SafeWork NSW v Broadspectrum (Australia) Pty Ltd

[2018] NSWDC 7

District Court

New South Wales

Medium Neutral Citation:	SafeWork NSW v Broadspectrum (Australia) Pty Ltd [2018] NSWDC 7
Hearing dates:	30 November 2017
Date of orders:	02 February 2018
Decision date:	02 February 2018
Jurisdiction:	Criminal
Before:	KEARNS DCJ
Decision:	The defendant is convicted and fined $240,000 with a moiety to the prosecutor. The defendant is to pay the prosecutor’s costs in an agreed sum of $51,000.
Catchwords:	CRIMINAL LAW – prosecution – work health and safety SENTENCE – objective seriousness – safe systems – general and specific deterrence – acceptance of responsibility and remorse – post incident steps taken by defendant – defendant a citizen of good standing – plea of guilty Steel storage rack in yard exposed to corrosive elements – worker collecting item from rack – rack affected by rust and corroded – rack collapsed – fatal injury
Legislation Cited:	Workplace Health and Safety Act 2011 Crimes (Sentencing Procedure) Act 1999
Category:	Sentence
Parties:	SafeWork NSW (prosecutor); Broadspectrum (Australia) Pty Ltd (defendant)
Representation:	Counsel: Ms E James appeared for the prosecutor; Mr B Hodgkinson SC appeared for the defendant   Solicitors: SafeWork NSW Legal Services (prosecutor); K&L Gates Lawyers (defendant)
File Number(s):	2016/274750

Judgment

The charge and the plea

1. The defendant is charged with an offence under s 32 of the Work Health and Safety Act 2011 in that on the 29 January 2015 at Botany Industrial Park, Botany in the State of New South Wales, it did fail to comply with a duty under section 19(1) of the Act.

2. The defendant has pleaded guilty.

3. The maximum penalty is $1,500,000.

The incident

4. On 29 January 2015, Mr Yoon was accessing a rack at the worksite to retrieve a steel pipe. The rack was outside and was affected by rust. There were no witnesses to the incident, but in the course of accessing the pipe, the rack collapsed causing Mr Yoon to fall and suffer fatal injuries.

The facts

5. The parties have provided an Agreed Statement of Facts which I summarise and supplement with reference to other evidence.

6. The defendant, formerly known as Transfield Services (Australia) Pty Ltd, conducted a business or undertaking providing repair and maintenance services to infrastructure, plant and equipment.

7. The defendant was contracted by Qenos Pty Ltd to provide maintenance services within Botany Industrial Park (BIP). Within the BIP was an area known as the Transfield Alliance Compound (the Compound). The Compound consisted of a workshop and open yard area used to store equipment and engineering consumables. At the time of the incident, the Compound was under lease to and was controlled by the defendant, which was responsible for the maintenance and repair of plant and structures for Qenos throughout the BIP.

8. NWEC Pty Ltd was a registered corporation and conducted a business or undertaking which included labour hire.

9. NWEC was contracted by the defendant to supply tradespersons such as welders, boilermakers and pipefitters to the defendant as required. As at 29 January 2015 NWEC provided and assigned workers to the defendant in order to undertake the required maintenance services at the BIP.

10. NWEC did not occupy the Compound. However, Mr Jae Lee, the sole director and secretary of NWEC occasionally attended the Compound to discuss matters involving the work of its workers with the defendant. As at 19 January 2015 NWEC had a total of five workers assigned to work at the BIP.

11. Mr Yoon was engaged by NWEC through his own company, Indong Pty Ltd, as a subcontractor, to work as a boilermaker and pipefitter. Mr Yoon had been engaged by NWEC and assigned to work at the BIP or Compound since approximately 2005. At all material times, Mr Yoon’s work was directed on a day to day basis by the defendant. As at 29 January 2015, Mr Yoon’s main duties were maintenance tasks, utilising his skills as a pipe fitter and boiler maker.

12. The defendant’s HSE manager for the NSW South East Region, Mr James McNamara attended the Compound monthly or as needed regarding HSE matters on site. The defendant’s Contract Alliance Manager, Mr Troy King, was responsible for day-to-day operations at the BIP and he generally attended the Compound daily. Mr King was assisted by a supervisory team led by the Site Superintendent Mr Simon Tescon, as well as engineers and supervisors.

13. At all material times, Mr McCool was the defendant’s Mechanical Supervisor, whose duties included supervision, planning and scheduling. As at 29 January 2015, Mr McCool had supervisory responsibility for the 16 workers at the BIP and the Compound, including Mr Yoon. On the date of the incident, the work tasks were allocated to Mr Yoon by Mr McCool.

14. The rack was a welded steel frame in the form of a single sided, multi-armed, open-faced cantilever type of rack and was located in an outdoor concreted area of the workplace. Before it collapsed, the rack was approximately 1850 mm in height with four levels of shelf extending out approximately 635 mm from the support columns. The rear of the base frame support members were not blanked off or otherwise sealed. Hence the hollow-tube members of the rack were open to the element at all times

15. The cause of the collapse of the rack was corrosion of the base support beams at the anchorage points of the rack structure. This placed the structure in danger of total collapse. Insufficient drainage holes had been provided in the base frame of the rack. Prior to the collapse no steps had been taken to address the corroded condition of the rack. The frame had not been galvanised, painted or otherwise corrosion-protected.

16. Corrosion protection of steel structures is addressed in clause 3.5.6 of Australian Standard AS 4100-1998: “Australian standard – Steel structures” (the Standard). That clause provided as follows:

17. “When steelwork in a structure is to be exposed to a corrosive environment, the steelwork shall be given protection against corrosion.”

That Standard and standard AS/NZS 2312.1:2014 go on to give guidance as to the nature of the protection required depending on the nature of the exposure.

18. The defendant submitted the Standard did not apply because it was directed to “design, fabrication, erection, and modification” of steel work – cl 1.1.1. Further, cl 3.5.6 was, it was submitted, directed to “design” – cl 3.5.2. There are two comments to note here. The first is that even if the Standard is so limited, the point is it sets standards for protection of steel work in various conditions because steel can rust and, as a result, pose serious danger. Even if the Standard did not apply to the defendant, it must have been aware of the need for anti-rust protection for the steel racking and the Standard could give it good guidance. The second comment is that it is an agreed fact that “There was no corrosion protection applied to the rack in the form of galvanisation or protective coating in contravention of the Standard” (ASOF [39], emphasis added).

19. The defendant had a similar submission in relation to AS/NZS 2312.1:2014 in that its objective was to provide guidance for “architects, engineers, builders, the surface coating industry and users of protective services in general on paint coating systems for the protection of steel work against corrosion” (p2 AS/NZS 2312.1:2014). The defendant was not using protective services, but in the environment in which the rack stood, it should have been. In any event, this Standard was a resource that was available to the defendant had it chosen to use it.

20. “At the time of the incident, Broadspectrum had a workplace inspection checklist, a manual handling procedure, and a job safety and environmental analysis (JESA) worksheet in place for their undertakings” ([33] Agreed Statement of Facts).

21. “The workplace inspection checklist was not used to identify or report concerns with the rack. The rack was not specifically identified as plant requiring inspection on the workplace inspection checklist.” ([34] Agreed Statement of Facts)

Although this is an agreed fact, it is to be noted that the checklist did refer to racks in referring to their content. It had an item “Is C. Steel & S. Steel separate in Racks and Workshop?”

22. “The Broadspectrum manual handling procedure from 2007 was implemented for the BIP and Compound and was broad in nature. Mr Yoon was provided with manual handling training in 2009 and in 2015.” ([35] Agreed Statement of Facts)

23. “The JESA advised the use of mechanical aids for heavy objects as required.” ([36] Agreed Statement of Facts)

24. “The base support beams of the rack were open-ended. The non-blanked off areas allowed moisture including rain water to freely enter into and then pool within the interior of the structure allowing internal corrosion to occur.” ([37] Agreed Statement of Facts)

25. “The BIP was situated within a former chemical plant and was in close proximity to Botany Bay and the ocean. As such, the rack was subject to severe atmospheric corrosion” ([38] Agreed Statement of Facts)

26. “There was no corrosion protection applied to the rack in the form of galvanisation or protective coating in contravention of the standard.” ([39] Agreed Statement of Facts)

27. Following the incident, the defendant was issued with two improvement notices relating to the racking. It complied with both.

The risk

28. The risk was a risk to workers of death or serious injury as a result of the rack collapsing due to corrosion of the support structures.

The particulars

29. The particulars of the charge are as set out in the Amended Summons as follows.

30. The defendant failed to ensure the health and safety of workers whose activities were influenced or directed by it, in particular Mr Yoon, in that it failed to take one or more of the following reasonable practicable measures to eliminate (or alternatively minimise if not reasonably practicable to eliminate) the risks to health and safety to workers including the risk of the storage rack collapsing by:

1. Conducting a risk assessment which identified the hazards associated with the storage rack being subject to corrosion;

2. Carrying out regular inspections of the storage rack and addressing any signs of damage or corrosion;

3. Maintaining the structural integrity of the storage rack by;

1. Protecting it from exposure to the open-air environment by the application of a protective coating;

2. Blocking off the ends of the hollow steel members forming the base support beams of the storage rack so as to prevent rainwater entering and pooling within the interior of the structure and causing corrosion;

31. As a result of the defendant’s failures Mr Yoon was exposed to a risk of death or serious injury from the collapse of the storage rack.

The sentencing process

32. I bear in mind several matters. I bear in mind the purposes of sentencing as enumerated in s 3A of the Crimes (Sentencing Procedure) Act 1999. I bear in mind the purposes of the Work Health and Safety Legislation, in particular ensuring the safety, health and welfare of workers and others on workplace premises. I bear in mind any aggravating and mitigating factors, including any mentioned in s 21A of the Crimes (Sentencing Procedure) Act so far as any of those may be relevant.

33. I start my analysis with a consideration of the gravity of the offence. This may be determined in part by the foreseeability of the risk of injury, the foreseeability of the consequences of the risk of coming home and the measures available to avoid the risk.

34. Foreseeability of the rack collapsing is clear. I accept the defendant’s submission that it was not as obvious as might be apparent from the photographs taken after the incident (Tender Bundle Tab 3). They show a state of rust and damage not all of which would have been apparent on inspection before the incident. Nevertheless, there was rust visible before the incident in the steel components of the rack which was located in a highly corrosive atmosphere. This makes the foreseeability of collapse clear.

35. The foreseeable consequences of the rack collapsing included serious, even fatal, injury.

36. There were measures readily available to the defendant to have eliminated the risk. They are spelled out in the particulars of the charge. Supporting that is the fact that the defendant undertook corrective measures almost immediately after the incident. Further, the standards referred to offered guidance as to measures to be taken to protect the steel work in this situation.

37. The objective seriousness of the offence, however, is not to be measured by these matters alone. I take into account also the defendant’s approach to safety. The defendant’s approach to safety was extensive. Evidence of it was given in an affidavit affirmed by Glen Cowling, the Executive Manager, Health Safety and Environment for the Resources Business Division of the defendant.

38. The defendant is a large multinational corporation. At the time of the incident it employed over 14,500 people in Australia with 60 employed at the BIP. There could be as many as 100 employed at the BIP depending on the work. The defendant’s health and safety system applied over that large workforce.

39. The defendant’s evidence as to its health and safety system is unchallenged. I do no more than offer a short point form summary of it. It includes:

• a written health and safety policy;

• mandatory safety rules;

• induction of all workers and others entering the site;

• an HSE management system;

• the HSEs are subject to internal and external audit and, depending on the audit, this may be from daily to annually;

• the defendant has a number of external certificates and accreditations. One accreditation is as a self-insurer. That requires external audit of HSE;

• risk management including workplace inspection checklists, job starts, workplace inspections and job safety observations;

• programmes encouraging leadership in safety;

• risk assessments undertaken on an ongoing basis;

• on 28 and 29 January 2015, Mr Yoon took part in a JSEA information session covering the task allocated to him;

• because of the diversity of work and the multiplicity of hazards and risks, it was necessary for workers to undertake specific inductions. Mr Yoon had undertaken 10 inductions;

• Mr Yoon had undertaken training in manual handling techniques;

• the defendant consulted regularly with its employees, contractors and clients on matters of safety.

40. The defendant’s approach to health and safety may be described as conscientious and diligent. It was extensive in area and personnel covered. It was extensive in subject matter covered. The defendant was, generally speaking, proactive in its approach to safety. It developed sound systems. It maintained, enforced, audited and reviewed those systems. Its system failed to pick up the subject matter of the rack. It ought to have. It had a lead into it with its own workplace inspection checklist which included the reference to “Racks”, but in the context of the racks’ contents and not the racks themselves.

41. This is not a case of no system. It is not a case of the maintenance of a faulty system. It is a case of a good system, but one which overlooked an item it should have picked up.

42. The risk was a serious one, but in a case where the defendant had undertaken extensive steps in its attempts to comply with its health and safety duty. I consider the seriousness of the offence falls towards the lower end of the mid-range.

43. There is an aggravating factor and this is the incident resulted in fatal injury – s21A(2) of the Crimes (Sentencing Procedure) Act 1999.

44. There is a need to account for general deterrence. People operating in this industry must be aware of the need for attention to safety and that failure to comply with their duty will have consequences.

45. I also take into account specific deterrence, but only in a relatively minor way. There was extensive evidence, some of it summarised above, about the defendant’s approach to safety before the incident.

46. There is also extensive evidence as to steps taken since the incident. Several were taken almost immediately. These factors indicate that specific deterrence is a minor factor to be considered in this matter.

47. The defendant has one prior conviction. It was in 2005 for an offence in 2002. The incident in that case involved serious burns. That record needs to be understood against a background of the defendant’s size and area of operations, much of which involves hazardous work. It is one conviction only over a period that goes back at least to 1993.

48. There are mitigating factors.

49. The defendant has accepted responsibility for its breach and expressed apology, its regret and remorse.

50. The defendant has taken extensive steps since the incident. These are steps in conformity with the approach to safety the defendant has demonstrated throughout. Again, I but mention some summarily:

• an alert was issued to all defendant’s operations;

• site briefings were held with employees and contractors;

• investigation of the incident was undertaken;

• 1871 reviews of racking over 198 sites were undertaken;

• new methods and systems were introduced;

• there were changes in the leadership team at the BIP site with improvement of safety at that site;

• there has been increased, more than double, leadership contact with employees.

The changes have been followed by a 20% drop in injury rate across Australia in the last two financial years.

51. The defendant has cooperated fully with the regulator throughout its investigation.

52. The defendant is a corporate citizen of good standing. It is a well-known supporter of the Arts in Australia. Its support for community matters is extensive. Some of it includes the Inaugural Cultural Inclusion Celebration Day, Building Relationships with Indigenous Australians. It has an indigenous advisory board which takes on several roles in seeking improvements for indigenous Australians. It supports the YMCA Bridge Project which seeks to aid the rehabilitation of young offenders. Significant cash donations have been made to education, health, indigenous, safety and youth causes in outback Australia. The defendant supports a number of other causes.

53. The defendant entered a plea of guilty at the first available opportunity and I consider it is entitled to a discount of 25% on the penalty otherwise to be imposed.

Order

54. The defendant is convicted and fined $240,000 with a moiety to the prosecutor.

55. The defendant is to pay the prosecutor’s costs in an agreed sum of $51,000.

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Decision last updated: 02 February 2018