SafeWork NSW v MMP Industrial Pty Ltd

[2019] NSWDC 854

District Court

New South Wales

Medium Neutral Citation:	SafeWork NSW v MMP Industrial Pty Ltd [2019] NSWDC 854
Hearing dates:	4 November 2019
Date of orders:	22 November 2019
Decision date:	22 November 2019
Jurisdiction:	Criminal
Before:	Strathdee DCJ
Decision:	(1) The defendant is convicted of the s 32(1) offence. (2) The appropriate fine would be $100,000.00 and that will be reduced by 25% to reflect a plea of guilty. (3) I accordingly order the defendant to pay a fine of $75,000.00. (4) The defendant is convicted of the s 38(1) offence. (5) The appropriate fine would be $1,000.00 and that will be reduced by 25% to reflect the guilty plea. (6) I accordingly order the defendant to pay a fine of $750.00. (7) I order pursuant to s 122(2) of the Fines Act 1996 that 50% of the fines are to be paid to the prosecutor. (8) I impose a training order in accordance with paragraph 94(1) – (6) inclusive. (9) The matter is listed before me at 10:00 am on 20 November 2020 to check compliance with the training orders. (10) The defendant is to pay the prosecution’s costs as agreed or assessed. (11) Pursuant to s 241 of the Act: (a) the defendant is to arrange that Nat Stewart (General Manager) and Amy Borgman (WHS Officer) are to undertake a course in due diligence training for senior managers and company directors, within six months of the date of these orders; and (b) The course in due diligence training for senior managers and company directors is to be provided by PeopleSafe Australia [ABN 55 125 740 730] and titled ‘Due Diligence Training for Senior Managers and Company Directors’. (12) Pursuant to s 21 of the Act: (a) the defendant is to arrange that Nat Stewart (General Manager) and Amy Borgman (WHS Officer) are to undertake a course in hazardous substance training, within six months of the date of these orders; and (b) the course in hazardous substance training is to be provided by PeopleSafe Australia [ABN 55 125 740 730] and titled ‘Hazardous Substance Training’. (13) Pursuant to s 241 of the Act: (a) the defendant is to arrange that Nat Stewart (General Manager) and Amy Borgman (WHS Officer) are to undertake a course in electrical compliance in hazardous areas, within six months of the date of these orders; and (b) the course in electrical compliance in hazardous areas is to be provided by Explosion Protection Technology Pty Limited [ACN 617 291 595] titled ‘How to Apply Hazardous Area Australian Standards’. (14) Pursuant to s 238 of the Act, the defendant is to: (a) within three months of completion of the Training Orders stated above at paragraphs 4 to 6 (inclusive), prepare a work health and safety plan (‘WHS Plan’) that outlines how the lessons learned through the Training Orders have been (or will be) implemented in the workplace of the defendant, and in particular how the defendant will take steps to: (i) acquire and keep up-to-date knowledge of work health and safety matters; and (ii) gain an understanding of the nature of all operations of the business or undertaking of the defendant, and of the hazards and risks associated with those operations, with a specific focus on the risks of uncontrolled explosion and/or fire, risk of static discharge/charge, risks associated with flammable liquids, risks associated with the handling of dangerous goods/hazardous substances and the eliminating and/or minimisation of those risks by the safe storage and handling techniques of Dangerous Goods/Hazardous Substances; and (iii) ensure that the defendant has available for its use, and uses appropriate resources and processes to eliminate or minimise risks to health and safety form work carried out as part of the conduct of the business by undertaking a current staff skills audit (capability matrix), including the identification of the supervision arrangements; and (iv) ensure the defendant has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way of that information to works, directors, and SafeWork NSW, such as an incident and hazard system, risk register, WHS item on meeting agendas; and (v) comply with its duties or obligations under the Act with a specific focus on the risks and control measures of uncontrolled explosion and/or fire, risks and control measures of static discharge/charge, risks and control measures associated with flammable liquids, risks and control measures associated with the handling of dangerous goods/hazardous substances and the eliminating and/or minimisation of those risks by the safe storage and handling techniques of Dangerous Goods/Hazardous Substances. Such a safety management system should be in accordance with AS/NZS ISO 45001:2018: Requirements with guidance for use – Occupational health and safety management systems – Requirements with guidance for use. Within two months of the completion of the WHS Plan, arrange and attend a meeting with the SafeWork NSW Inspectorate, to review and finalise the WHS Plan. (15) Pursuant to s 239 of the Act, the defendant is to enter into a work health and safety undertaking on the condition that within two months of the completion of the WHS Plan, arrange and attend a meeting with the SafeWork NSW Inspectorate, to review and finalise the WHS Plan. (16) Pursuant to s 239 of the Act, the defendant is to enter into a work health and safety undertaking on the following conditions: (a) the matter is adjourned to 20 November 2020, and the defendant is to appear on that date; and (b) the defendant is to appear before the Court if called on to do so during the term of the adjournment; and (c) the defendant is not to commit any offence under the Act during the term of the adjournment; and (d) the defendant is to complete the Training Orders mentioned above in paragraph 4 to 6 (inclusive) and to provide evidence of their completion to the Court on the date specified by the Court; and (e) the defendant is to notify the Prosecutor and the Registrar of the NSW District Court at the Downing Centre of any change of address for service.
Catchwords:	CRIMINAL LAW – prosecution – work health and safety – duty of persons undertaking business – risk of death or serious injury SENTENCE – objective seriousness – mitigating factors – aggravating factors – plea of guilty – general deterrence – specific deterrence – appropriate penalty – training orders – due diligence plan – work health and safety undertaking COSTS – prosecution costs OTHER – use of flammable liquids – risk of explosion or fire – inadequate training
Legislation Cited:	Crimes (Sentencing Procedure) Act 1999 (NSW) Work Health and Safety Act 2011 (NSW) Work Health and Safety Regulation 2011 (NSW)
Cases Cited:	Bulga Underground Operations v Nash (2016) 93 NSWLR 338; [2016] NSWCCA 37 Capral Aluminimum Ltd v WorkCover Authority of New South Wales [2000] NSWIRComm 71; (2000) 49 NSWLR 610 Capral Aluminium Limited v WorkCover Authority of NSW (Inspector Mayo-Ramsay) (2000) 49 NSWLR 610; (1990) 90 IR 256 Department of Mineral Resources of NSW (McKensey) v Kembla Coal & Coke Pty Limited (1999) 92 IR 8; [1999] NSWIRComm 353 Nash v Silver City Drilling (NSW) Pty Ltd; Attorney General for New South Wales v Silver city Drilling (NSW) Pty Ltd [2017] NSWCCA 96 SafeWork NSW v Samuels [2019] NSWDC 111 SafeWork NSW v Yan Huai Wu and Zenger (Aust) Pty Ltd [2018] NSWDC 211 SafeWork (NSW) v Romanous Contractors [2016] NSWDC 48 WorkCover (Inspector Calvez) v TAFE Commission [2014] NSWDC 108 WorkCover v Brandown Pty Ltd [2015] NSWDC 261
Texts Cited:	Australian Standard AS/NZS 1020:1995 SafeWork Australia: Managing risks of hazardous chemicals in the workplace (July 2012) SafeWork Australia: Managing risks of hazardous chemicals in the workplace (July 2014)
Category:	Sentence
Parties:	SafeWork New South Wales (Prosecutor) MMP Industrial Pty Ltd (Defendant)
Representation:	Counsel: Mr C McGee appeared for the Prosecutor Ms E James appeared for the Defendant   Solicitors: Department of Legal Services (Prosecutor) Brendan Kennedy, Wotton + Kearney Lawyers (Defendant)
File Number(s):	2018/253080 and 2018/253087
Publication restriction:	None

Judgment

1. On 9 September 2019, MMP Industrial Pty Limited (‘the defendant’) pleaded guilty to an offence contrary to s 32 of the Work Health and Safety Act 2011 (NSW) (‘the Act’) by failing to comply with the health and safety duty imposed upon it by s 19(1) of the Act, namely, to ensure so far as is reasonably practicable the health and safety of workers while the workers are at work in the defendant’s business or undertaking, and in doing so exposed workers to a risk of death or serious injury.

2. This offence carries the maximum penalty of $1,500,000.00.

3. On 9 September 2019, the defendant further entered a plea of guilty to an offence contrary to s 38(1) of the Act, namely being a person conducting a business or undertaking it failed to ensure that the Regulator, SafeWork NSW, was notified immediately after becoming aware that a notifiable incident arising out of the conduct of the business or undertaking had occurred.

4. This offence carries the maximum penalty of $50,000.00

5. The prosecutor tendered an Agreed Statement of Facts and an Agreed Tender Bundle which forms the basis of the background set out below.

BACKGROUND

6. At all material times the defendant company was a person conducting a business or undertaking (‘PCBU’) within the meaning of the Act in a workplace for the purposes of s 8 of the Act.

7. The defendant is a registered corporation conducting a business that primarily involved the manufacturing of industrial chemicals and pant aerosols. The defendant operated under a trust known as R & R Discretionary Trust, the instrument under which Mr David Stewart is the specified beneficiary.

8. The defendant conducted its business at 3 Hannabus Place, Mulgrave in the State of New South Wales (‘the workplace’). The premises contained 12 warehouses. The defendant employed 50 employees at the workplace.

9. On 29 August 2016, the defendant’s business or undertaking at the workplace included painting mixing and cleaning mixing vats.

10. The defendant employed Mr Shashi Choudhary (‘Mr Choudhary’), a fitter and machinist by trade. Mr Choudhary commenced employment with the defendant on 28 January 2016. His main duties included paint blending, mixing paints and cleaning mixing vats in warehouse 7.

11. Mr Choudhary’s activities in carrying out his duties was directed or influenced by the defendant as the defendant allocated tasks and Mr Choudhary was supervised by the defendant.

12. The defendant employed Mr Brett White (‘Mr White’), whose main duties included paint blending and cleaning mixing vats. He was also responsible for supervising and training Mr Choudhary at the time of the incident. Mr White commenced employment with the defendant in 2011.

THE INCIDENT

13. On 29 August 2016, Mr Choudhary commenced work at about 7am in warehouse 7 at the workplace. Mr White allocated the task of cleaning mixing vats at warehouse 7 to Mr Choudhary.

14. Throughout the work day, Mr Choudhary was wearing personal protective equipment (‘PPE’) comprised of rubber boots, a polyester top, safety glasses, a respirator, apron, cap, and latex gloves while cleaning the mixing vats. Mr Choudhary had cleaned approximately 6 vats by about 3pm.

15. At about 3pm, Mr White instructed Mr Choudhary to clean a 500-litre metal mixing vat (‘the mixing vat’). The mixing vat had either been used to mix solvents containing the chemical hexatone, or to mix paint. The mixing vat was not fitted with an earthing strap or non-static wheels, despite earthing straps being available for use in warehouse 7.

16. The process of cleaning the mixing vat required Mr Choudhary to spray the mixing vat with a small amount of acetone to clean the interior. In order to do so, Mr Choudhary used a hose fitted with a porter lever to spray the acetone into the mixing vat.

17. While Mr Choudhary was using the hose to spray the inside of the mixing vat, there was a discharge of static electricity causing spontaneous ignition of the acetone vapours (‘the explosion’). At the time of the explosion, Mr Choudhary was standing approximately half a metre away from the mixing vat. The explosion struck Mr Choudhary and caused the substances in the mixing vat to catch alight.

18. Mr Choudhary turned off the valve to the hose stopping the spray of acetone from the hose and used a fire extinguisher to extinguish the fire inside the mixing vat. Immediately after the explosion Mr White and Ms Amy Borgman (‘Ms Borgman’), the defendant’s work health and safety manager, came to Mr Choudhary’s aid.

19. Mr Choudhary was taken to the deluge shower, where he showered for approximately 20 minutes. Mr Choudhary was provided with burn cream and instructed to see a doctor. Mr Choudhary left the premises shortly afterwards and drove to Plumpton Medical Centre. From there, he was referred to Mount Druitt Hospital. He attended Mount Druitt Hospital and was treated and discharged the same day.

20. Mr Choudhary attended Concord Repatriation Hospital the following day where he received more extensive treatment, including skin grafts.

THE INJURIES

21. Mr Choudhary sustained serious injuries, being partial thickness burns to the right side of his face and right ear, and partial thickness burns to all 10 digits of both hands and parts of both wrists.

22. Mr Choudhary was away from work for approximately three weeks while he recovered from his injuries. He returned to full time work at the workplace in the same role he had prior to the incident.

THE DUTY

23. The defendant had a duty under s 19(1) of the Act to ensure, so far as was reasonably practicable, the health and safety of workers, including Mr Choudhary, while they were at work in the business or undertaking.

THE RISK

24. The risk was a risk of workers, in particular Mr Choudhary, suffering serious injury or death as a result of an uncontrolled explosion and/or fire caused by static discharge whilst working with flammable liquids.

NOTIFICATION

25. The incident was a notifiable incident under ss 35 and 37 of the Act in that it arose out of the defendant’s business or undertaking, and that:

1. Mr Choudhary suffered a serious injury as defined in s 36 of the Act, namely an injury requiring him to have immediate treatment for a serious burn; and/or

2. It was a dangerous incident in relation to the workplace that exposed workers to a serious injury emanating from an immediate exposure to uncontrolled explosion or fire.

26. The defendant was aware on 29 August 2019 that the incident had occurred.

27. Pursuant to s 38(1) of the Act, the defendant had a duty to notify the Regulator, being SafeWork NSW, immediately after becoming aware that a notifiable incident arising from the business or undertaking had occurred.

28. The defendant did not notify the Regulator immediately of the incident on 29 August 2016.

29. On 5 September 2016, the defendant notified SafeWork NSW of the incident (‘the incident notification’).

30. SafeWork NSW inspectors attended the workplace on 19 September 2016 in response to the incident notification.

SYSTEMS OF WORK BEFORE THE ACCIDENT

31. As part of the defendant’s business or undertaking, mixing vats were used in the production of paint and other products and for blending paints and other solvents at the workplace.

32. The system of work used by the defendant’s workers in respect to cleaning mixing vats was dependent upon the substance that was to be cleaned from the mixing vats. When a mixing vat had been used to blend paint, the system of work for cleaning the mixing vat was:

1. The mixing vat would be positioned, in a tilted position, in a cleaning bay within the warehouse using a forklift;

2. Acetone would be sprayed into the mixing vat using a hose fitted with a porter lever;

3. Once the mixing vat was sprayed, the waste product, including waste acetone which had accumulated at the bottom of the mixing vat, would be pumped out of the mixing vat using an air operated diaphragm pump which fed into a waste vat;

4. The mixing vat would then be placed into a mechanical scrubber which would scrub the inside surface of the mixing vat;

5. Once the mixing vat was scrubbed, an amount of acetone would be sprayed into the bottom of the mixing vat;

6. A long handled broom would then be used to further clean the inside surface of the mixing vat;

7. The waste product, including waste acetone which had accumulated at the bottom of the mixing vat, would be pumped out of the mixing vat using an air operated diaphragm pump which fed into a waste vat;

8. Any excess waste in the mixing vat would be wiped clean using a rag; and

9. Once cleaned, the mixing vat would be covered with plastic sheeting and stored.

33. When a mixing vat had been used to mix solvent a shortened process would be used which involved spraying a small amount of acetone into the mixing vat and then brushing the mixing vat with a long handled broom and wiping the mixing vat clean using a rag.

34. The defendant had a ‘Paint Manufacturing Safety Procedure (July 2001)’ system that provided safety advice regarding static discharge and specified the procedure to be used when cleaning mixing vats.

35. The defendant had a ‘Redox Safety Data Sheet: Acetone (Revision 2; June 2014)’ which provided precautionary statements on the risk of static discharge in relation to handling and storing acetone (as it is a flammable liquid) including the use of bonding and grounding equipment as a measure to avoid static discharge.

36. The defendant also had a ‘Risk Register’ which included specific reference to the use of earthing equipment when using decanting drums in order to safeguard against the risk of fire and/or explosion which could result in an injury/fatality.

INVESTIGATIONS BY THE DEFENDANT

37. The defendant conducted an investigation in to the incident and it identified the following potential causes of the static build up that led to the uncontrolled explosion:

1. That a static charge was generated in Mr Choudhary because he was working with plastic sheets before the incident and was wearing non-conductive rubber boots, which resulted in a static discharge between Mr Choudhary and the mixing vat when he reached over and touched the vat;

2. That a static charge was generated because of the flow rate of the acetone that was being used to clean the mixing vat, as it was above the recommended rate;

3. That a static charge was generated because of a possible vapour differential between the contents of the mixing vat and the acetone that was being used to clean the vat.

LEGAL OBLIGATION AND GUIDANCE MATERIAL

38. At the time of the incident, the defendant had a legal obligation under:

1. Clause 351 of the Work Health and Safety Regulation 2011 (NSW) (‘the Regulations’) which required the defendant to manage, in accordance with Part 3.1, risks to health and safety associated with using, handling, generating or storing a hazardous chemical at a workplace;

2. Part 3.1 of the Regulation, cl 32 - 38, which provides that to manage risk under the Regulations, a PCBU must:

1. identify reasonably foreseeable hazards that could give rise to the risk;

2. eliminate the risk so far as is reasonably practicable;

3. if it is not reasonably practicable to eliminate the risk - minimise the risk so far as is reasonably practicable by implementing control measures in accordance with the hierarchy of risk control;

4. maintain the implemented control measure so that it remains effective; and

5. review, and if necessary, revise all risk control measures to maintain, so far as is reasonably practicable, a work environment that is without risks to health and safety.

3. Division 8 of the Regulation, cl 51 - 52, which provides that a PCBU must manage the risk to health and safety associated with a hazardous atmosphere or an ignition source in a hazardous atmosphere at the workplace;

4. Clause 46 of the Regulation which provides that a worker must, so far as reasonably able, wear the PPE in accordance with any information, training or reasonable instruction; and

3. Clause 44 of the Regulation which provides that if PPE is to be used at the workplace, the PCBU must ensure that the equipment is:

1. selected to minimise risk to health and safety;

2. suitable for the nature of the work and any hazard associated with the work;

3. a suitable size and fit and reasonably comfortable for the person wearing it;

4. maintained, repaired or replaced so it continues to minimise the risk; and

5. used or worn by the worker, so far as is reasonably practicable.

39. Guidance materials provided advice regarding any work involving hazardous chemicals and controlling static electricity. Such guidance materials included:

1. SafeWork Australia: Managing risks of hazardous chemicals in the workplace (July 2012) (‘the 2012 Code of Practice’). The 2012 Code of Practice provides a PCBU with information on how to manage the risks associated with hazardous chemicals in the workplace. The 2012 Code of Practice provides detailed guidance on the fire risks associated with hazardous chemicals and refers to static electricity as an ignition source. The 2012 Code of Practice states at Chapter 3.4 that a PCBU should identify the hazards of all sources of fuel that could contribute to fire and explosion risks (such as hazardous chemicals that are flammable), identify the sources of oxygen (such as compressed air in cylinders), and identify ignition sources that can be any energy source that has the potential to ignite a fuel (including the common example of an ignition source being static electricity including from friction sources). The 2012 Code of Practice also provides at Chapter 4.1 several ways to control the risks associated with hazardous chemicals. These include:

1. Engineering controls that are physical in nature, including mechanical devices or processes that eliminate or minimise the generation of chemicals, suppress or contain chemicals, or limit the area of contamination in the event of spills and leaks; and

2. The use of PPE as a last resort when all other reasonably practicable control measures have been used and the risk has not been eliminated, or as interim protection until higher level controls are implemented.

2. SafeWork Australia: Managing risks of hazardous chemicals in the workplace (July 2014) (‘the 2014 Code of Practice’). The 2014 Code of Practice provides a PCBU with information on how to manage the risks associated with hazardous chemicals in the workplace. The 2014 Code of Practice provides an overview of the process for the assessment of health risks arising from the use of hazardous chemicals in the workplace (Appendix F) and a risk assessment checklist (Appendix G); and

3. Australian Standard AS/NZS 1020:1995: The control of undesirable static electricity (‘the AS’) sets out advice and recommendations for controlling static electricity that may be generated incidentally by processes or activities and that may present hazards, damage or inconvenience. The AS deals with the following risks:

1. the risks of static electricity from other sources including apparel - Section 5.2 – ‘Wearing apparel (other than footwear)’,

2. Section 5.3 – ‘Earthing persons by footwear’;

3. Section 6.1 – ‘The risk of static from liquids’, which includes the following information:

‘6.1.1 Generation of static Liquids can become electrostatically charged while flowing past the walls of pipes or vessels, while impinging upon obstacles, during jet or propeller mixing, and when released as a spray.

…

6.1.2 Fire and explosion dangers. Static generated by liquids may give rise to fire or explosion dangers if ignitable mixtures are present.

6.1.3 Factors affecting static generation

…

As a general guide, all pure flammable liquids can be expected to present dangers due to static unless proved otherwise by test.’

INFORMATION AND TRAINING

40. Mr White was inducted by the defendant at the commencement of his employment which included training in the defendant’s safety procedures and health and safety policies. He was provided with on the job training for paint blending and mixing vats by Mr White.

41. However, Mr White was not trained in the specific risks associated with cleaning mixing vats nor spraying acetone (such as when dispensing acetone to minimize splash filling).

42. Mr White was not trained in issues dealing with static electricity such as circumstances and causes of static accumulation and discharge and the risk of fire caused by static discharge.

43. The defendant failed to ensure that workers, and in particular Mr Choudhary, received adequate information and training in relation to the risk of static electricity and how to control the risks arising from static electricity during the tasks of cleaning the mixing vats.

SYSTEMS OF WORK FOLLOWING THE ACCIDENT

44. Subsequent to the incident, the defendant implemented the following measures to treat the risk of fire from a static discharge:

1. Installation of antistatic wheels on mixing vats;

2. Development of a new vat cleaning procedure, including procedures to reduce the risk of splash filling by requiring workers to decant out of the hose along the side of the vessel to prevent splash and to place the hose nozzle down into the mixing vat;

3. Installation of a flow restriction device to the pipeline for the acetone hose to reduce the flow rate;

4. Installation of a dead man’s switch on the acetone hose requiring two workers, one to work the hose and the other to operate the switch;

5. Installation of antistatic hoses;

6. Labelling of hoses and pipes;

7. Provision of antistatic PPE to workers, including antistatic boots and vests;

8. Installation of additional earthing straps on equipment (including on pumps, hoses and vats) and introducing procedures for inspecting earthing straps including site audits; and

9. Institution of formal training in relation to static electricity for all workers.

45. In the week after the incident the defendant conducted a series of training sessions in relation to the risks associated with static electricity which were attended by all employees.

46. When Mr Choudhary returned to work, he received training and relevant information on the changes that had been introduced by the defendant to the systems of work to deal with the risk of explosion and fire from static discharge.

PRIOR HISTORY

47. The defendant has not previously appeared before the courts on health and safety matters and has co-operated with the SafeWork investigation.

CONSIDERATIONS

48. I have had regard to the objectives set out in s 3A of the Crimes (Sentencing Procedure) Act1999 (NSW) (‘the Sentencing Act’) for the purpose of sentencing.

OBJECTIVE SERIOUSNESS OF THE OFFENCE

49. The duties of the defendant require that it ensure that the health and safety of workers as far as reasonably practicable. As the defendant has pleaded guilty, it has admitted that the measures to ensure safety would have been reasonably practicable.

50. The duty requires the identification of risks in the workplace and an assessment of measures to address such risks.

51. Although the gravity of the risk, degree of foreseeability of the risk, and the ease of implementation of remedial measures are relevant to the assessment of objective seriousness, I am not limited to taking in to account such factors.

52. In Nash v Silver City Drilling (NSW) Pty Ltd; Attorney General for New South Wales v Silver city Drilling (NSW) Pty Ltd [2017] NSWCCA 96 at [11] Basten JA explained the approach to sentencing as follows:

‘34. The sentencing judge commenced his consideration with the proposition that ‘greater culpability attaches to the failure to guard against an event the occurrence of which is probable rather than to guard against the occurrence of which is extremely unlikely’. However the truth of that proposition depends upon other considerations including:

(a) the potential consequences of the risk, which may be mild or catastrophic;

(b) the availability of steps to lessen, minimise or remove the risk; and

(c) whether such steps are complex and burdensome or only mildly inconvenient. Relative culpability depends on assessment of all those factors.

…..

42. The culpability of the Respondent is not necessarily to be determined by the remoteness of the risk occurring, nor by a step-by-step assessment of the various elements. Culpability will turn upon an overall evaluation of various factors, which may pull in different directions. Culpability in this case is reasonably high because, even if the pressure event of the force which occurred might not be expected to occur often, the seriousness of the foreseeable resultant harm is extreme and the steps to be taken to avoid it, which were not even assessed, were straightforward and involved only minor inconvenience and little, if any, costs.’

53. In entering its pleas the defendant accepts that the risk to workers was a risk of serious injury or death; and that the risk to which Mr Choudhary was exposed was a serious risk to his health and safety.

54. The degree of foreseeability of the risk is a significant factor that I must take into account in assessing the relative level of culpability of the defendant.

55. If there is an obvious or foreseeable risk against which appropriate measures were not taken, in circumstances where such measures are avoidable and feasible, then that would point to the offence being serious.

56. The defendant was aware of the highly flammable nature of acetone used as part of its processes for cleaning vats. It was also aware of the risk of accumulation and discharge of static electricity during the paint manufacturing and cleaning process. It was aware that there was a risk that the discharged static electricity could cause the ignition of acetone vapour leading to uncontrolled explosion and fire at its workplace. The defendant was aware therefore that the workers were placed at risk of sustaining serious or fatal injuries from such an uncontrolled explosion and/or fire caused by a static discharge whilst working with highly flammable liquids such as acetone.

57. Thus, the risk was clearly foreseeable, it was known and identified, or reasonably able to be known or identified on the date of the offence by the defendant. This points to the objective seriousness of the offence being a serious offence.

58. The existence of straightforward control measures which could have been taken by the defendant to avoid the risk to safety is relevant to assessing the seriousness of the offence (see Department of Mineral Resources of NSW (McKensey) v Kembla Coal & Coke Pty Limited (1999) 92 IR 8 at 27).

59. The defendant could have provided paint mixing vats fitted with antistatic wheels to control the risk of static accumulation. This was a simple step and one that they adopted after the incident.

60. The defendant could have implemented and enforced an adequate work procedure for the cleaning of the paint mixing vats. If it did not have the requisite skills internally to prepare such a procedure, it could have arranged to have a qualified person to do so. Such a work procedure should have specified:

1. That earthing straps are to be used on equipment (including pumps, hoses and vats) when cleaning paint mixing vats to control the risk of static accumulation;

2. That mixing vats are to be earthed with antistatic wheels to control the risk of static accumulation;

3. The procedure for dispensing acetone into the mixing vats to minimise the risks associated with splash filling and to reduce vapour emissions and the generation of a static charge; and

4. That workers performing the task of cleaning paint mixing vats must wear antistatic personal protective equipment (including antistatic boots and vests).

61. The measures to which the pleas are entered are measures that were suitable and available, and if they had been implemented at the time of the incident, they would have eliminated or minimised the risk.

62. The gravity of the potential risk to safety flowing from the breach is relevant as a measure of the gravity of the breach and the culpability of the defendant.

63. Although the damage or injury caused by the breach does not of itself dictate the seriousness of the offence or the penalty, a breach where there was every prospect of serious consequences may be assessed on a different basis from a breach unlikely to have such consequences. The occurrence of death or serious injury may manifest the degree of the seriousness of the relevant risk. (WorkCover v Brandown Pty Ltd [2015] NSWDC 261 per Scotting DCJ at [36], SafeWork (NSW) v Romanous Contractors [2016] NSWDC 48 per Scotting DCJ at [69], in each citing with approval Capral Aluminimum Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at [94]; [2000] NSWIRComm 71).

64. In the present proceedings, the possible consequence of the defendant’s breach was serious injury. The probability that such a consequence would follow in the event of an uncontrolled explosion and a fire involving a highly flammable substance was self-evidently high. This was particularly high in circumstances where the acetone vapour could travel a considerable distance to a source of ignition and flashback. It was particularly egregious in circumstances where the defendant stored and used other highly flammable substances in warehouse 7. The risk of persons suffering serious injuries in the circumstances was a real and substantial risk and the risk was not remote.

65. Whilst the elements of the offence under s 32 of the Act does not require an injury to be made out, only the creation of a risk, the fact that Mr Choudhary sustained serious injuries is an aggravating factor.

66. Given the obvious and foreseeable risk to safety against which appropriate measures were not taken, in circumstances where such measures were available and feasible, these factors point to an objectively serious offence.

DETERRENCE

67. In fixing a penalty in relation to this offence an important objective feature is the need for specific and general deterrence. This is enshrined in s 3A(b) of the Crimes (Sentencing Procedure) Act 1999 (NSW) (‘the Sentencing Act’).

68. The Court of Criminal Appeal in Bulga Underground Operations v Nash [2016] NSWCCA 37; (2016) 93 NSWLR 338 at 372 to 373 [178]-[180] cited with approval the decision of the Full Bench of the Industrial Court of NSW in Capral Aluminium Limited v WorkCover Authority of NSW (Inspector Mayo-Ramsay) (2000) 49 NSWLR 610; (1990) 90 IR 256 at [73]-[79] which reaffirmed the principle that both aspects of deterrence are matters which should be normally given weight of some substance in the sentencing process, unless there are exceptional circumstances which would allow a Court to depart from this rule:

‘[74] It follows that both aspects of deterrence [specific and general] 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.

…

[75] … Even where an offender demonstrates good character or a commitment to rehabilitation, the court may be obliged to have regard to the need for general deterrence; see R v Thompson (1975) 11 SASR 217 at 222. This is particularly so where the offence in question is prevalent in society and represents a serious threat to the community. The need for general deterrence in relation to serious offences under the Act is undeniable.’

69. In relation to specific deterrence, the attitude of the defendant to questions of workplace safety and any steps taken to improve the safety following a breach of a duty are relevant as is the propensity for the offender to reoffend.

70. I note that the defendant continues to operate its business as a manufacturer of industrial paint and aerosol products across 14 separate factories. It is apparent both from the inherent nature of the products it produces and the requirement for use of highly flammable products in the manufacturing process that it is a highly dangerous industry with a range of hazards in particular the risk to its workers from explosions and fires.

71. Subsequent to the incident, the defendant has been engaged in ongoing interactions with the Regulator in relation to areas of improvement in its systems and processes. The defendant has also had interactions with the Hawkesbury City Council and Fire & Rescue NSW (‘FRNSW’) in respect of fire safety issues associated with the manufacturing processes at its various warehouses at its manufacturing site.

72. It is important to ensure that the defendant is vigilant in ensuring its compliance with the Act and ensuring the safety of all workers at its premises.

73. I note that the defendant did take some steps after the incident to improve the health and safety systems applicable to its undertaking. However, this must be balanced against the ongoing identification of further measures that needed to be taken through the issuing of Improvement Notices and the FRNSW Fire Safety Study.

74. I note with great concern that after the incident, and in ongoing interactions with SafeWork and the FRNSW, 16 further improvement notices were issued to the defendant with regard to the ongoing use of flammable substances. There were also concerns raised by the local council and FRNSW as to the challenges that could be faced by FRNSW because of the site and the chemicals used. These improvement notices continued to be issued into the middle of this year.

75. Counsel for the defendant submitted that the defendant’s responses to the improvement notices have gone above and beyond what was required, and that the training program has been broadened to not just this warehouse, but to other sites where the defendant operates its similar businesses. It was further submitted that as the defendant now has a productive working relationship with SafeWork and thus the question of specific deterrence has to a large extent been addressed.

76. With respect, I cannot agree. The business that the defendant operates over some 14 sites is an inherently dangerous operation utilising highly flammable products and processes that can create explosions and fires. The fact that this incident occurred has at least triggered some compliance by the defendant, but in my view, not enough.

77. Whilst I accept that the defendant addressed each improvement notice, in my view the response of the defendant has been reactive rather than proactive. The fact that there were still improvements required as at May 2019 causes me unease as to whether the defendant is doing all that it can to protect its workers from the risk of serious injury or death.

78. It is not the duty of the Regulator to have to keep checking up on the defendant after a breach has occurred. I am not satisfied that the defendant is now compliant, nor that it will not reoffend, and to that extent specific deterrence is an important factor in my determination.

79. The requirement to meet the expectations of the community, that both large and small employers will comply with safety requirements, means that employers must take the obligations imposed by the Act very seriously. However, whilst general deterrence is a matter that I must take into consideration in the sentencing process, it ought not be a factor to dominate my discretion.

AGGRAVATING FACTORS

80. The injuries sustained by Mr Choudhary were serious however I note that he has fortunately recovered to the extent that he has returned to work with the defendant.

MITIGATING FACTORS

81. The defendant entered a plea of guilty at an early stage and is entitled to a discount of 25% based on the utilitarian value of the plea (s 21A(3)(e) of the Sentencing Act).

82. The defendant does not have any antecedents (s 21A(3)(e) of the Sentencing Act).

83. The defendant so-operated with the SafeWork investigation (s 21A(3)(m) of the Sentencing Act).

81. The defendant through its director has shown remorse and I accept that as genuine (s 21A(3)(h) of the Sentencing Act). The affidavit of Amy Jennifer Borgman, Work Health & Safety and Human Resources Officer sworn 29 October 2019 (Exhibit 1) evidences the defendant’s remorse.

82. I accept that the defendant was of good character prior to the incident (s21A(3)(f) of the Sentencing Act).

THE SECTION 38 OFFENCE

86. The offending conduct constitutes a delay in notifying SafeWork of some 7 days including the weekend, and is not a failure to notify at all. I accept the defendant’s explanation for the delay as contained in the affidavit of Ms Borgman (Exhibit 1).

87. I accept that the plea of guilty was entered at an early opportunity and that the defendant has expressed its remorse.

88. I accept that the defendant is unlikely to re-offend with regard to this charge.

TRAINING ORDER

89. The Prosecutor submitted that I should make a training order. Such an order has been made by both Judge Scotting and Judge Russell of this court (see SafeWork NSW v Yan Huai Wu and Zenger (Aust) Pty Ltd [2018] NSWDC 211; SafeWork NSW v Samuels [2019] NSWDC 111).

90. The Prosecutor set out the orders he seeks in a document attached to his written submissions. Counsel for the defendant submitted that such orders are not warranted in these circumstances.

91. As previously noted, the defendant was issued with 16 Improvement Notices in the few years after the incident, including as recently as May this year. The defendant operates is business over 14 different sites and employs about 70 people. Given the inherently dangerous nature of the activities involved, and the use of flammable products, I find that the risk to the safety of workers is significant. It seems despite breaches of the Act being drawn to the attention of the defendant by SafeWork, they took some steps to address the issues, but to my mind not enough.

92. As previously indicated, specific deterrence in this matter is of great importance. The approach of the defendant since the incident to the issues of work health and safety are reactive rather than proactive. In those circumstances, a training order is appropriate with regard to the s 32(1) offence.

93. I note that the current director of the defendant, David Stewart, is winding back his involvement in the company and his son, Nat Stewart, will be taking over the role as general manager. I accept the submission from Counsel for the defendant that the training order would be more appropriately applied to Nat Stewart and the Work Health & Safety Officer, Amy Borgman, rather than David Stewart.

94. I make the following training orders:

1. Pursuant to s 241 of the Act:

1. the defendant is to arrange that Nat Stewart (General Manager) and Amy Borgman (WHS Officer) are to undertake a course in due diligence training for senior managers and company directors, within six months of the date of these orders; and

2. The course in due diligence training for senior managers and company directors is to be provided by PeopleSafe Australia [ABN 55 125 740 730] and titled ‘Due Diligence Training for Senior Managers and Company Directors’.

2. Pursuant to s 21 of the Act:

1. the defendant is to arrange that Nat Stewart (General Manager) and Amy Borgman (WHS Officer) are to undertake a course in hazardous substance training, within six months of the date of these orders; and

2. the course in hazardous substance training is to be provided by PeopleSafe Australia [ABN 55 125 740 730] and titled ‘Hazardous Substance Training’.

3. Pursuant to s 241 of the Act:

1. the defendant is to arrange that Nat Stewart (General Manager) and Amy Borgman (WHS Officer) are to undertake a course in electrical compliance in hazardous areas, within six months of the date of these orders; and

2. The course in electrical compliance in hazardous areas is to be provided by Explosion Protection Technology Pty Limited [ACN 617 291 595] titled ‘How to apply hazardous area Australian Standards’.

4. Pursuant to s 238 of the Act, the defendant is to:

1. Within three months of completion of the Training Orders stated above at paragraph 4 to 6 (inclusive), prepare a work health and safety plan (‘WHS Plan’) that outlines how the lessons learned through the Training Orders have been (or will be) implemented in the workplace of the defendant, and in particular how the defendant will take steps to:

1. acquire and keep up-to-date knowledge of work health and safety matters; and

2. gain an understanding of the nature of all operations of the business or undertaking of the defendant, and of the hazards and risks associated with those operations, with a specific focus on the risks of uncontrolled explosion and/or fire, risk of static discharge/charge, risks associated with flammable liquids, risks associated with the handling of dangerous goods/hazardous substances and the eliminating and/or minimisation of those risks by the safe storage and handling techniques of Dangerous Goods/Hazardous Substances; and

3. ensure that the defendant has available for its use, and uses appropriate resources and processes to eliminate or minimise risks to health and safety form work carried out as part of the conduct of the business by undertaking a current staff skills audit (capability matrix), including the identification of the supervision arrangements; and

4. ensure the defendant has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way of that information to works, directors, and SafeWork NSW, such as an incident and hazard system, risk register, WHS item on meeting agendas; and

5. comply with its duties or obligations under the Act with a specific focus on the risks and control measures of uncontrolled explosion and/or fire, risks and control measures of static discharge/charge, risks and control measures associated with flammable liquids, risks and control measures associated with the handling of dangerous goods/hazardous substances and the eliminating and/or minimisation of those risks by the safe storage and handling techniques of Dangerous Goods/Hazardous Substances. Such a safety management system should be in accordance with AS/NZS ISO 45001:2018: Requirements with guidance for use – Occupational health and safety management systems – Requirements with guidance for use. Within two months of the completion of the WHS Plan, arrange and attend a meeting with the SafeWork NSW Inspectorate, to review and finalise the WHS Plan.

5. Pursuant to s 239 of the Act, the defendant is to enter into a work health and safety undertaking on the condition that within two months of the completion of the WHS Plan, arrange and attend a meeting with the SafeWork NSW Inspectorate, to review and finalise the WHS Plan.

6. Pursuant to s 239 of the Act, the defendant is to enter into a work health and safety undertaking on the following conditions:

1. The matter is adjourned to 20 November 2020, and the defendant is to appear on that date; and

2. The defendant is to appear before the Court if called on to do so during the term of the adjournment; and

3. The defendant is not to commit any offence under the Act during the term of the adjournment;

4. The defendant is to complete the Training Orders mentioned above in paragraph 4 to 6 (inclusive) and to provide evidence of their completion to the Court on the date specified by the Court; and

5. The defendant is to notify the Prosecutor, and the Registrar of the NSW District Court at the Downing Centre of any change of address for service.

COSTS

95. The defendant is to pay the prosecution’s cost as agreed or assessed.

PENALTY

96. The defendant is convicted of the s 32(1) offence.

97. The appropriate fine would be $100,000.00 and that will be reduced by 25% to reflect a plea of guilty.

98. I accordingly order the defendant to pay a fine of $75,000.00.

99. The defendant is convicted of the s 38(1) offence.

100. The appropriate fine would be $1,000.00 and that will be reduced by 25% to reflect the guilty plea.

101. I accordingly order the defendant to pay a fine of $750.00.

102. I order pursuant to s 122(2) of the Fines Act 1996 that 50% of the fines are to be paid to the prosecutor.

103. I impose training orders in accordance with paragraph 94(1) – (6) inclusive.

104. The matter is listed before me at 10 am on 20 November 2020 to check compliance with the training orders.

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Decision last updated: 19 March 2020