Director of Public Prosecutions v New Sector Engineering Pty Ltd

[2020] VCC 400

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

CRIMINAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CR-19-02392

DIRECTOR OF PUBLIC PROSECUTIONS

v

NEW SECTOR ENGINEERING PTY LTD

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JUDGE:	O'CONNELL
WHERE HELD:	Melbourne
DATE OF HEARING:	25 March 2020
DATE OF SENTENCE:	6 April 2020
CASE MAY BE CITED AS:	DPP v New Sector Engineering Pty Ltd
MEDIUM NEUTRAL CITATION:	[2020] VCC 400

REASONS FOR SENTENCE
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Subject:  CRIMINAL LAW

Catchwords:   Occupational health and safety; Failure to ensure safe system of work; Failure to provide necessary information, instruction and training; Failure to ensure non-employees were not exposed to health and safety risks; Employee transported bottles of volatile gases in a company vehicle not fit for purpose; Risk of explosion; Serious injury caused to employee following explosion; Serious breach of duties owed; Early plea of guilty; General deterrence; Double punishment; Totality.

Legislation Cited:                Occupational Health and Safety Act2004; Sentencing Act1991; Interpretation of Legislation Act 1984.

Cases Cited:Pearce v The Queen (1998) 194 CLR 610; DPP v Cool Dynamics Refrigeration Pty Ltd [2015] VCC 1882; DPP v Vibro-Pile (Aust) Pty Ltd [2016] VSCA 55.

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APPEARANCES:	Counsel	Solicitors
For the DPP	Mr C Mandy SC	Office of Public Prosecutions
For the Accused	Mr R Taylor with Ms A Dickens	MST Lawyers

HIS HONOUR:

Introduction

1       On 25 March 2020, New Sector Engineering Pty Ltd (‘New Sector’) pleaded guilty to one charge of failing to provide or maintain a safe working environment, and one charge of failing to ensure persons other than employees were not exposed to risks to their health or safety arising from the conduct of the company.

2       The events leading to these charges essentially concern a deemed employee of New Sector, John Portelli, who in the course of his employment collected two gas cylinder bottles which were to be transported back to his workplace. The bottles were loaded into an enclosed toolbox in the tray of the company’s ute, lying on their side. In that environment, vapour escaping from one or both of the bottles ignited causing an explosion resulting in serious injury to Mr Portelli and damage to nearby cars, houses and powerlines. The precise cause of the explosion was unable to be determined.

3       To avoid the risk of an accident such as this, the gas bottles should have been placed in a ventilated area and secured in an upright position when transported. As I explain below, it would not have been difficult for New Sector to reduce, if not eliminate, that risk.

Factual basis for sentence

4       At the plea hearing the prosecutor, Mr Mandy of Senior Counsel, tendered a summary of prosecution opening for plea which detailed the circumstances associated with this offending. Mr Taylor, who appeared with Ms Dickens on behalf of the company, accepted that the summary accurately set out the factual basis for sentence.

5       Relying upon that summary, the offending can be briefly described as follows:

6       New Sector Engineering Pty Ltd is a contracting firm that performed maintenance and project work for the food and industrial sector. It operated from Unit 1, 5 Michellan Court, Bayswater. Richard Meehan is the director of New Sector. Galaxy Personnel Pty Ltd (‘Galaxy’) is a labour hire agency that operates from the same premises as New Sector and has the same director.

7       John Portelli was an employee of Galaxy, and as such was deemed to be an employee of New Sector. His duties involved deliveries, pickups, fabrication, welding and using a forklift.

8       On 1 December 2017, Mr Portelli was given the task of picking up one acetylene gas cylinder bottle and one oxygen gas cylinder bottle from Supagas Pty Ltd (‘Supagas’), a supplier of industrial/LPG prefilled gas cylinders, at 841 Mountain Highway, Bayswater. For this purpose, Mr Portelli was driving a Toyota ute owned by New Sector, which had a modified tool box on the back that was fully enclosed.

9       Adam Sanders was on the loading dock at Supagas on that day. He provided the cylinders to Mr Portelli. He told Worksafe inspectors that it was the practice of Supagas not to permit customers to load ‘E’ size cylinders into an enclosed space for transport. He stated that he had turned away customers in the past when they had attempted to do so. With respect to Mr Portelli, however, he stated that it must have ‘slipped through’.[1]

[1] I was informed that Supagas have also been charged and that matter will proceed to trial.

10      After loading the gas bottles, Mr Portelli left Supagas and proceeded along Mountain Highway in Bayswater.

11      A witness, Ed Genis, was driving along Mountain Highway at 8:15 AM and had come to a stop at a red light and school crossing. He saw the ute travelling in the opposite direction when it exploded and rolled to a stop. He observed several gas cylinders on fire in the rear of the ute and on the roadway behind it.

12      Another witness, Blake Wharton, was on a worksite on Mountain Highway at the time of the explosion. He heard a loud bang and saw part of an aluminium toolbox fly through the air and hit some powerlines, which ‘sparked and lit up blue’. He and his co-workers ran to a white ute which they saw was on fire and attempted to extinguish the flames. He thought that there were about 12 people around the ute trying to put out the fire and get the driver out of the cab.

13      Taylah Westwood had been travelling in her car in the opposite direction to the ute when she felt her car shake and saw pieces of debris flying through the air and red liquid splashing onto her windscreen. Her car was damaged by the blast and she was forced to leave it at the scene.

14      Another witness, Sarah Denholm, was getting out of her mother’s car at the doctors surgery in Harris Grove near the intersection with Mountain Highway. She heard a loud bang and saw a power pole sparking and making noises. She saw the powerlines half on the road and half on the nature strip. She heard a second bang coming from the ute which had rolled to a stop on Mountain Highway. She ran over to the ute with others and tried to get the driver out, but saw that his legs were pinned inside. Emergency services needed to use the jaws of life to extract Mr Portelli.

15      As a result of this incident, Mr Portelli sustained multiple traumatic injuries requiring hospitalisation initially at the Royal Melbourne Hospital, and from 22 December 2017 to 10 March 2018, at the Caulfield Rehabilitation Hospital. His legs were both seriously injured with 10% movement of his left leg, and 80% of his right leg, at the time of his discharge from hospital. He suffered eight fractured ribs, a sheared aorta, a fractured scapula and a torn rotator cuff. He continues to suffer memory loss and remains in a wheelchair. He has no feeling in his genitalia and has to self-catheterise. I will return to the impact of this incident on Mr Portelli shortly.

Investigation

16      Kahn Sheu (Geoff) Ooi, a WorkSafe Engineer, reviewed documents provided to him in relation to the ute and formed the view that the gas bottles could not have fitted under the canopy and been secured in a fully upright position, because the bottles were taller than the height of the canopy. It followed that the ute was not suitable for transporting dangerous goods in that:

a)    the vehicle was enclosed and was not adequately ventilated;

b)    the gas cylinders could not be adequately secured in the vehicle; and

c)    gas cylinders could not be transported in an upright position.

17      A forensic officer at Victoria Police Forensic Services Centre, George Xydias, attended the scene after the explosion. It was his opinion that a vapour/air explosion occurred inside the rear toolbox/storage canopy, and the likely cause of the explosion and ensuing fire was the ignition of acetylene vapour and air mixture in the rear compartment. He noted metal outer panels, tools and other fittings from the ute within a 100 metre radius of the blast location, with some of the furthest objects located up to 200 metres away.

18      Neil Drake, the factory manager at New Sector, informed investigators that about a week before the incident, Mr Portelli had been tasked with taking oxygen and acetylene bottles to Cadbury. They were ‘E’ size and were transported on the open flatbed of the truck, standing up. Mr Drake was aware that the ‘E’ size bottles would not have fitted under the canopy of the ute, and if he had known that Mr Portelli was transporting them in that way, he ‘would have gone crook at him’.

19      Mr Portelli started working with New Sector in March 2017. He usually worked three days per week for a total of about 12 hours. He was a fitter and turner by trade, and although he had welding skills and therefore some experience with the use of oxy-acetylene, he was not a qualified welder. When he first started his employment he was given a verbal induction by Galaxy. He could not recall any specific training or instruction with respect to the handling of dangerous goods at any time whilst he was at New Sector. Health and safety issues were apparently dealt with ‘as they came up’.

20      In the nine months during which Mr Portelli had worked at New Sector, he had been requested to collect gas bottles from Supagas on as many as 20 occasions. When he did so, he used the Toyota ute that he was driving on this occasion. Usually he would collect argon bottles in the ‘D’ size, which were capable of being transported upright and clamped into the ute, but still within the enclosed space in the tray.

21      Understandably, Mr Portelli has no memory of his movements on the day of the incident, but it is clear that this job was relatively unusual because New Sector would only require the oxygen and acetylene bottles two or three times a year, and only used the larger ‘E’ sized bottles. He stated that he was aware of the risks associated with lying gas bottles down, and believed that he would have only stored them in an upright position. However, the oxygen and acetylene bottles collected from Supagas on this day were too tall to fit upright under the canopy. It follows that they must have been loaded and transported on that day lying down in the tray of the ute.

Charge 1 – The danger to employees

22      I will turn now to the specifics of the two charges. The volatile nature of gases such as oxygen and acetylene are well understood. If there are leaks in cylinders or valves then any source of ignition, such as a spark, could ignite the gases causing an explosion. Part of New Sector’s business involved welding and fabrication. For that purpose, it used various gases in gas bottles of varying sizes which were transported to and from worksites. The company was aware of the need to transport gas bottles in a secured, upright position which was well ventilated and not enclosed.

23      On the day of the incident, Mr Portelli was tasked with collecting oxygen and acetylene which New Sector always used in ‘E’ size bottles. The ute used by Mr Portelli was unfit for the purpose of transporting the ‘E’ sized bottles containing volatile gases.

24 New Sector therefore contravened s 21 of the Occupational Health and Safety Act 2004 (‘the Act’) by failing to maintain a safe working environment for its employees in two ways:

25      First, it was reasonably practicable for New Sector to have reduced the risk by providing and maintaining a system of work that required New Sector employees to only transport gas cylinder bottles in a vehicle that was adequately ventilated, in which the gas cylinder bottles were able to be adequately secured and in which they were able to be transported in an upright position.

26      Second, the company failed to provide its employees with the information, instruction and training necessary to enable them to perform their work safely and without risks to health. The information required related to the risks and hazards associated with loading and transporting gas cylinder bottles. The instruction and training required related to ensuring that employees only transported gas cylinder bottles in a vehicle that was adequately ventilated, where the gas bottles were properly secured and in which those gas bottles were able to be transported in an upright position.

27 Charge 1 is a rolled-up charge encompassing two contraventions of s 21(1) of the Act, being s 21(2)(a) and s 21(2)(e).

Charge 2 - The danger to persons other than employees

28 Dealing now with the danger to non-employees arising from a contravention of s 23(1) of the Act. There was a risk to the health and safety of people in the vicinity of the ute if the gas cylinder bottles were loaded into that vehicle and transported in the manner I have previously described when it was unfit for that purpose. The danger to non-employees was that they could be seriously injured or killed by an explosion caused when volatile gasses ignite in an enclosed space.

29      New Sector failed to ensure that its employees collected and transported gas cylinder bottles in a vehicle that was suitable for that purpose. The people exposed to the risk included Adam Sanders, Jake Schroder, Blake Wharton, Ed Genis, Tayleh Westwood, Lincoln Brunne and Sarah Denholm.

30      Charge 2 is therefore constituted by a contravention of the duty owed to persons other than employees not to expose them to the risk of an explosion arising from the company’s conduct.

Victim impact

31      Mr Portelli provided a very moving victim impact statement together with two medical reports setting out the extensive medical treatment he has required.

32      In short, this accident has had a dramatic effect on Mr Portelli’s quality of life. I have already summarised the substantial physical injuries he sustained. He spent over a week in intensive care and was then moved to a spinal unit. About two and a half weeks later, he was transferred to Caulfield Hospital at which time he was not able to sit, stand or walk on his own. He had an incomplete spinal cord injury which resulted in ‘weakness in his lower limbs particularly in the left leg, altered sensation from the mid thoracic region and below, bladder dysfunction, neuropathic pain and involuntary muscle spasms’. He also had fatigue and reported some word finding difficulties, likely in the context of his traumatic brain injury.

33      Through hard work in rehabilitation and with the support of his wife, Mr Portelli’s condition has slowly improved, however he remains in a wheelchair and continues to suffer from fatigue, sexual dysfunction, forgetfulness and ongoing pain.

34      In terms of his mental health, Mr Portelli has struggled to adjust to the life changing effects of those physical injuries. For example, he finds it particularly frustrating that he can’t assist his wife with ordinary physical tasks about the house, his emotions fluctuate much more so than previously and his concentration wanes quickly. Fortunately, he has been able to obtain further funding to enable him to regularly see a psychologist which he finds helpful.

35      I should say, that despite the devastating effects of this accident, it is clear that Mr Portelli has tried to remain positive which is very much to his credit. His commitment to rehabilitation has likewise been a credit to both he and those who have supported him throughout this ordeal, particularly his wife.

36      I note that the injuries sustained by Mr Portielli is not an element of either of the charges and, as I discuss below, is relevant only as illuminating the existence of the risk, the likelihood of the risk eventuating and the gravity of the consequences should the risk be realised. As has often been said, these offences are risk based not outcome based.

37      Nonetheless, s 5(2)(daa) and s 5(2)(db) of the Sentencing Act 1991 require that I have regard to the impact of the offence on any victim, and any injury, loss or damage resulting directly from the offence. Accordingly, I will take into account Mr Portelli’s injuries, and the impact those injuries have had on him, in that way. 

The company

38      New Sector is a small company which was established by Richard Meehan in 1994. He is the sole director.

39      Mr Taylor, who appeared on the company’s behalf together with Ms Dickens, emphasised the fact that the company has no prior convictions. In the past it had received three previous visits and audits from Worksafe, but on no occasion had it received improvement or prohibition notices. There are no subsequent convictions or matters pending. Accordingly, New Sector has operated with an unblemished safety record for the last 26 years. It was therefore submitted that this should be viewed as an isolated incident and not at all indicative of the company’s attitude to occupational health and safety issues.

40      Mr Taylor explained that Mr Meehan had worked in engineering all of his working life. After completing year 11 he went on to do a fitting and turning apprenticeship, and between 1986 and 1994 worked as an engineer on his own account before incorporating. Three personal references were tendered from colleagues of Mr Meehan within the industry – Vince Zappia, Rob Duyker and John Cuthbertson – attesting to his general good character and specifically to his commitment to adhering to legal and occupational health and safety requirements in the course of his work. I have taken those references into account.

41      Importantly, in my view, Mr Meehan has shown a commitment to Mr Portelli. In his victim impact statement, Mr Portelli stressed that Mr Meehan had ‘been incredibly supportive following the incident on 1 December, 2017 and has been in regular contact with me to check on my condition and injuries’. I was informed, for example, that Mr Meehan had sought to assist in making improvements to Mr Portelli’s residence to enable greater accessibility.

Defence submissions

42      With respect to the offending itself, Mr Taylor explained that New Sector owned a vehicle which was suitable for the purpose of transporting oxy-acetylene bottles. It is not clear why that vehicle was not utilised on this day. Had the vehicle which was fit for purpose been used, the risk to Mr Portelli and others would have been reduced markedly if not eliminated.

43      In any event, the transportation of oxy-acetylene bottles was an infrequent task, perhaps only needing to be performed about twice or so a year. Generally, smaller argon gas bottles were transported which were not volatile in the way that these gases were.

44      Moreover, New Sector had taken action to ensure that this sort of accident will not occur again. Now, contractors are required to obtain the industrial gases required at the worksite. New Sector no longer transports oxygen and acetylene gas bottles. The risk the subject of these charges has thus been eliminated, by this company at least.

45      Consistent with authority, it was submitted that I should assess the gravity of the breach in this instance by reference to the extent to which the company had departed from its statutory duty, and the extent of the risk of death or serious injury which might result from the breach. As I have indicated, the fact that Mr Portelli received serious injuries is relevant only in the sense that it demonstrates the nature and consequences of the risk to health and safety resulting from a breach.

46      Approached in this way, Mr Taylor submitted that the breach in this instance was not as serious in comparison with other cases, and, importantly, the company had not wilfully disregarded the risk the subject of these charges. There had been no ‘near misses’. There had been no prior warnings. In all of the circumstances, therefore, it was submitted that New Sector’s culpability fell at the lower end of the range for these offences.

47      The plea of guilty should operate, it was submitted, to substantially reduce the sentence that might otherwise be imposed. The plea was made at an early stage in the proceeding. It facilitates the course of justice. It is also indicative of genuine remorse, as evidenced by the company and Mr Meehan’s response to the accident.

48      I will indicate now that I accept those submissions with respect to the plea of guilty and that the sentence will be substantially reduced as a result.

49      No issue arose as to whether New Sector had the capacity to pay an appropriate penalty.

50      Finally, Mr Taylor submitted that the company should not receive any additional penalty in respect of Charge 2. That is so, it was contended, because the actus reus in respect of both charges, the failure to ensure that the same safe system of work, instruction and training was in place, was identical. Relying on, among other authorities, Pearce v The Queen[2], and s 51 of the Interpretation of Legislation Act1984, Mr Taylor argued that the company should not be punished twice for the same contravention.

[2](1998) 194 CLR 610.

Prosecution submissions

51      Mr Mandy, on behalf of the Crown, accepted that the plea of guilty was entered at an early stage and, that for the reasons to which I have already referred, the sentence should be substantially reduced.

52      Whilst general deterrence was a highly relevant sentencing consideration, having regard to the lack of prior convictions and the company’s otherwise good character, it was conceded that specific deterrence was a far less relevant consideration.

53      As to the seriousness of the breach, Mr Mandy maintained that these were significant breaches of the duties owed by the company to both its employees and to non-employees. The risk of explosion was high in circumstances where the employee was transporting volatile gases in unsecured cylinders in a closed environment. Any leak from the bottles, or their valves, would result in highly flammable gases congregating, giving rise to the risk of a potential explosion. That risk was foreseeable and its consequences far-reaching, as this incident demonstrates.

54      He pointed to the maximum penalty for each offence of 9,000 penalty units (equating to $1,427,130.00) as an indicator of the seriousness of this type of offending.

55      As to the defence submissions with respect to double punishment, it was acknowledged that there should be substantial overlap between the penalties imposed, however, the charges represent two distinct and separate duties owed by the company. One is to its employees, and the other is to other members of the public. Notwithstanding that the failure is the same for each breach, a degree of separate punishment is warranted.

56      Finally, Mr Mandy referred to one case for comparative purposes: DPP v Cool Dynamics Refrigeration Pty Ltd[3]. It was submitted that there were factual similarities between that case and this offending. He submitted that the fines imposed in this case should be of a similar order to those imposed there. In response, Mr Taylor submitted that Cool Dynamics involved more serious breaches of the Act, and the penalties imposed in that case should be seen as very much at the upper limit.

[3] [2015] VCC 1882, (‘Cool Dynamics’).

Analysis

57      In my view, these were serious breaches of the duties owed to employees and to persons other than employees. The hazards and risks associated with loading, storing and transporting oxygen bottles and acetylene bottles were well understood, and the danger flowing from an explosion was very high, as the injuries to Mr Portelli attest. A company in the position of New Sector should have known better and should have taken much greater care.

58      I do accept, however, that New Sector had not wilfully disregarded the risk. This is not a situation where the company had been warned in the past and had failed to act, or where there had been ‘near misses’ which should have alerted the company to the breaches. By contrast, New Sector has operated for 26 years safely and without blemish.

59      I have derived some limited assistance from the decision in Cool Dynamics given some of the factual similarities, although I note that it was handed down before the Court of Appeal decision in DPP v Vibro-Pile (Aust) Pty Ltd[4]. That later case, in allowing the Director’s sentence appeal, emphasised the need in cases of this kind to have regard to the maximum penalty for these offences and the nature and gravity of the offending.

[4] [2016] VSCA 55, (‘Vibro-Pile’).

60      As I have indicated, because New Sector has pleaded guilty, its director has shown remorse and responded appropriately by eliminating the risk of this sort of incident happening again, the sentence will be substantially reduced.

61      I accept the view of both parties that specific deterrence has very little role to play in the formulation of this sentence, however, consistent with authority, general deterrence remains the primary sentencing purpose. As was said in Vibro-Pile at [233]:

The sentences imposed need to draw attention to the importance of workplace safety, and to send a message to employers that failure to eliminate or mitigate safety risks will attract significant punishment.

62      I reject the contention that no additional penalty should be imposed in respect of Charge 2. Each charge is concerned with a different duty, directed to the risk to different classes of persons. Although there is a substantial overlap between the charges, because the contravening conduct/omission in each charge is virtually identical, it is nonetheless appropriate in my view to mark the contravention of each duty with an individual penalty. That said, I am conscious that I must apply, with necessary adaptation, the principle of totality.

63      Essentially for the same reasons, I will not impose an aggregate fine.

Sentence

64      Taking all relevant matters into account New Sector will be sentenced as follows:

65      On Charge 1, the company is convicted and fined $175,000.00.

66      On Charge 2, the company is convicted and fined $125,000.00.

67      This makes a total effective fine of $300,000.00.

68 I will declare pursuant to s 6AAA of the Sentencing Act 1991 that but for the company’s plea of guilty, I would have imposed a total effective fine of $440,000.00.