WorkCover Authority of NSW (Inspector Wade) v Hunter Area Health Service and Coltit Pty Limited

WorkCover Authority of NSW (Inspector Wade) v Hunter Area Health Service and Coltit Pty Limited - [2005] NSWIRComm 87 - NSWIRComm 2005 case summary — Zoe

[14]

1 The Hunter Area Health Service (HAHS) (now the Hunter/New England Area Health Service) is a body corporate constituted by the provisions of the Health Services Act 1997 and engages in the business of public health care. 2 At all material times, the John Hunter Hospital (the Hospital) at Lambton Heights, New South Wales, was a unit of the HAHS. Located at the Hospital were two boilers, owned by the HAHS, identified as Alliance Watertube Boiler No. 1 (Boiler No. 1) and Alliance Watertube Boiler No. 2 (Boiler No. 2). 3 As at 30 November 2000, Coltit, trading as Amalgamated Steam and Heating (ASH), carried on the business of engineering work involving the service and maintenance of hot water or steam boilers. The HAHS had a Plant Maintenance Agreement with ASH, whereby ASH would perform periodical service and maintenance of Boiler No. 1 and Boiler No. 2 at the Hospital. 4 In addition to that agreement, the HAHS had requested ASH to install a lamp test circuit and a flow control circuit on No. 2 Boiler located in room 4031 Level 4 South Plant Room of the Hospital. On 30 November, Mr William Edward Wayne Davies, an employee of ASH, attended the Hospital for the purpose of carrying out that work on Boiler No. 2. Amongst other things, Mr Davies installed the light test circuit, which was constructed by soldering diodes and wires to a Vero board, into the existing wiring of No. 2 Boiler. 5 Although the circuit was substantially completed on that day, there was no button or switch to connect it to an active power source to make it functional. Because of that, Mr Davies was unable to complete installation on that day. Nevertheless, Mr Davies reconnected power to the No. 2 boiler. He tested the circuit by holding the bared end of the wire that was proposed to be connected to the button or switch, to a live power source. He observed that most, but not all, of the lights on the circuit panel were operating. Having tested the power supply at the rear of those globes, Mr Davies satisfied himself that it was simply a fault in the respective globes or light fittings for those inactive globes. 6 After re-starting the No. 2 Boiler, Mr Davies opened the crown valve and put it back on line with No. 1 Boiler. He left the plant room at approximately 3.35pm, returning the keys to Mr David Tietze, Building Maintenance Supervisor on duty. 7 Later that afternoon Mr Tietze received a message via his pager informing him that No. 2 Boiler had faulted and needed to be reset. After attending the Plant Room Mr Tietze attempted to initiate a restart but was unsuccessful. He then left to attend to a person he had been informed was trapped in an elevator at a location close to the Plant Room. While investigating that situation, the Maternity Ward Delivery Suite Front Desk, which was located immediately below the boiler plant room, reported to Mr Tietze that they had heard a large explosion, followed by dust and a smell of gas. On attending the boiler plant room, Mr Tietze observed through the door that No. 2 Boiler had suffered major damage. That major damage was caused by an explosion in the firebox of Boiler No. 2. 8 Following an investigation of the incident, the HAHS was charged with an offence arising under s15(1) of the Occupational Health and Safety Act 1983 (the Act). At that time, the defendant HAHS entered a plea of not guilty. Three charges were also brought against Coltit under ss 16(1), 18 and 15(1) of the Act respectively. (IRC Matter No's 6786/2002; 6787/2002 and 6788/2002) 9 On 11 September 2003, a plea of guilty was entered on behalf of Coltit with respect to IRC Matter No's 6787/2002 and 6788/2002 when all three matters concerning it first came before the Court. My intention was to deal with those matters at the conclusion of the defended proceedings involving HAHS. 10 On the first day of the defended hearing relating to HAHS, counsel for the defendant indicated that, subject to the filing of an amended summons by the prosecutor, a plea of guilty would be entered. That was done, a plea of guilty was entered and the matter proceeded as a plea on sentence. 11 At the conclusion of the submission on plea in relation to HAHS, counsel for the prosecutor indicated to the Court that Coltit had been de-registered, ceasing to be a legal entity, and as such the prosecutions brought against it were to be entirely withdrawn. To that effect the prosecutor filed in court a Notice of Discontinuance in relation to those three matters. Resultantly, it is the matter concerning the HAHS and its plea of guilty that is the subject of this judgment. To that effect, any reference to the 'defendant' in this matter after this point should be viewed as referring to the HAHS. 12 In relation to the HAHS, the amended summons filed to which a plea of guilty was entered, identified the offence as being that the defendant: Failed to ensure the health, safety and welfare at work of all its employees, in particular, David Michael Tietze, contrary to Section 15(1) of the Occupational Health and Safety Act 1983 13 In particular, the defendant's failures were identified as follows: (a) failed to ensure that William Edward Wayne Davies was the holder of a Certificate of Competency for the operation and use of boilers as prescribed by the Occupational Health and Safety (Certificates of Competency) Regulation 1996 or in the alternative failed to prevent William Edward Wayne Davies from operating No. 2 Boiler when he was not the holder of a Certificate of Competency as required by the Occupational Health and Safety (Certificates of Competency) Regulation 1996 in that he commissioned the boiler and put it back into operational service;

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[2] At all material times the Defendant was an employer. As at 30 November 2000 the Defendant employed the following people: (i) Mr David Knight, Manager Engineering and Support Services, Greater Newcastle sector. He co-ordinated the provision of engineering services for the Greater Newcastle sector; (ii) Mr Neil Baylis, Deputy Manager of Greater Newcastle sector and in charge of contracts and service level agreements for the Greater Newcastle sector; (iii) Mr Cliff Pollock, Maintenance Engineer for Greater Newcastle sector (Site Supervisor at the Hospital), who was in charge of maintenance. (iv) Mr Peter Allen, acting Maintenance Engineer for Greater Newcastle sector (Site Supervisor at the Hospital), for the period 17 November 2000 to about 18 December 2000 whilst Mr Pollock was on leave; (v) Mr Mark Fekonja, Mechanical Services Supervisor. He had previously been employed as a Building Maintenance Supervisor at the Hospital; (vi) Mr David Tietze as Building Maintenance Supervisor. [3] The Defendant was the owner of two boilers, located at all material times at the premises. These boilers were identified as Alliance Watertube Boiler No 1 (Boiler No 1) and Alliance Watertube Boiler No 2 (Boiler No 2). [4] Inspector Wade and Inspector Gary Sandall attended the Hospital on 23 October 2000 to inspect the Hospital's boilers as part of a WorkCover Compliance Project. [5] The two boilers were operated as unattended boilers. The current Certificates of Inspection for Boiler No 1 and Boiler No 2 were not endorsed as "unattended". The boilers had been configured from installation as unattended boilers. However in NSW Regulation 80A of the Boiler and Pressure Vessel Regulations requires boilers to be under the continual supervision of a boiler attendant unless granted an exemption under Regulation 86. If granted an exemption the Certificate of Inspection should be endorsed accordingly. [6] Improvement Notice 226519 was issued on 23 October 2000 by Inspector Wade. It required the following matters to be addressed: (i) At all times a current certificate of compliance in respect of each boiler should be displayed; (ii) Certificate of Compliance should state level of attendance required, supervision and maintenance; (iii) WorkCover exemption to be obtained. [7] The Hospital engaged a competent person, Mr Rob Svensk, to inspect the boilers for the purposes of having the boiler Certificate endorsed as unattended. This required Mr Svensk to perform an inspection and carry out tests to satisfy himself that they complied with the relevant Australian Standards. [8] On 7 November 2000 Boiler No 1 and Boiler No 2 were inspected and tested by Mr Svensk in the presence of Mr Fekonja. He recommended that a flow switch and a lamp test circuit be fitted to Boiler No 1 and Boiler No 2. The two recommendations that were made were not required for the boilers to comply with the Australian Standards for unattended boilers. However, they were improvements that would simplify 24 hour interval boiler checks. [9] A lamp test circuit allows, with a single push button operation, for all function indicator lamps on the control panel to light up to prove that the globes are functional. [10] As a result of the inspection and recommendations by Mr Svensk the following Job Sheets were raised by Mr Fekonja on 7 November 2000: (i) no. 142422 to replace the feedwater flow switches on both boilers; (ii) no. 142423 to install a lamp test circuit on the two boilers; (iii) no. 142424 to re-label the fault light to indicate what they were detecting. [11] Coltit Pty Ltd trading as Amalgamated Steam and Heat (ASH) was engaged by the Defendant to undertake the work requested on Job Sheets no 142422, no 142423 and no 142424. Mr Fekonja supplied the Job Sheets and a copy of the circuit diagram (schematic wiring diagram of the electrical circuitry) to Mr Davies an employee of ASH on 8 November 2000.

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[13] In 2000 the Hospital called for expressions of interest in relation to the servicing of Boiler No 1 and Boiler No 2. ASH was selected. The service contract commenced on 1 July 2000 for a period of two years. [14] The contract was for three monthly, six monthly and annual inspections in accordance with Australian Standards. [15] Mr Boden was the Director of Coltit Pty Limited (trading as ASH). Mr Davies was employed by ASH as a technician. Mr Davies had been employed by ASH from about July 2000. Mr Davies was a qualified unrestricted licensed electrician. [16] Mr Boden and Mr Davies discussed ways of doing the job. Mr Boden discussed the design with Mr Davies. Mr Davies explained to Mr Boden how he was going to do the job namely by using a vero board with blocking diodes. [17] Mr Baylis had the authority to approve what was being undertaken and the issuing of the work orders and the methodology to be employed by ASH. [18] Mr Davies stated that he had a conversation with Mr Baylis about the work, prior to Mr Davies undertaking the design and installation of the lamp test circuit. Mr Davies stated that he told Mr Baylis that he was going to use a diode board and explained how it worked. [19] Mr Baylis stated that he did not recall the job being discussed in any great length. He did not discuss the methodology. He may have discussed the lamp test circuit. He may have discussed the use of a diode circuit. He may have authorised ASH to proceed and install it as an out of contract item. [20] The installation of the lamp test circuit required modification of the circuitry of Boiler No.2 to allow for its incorporation. It was undertaken as an out of contract item beyond the scope of the plant maintenance agreement. [21] Mr Baylis did not approve the design. [22] Prior to 30 November 2000 Mr Davies bought vero board, diodes and wire for the construction of the lamp test circuit. Mr Davies marked up the circuit diagram of how he intended to wire the lamp test circuit into Boiler No 2. [23] Mr Davies carried out a test of the vero board with a multimeter and based on the test/s that he performed he believed that the lamp test circuit had been constructed properly in the workshop of ASH, prior to attendance at the Hospital. [24] Mr Davies attended the Hospital on 30 November 2000 at 9.00am and signed the Sign In/Sign Out Book situated at the control room. Mr Davies was issued a key to the boiler plant room in which Boiler No 1 and Boiler No 2 were situated (the plant room) from the Building Maintenance Supervisor on duty. [25] Mr Davies went to the plant room and took Boiler No 2 off line and shut it down before working on it. [26] Mr Davies commenced the installation of the lamp test circuit into the existing wiring of Boiler No 2, by connecting the wires to the boiler in line with the numbering as per the schematic wiring diagram. [27] Mr Davies had not completed the installation of the lamp test circuit into the existing wiring of Boiler No 2. Mr Davies did not have an actuating switch or button to facilitate the operation of the actual lamp test function and intended returning the following day with the necessary equipment to complete the work. [28] Davies then tested and proved that, with the exception of the wire to be connected to the operating switch/button, each of the new wires he had installed went to the correct light fittings on the control panel using his multi-meter. He reconnected power to Boiler No 2, and checked that power was being supplied to the control panel. He then held the bared end of the wire that was proposed to be connected to the button or switch to a live power source and observed that most of the lights on the control panel were illuminated. Two or three of the light globes were not illuminated, so using his multi-meter he tested them and found that power was being supplied to the wire at the back of the light fitting. [29] Although Mr Davies cannot remember which globes were not functioning he is pretty sure that the globe for the Flow indicator was one of the ones that did not illuminate when tested. [30] Mr Davies left the wire to be connected to the operating switch/button exposed and not attached to any button/switch. Mr Davies did not insulate the end which was exposed. This wire did not have power connected to it and was not live. [31] Mr Davies then attempted to restart Boiler No 2. He pressed the start button, and observed Boiler No 2 initiate the controller start-up cycle. Mr Davies observed that the pumps cut in, and he watched the water level in the sight glasses go up to full. However Boiler No 2 then faulted itself, and shut down as Mr Davies had not turned on the gas supply. [32] He reconnected the gas supply and re-started Boiler No 2 and observed it in operation for approximately ten minutes, turning it off and on several times to check it was functioning and starting satisfactorily. By this time it had built up pressure and Davies opened the crown valve and put it back on line with Boiler No 1 and left the plant room. [33] The Defendant did not advise Mr Davies to contact anyone to carry out checks before bringing Boiler No 2 back on line. [34] Mr Davies then returned to the Building Maintenance Control Room; returned the plant room key to Mr Tietze, Building Maintenance Supervisor on duty; spoke to Mr Tietze; signed out and left the Hospital at 3.35 pm. [35] At approx. 4.05pm, Mr Tietze received a pager message advising him that a person was trapped in an elevator. Shortly after, Mr Tietze received a message via his pager that Boiler No 2 had faulted. [36] Mr Tietze proceeded to the plant room first, as this was on the way to where the person was trapped in the elevator. [37] Once in the plant room, Mr Tietze checked Boiler No 2 to ascertain why it had faulted. He looked at the sight glasses and noted the water level was satisfactory. The lights on the control panel indicated that the Burner Fault and the Master Reset were both tripped out. Mr Tietze attempted to reset the boiler but it would not initially reset. [38] He opened the control panel and noticed the wiring loom had not been secured and was hanging loosely. He then looked inside at the controller to see at what stage of the operation cycle it had faulted, and then re-checked the water levels. .He pushed the reset buttons again, and this time they appeared to hold. [39] Boiler No 2 did not appear to Mr Tietze to be initiating a restart, so at approximately 4.11pm he decided to attend to the person trapped in the elevator and then come back to the plant room. [40] After releasing the trapped persons from the elevator and on attending another plant room to isolate the elevator, Mr Tietze began to receive messages on his pager. [41] Using an internal phone he responded to the messages on his pager. He was advised by the Maternity Ward Delivery Suite Front Desk, which is located immediately below the plant room, that they had heard a large bang, there was dust and a smell of gas". [42] Mr Tietze immediately went to the plant room. Through the door he was able to observe that Boiler No. 2 had suffered major damage. He saw a lot of dust and debris, steam escaping, and he could smell gas. [43] Mr Tietze turned off the main gas valves, which were located outside the plant room, and he then pressed the emergency shutdown buttons, located insider the plant room doors, which electrically isolate the two boilers. He then went into the plant room and shut off all services on the boilers. [44] At about 4:50pm on 30 November 2000, Mr Ian Lovell took two photographs of the plant room, photographs 1 and 2. [45] On 1 December 2000 Inspectors Wade and Sandall attended the Hospital and inspected the plant room. Much of the debris had been cleared from the room, and substantial work had been done through the night to re-commission Boiler No 1 so that the Hospital could continue with surgery and other essential services. [46] During the inspection, Inspector Wade took possession of the door of the control panel from Boiler No. 2, including the wiring and vero board modifications installed by Mr Davies the previous day, and all the indicator lights. These were forwarded to TestSafe Australia for examination and testing. [47] Both Inspectors took photographs on 1 December 2000. [48] Michael Kabriel, Electrical Engineer, of TestSafe Australia was provided with the control box door and, burner controller from Boiler No 2. Subsequent to his examination and testing, he identified a short circuit between two of the diodes on the 240 volt ac input side of the vero board. The two diodes were identified as being connected to wire 23 (feedwater flow panel indicator light) and wire 40 (gas burner indicator light) He prepared a report dated 11 April 2001. [49] Subsequent testing by Ajay Maira of TestSafe Australia established that both the globe and the light fitting of the feedwater flow panel indicator light were fully functional. [50] Mr Davies was not the holder of a Certificate of Competency for the operation and use of boilers as prescribed by the Occupational Health and Safety (Certificates of Competency) Regulation 1996. [51] Mr Davies main role as a technician was "Break-down work on electric, gas and oil fired burners, fault finding, general service - mechanical and electrical. Installation". Mr Davies had served an apprenticeship as an electrical fitter/mechanic. He had an electrical trades certificate, an unrestricted electrical contractor's license and a WorkCover ticket for Skid Steer and Forklift. [52] His work experience included:- (i) L & S Gilmore doing motor rewinds, general electrical installations and maintenance, and marine work; (ii) Varleys - doing similar work, bigger installation projects; (iii) F J Walkers - as an assistant plant engineer, mainly looking after maintenance crews and the electrical side: (iv) James Watt - initially as an electrician and progressed through working in the workshop, building wiring switchboards, into the office estimating and design, and workshop supervisor; (v) Own business as an electrical contractor doing mostly industrial and commercial work, burner control work on heated spray booths; (vi) For a plumber - doing electrical work and general maintenance work around farms. [53] Mr Davies' experience in boilers consisted of working on gas burners in spray booths. He had some experience at Varleys doing marine work on boilers, restricted to the electrical side not the mechanical side. The mechanical side was learnt at ASH and the electrical side from working with James Watt building switchboards, which often incorporated burner controls into the switchboards He knew the operation of Boiler No 2 having serviced it in the past with other technicians and with Dave Boden. [54] Prior to 30 November 2000 Mr Davies had not seen "the internals" of Boiler No 2, namely the mechanics of the combustion chamber and water tubes. [55] Mr Davies had no experience as a boiler operator, nor had he had experience in modifying the circuitry of boilers He had not constructed a Vero board for a boiler before.

[20]

[56] ASH staff rarely did circuit modifications on boilers. Neither ASH, nor Mr Boden had done modifications like this before to another boiler. [57] Mr Davies was required to attend the Defendant's orientation program in October 2000. [58] After the incident the following steps were put in place; (i) All work undertaken by ASH was to be checked by a technician from ASH of at least the same level or higher qualified than the person performing the work; (ii) All work undertaken is to be handed back to the Defendant at the completion of each shift with a full explanation of all work undertaken and current status of all equipment; (iii) An area wide review of boiler maintenance was instigated to ensure that only appropriately qualified personnel undertake work on pressure vessels. (iv) After the incident ASH presented a relay modification they were planning to install for the lamp test circuit and the Defendant approved it; (v) Greater controls were being put in place for control of contractors and identifying them. 15 In addition to the agreed statement of facts, the prosecutor tendered a bundle of documents identified as 'Prosecution Materials on Sentence' which was marked as a single exhibit. That bundle included, amongst other material, the following: · Factual Incident Report prepared by Inspector Paul Wade dated 25 June 2002. · 32 photographs taken at the accident scene on 30 November and 1 December 2000. · An expert report of Mr James Forbes dated 9 July 2004. Mr Forbes, at the time he prepared his report, was the Group Managing Director of Forbes (Aust) Pty Ltd, which is a company that includes Hunt Boilers, the original manufacturers of Boiler No 2. Mr Forbes is a person of considerable experience in the 'Australian pressure equipment industry', in which he has been involved for approximately twenty years. His report went to analysing the conduct of the defendant as a boiler owner in light of its responsibilities under relevant Australian Standards. Some parts of Mr Forbes' report were not relied upon by the prosecutor. Accordingly, any consideration of Mr Forbes' report does not rely on those parts not pressed. · TestSafe Australia Report signed by Michael Kabriel dated 11 April 2001. Mr Kabriel was the expert who undertook the examination of the controller components and modifications from Boiler No 2, which Mr Davies installed. His evidence went to the quality of those components and the standard of work performed by Mr Davies. · Three Australian Standards: AS 2593-1995; AS 3873-1995; AS/NZS 3788:1996. · A copy of the 'Plant Maintenance Agreement' between ASH and the HAHS dated 20 June 2000. · The prior convictions of the HAHS. 16 Two items of machinery were also included in this bundle, identified as a 'Control Panel' and a 'Flow Switch'. 17 On behalf of the HAHS the affidavit of Mr David Bruce Knight was tendered subject to minor amendments. That affidavit was sworn on 23 February 2005 and contained 14 annexures including, but not limited to, the following: · Various correspondence between Mr Tom Breaden of Hunt Engineering Pty Limited and the HAHS. · A Microsoft PowerPoint presentation used at contractor orientation seminars conducted by the HAHS, including a specific presentation for the Hospital. · Versions 2 and 12 of the defendants 'Contractor's Handbook dated September 2000 and January 2005 respectively. · An expression of interest document prepared by ASH and submitted to the HAHS in relation to 'Steam and Low Temperature Hot Water Boiler Maintenance'. · Two documents under ASH letterhead entitled 'Steam Boiler Service Schedules' for both Boiler No 1 and Boiler No 2, each dated 14 November 2000. 18 Mr Knight is the Director Area Facilities Management Unit for the Hunter/New England Area Health Service (formerly the HAHS). He stated that he has been an employee of the HAHS since 1999. His affidavit details, but is not limited to, the following matters: · The contractor management system at the Hospital; · Contractor orientation; · The tender process involved in the Plant Maintenance Agreement between the HAHS and ASH; · The incident of 30 November 2000; and · Post incident measures of the defendant. 19 No oral evidence was received in these proceedings. Relevant Principles

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23 The principle of foreseeability as a factor in determining the objective seriousness of an offence as part of the sentencing process was considered and affirmed in the Full Bench decision of Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at 646 as follows: The question of foreseeability is relevant to the assessment of the seriousness of the offence. We consider that the appropriate approach is that of Walton J, Vice President, in Department of Mineral Resources of NSW (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 at 27: Whilst the reasonable foreseeability of an accident may not be relevant to the question of liability under the Act (see Drake Personnel Ltd t/a Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432), the degree of foreseeability is a significant factor to be taken into account when assessing the level of culpability of the defendant. The existence of a reasonably foreseeable risk to safety which is likely to result in serious injury or death is a factor which will be relevant to the assessment of the gravity of the offence. 24 On the issue of foreseeability, the Full Bench in Capral also stated: The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However, the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J, President, in Ferguson v Nelmac Pty Ltd (at 209-210) in these terms: ... reliance on 'hindsight' must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s 15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy. So much is clear from the structure and language of the section which is premised on the requirement to 'ensure ... health, safety and welfare at work' and the decided cases which make plain the nature of the obligation. 25 It is also necessary to consider the damage and injury suffered in the context of the evidence and 'in light of the principles which have been laid down in relation to the relationship between the seriousness of injuries which have been suffered, or which may have been suffered, and the gravity of the offence.' (Capral at 650). On that point the Full Bench in Capral stated: 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 Ltd (1992) 34 AILR 377at 378, Watson v Southern Asphalters Pty Ltd (1996) 83 IR 446 at 456, Wong v Melinda Group Pty Ltd (1998) 82 IR 118 at 131, WorkCover Authority of New South Wales (Inspector Hannah) v Albury City Council (1999) 90 IR 397 at 408-409, Lawrenseon Diecasting Pty Ltd (at 476), WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd (at 428) and Page v Walco Hoist Rentals Pty Ltd (No 2) (at 22). 26 The principles of general and specific deterrence are also relevant in sentencing considerations. The approach to be taken on that issue has also been dealt with in some detail in Capral at 643-645. Without detailing all that the Full Bench had to say on those issues I believe the approach to deterrence in the sentencing process is encapsulated in the following passage from the Full Bench in Capral at 644 as follows: ... both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Page v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39 at [40]-[43] we would expect such cases to be very rare, and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted. 27 In the context of the above well established sentencing principles it will also be necessary to have regard to those general matters going to aggravation, mitigation and other factors identified in s 21A (1) of the CSPA relevant to the defendant. As was said in R v Way at [56]:

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34 The issue of foreseeability is a central consideration when assessing the culpability of a defendant. In Capral, the presence of foreseeability 'will necessarily result in the offence being more serious in nature'. As such, the starting point for the determination of foreseeability within the context of the objective seriousness of an offence is whether there was 'an obvious or foreseeable risk to safety against which appropriate measures were not taken'. (Lawrenson Diecasting at 476). 35 In addressing that issue relevant to the defendant's culpability, the prosecutor sought to draw a distinction between 'upstream', or source failings, and 'downstream' failings. 'Upstream' failings, the prosecutor submitted, referred to the failure of the defendant to engage the services of a properly qualified contractor to do the work required. The selection of ASH, and specifically Mr Davies who was not at the time a holder of a Certificate of Competency prescribed by the Occupational Health and Safety (Certificates of Competency) Regulation (the Regulation) led to the development of the risk to safety 'downstream' and subsequently to the incident of 30 November. The other failures of the defendant, going to the absence of any tests performed to validate the quality of the component designed and installed by Mr Davies, were said to be 'downstream' failures, equally germane to the creation of risk. In relation to both of these categories, the prosecutor drew attention to, inter alia, relevant Australian Standards providing standards of conduct for boiler owners going to ensuring the proper qualification of contractors, and the validation of work performed. It was said that the failures of the defendant amounted to conduct contrary to the provisions of those Standards. As such, the risk created by the conduct of the HAHS was readily foreseeable on any view, and could have been prevented had 'appropriate measures' been undertaken. 36 Overall, the submission made by the prosecutor is not, in my view, as clear cut as first considerations would suggest.

[45]

46 Counsel for the defendant, accepting that Mr Davies was not the holder of the relevant Certificate of Competency, submitted that Mr Davies was qualified as an electrician with an unrestricted licence to perform the work he did up to the point prior to him recommissioning the boiler. It was submitted that the design, manufacture and installation of the relevant lamp test and flow control circuits was work that could properly be performed by a qualified electrician such as Mr Davies and that the Certificate of Competency was a requirement only when wishing to recommission the boiler at the completion of the installation. In resisting such a submission, the prosector submitted that the work performed by Mr Davies was not 'plain, ordinary, electrician's work', but rather involved the integration of componentry that had the capacity to directly affect the circuitry of the boiler and its fail safe mechanisms. In the Report of Mr Forbes, the work performed by Mr Davies was described as follows: The two modifications requested amounted to significant changes to the existing control circuit... 47 Making reference to the pertinent Australian Standards, Mr Forbes went on to set out the qualifications required of a contractor engaged to perform this work: The modified flow test and lamp test facility required a person with the following electrical qualifications and experience as detailed in Appendix b, section B3.4(b): (i) Steam - Boiler Attendant's Certificate of Competency or equivalent. (ii) Combustion - Practical and theoretical knowledge of gas, oil or coal-fired burners and combustion equipment appropriate to the design of the boiler proposed together with, where appropriate, a regulatory authority-recognised registration of competence. (iii) Electrical - · an unrestricted electrical licence (A Grade); · a restricted electrical licence plus a minimum of three years experience and training in the service and maintenance functions of electrical circuitry with a principle boiler contractor; or · completion of an apprenticeship or trades course in the electrical field plus a minimum of five years experience and training in the service and maintenance functions of electrical circuitry with a principle boiler contractor. (iv) Experience - Together with the above qualifications, it will be necessary to provide a statement of experience from a principal boiler contractor that the applicant has a minimum of one year's (full-time) experience on unattended/limited attendance boilers. Upon satisfying the above requirements in the electrical category, the applicant shall have demonstrated sufficient mechanical aptitude to perform the mechanical component of the maintenance of unattended/limited attendance boilers.

[46]

That aspect of Mr Forbes' report was not challenged in any way and I accept it as correct. 48 In October 2000 and before the incident on 30 November 2000, WorkCover sought from HAHS further and more detailed information on the qualifications of ASH as the selected contractor for HAHS. HAHS in turn asked ASH to provide the information to enable them to pass it on to WorkCover. Mr Boden, a director of ASH, responded to the request by writing to HAHS on 24 October 2000. I do not propose to reproduce the terms of that letter at this stage as it's present relevance only goes to contemporise the following statement of Mr Forbes in his Report: As of the 24th October 2000, Amalgamated Steam and Heating did not appear to have anyone with the qualifications or expertise to perform electrical servicing on Unattended boilers. In my opinion the John Hunter Hospital did not select an appropriate organisation as a sub-contractor to Service their Unattended boilers and permitted Mr Davies to undertake the work even though he was not qualified to do so. 49 Given all of the above, it is clear that by contracting with ASH to undertake the work on the boilers, the HAHS was not adequately complying with the relevant Australian Standards. Bearing that in mind, the risk of work being performed that may well create a risk to safety was foreseeable. What was not foreseeable was the precise circumstances that did eventuate leading to the short circuit and ultimate explosion of Boiler No.2. 50 On the basis of the decision of the Full Bench in Capral, the foreseeability of risk to safety is a direct determinant of the nature and quality of the offence committed by the HAHS. Nevertheless, the defendant highlighted the manner in which ASH were contracted and the statements it (ASH) made prior to 30 November 2000 in relation to the qualifications of its employees as significantly reducing the culpability of the HAHS. It was submitted by counsel for the defendant that the provision of services by ASH were based on representations made by ASH and accepted by HAHS in good faith rather than an overt disregard for the obligations imposed on employers to provide a safe workplace. In order to properly consider that submission, it is necessary to set out the relationship between the HAHS and ASH in some detail.

[52]

Five of the key personnel employed by A.S.H. have the following formal qualifications: · Electrical trades with contractors license · Air conditioning refrigeration trade with contractors license · Fitting machining trade · Pneumatics trade · Hydraulics trade · Diesel engineering · Boiler making, with pressure ticket · Industrial supervision Cert · Business management Cert · Intermediate boiler cert 56 On any view, it is clear that ASH held itself out as a company with access to a vast array of technical expertise. That in itself is not surprising, given that ASH had at the time bid for and won a two year contract with the HAHS. HAHS points to that material now as reducing its overall culpability, evidencing that it was an organisation concerned to appoint a properly qualified contractor. It was also submitted that had ASH not been qualified to perform the work requested of them as part of the independent contract then the HAHS had a reasonable expectation that it would have been informed. Given that ASH held itself out as having in its employment 'licensed tradespeople', I believe there is merit in such a contention. 57 The affidavit of Mr Knight detailed the process undertaken by HAHS in engaging the services of a contractor. That process involved the application of strict guidelines as explained by Mr Knight in the following terms: The first project undertaken by the Greater Newcastle Sector of the Hunter Area Health Service, in 1999, was the creation of a contractor management system. This system was based on the processes developed by BHP and includes such things as how to: (a) Call for quotations from qualified contractors which includes: (i) Reference to relevant Australian Standards, where applicable; (ii) Scope of works; (iii) List of plant or equipment at each site; (iv) Hunter Area Health Service requirements for conditions of entry as a preferred contractor; ...... (b) How the contractors response was to be assessed including: (i) Qualification, Certification and Experience of Contractor... 58 Furthermore, the HAHS imposed upon all contractors appointed the need to attend an orientation programme. Mr Davies undertook that on 11 October 2000. That orientation addressed 'safety performance, workers compensation, fire precautions and other emergency procedures, service isolation policies (eg danger tags and out of service tags); site access and controls; Contractors Handbook; infection control'. 59 Annexed to the affidavit of Mr Knight is a copy of the HAHS Contractors Handbook, version 2, Issued: September 2000. That handbook was in place at the time of Mr Davies' orientation. Amongst other matters, that handbook addresses the certification of contractors. At page 12 it states: All personnel employed by the Contractor to operate any plant, machinery, vehicles or tools must be trained/qualified to do so and be the holder of the appropriate licence(s) or certificate(s) of competency for the type of equipment being operated.

[67]

It is also my opinion that if the John Hunter Hospital had inspected the boiler prior to it being placed back into service it would have been evident that the diode circuits installation had not been completed as there was some panel lights not operational and wires left disconnected. Under such circumstances the boiler would not have, or should not have, been placed back into service. 69 In assessing the foreseeability of the risk, the defendant submitted that it was not reasonably foreseeable that ASH, and in particular Mr Davies, would produce work not of a workmanlike quality. That is not the issue, it seems to me. To assert that it was not foreseeable that Mr Davies would produce a component that led to a short circuit and subsequent explosion is to obfuscate the duty of an owner to ensure that such work is performed properly and safely. In this matter, the HAHS had an obligation to test the work performed by Mr Davies in order to meet it's 'proactive' obligation to ensure the health and safety of employees at work. It is clear that the chain of events that created the risk to safety in these circumstances commenced with the poor workmanship of Mr Davies. It is reasonably foreseeable that a failure to inspect and validate such work would facilitate the creation of such a risk. 70 On behalf of the defendant, it was also submitted that it was not reasonably foreseeable that Mr Davies would recommission the boiler without the requisite Certificate of Competency. Firstly, the evidence suggests that the inadequacy of Mr Davies' qualifications extended beyond his ability to recommission the boiler and included his ability to design, manufacture and install the relevant components. On the opinion evidence of Mr Forbes: As of the time of the explosion Amalgamated Steam & Heating and more specifically Mr Davies did not satisfy the qualification and experience requirements of AS2593 for design, installation and commissioning ... 71 Nonetheless, the foreseeability is not whether Mr Davies would recommission the boiler without a certificate but whether failure to validate the qualifications of a contractor created a risk to health and safety that was reasonably foreseeable. It is clear from the Standards that the obligation to validate qualifications rests with the owner of the boiler. Those Standards put boiler owners on notice that it is their obligation to ensure that their boilers are worked by qualified tradespeople. Any failure to do that is a failure that potentially leads to the creation of a reasonably foreseeable risk to safety, as it did in this instance.

[77]

77 In dealing with that submission, his Honour said (at [31]) that he did 'not consider that the fact that the prosecution did not proceed against Abbatroy Pty Ltd ... is of great relevance to these proceedings.' He went on to say: In any event, as I understand the decision of the Full Bench in Nesmat Pty Limited it was not held that the failure to prosecute a defendant which was otherwise appropriate to be prosecuted was a matter which, of itself, would mitigate the penalty. Rather, what the Full Bench decided was that in a situation where there had been a failure, in assessing a defendant's relative culpability, to consider the inter-related culpability of another party which had not been prosecuted, and that failure resulted in an inappropriate penalty being imposed, that situation itself engendered an appropriately based sense of grievance which was in turn emphasised by the failure to prosecute the other potential defendant. 78 Further, his Honour summarised, correctly in my view, the situation as follows at [34]: The significance of the failure to prosecute, or to continue the prosecution of the other potential defendants, is not that fact but rather the fact that any assessment of the role of the present defendants must be considered in the light of the consideration that the criminality for the breach of occupational health and safety was one which did not fall solely on the shoulders of these defendants. That fact, of itself, involves consideration of matters which may mitigate the conclusion as to the objective seriousness of the offences committed and thus the penalty which should be imposed in relation to them. 79 Given that finding, the nature and quality of the offence committed by the HAHS 'must be considered in light of the consideration that the criminality for the breach of occupational health and safety was one which did not fall solely on the shoulders of these defendants' as expressed in Walco Hoist. 80 The prosecutions involving Coltit were discontinued. To that extent, the full culpability of that company has not been an issue that has been fully ventilated before me. Nevertheless, counsel for the defendant invited the Court to conclude that, despite the obligations of the HAHS as boiler owner, the greater culpability for this incident rested with Coltit. Counsel for the defendant emphasised the fact that it was a safety conscious employer and did make attempts, if ultimately unsatisfactory, to fulfil its obligations under the Act. At the same time, it was submitted, it was Coltit, through Mr Davies, that performed work of poor quality and held itself out as an organisation with qualified and competent technicians and subsequently was the direct cause of the incident of 30 November 2000.

[86]

(b) current Contractors Passports issued to that organisation; (c) any incidents or injuries. ...... 90 On any view the steps taken by the defendant to ensure compliance with its occupational health and safety obligations are significant. In light of that, I believe there is a significantly reduced chance of the defendant re-offending in the manner giving rise to this prosecution. However, it is necessary to give effect to consider the Full Bench in Capral on this point at [77]: However, we think it unlikely that the weight to be attached to specific deterrence could be reduced to zero in case of offences under the Act. At least where the offender continues to be an employer, risks to the safety of its employees or contractors may exist or be possible. Breaches of the duties imposed by the Act may occur both by commission and omission. Employers are required to maintain constant vigilance and take all practicable precautions to ensure safety in the workplace. They must adopt an approach to safety which pro-active and not merely re-active: WorkCover Authority of New South Wales v Atco Controls Pty Ltd (1998) 82 IR 80 at 85. In view of the scope of these obligations, in most cases it will be necessary to have regard to the need to encourage a sufficient level of diligence by the offender in the future. This is particularly so where the offender conducts a large enterprise which involves inherent risks to safety: see WorkCover Authority of New South Wales (Inspector Glass) v Kellogg (Aust) Pty Ltd [2000] NSWIRComm 53 at 46. 91 It is self evident, to the extent that procedures were in place prior to 30 November 2000, the extensive policies of the defendant were either inadequate or inadequately enforced such as to ensure that the defendant fulfilled its obligations as an employer to protect the health and safety of employees. On that basis, the circumstances of this matter dictate that some degree of specific deterrence should be factored into any penalty that I determine. 92 Finally, it is also appropriate, in the context of well established sentencing principles, to have regard to those general matters going to the subjective elements of the offence. 93 In the determination of penalty, the defendant is entitled to have taken into account the plea of guilty entered. In assessing the impact of the plea, the Court is guided by the decision of R v Thomspon; R v Houlton (2000) 49 NSWLR 383, the principles of which are well settled and need no elaboration. 94 The defendant in this matter entered its plea of guilty on 9 February 2005, the same day this matter was listed to commence a twelve day hearing. The timing of this plea means that the defendant is not entitled to the full discount that a plea of guilty might otherwise attract. However, the utilitarian value of the plea must be assessed in light of the anticipated duration of proceedings and the extent to which Court time was spared. In the circumstances, I determine a discount of fifteen per cent in favour of the defendant for entering the plea when it did. 95 A relevant subjective feature is the conduct of the defendant both before and after the incident. I have already set out in detail those measures taken by the defendant regarding occupational health and safety issues and specifically its duties as a boiler owner. They illustrate a genuine and longstanding commitment to ensuring the health and safety of employees. 96 No issue is taken by the prosecutor suggesting that the defendant did not cooperate with the WorkCover Authority in its investigation of and subsequent prosecution regarding the incident. I believe it is evident that the defendant acted in a cooperative manner with the WorkCover Authority and it is a matter I take into account in the defendant's favour. 97 Considering the subjective features identified, I determine a further discount on penalty of ten per cent. 98 As a final matter, two decisions of this Commission involving prosecutions against the defendant were placed before me. Having considered the factual matrix of those decisions, I am satisfied that they are significantly distinguishable from the circumstances of this matter. To that extent, I do not believe that the penalty I impose should be added to by those prior convictions. Their relevance to this matter is limited to enlivening the provisions of s 51A of the Act providing for a greater maximum penalty. 99 Taking into account all the matters I have referred to, I determine a penalty in this matter of $130,000. In applying the discounts I have determined, I determine a final penalty of $97,500. 100 I make the following orders: (1) I impose a penalty in this matter of $97,500. (2) I allocate a moiety to the prosecution on the usual terms. (3) I order the defendant pay the costs of the prosecutor as agreed. Failing agreement within 28 days, the matter is to be referred to the Registrar for assessment. (4) If agreement is reached as to costs, the parties are to prepare draft orders to reflect the decisions I have made in order to record conviction and specific costs.

At a glance

Court

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Before

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Judgment (87 paragraphs)

Parties

Cases Cited (15)