WorkCover Authority of NSW v Drayton and Sons Pty Ltd

[2014] NSWDC 180

District Court

New South Wales

Medium Neutral Citation:	WorkCover Authority of NSW v Drayton & Sons Pty Ltd [2014] NSWDC 180
Hearing dates:	15/09/2014
Decision date:	15 September 2014
Before:	Curtis DCJ
Decision:
Legislation Cited:	Occupational Health and Safety Act 2000
Category:	Sentence
Parties:	Work Cover Authority of New South Wales (Inspector Wade) Drayton & Sons Pty Ltd
Representation:	M Cahill appeared for the prosecutor B Hodgkinson SC with A Harding appeared for the defendant WorkCover Legal Group (Prosecutor) Herbert Smith Freehills (Defendant)
File Number(s):	2013/7378 2013/7390

Judgment

1. In matter number 2013/7390 W Drayton and Sons Pty Ltd trading as Drayton Family Wines pleads guilty to the charges that between 9 January 2008 and 17 January 2008 it failed to ensure that persons other than its employees, in particular Mr Edgar Orgo, Mr Matthew Lahz, Mr Peter Sams and Mr Derek Sharp were not exposed to risks to their health and safety arising from the conduct of the defendant's undertaking while they were at the defendant's place of work.

1. The charges follow an explosion on 17 January 2008 at the defendant's winery caused by Mr Orgo, an employee of a welding contractor, welding steel brackets onto the outside of a stainless steel bulk wine vessel of 27,000 litre capacity.

1. Unknown to Mr Orgo, who was killed in the explosion, the vessel was filled to 9,000 litres with the highly inflammable substance, ethanol. This material is used in the wine making process to create fortified wines by addition to wines fermented at the premises.

1. The ethanol had been purchased on 2 January and delivered to the winery on 9 January. Between 9 January and 17 January Mr Orgo was engaged in welding dimple plates on the outside of various vats within the winery for the purpose of circulating a coolant. During that time also, Mr Gregory Drayton was engaged in soldering, another hot process, in the area above the vat containing ethanol. The presence of the ethanol in close proximity to hot work procedures created a very high risk of injury.

1. The work of welding the steel brackets onto the vat containing ethanol was work commissioned by the defendant as an afterthought after the dimple plates had been welded onto other vats.

1. The defendants operations were managed by Mr John Drayton, who was responsible for administration, Mr Trevor Drayton who was responsible for wine making, and Mr Greg Drayton who was responsible for the vineyard. The defendant's failures were effectively failures by two men, Mr Trevor Drayton and Mr John Drayton.

1. Sadly, Mr Trevor Drayton who arranged the purchase, delivery, and storage of the ethanol also died in the explosion.

1. Mr John Drayton commenced full-time as an administration manager in 1989. He was charged with preparing formal documentation in relation to Occupational Health and Safety. Immediately before these events there was no documentation in place. Mr Drayton says that he was working on it. That work was tardy in the extreme.

1. The minutes of the management meeting on 28 August 2003 note that: More formal documentation should be put in place to cover OH & S requirements. On 6 January 2004 the minutes record that there was "a process of writing work related procedures". On 16 January 2004 a statement that JD concerned the procedures may not be correctly in place. On 7 November 2004 the minutes read "OH & S Manual - a manual has been written and needs to be confirmed and/or amended". On 16 November 2004 it was noted that some minor amendments were required. On 20 December 2004 the note is "OH & S manual. JD to amend manual to better effect Drayton's operations".

1. At 20 January 2005 Mr Drayton was still making "adjustments" to the manual.

1. Approximately six months prior to the accident a draft Occupational Health and Safety Policy had been formulated by Mr Drayton that was "ready to be adopted", however that document was neither adopted by the board of directors nor distributed to the staff.

1. As at 9 January 2008 when the ethanol was delivered to the premises, and up to and including 17 January the defendant had no documented policies, procedures or training for staff in relation to the use, storage and handling of dangerous goods.

1. As at 17 January the defendant had no policy or procedure in relation to the induction or management of contractors coming into the winery to perform hot work such as welding work.

1. It is not as if guidance were not available to Mr Drayton in this regard.

1. In 1995 WorkCover released Work Health and Safety in the Wine Industry Code of Practice. That publication drew the attention of the reader to the need to check whether goods were dangerous and attend to their safe handling.

1. The document advised that flammable liquids were to be kept away from sources of heat. That document also drew the attention of the reader to Australian Standard 1940, Storage and Handling of Flammable Combustible Liquids, Australian Standard 2714 Storage and Handling of Hazardous Chemical Materials, and Australian Standard 2430 Classification of Hazardous Areas.

1. Clause G2.1 of Australian Standard 1940 required that where flammable spirits are kept in a multi purpose building they were to be clearly marked.

1. Clause G2.2.1 was specifically directed at wineries, distilleries and similar installations. It required that tanks be designed so as to fit the intended purpose.

1. Clause G4.8 required that every container should be identified by a number.

1. Australian Standard 1674.1 is entitled "Safety and Welding and Allied Processes". Clause 2.1 provides that:

"2.1 Supervision. Hot work shall be carried out under the control of a person who is responsible for the safe execution of all operations as authorities would enforce the requirements of this Standard in respect to other employees, outside contractors and other people in the area. Before hot work is commenced at any location this person shall ensure that,

(a) the hazards of the location are identified.

(b) a means of managing the hazards is in place.

(c) the equipment complies with the standards."

1. Clause 3.3 required that prior to the commencement of hot work in any hazardous area, fire hazards should be identified within 15 metres from the work.

1. It seems to me that the publication of Standards is futile if the managers of industries to whom they are directed do not even consult them.

1. The failure by this defendant to implement a formal occupational health and safety regime is egregious, but it should be noted that even in the draft, which was not provided to employees, clause 16 warned against unsafe welding procedures.

1. The welder Mr Orgo did not know of the hazard which he faced.

1. The defendant's failure is also a failure on the part of the unfortunate Mr Trevor Drayton who was the person directly responsible for the work in the winery.

1. The agreed facts provide no explanation for the circumstances in which Mr Drayton permitted welding work to occur after 9 January within 15 metres of the lines which carried the ethanol into vat 104. The facts provide no explanation as to why the vat was not labelled with its content. Both of these circumstances were within Mr Trevor Drayton's area of responsibility.

1. Mr Hodgkinson SC for the company submits that the appropriate penalty should reflect the circumstance that there is no need for specific deterrence. I think the submission does have weight. The loss of the brother and son of shareholders of the company is a grievous infliction. The company has suffered financially to the extent of nearly $3 million in rebuilding the winery, in lost sales, and in legal expenses.

1. Nevertheless, the penalty must substantially reflect the need for general deterrence. As I have said, standards and safety advices from responsible state agencies are futile if those responsible for their implementation ignore them.

1. It may be that the events leading to this explosion are unusual, but standards are addressed to the myriad risks which may exist in any industry. Human experience demonstrates that unless a rigorous and systematic approach is taken to safe working practices by production of a formal written plan, hazards, injuries and deaths caused by inadvertence will multiply.

1. Mr Orgo died, and another person was subject to very serious burn injuries. It is appropriate that the sentence serve to denounce the failings responsible for those consequences.

1. In fixing the appropriate penalty I cannot take into account the suffering revealed by Mrs Orgo in her victim statement, but I do note and record the grief and loss occasioned to her by the defendant's failings.

1. I regret that the necessary publication of these remarks will cause further suffering to Mr John Drayton who grieves the loss of his brother.

1. The maximum penalty is $550,000. An appropriate penalty before adjustment is $300,000. The defendant is entitled to a deduction of 25 per cent in respect of its early plea. Subjective factors including remorse entitle the defendant to a further reduction of five per cent.

1. The defendant is convicted and fined $210,000.

1. The defendant is also to pay the costs of the prosecution agreed in the sum of $25,000.

1. I order the prosecution have a moiety of the fine.

1. The defendant also pleads guilty in Matter number 2013/7378. That charge relates to identical failures in relation to safeguarding the health, safety and welfare of employees pursuant to section 8(1) of the Act. An appropriate penalty for that offence is $210,000.

1. I am of the opinion that the principles of totality require that the overall penalty in relation to both matters be restricted to $210,000.

1. Accordingly the defendant is convicted in matter number 7378 of 2013, and I make no further order.

Decision last updated: 29 October 2014