Safe Work NSW v New South Wales Sugar Milling Co-operative Limited

[2017] NSWDC 230

District Court

New South Wales

Medium Neutral Citation:	Safe Work NSW v New South Wales Sugar Milling Co-operative Limited [2017] NSWDC 230
Hearing dates:	14 August 2017
Date of orders:	28 August 2017
Decision date:	28 August 2017
Jurisdiction:	Criminal
Before:	Judge AC Scotting
Decision:	1 The offender is convicted. 2 I impose a fine of $42,500. 3 I order that pursuant to section 122(2) Fines Act 1996 that 50% of the fine is to be paid to the prosecutor. 4 I order that the offender pay the prosecutors costs in the agreed sum of $92,500
Catchwords:	CRIMINAL LAW – prosecution – work health and safety – duty of persons undertaking business – duty of employers – risk of death or serious injury – risk of immolation – fire protection – safety procedure – igniting of boiler – electrical generation – safety guidelines SENTENCE – mitigating factors – aggravating factors – fine – capacity to pay – circumstances – objective seriousness – specific deterrence – general deterrence – appropriate penalty SENTENCE PRINCIPLES – parity – totality – community values – remorse – contrition – onerous penalty – extra curial punishment COSTS – prosecution costs OTHER – bagasse – diesel – ignition
Legislation Cited:	Work Health and Safety Act 2011 ss.19, 32 Crimes (Sentencing Procedure) Act 1999 ss.3, 3A, 10, 21A(2)(d), 21A(3)(i), 21A(3)(k), 21A(3)(m), Fines Act 1996 ss. 6, 122(2)
Cases Cited:	R v Thomson & Houlton (2000) 49 NSWLR 383 R v Borkowski (2009) 195 A Crim R 1 Bulga Underground Operations Pty Ltd v Nash [2016] NSWCCA 37 Cobiac v Liddy (1969) 119 CLR 257 R v Nguyen [2002] NSWCCA 183
Category:	Sentence
Parties:	Safe Work NSW (Prosecutor) New South Wales Sugar Milling Co-operative Limited (Offender)
Representation:	Counsel: Mr M Cahill (Prosecutor) Mrs W Thompson (Offender)   Solicitors: Safe Work NSW (Prosecutor) Norton Rose Fullbright (Offender)
File Number(s):	2016/00262216
Publication restriction:	None

sentence

1. New South Wales Sugar Milling Co-operative Ltd (the offender) appears for sentence after it pleaded guilty to an offence to an offence contrary to section 32 Work Health and Safety Act 2011 (the Act) of failing to comply with its health and safety duty and thereby exposing Caine Mustow and Christopher Clark to a risk of serious injury or death.

2. The maximum penalty for the offence is a fine of $1.5 million.

The facts

3. The parties presented an Agreed Statement of Facts that can be summarised as follows.

4. The offender operated a sugar cane mill and electrical co-generation facility at 117 Pacific Highway Broadwater, New South Wales (the site). The offender operated a similar business at Condong, operated a joint venture business with the Manildra group of companies at Harwood Island and operated other facilities at Murwillumbah, Grafton and Ballina. As at 4 September 2014 the offender had 434 employees of whom 121 were employed at the site.

5. At the site there were 2 boilers; the No 12 boiler and the No 1 boiler.

6. The No 12 boiler commenced operation at the site in 1995. It was designed to be fired by 2 fuel sources, bagasse [1] and bunker oil. The No 12 boiler had installed in it equipment to pump the bunker oil into its furnace and to ignite the oil (the oil firing equipment). The operating manual for the No 12 boiler provided detailed instructions and procedures for the “cold start up” and the “hot restart” of the No 12 boiler.

   1. The material left after the sugar cane was crushed.

7. The oil firing equipment for the No 12 boiler proved largely unreliable from the date of its commission. In about 2007 the No 12 boiler was converted from bunker oil to recycled waste oil.

8. On 11 October 2011 the offender entered into a joint venture with Delta Electricity to generate power at the site to be fed into the electricity grid.

9. The No 1 boiler was constructed at the site as part of the installation of a new 30MW power station at the site. It was a term of the development consent that the boilers at the site would be fired by bio-mass fuel (bagasse) and diesel as the auxiliary fuel. The offender converted the oil firing equipment, the fuel tank and the auxiliary fuel piping system to the No 12 boiler, to work with diesel for the No 1 boiler.

10. In December 2007 the offender sought advice from the manufacturer of the No 12 boiler oil firing system as to how to convert it to diesel. On 17 December 2007 the offender was advised by the manufacturer that parts valued at $5,019.00 were required to be installed to convert the auxiliary fuel system in the No 12 boiler to diesel.

11. The conversion of the oil firing system on the No 12 boiler was not undertaken.

12. From about this time, the offender began to use diesel as the auxiliary fuel in the No 12 boiler. No risk assessment was undertaken and no formal procedures were adopted for the cold start up or hot restart of the No 12 boiler.

13. A diesel outlet valve and hose was installed adjacent to the No 12 boiler to allow diesel to be pumped into the No 12 boiler onto the bagasse on a grate inside the furnace for cold start up. The pump that supplied the diesel was controlled from the control room.

14. The offender adopted an informal, undocumented protocol (the protocol) to undertake start up of the No 12 boiler. Bagasse was fed into the furnace and if the conductive heat in the furnace was sufficient the bagasse would ignite. A boiler assistant would look through the side viewing window and inform the No 1 operator if there were signs of combustion. The protocol did not specify the conditions for which the start up was considered to be cold, warm or hot. The No 1 Operator had access to read outs in the control room that could display the temperature inside the furnace and the drum pressure.

15. If the conductive heat in the furnace failed to ignite the bagasse a worker would use the hose to spray diesel on top of the bagasse and then ignite it.

16. On the morning of 4 September 2014 the mill had temporarily stopped crushing and there was no bagasse available to fuel the furnaces of the boilers. A fuel mix of wood chip and sawdust was being used as the biomass fuel. The fuel mix was wet and there was difficulty in keeping both furnaces operating. At sometime between 7.30am and 8.00am the furnace of the No 12 boiler went out and it was shut down temporarily, until the mill started crushing again and bagasse was available.

17. At about 10.15am the Shift Supervisor, Mr Ellis directed the boiler operators to restart the No 12 boiler. The No 1 Operator, Mr Stanley-Jones was in control of the task from the Control Room. Mr Mustow and Mr Clark went down to the No 12 boiler. The workers were in contact with each other by radio. Mr Mustow and Mr Clark reported that there was no bagasse on the grate of the furnace. Bagasse was loaded onto the grate of the furnace by mechanical means on 2 occasions. After the second load of bagasse was loaded, Mr Mustow and Mr Clark waited for the retained heat in the furnace to ignite the bagasse.

18. After about 8 minutes, Mr Mustow opened the middle door of the furnace and could not detect any signs of the bagasse igniting. Mr Mustow decided to hose diesel onto the bagasse on the grate. Mr Clark radioed the control room to tell them of the intended action. Mr Clark asked Mr Stanley-Jones to turn on the diesel pump.

19. Mr Mustow stood about 1-1.5m away from the open furnace door and started hosing diesel into the furnace. The diesel ignited and a fireball blew back through the open furnace door. Mr Mustow suffered superficial burns to his face, wrist, ears and neck.

20. Mr Clark shut down the diesel and closed the furnace door. He helped Mr Mustow to the emergency shower and an ambulance was called. Mr Mustow was taken to hospital and he returned to work on 13 October 2014, on a graduated return to work program. Mr Clark was not injured.

21. The incident was the first time that Mr Mustow had been involved in a hot restart of the No 12 boiler, without the supervision of a more experienced boiler attendant. Mr Clark had assisted other workers in a cold start up of the No12 boiler, but had never been involved in a hot restart of the No 12 boiler.

22. The flash point of diesel is 63 degrees Celsius. There was no way of measuring the temperature inside the furnace at the grate, but the control panel displayed a reading for the superheater gas exit temperature, which was a good indicator of the temperature. At the time of the incident, that temperature was 155 degrees Celsius. Further, the conditions at the time when the diesel was added to the furnace provided a fuel/air mixture that contributed to the risk of an uncontrolled ignition.

23. At the time of the incident Mr Mustow and Mr Clark had not been instructed to wear a face shield when conducting a hot restart of the No 12 boiler.

24. After the incident the offender developed written procedures for starting the No 12 boiler. Those procedures defined the conditions for a cold start up and a hot restart. A hot restart was defined as when the temperature was greater than 50 degrees Celsius and prohibited the use of diesel in those conditions. The procedures also provided for the use of appropriate PPE.

25. Expert advice was also sought on the start up procedures. Advice was obtained that if diesel was to be introduced that it should be already alight, to avoid any risk of an uncontrolled explosion.

26. On 31 July 2016 the operation of the boilers was overtaken by other companies.

27. In about 2008 when the No 1 boiler was commissioned, the manufacturer provided the offender with an Operating Procedures Manual providing for the cold start-up, warm restart and hot restart of the No 1 boiler. The offender developed and published written safe work procedures on the start up of the No 1 boiler dated in January 2014. Similar procedures were not developed for the No 12 boiler.

28. At the time of the incident each of the relevant employees held a High Risk Work Licence relating to boiler operations and had received training both from external providers and on the job training.

The offender’s case on sentence

29. The offender relied on an affidavit of David John Wood sworn 10 August 2017. Mr Wood was not required for cross-examination. The salient points of the evidence can be summarised as follows.

30. Mr Wood was the Operations Manager at the site from March 2012 and he had been employed by the offender from August 1995.

31. The offender accepted through Mr Wood that the safety systems in place at the time of the incident failed to prevent the injury to Mr Mustow and that there were reasonably practicable measures available to the offender that should have been taken. Mr Wood expressed deep regret for the injuries sustained by Mr Mustow and the risk of injury to Mr Clark.

32. The offender is a grower-owned co-operative, made up of 500 members in New South Wales.

33. Cape Byron I Pty Ltd and Cape Byron II Pty Ltd trading as Cape Byron Power (CBP) owned the co-generation plants at Broadwater and Codong since November 2013. The No 12 boiler was operated during the crushing season to provide sufficient power for the site. At the time of the incident the offender was contracted to provide operation and maintenance services to CBP, including the operation of the No 12 boiler.

34. It was a term of the agreement between the offender and CBP that the plant would be operated in accordance with an Asset Management Plan (AMP). No AMP had been provided by CBP in accordance with its contractual obligations, and the offender was concerned that CBP would not approve an appropriate budget to carry out the required maintenance of the plant. The offender later terminated the agreement with CBP because the risks involved in continuing the contract was too high; including the risk to the offender’s employees.

35. CBP took over the operation and maintenance of the boilers after the agreement was terminated. A number of the offender’s employees were thereafter employed by CBP.

36. The offender was formed in 1978. The sugar industry in northern New South Wales employs about 2,200 people. The offender is the only Australian owned sugar refining business and the only Bonsucro sustainably certified sugar enterprise. Bonsucro certification is an internationally recognised standard for sustainable sugar production. The offender had held this certification since 2012. The offender produces and refines about 5% of Australia’s national sugar production.

37. In 2012 the offender entered into an alliance with WorkCover New South Wales. At that time it undertook a review of its safety systems. In 2 consecutive maintenance seasons (January to June 2013 and January to June 2014) the offender assigned 4 senior No 1 Operators and a Shift Supervisor to rewrite all of the safe work procedures for the boilers. It was intended that the relevant workers would be trained in the procedures developed. The process involved about $100,000 in wage costs and the procedures for the No 12 boiler had not been completed by the time of the incident.

38. The offender has been involved in a “Boiler Working Group” (BWG) that was initiated by its insurer in July 2016. Some of the learning from the incident has been developed into industry best practice through the offender’s participation in the BWG.

39. Each of the relevant personnel in the incident had obtained High Risk Work Licences (HRWL) in boiler operations, as well as receiving other externally administered training and on the job training.

40. The offender accepts that it relied too heavily on the fact that its employees had HRWLs. It believed that the external training provider had conducted that training on both boilers, whereas in fact the employees were trained on the No 1 boiler only.

41. The offender accepts by its plea of guilty that it placed too much reliance on the competency and experience of its employees and that it should have assessed and formalised the procedures in place.

42. The No 1 Operator had available to him at the time of the incident a substantial amount of information from the computer system in the control room.

43. After the incident the offender conducted its own investigation and conducted tool box talks to deal with the findings and corrective outcomes. It developed a written safe work procedure for the cold start up and hot restart of the No 12 boiler. The offender shortened the diesel hose so that diesel could not be pumped into the furnace. The offender also re-evaluated the agreement with CBP leading to a termination of that agreement.

44. The hot restart procedure was followed by the offender until CBP took over operation of the No 12 boiler on 31 July 2016. The offender now operates only 1 boiler at Harwood Island. After the incident a complete review of the procedures for that boiler was undertaken and implemented.

45. The offender provided financial support for Mr Mustow and his family, whilst he was in hospital in Brisbane. Mr Mustow was fit to participate in interviews with SafeWork on 9 September 2014.

46. Mr Mustow returned to work on a graduated return to work program. He recommenced his pre-injury duties on 13 November 2014. He left the employment of the offender on 28 October 2016.

47. The offender co-operated with SafeWork’s investigation of the incident.

48. The offender is involved in a number of community projects including the support of schools, the Southern Cross University, sporting teams and community groups. The offender provides a large number of apprenticeships and traineeships having up to 30 apprentices or trainees employed at any one time.

49. Mr Wood expressed concern that a conviction may jeopardise the offender’s Bonsucro certification and that future tenders may require the disclosure of the offender’s convictions for braches of the health and safety law. Mr Wood deposed that the sugar industry is highly competitive and that a conviction may make it difficult for the offender to compete with its major competitor, a Singaporean company, if it loses its Bonsucro certification that it relies on to differentiate itself.

Consideration

50. I have had regard to the objects of the Act set out in section 3 and the purposes of sentencing set out in section 3A Crimes (Sentencing Procedure) Act 1999.

Objective seriousness of the offence

51. The risk posed to the workers by spraying diesel into a hot furnace was obvious. It was a risk that was referred to in the Operating Manual for the No 1 boiler and the safe work procedures that the offender had developed and implemented for the No 1 boiler. The offender allowed an informal protocol to be used for the hot restart of the No 12 boiler that did not recognise the hazards identified as relevant to the No 1 boiler. The informal protocol was not well developed and not known to the relevant employees involved in the incident.

52. The likelihood of the risk occurring was low to moderate. The informal protocol was not well known and workers were not trained in it. No parameters were identified to prohibit the introduction of the diesel to a hot furnace. The flash point of diesel was known to the offender and it had the capacity to gauge the temperature within the furnace.

53. The steps required to eliminate the risks were simple and readily available. The most effective option would have been to convert the oil firing system to use diesel. The offender had made enquiries of what was required to achieve this. It required a relatively modest expenditure on parts of about $5,000 and it probably required some other relatively modest cost to install those parts and to have the No 12 boiler off line for the time required to undertake the work. This option would have eliminated the risk. The other option of developing safe work procedures based on the No 1 boiler procedures would have involved little cost and was capable of eliminating the risk.

54. The gravity of the risk was significant and it included a risk of death, but was more likely to involve serious burns. But for the swift action of Mr Clark the incident could have been much more serious.

55. The injuries to Mr Mustow were at the lower end of the scale. They were superficial and he returned to work quickly and completely.

56. The offender placed too much reliance on the perceived competency and skills of its workers. The failure of the offender was to provide documented systems for a dangerous procedure to minimise or eliminate the risk that the workers would make errors that could lead to a risk of death or serious injury.

57. The objective seriousness of the offence is in the low range.

Deterrence

58. The penalty imposed in relation to this offence must provide for general deterrence. Employers must take the obligations imposed by the Act very seriously. The community is entitled to expect that both small and large employers will comply with safety requirements. General deterrence is a significant factor when safety obligations are breached: Bulga Underground Operations Pty Ltd v Nash [2016] NSWCCA 37 at [180].

59. There is also a need for specific deterrence although it is reduced. The offender continues to operate and engage workers to undertake tasks that may present a risk to their health and safety. The offender now only operates 1 boiler at a different site and I am satisfied that the offender has undertaken a significant upgrade of its safety systems as a result of the incident.

Aggravating factors

60. The offender has a number of previous convictions for breaches of the Occupational Health and Safety Act 1983. The most recent was recorded on 2 March 1999. The prosecution did not contend that these prior convictions should amount to the aggravating factor provided for in section 21A(2)(d) Crimes (Sentencing Procedure) Act 1999.

Mitigating factors

61. The offender has demonstrated remorse: section 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. I am satisfied on the offender’s evidence that the offender has accepted responsibility for the failings that led to the commission of the offence and that it has expressed genuine contrition and remorse.

61. The offender entered a plea of guilty: section 21A(3)(k) and section 22 Crimes (Sentencing Procedure) Act 1999. Action is entitled to a discount on penalty that reflects the utilitarian value of that plea. The extent of the discount should generally be assessed in the range of 10-25%, but that is only a guide. The primary consideration in determining where in the range a particular case should fall is the timing of the plea, so that the earlier the plea the greater the discount: R v Thomson & Houlton (2000) 49 NSWLR 383 and R v Borkowski (2009) 195 A Crim R 1 at [32]. The plea also indicates remorse: Borkowski at [32]. The plea was entered after the matter was listed for a defended hearing. The appropriate discount is 15%.

62. The offender co-operated with the investigation: section 21A(3)(m) Crimes (Sentencing Procedure) Act 1999.

Other matters

64. The offender is a good corporate citizen. It is actively involved in many community projects and charitable works.

65. The offender contended that this matter could be dealt with under section 10 Crimes (Sentencing Procedure) Act 1999, without recording a conviction. The basis for that application is that a conviction will put the offender at risk of losing its Bonsucro certification, thereby making it harder for the offender to compete or obtain new contracts.

66. Section 10 Crimes (Sentencing Procedure) Act 1999 provides that the Court finds an offence proven may conditionally discharge a defendant, without proceeding to a conviction. The Court may consider the person’s character, age antecedents, the trivial nature of the offence, any extenuating circumstances and any other appropriate matter. Section 10 and its predecessors reflect the willingness of the legislature and the community to provide offenders with an opportunity in certain circumstances to maintain a reputation of good character and to avoid the otherwise rigid application of the inexorable laws: Cobiac v Liddy (1969) 119 CLR 257 at 269; R v Nguyen [2002] NSWCCA 183 at [50].

67. I do not think that this is an appropriate matter to be dealt with pursuant to section 10 for the following reasons. First, I am not convinced on the evidence that there is a significant risk that the offender will lose its certification. There is no evidence that this will be the likely result. Mr Wood did not depose that he had made any relevant enquiries on the issue. The offender was first certified in 2012 at a time when it already had 6 prior convictions. Clearly, those prior matters were not sufficient to prevent the offender from being certified. I expect that the circumstances of the offence will be fully considered by the certifying body before any decision is made on the basis of any conviction. Second, the circumstances of the offence cannot be considered trivial and I am not satisfied that extenuating circumstances exist to allow for the application of section 10.

Penalty

68. The offender is convicted.

69. The appropriate fine is one of $50,000 that will be discounted by 15% to take into account the plea of guilty.

70. I impose a fine of $42,500.

71. I order that pursuant to section 122(2) Fines Act 1996 that 50% of the fine is to be paid to the prosecutor.

72. I order that the offender pay the prosecutors costs in the agreed sum of $92,500.

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Endnote

Decision last updated: 28 August 2017