knew there were impurities in the oil storage tank and that there was no attempt on the part of the defendant to ascertain the nature of the material therein. Further, regardless of whether the defendant knew that welding work was technically termed "hot work" and that there are a number of safety considerations that are to be taken into account in dealing with any such "hot work", the defendant did know that the work to be performed involved welding. The performance of welding work in and around a tank of waste oil, known to contain impurities, when there had not been any steps taken to ascertain the nature of the material therein, was on any view dangerous to the safety of persons in the precincts. The tank, in fact, contained material that was 53 per cent lubrication oil, the remainder being a number of contaminants including petrol, kerosene and diesel. Mr Russell deposed in his affidavit to the fact that he later knew there was a dangerous situation applying where these men were going to work. These facts alone indicated a reckless attitude to the safety considerations that would obviously be applicable in a situation where welding works were to be performed around a tank containing unknown and potentially dangerous substances. It was clear that the defendant did not take sufficient care to avoid potential risks to the health and safety of these men.

Given that this matter comes by way of a plea, the defendant takes responsibility for the incident. The defendant has, however, made attempts to have that responsibility mitigated by indicating that due to their inexperience in work of this nature, they were required to rely on the skills and experience of the contractor selected. In these circumstances, it becomes relevant to consider how the contractor was selected, in order to ascertain whether the defendant could have been properly satisfied as to the expertise of the contractor, and the extent to which the contractor would conscientiously comply with safety requirements applicable given the nature of the work to be performed. The evidence of Mr Russell indicated quite a superficial attempt to ascertain the true expertise of this contractor in relation to the work to be performed. Further, there was no attention paid to safety requirements associated with the work, the extent to which this contractor would follow these safety requirements and, more specifically, what measures the contractor would put in place to ensure that safety requirements were fulfilled.

The defendant had seriously neglected its responsibility to verify that this contractor was an appropriate contractor given the work to be performed and had failed to have regard to the instructions that would necessarily need to be provided to safely perform this work near hazardous substances.

The defendant had demonstrated a recklessness with regard to safety and in the manner with which it appointed contractors in that there was no real scrutiny of the contractor retained to perform the work so as to ensure that the work would be carried out safely.

Having regard to the time of the accident, the maximum penalty applicable is $550,000.

Submissions for the Defendant 41 Mr Crow , counsel for the defendant, submitted that the defendant had fully co-operated with the prosecutor, having provided the WorkCover Authority with a copy of its own internal investigation report. The defendant had demonstrated contrition in the measures it had taken and in having entered a plea of guilty. He also submitted that the defendant had not had any prior convictions and, given the nature of the defendant's business, this was commendable. 42 Further, Mr Crow submitted that it was not fair for the prosecutor to put that the defendant was superficial in his method of selecting a contractor to perform the work associated with the incident. An hour on site with the contractor was not an unreasonable way for the defendant to go about things, albeit that the defendant acknowledged that the procedure needed improving (and, indeed, has taken steps to bring about improvements). 43 It was submitted for the defendant that the failure in the procedures adopted by the defendant for controlling the material stored within the tank, as had been asserted by the prosecutor as part of its case, were not identified in the recommendations made by WorkCover Techsource in relation to the tank, nor anywhere else in its recommendations. 44 This failure by Techsource was, it was submitted, relevant to the assessment of penalty as it illustrated the degree of foreseeability of an incident (particularly when the prosecutor was careful to submit that the potential for injury should have been obvious to the defendant). Whilst the risk or omission was not completely unforeseeable, the failure of Techsource to identify the risk indicated that it was not obvious and that the risk was at "the higher end of the unforeseeable index". 45 Mr Crow pointed to the evidence of Mr Russell to the effect that neither he, nor anyone else in the employ of the defendant at the Belrose premises, had any knowledge of the welding techniques or the welding trade. It was for that reason that the defendant sought a specialist welding contractor. The defendant relied on Mr Brescic's advice that he was used to this sort of work and that he had also worked on gas pipelines. Further, Mr Brescic was put on notice or reminded by Mr Russell of the option of having the tank emptied. Mr Russell accepted Mr Brescic's superior expertise when it came to welding procedures. 46 Mr Crow submitted that it is the nature and quality of the offence, rather than the result of the incident, which is of primary significance in the assessment of penalty. This is a case where the defendant, through its officers, had been guilty of relying too much on others. Firstly, it relied upon the welding contractor's assurance of competence. Mr Russell, it was true, did not know exactly the chemical composition of the contents of the tank. He assumed it was generally waste oil with some contaminants. Mr Russell offered to have it flushed out but Mr Brescic said that he did not need that done and Mr Russell relied upon that as the opinion of someone who was more knowledgeable. 47 It was submitted the defendant relied too heavily on the advice of Mr Brescic and on the site's managing contractor, Heggies, to properly follow the procedure for the disposal of waste oil. 48 The defendant conceded that this was obviously not an adequate procedure but it was a procedure which the defendant relied upon to achieve the result where the tank contained waste oil. 49 In relation to the control of the material going into the tank, Mr Crow submitted this was not a situation where there was a complete absence of any procedure. The procedure involved the contractor, in this case Heggies Bulkhaul, inspecting the contents of a container presented by the public which purported to contain waste oil and then deciding whether it was suitable to be poured into the tank. Further, the lid of the tank was to be locked to ensure that only waste oil was poured into the tank when Heggies Bulkhaul employees were not around. It does, however, seem that these procedures had not been followed and there were deficiencies in the procedures. 50 It was submitted that, from a critical examination of its deficiencies, the defendant had not shirked its responsibilities. To the extent that penalty in a matter such as this needs to have a deterrent component, there is very little of that element necessary in this case because the defendant, prior to the incident, had initiated a safety survey from WorkCover and, following the incident, had initiated its own investigation and implemented changes to the manner in which it does business in a very significant and major way. The defendant does, however, accept that there are issues of general deterrence that are required in matters of this kind and that, as such, a penalty would need to be imposed.

Review of the Evidence 51 In addition to the foregoing description of the evidence, I shall shortly review the evidence, noting that which was recently stated by a Full Bench of the Commission in Court Session in Capral Aluminium Limited v WorkCover Authority of New South Wales [2000] NSWIRComm 71 at 60, as to the appropriate approach to findings of fact in relation to sentencing: It is convenient to state our view on this question, although we are bound of course to approach the matter in the terms recently restated by the High Court in R v Olbrich . In that case the majority of the court said: [27] As to the standard of proof that should be applied, we should adopt what was said by the majority in R v Storey [1998] 1 VR 359 at 369, per Winneke P, Brooking and Hayne JJA and Southwell AJA - that a sentencing judge "may not take facts into account in a way that is adverse to the interests of the accused unless those facts have been established beyond reasonable doubt. On the other hand, if there are circumstances which the judge proposes to take into account in favour of the accused, it is enough if those circumstances are proved on the balance of probabilities". It should be noted that the majority had earlier stated that it rejected the contention that a judge who is not satisfied with some matter urged in a plea on behalf of an offender must, nevertheless, sentence the offender on a basis that accepts the accuracy of that contention unless the prosecution proves the contrary beyond reasonable doubt. This Court will approach this matter in the same way.

52 The defendant conducted waste recycling and processing operations, including liquid and solid waste disposal, recycling and processing centres and landfill sites at various premises. As a part of those operations the defendant owns seven Transfer Station Waste Management Centres, including the Belrose premises. With a few exceptions at sites not relevant for present considerations, the defendant does not employ any day time labourers for the operation of their recycling centres, such day to day operations being carried out by contractors. 53 The Belrose premise's daily operations, including the daily supervision of waste materials deposited in the tank by the public, are carried out by Heggies Bulkhaul Pty Limited ("Heggies") under contract to the defendant. On the evidence presented, the exact working relationship between the defendant and Heggies was not clear, however, it was clear that the defendant would make arrangements to contract out any major capital works that were required at the Belrose premises and then to supervise that work. 54 In any event, it was employees of the defendant who had arranged for the particular contractors in this case to complete the various welding works associated with the incident at the Belrose premises. 55 The welding works were undertaken to implement recommendations made by an arm of the WorkCover Authority, known as WorkCover Techsource, in a safety survey conducted at the Belrose premises. These various welding works included the removal and reattachment of a ladder on the waste oil tank. 56 The defendant undertook a tendering process for the selection of a contractor in accordance with its established policies. The result being that Z & F Welding were the successful tenderer and were employed by the defendant to perform the various welding works at the Belrose premises. 57 One point of contention in the proceedings related to the instructions provided to the contractor Z & F Welding. On the evidence of the defendant, there was no history of dealings between the contractor and the defendant and there was no written documentation provided to the contractor as to the nature of the work or the contents of the tank. In accordance with the defendant's then current policies, there were no safety procedures stipulated by the defendant for the performance of the work associated with the incident. The defendant, following its policy, simply obtained three quotes for the work to be performed and selected the contractor accordingly. I find that the selection involved Mr Russell from the defendant company spending approximately one hour on site with Z & F Welding discussing the work to be performed. This involved the defendant asking "a number" of questions as to Z & F Welding's relevant degree of experience in these matters. As a part of this selection process the defendant asked Z & F Welding, as it did all the contractors who tendered for the work, whether they would need the tank to be pumped out to allow the work to be performed. Adopting the approach to the evidence, as outlined in Capral Aluminium , I am satisfied that the defendant did ask Mr Brescic if the tank needed to be emptied and that he responded in the negative. 58 However, it is clear on the evidence, and indeed admitted by the defendant, that the defendant was not aware of the contents of the waste oil tank to any relevant extent and had taken no steps to ascertain with any precision the contents (or their volatility) prior to engaging the contractor. On the evidence, the contractor was either not advised of the contents of the tank or, upon Mr Russell's version of the events preceding the incident, the contractor was advised that the tank contained waste oil received from residential customers and "some impurities". Again, applying the approach stated in Capral Aluminium , I find that the defendant advised Z & F Welding that the tank essentially contained waste oil and "some impurities", although at no stage did the defendant identify to the contractor that such impurities would substantially alter the volatility of the materials held in the tank such as to significantly increase the risk of ignition or explosion during the carrying out of work associated with the incident. 59 The defendant gave evidence that the waste oil tanks at their transfer stations, including the tank in question at the Belrose premises, were designed to house non-volatile waste sump oil, or C2 type materials. This is opposed to more volatile materials such as petrol and kerosene, which the defendant referred to as C1 type materials. To monitor what materials went into the tank, the defendant relied upon a system of monitoring which, at the Belrose premises, involved Heggies staff inspecting any material that was to be deposited in the waste oil tank, prior to it being deposited, with a view to excluding from the tank various inappropriate materials, including flammable materials. The inlet point to the tank was readily accessible to anyone within the transfer station. It was, therefore, fitted with a lockable cover to prevent any unsupervised addition of inappropriate waste materials to the tank. The defendant's evidence was that on the basis of this system, it assumed that the waste oil tank was housing waste sump oil, noting, however, that it was aware of some non-flammable impurities. It is important to emphasise at this point that within relatively close proximity to the waste oil tank, there was an area for the depositing of kerosene and other more flammable, or C1 type materials, to allow for "special disposal". Further, an inspection of the site following the explosion revealed "three small drums of mower fuel" located near the waste oil tank which were apparently set aside for special disposal. 60 It is clear that the system adopted by the defendant failed. The analysis conducted by Oilcheck Pty Ltd on material contained within the tank following the incident indicated that the waste oil tank, in fact, contained only 53% non-volatile lubrication oil, with the remainder, that is nearly 50%, being made up of various other volatile C1 type contaminants such as petrol, kerosene and diesel. The result of the inclusion of these contaminants was a lowering of the flash point of the material stored in the waste oil tank to 44 degrees celsius. 61 Further, there was evidence from Station Commander Casey of the Forestville Fire Station that, in his opinion, the fire and explosion was caused by the ignition of hydro-carbon vapours, which had accumulated around the cylinder next to the arc, from welding being carried out adjacent to the storage cylinder. 62 The defendant has conducted an investigation following the accident, resulting in the identification of a number of measures that could be taken to prevent an incident of a similar nature. These preventative measures included the training of staff (required to be involved with the tendering out of work) on the management of occupational health and safety issues, safety induction programs for all contractors and the adoption of a 'three tier safety approach' to the identification of safety related issues. This is a significant change to the manner in which the defendant had conducted its business in the past. 63 Each of the defendant's waste oil tanks have been significantly modified, including the provision of emergency venting, overfill protection, exhaust fans and improved access to tanks so that all waste oil tanks now comply with the relevant Australian Standards related to the storage and handling of flammable and combustible liquids. Further, the defendant has significantly altered the manner with which it deals with waste oils stored in tanks at its various premises. All tanks will now be considered as containing flammable substances and will be dealt with accordingly. Furthermore, the public are prevented from placing waste oil directly in the receival area. The deposit of the oil is carried out by the employees of contractors. These are considerable changes to the manner with which the defendant operated its business prior to the incident.

The Legislation 64 Section 16 of the Act provides: 16 Employers and self-employed persons to ensure health and safety of persons other than employees at place of work

(1) Every employer shall ensure that persons not in the employer's employment are not exposed to risks to their health or safety arising from the conduct of the employer's undertaking while they are at his employer's place of work. (2) Every self-employed person shall ensure that persons not in the person's employment are not exposed to risks to their health or safety arising from the conduct of the person's undertaking while they are at the person's place of work. (3) If in proceedings against a person for an offence against this section the court is not satisfied that the person contravened this section but is satisfied that the act or omission concerned constituted a contravention of section 15, the court may convict the person of an offence against that section.

Relevant General Principles 65 The Court, as presently constituted, recently stated the principles to be applied in relation to the sentencing of an offender under the Act in WorkCover Authority of New South Wales (Insp Ankucic) v McDonald's Australia Limited and Anor (2000) 95 IR 383 at 427 - 433. The statement of those principles is adopted for the purposes of this decision. However, it is also necessary to refer to a number of recent decisions bearing upon sentencing which are relevant in the present matter. 66 As earlier mentioned, the defendant acknowledged that issues of general deterrence arose in relation to this matter, but argued that there was little necessity for a penalty to be imposed based on specific deterrence in the present case. This was put essentially upon the basis of the good behaviour of the defendant prior to the accident. Furthermore, the defendant had initiated, it was submitted, a safety survey, an internal investigation of the accident and necessary changes to prevent further occurrences. 67 Similar considerations arose for consideration in Capral Aluminium . It was there argued that less weight should have been given to deterrence in the light of the appellant's attempts in that matter, both before and after the accident, to ensure the safety of its workers by providing protective clothing (and also in the light of an appropriate appreciation of its record and acknowledged situation as a safety conscious employer). The Court found that both general and personal or specific deterrence were matters which should normally be given weight of some substance in the sentencing process and that although there are exceptional cases requiring a departure from that approach, they are very rare (at 74). 68 As to general deterrence, the Court stated (at 75): For the reasons we have given, we do not accept that the appellant's submissions could have a substantial impact upon the weight to be attached to general deterrence in determining an appropriate penalty in the present case. 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 Thomson (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. 69 As to specific deterrence, the Court held (at 76): On the other hand, the attitude of a defendant to questions of workplace safety and any steps taken to improve safety following an accident may be relevant to specific deterrence. Here the objective is to deter the particular offender from repeating the offence: see Ruby, Sentencing (5th Edition, Butterworths, Toronto, 1999) at 10. The propensity to re-offend must be considered when determining the weight, in any, to be attached to specific deterrence. In R v Pickard [1998] VSCA 50, for example, Winneke P and Charles JA of the Victorian Court of Appeal stated (at 4): An assessment by the judge of the risk of a prisoner re-offending is not a feat which requires any refinement of thought process. If the judge is satisfied that the accused constitutes such a risk that the penalty to be imposed should reflect an aspect of specific deterrence, it will be because he or she has no doubt that the accused poses such a risk. In our view, it is not a question of distinguishing between degrees of risk. It is simply because the judge perceives that the risk is such that the penalty should be one which will deter the accused from re-offending. The greater the judge perceives the risk to be, the more heavily specific deterrence will weigh in the instinctive decision as to the appropriate sentence. 70 The precise weight to be given to a question of deterrence in a particular case is a matter for the sentencing judge's discretion: Capral Aluminium (at 79).

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

South Wales (Inspector Ankucic) v McDonald's Australia Limited at 90 - 91; and Page v Walco Hoist Rentals Pty Limited (No. 2) at 22. 100 Before passing to the question of penalty, it is, however, appropriate to consider various subjective features which may properly lead to a reduction in the penalty which may otherwise have been imposed. 101 The defendant has entered an early plea of guilty which will give rise to a reduction in sentence upon the principles stated in R v Thomson; R v Houlton [2000] NSWCCA 309. Furthermore, I consider that the defendant has fully co-operated with the prosecutor in the investigation of the incident and, additionally, conducted an investigation which would have been of assistance to the prosecutor (and which was conducted arguably to its own detriment). In all these respects, I consider that the defendant has demonstrated contrition and deserves a significant discount based on subjective factors. 102 In applying the judgment in R v Thomson , I have had regard to the decision of Wright J, President, in WorkCover Authority of NSW (Inspector Sheppard) v The State Rail Authority of NSW [2000] NSWIRComm 179. I adopt his Honour's judgment in relation to the application of the guideline judgment. Wright J stated (at 37 - 40): On 17 August 2000, after judgment was reserved in this matter, the Court of Criminal Appeal ( Spigelman CJ, Wood CJ at CL, Foster AJA, Grove and James JJ) delivered judgment in R v Thomson; R v Houlton [2000] NSWCCA 309, the guideline judgment as to pleas of guilty in criminal proceedings. The guideline adopted and other pertinent observations are set out in the judgment of the Chief Justice as follows: 160. The Court should adopt the following guideline applicable to offences against State laws: (i) A sentencing judge should explicitly state that a plea of guilty has been taken into account. Failure to do so will generally be taken to indicate that the plea was not given weight.

(ii) Sentencing judges are encouraged to quantify the effect of the plea on the sentence insofar as they believe it appropriate to do so. This effect can encompass any or all of the matters to which the plea may be relevant - contrition, witness vulnerability and utilitarian value - but particular encouragement is given to the quantification of the last mentioned matter. Where other matters are regarded as appropriate to be quantified in a particular case, e.g. assistance to authorities, a single combined quantification will often be appropriate. (iii) The utilitarian value of a plea to the criminal justice system should generally be assessed in the range of 10-25 percent discount on sentence. The primary consideration determining where in the range a particular case should fall, is the timing of the plea. What is to be regarded as an early plea will vary according to the circumstances of the case and is a matter for determination by the sentencing judge.

(iv) In some cases the plea, in combination with other relevant factors, will change the nature of the sentence imposed. In some cases a plea will not lead to any discount. 161. The Court was asked to clarify its earlier guideline judgments in the light of any guideline it might propose in this respect. The standard case identified in each of Jurisic and Henry included a plea of guilty. That was not the case in Wong in which the range encompassed relevant matters, including a plea. In each of Jurisic at 231 and Henry at [162], the Court was concerned with a guilty plea of limited value. The guidelines for the offences considered in those cases should be understood to involve a late plea of guilty, for purposes of the application of the guideline promulgated in these reasons.

162. The discount range propounded for a guilty plea based on utilitarian consideration is not intended to result in any change in the level of sentences generally. Nothing in these reasons should be construed as indicating an opinion that trial judges have not in fact been giving appropriate consideration and weight to pleas in such a way as to distort the general level of sentences. The purpose of identifying a discount range is to improve the transparency of the process and to alter the widespread perception that there is no benefit from an early plea. Insofar as existing sentencing practice has been to allow discounts for pleas up to 35 percent, encompassing all relevant matters, such a practice remains appropriate. The guideline is to be considered with the relevant provision of the Crimes (Sentencing Procedure) Act 1999 which replaced s439 of the Crimes Act 1900 and which provides: 22(1) In passing sentence for an offence on an offender who has pleaded guilty to the offence, a court must take into account: (a) the fact that the offender has pleaded guilty, and

(b) when the offender pleaded guilty or indicated an intention to plead guilty, and may accordingly impose a lesser penalty than it would otherwise have imposed. (2) When passing sentence on such an offender, a court that does not impose a lesser penalty under this section must indicate to the offender, and make a record of, its reasons for not doing so. (3) Subsection (2) does not limit any other requirement that a court has, apart from that subsection, to record the reasons for its decisions. (4) The failure of a court to comply with this section does not invalidate any sentence imposed by the court. Also relevant is the approach followed and applied many times by this Court in R v Winchester (1992) 58 A Crim R 345 where Hunt CJ at CL said, at 350:

A plea of guilty is always a matter which must be taken into account when imposing sentence. The degree of leniency to be afforded will depend upon many different factors. The plea may in some cases be an indication of contrition, or of some other quality or attribute, which is regarded as relevant for sentencing purposes independently of the mere fact that the prisoner has pleaded guilty. The extent to which leniency will be afforded upon this ground will depend to a large degree upon whether or not the plea resulted from the recognition of the inevitable: Shannon (1979) 21 SASR 442 at 452; Ellis (1986) 6 NSWLR 603 at 604. The plea of guilty may also be taken into account as a factor in its own right independently of such contrition, as mitigation for the co-operation in saving the time and cost involved in a trial. Obviously enough, the extent to which leniency will be afforded upon this ground will depend to a large degree upon just when the plea of guilty was entered or indicated (and thus the savings effected): Beavan (unreported, Court of Criminal Appeal, NSW, Hunt, Badgery-Parker and Abadee JJ, 22 August 1991), at p 12. The considerations cited from R v Winchester are to be applied in this matter. The plea should be considered as an early plea; and although the Court does not find that a conviction would have been inevitable in the absence of a plea, the matter should be approached on the basis that a conviction was likely. I consider it is appropriate to apply the guideline judgment in R v Thomson; R v Houlton in determining the fine that should be imposed on the defendant in these proceedings.

103 I also intend to give the defendant a discount on penalty having regard to the actions taken by it to improve safety after the incident: Tyler v Sydney Electricity (1993) 47 IR 1 at 5 and Alcatel Australia Limited v WorkCover Authority of New South Wales (Inspector Clyant) (1996) 70 IR 99 at 103. 104 The prior record of the defendant is also a relevant factor to be considered when determining penalty. I note in that respect the defendant has no prior convictions. As I noted in Department of Mineral Resources v Kembla Coal and Coke at 30, the previous good industrial citizenship of the defendant in a potentially hazardous field should be recognised and this is clearly a factor to be taken into account in mitigation. 105 I note that, in accordance with the judgment in R v Thomson , I propose to quantify the discount allowed to the defendant having regard to the plea of guilty (including the utilitarian value of the early plea); the contrition of the defendant; the steps taken by the defendant to remedy defects in safety; and, its co-operation and assistance to the authorities. I allow in this respect 30 per cent discount upon the penalty, being a significant discount for these factors having regard to the substantial subjective factors in favour of the defendant. I have additionally allowed a discount for the good prior record of the defendant and its good industrial citizenship in assessing penalty. 106 In assessing penalty I have also taken into account the objective features of the offence and all the matters raised by the defendant in that regard as to the issue of aggravation. 107 For the foregoing reasons, I consider, after discount for the subjective factors, that an appropriate penalty with regard to the offence as charged to be a fine of $90,000. The prosecutor should have a moity of the fine. 108 I make orders as follows:

(1) The defendant is fined an amount of $90,000 with a moity thereof to the prosecutor.

(2) The defendant shall pay the costs of the prosector as agreed, or failing agreement, as assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.