Morrison v Fuchs Lubricants (Australasia) Pty Ltd [2010] NSWIRComm 5 (2 February 2010)

Last Updated: 23 February 2010

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION :
Morrison v Fuchs Lubricants (Australasia) Pty Ltd [2010] NSWIRComm 5



FILE NUMBER(S):
IRC 1189

HEARING DATE(S):
2 December 2009

DATE OF JUDGMENT:
2 February 2010

PARTIES:
Rodney Dale Morrison (Prosecutor)
Fuchs Lubricants (Australasia) Pty Ltd (Defendant)

CORAM:
Boland J President


CATCHWORDS: OCCUPATIONAL HEALTH AND SAFETY - Prosecution of employer under s 8(1) of the Occupational Health and Safety Act - Guilty plea - Underground coal mining industry - Death of employee struck by unplanned release of hydraulic fluid - Nature and quality of offence - Foreseeability of risk - Nature of injury sustained - Availability of simple steps to avoid risk - Deterrence - Maximum penalty - Subjective considerations - Culpability relative to other offenders - Penalty imposed.

LEGAL REPRESENTATIVES
Mr J V Agius SC with Mr I Taylor of counsel (Prosecutor)
Crown Solicitor's Office
Mr J C Phillips SC with Mrs W Thompson of counsel (Defendant)
Middleton Lawyers

CASES CITED:
Alcatel Australia Ltd v WorkCover Authority of New South Wales (1996) 70 IR 99
Capral Aluminium Ltd v WorkCover Authority of New South Wales [2000] NSWIRComm 71; (2000) 49 NSWLR 610
Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432
Ferguson v Nelmac Pty Ltd (1999) 92 IR 188
Haynes v CI & D Manufacturing Pty Ltd (No 2) (1995) 60 IR 455
Inspector Howard v Baulderstone Hornibrook Pty Ltd [2009] NSWIRComm 92; (2009) 186 IR 125
Inspector Kent v Duct Master Pty Ltd [2009] NSWIRComm 143
Inspector Legge v Intercast & Forge Pty Ltd [2006] NSWIRComm 182
Inspector Mayo-Ramsay v Rail Infrastructure Corporation [2002] NSWIRComm 217
Inspector Mayo-Ramsay (WorkCover Authority of NSW) v The Crown in the Right of the State of New South Wales (NSW Fire Brigades) (No 2) [2007] NSWIRComm 168
Inspector Patton v Western Freight Management Pty Ltd (No 2) [2009] NSWIRComm 124
Inspector Przibilla v Hyne & Son Pty Limited [2004] NSWIRComm 384
Inspector Short v The Crown in the Right of the State of New South Wales (NSW Police) [2007] NSWIRComm 138; (2007) 164 IR 198
Inspector Simpson v Tomago Aluminium [2005] NSWIRComm 117
Inspector Swadling v Empire Talkies Pty Ltd [2003] NSWIRComm 191
Inpector Amanda Templeton v Pirelli Cables Australia Limited [2003] NSWIRComm 177
Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464
Maddaford v CSR Ltd [2004] NSWIRComm 337
Markarian v R [2005] HCA 25; (2005) 228 CLR 357
Morrison v Centennial Coal Company Limited & Anor [2010] NSWIRComm 4
Morrison v Powercoal Pty Ltd [2003] NSWIRComm 416; (2003) 130 IR 364
Postiglione v The Queen [1997] HCA 26; (1997) 189 CLR 295
Veen v R (No 2) [1988] HCA 14; (1988) 164 CLR 465; (1988) 77 ALR 385
Warman International Ltd v WorkCover Authority of New South Wales (1998) 80 IR 326
WorkCover Authority of New South Wales (Inspector Ankucic) v Crown in the Right of the State of New South Wales (Department of Education and Training) [2001] NSWIRComm 313; (2001) 112 IR 1
WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd [2000] NSWIRComm 1123; (2000) 95 IR 383
WorkCover Authority of New South Wales (Inspector Ian Batty) v Graincorp Operations Ltd [2001] NSWIRComm 127
WorkCover Authority of NSW (Inspector Lyons) v Warman International Ltd [2001] NSWIRComm 62; (2001) 105 IR 236
WorkCover Authority of NSW (Inspector Sequeira) v Foti's International Fireworks (Displays) Pty Limited [2003] NSWIRComm 471
Workcover Authority of New South Wales (Inspector Stobo) v State Rail Authority of New South Wales [2002] NSWIRComm 72; (2002) 115 IR 130

LEGISLATION CITED:
Crimes (Sentencing Procedure) Act 1999
Occupational Health and Safety Act 1983
Occupational Health and Safety Act 2000


TEXTS CITED:




JUDGMENT:

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: BOLAND J, President

Tuesday 2 February 2010

Matter No IRC 1189 of 2008

RODNEY DALE MORRISON v FUCHS LUBRICANTS (AUSTRALASIA) PTY LTD

Prosecution under section 8(1) of the Occupational Health and Safety Act 2000

JUDGMENT

[2010] NSWIRComm 5

1 The incident giving rise to these proceedings occurred on 26 July 2006, when Kevin Trier Hansen, an employee of Fuchs Lubricants (Australasia) Pty Ltd ('the defendant' or 'Fuchs'), was performing the task of collecting samples of solcenic emulsion from a pump station located underground at Angus Place Colliery near Lithgow. Mr Hansen was working alone and collecting samples from the Re-Power Mining International Pty Ltd (‘RMI’) longwall pump station, a task he was required to undertake as a service engineer on a monthly basis. At approximately 4:14pm on 26 July 2006, it appears that Mr Hansen removed a metal staple from a hydraulic fitting at the pump station, apparently causing a highly pressured ejection of solcenic fluid to strike him in his face. Mr Hansen was found at approximately 4:30 pm that same day, exhibiting severe facial injuries and without pulse or signs of breathing. Mr Hansen suffered fatal injuries.

2 A charge was brought against the defendant by Rodney Dale Morrison of the Department of Primary Industries ('the prosecutor'), under s 8(1) of the Occupational Health and Safety Act 2000. In the amended application for an order it was alleged by the prosecutor that the defendant ‘failed to ensure the health, safety and welfare at work of its employee Kevin Trier Hansen at the said Angus Place Colliery contrary to s 8(1) of the Act’. The incident gave rise to two other related proceedings: a prosecution under s 8(2) of the Act against Centennial Angus Place Limited, the operator of the mine, and a prosecution under s 8(2) of the Act against Centennial Angus Place's parent company, Centennial Coal Company Ltd ('Centennial Coal'). Those prosecutions were the subject of separate proceedings: Morrison v Centennial Coal Company Limited [2010] NSWIRComm 4.

3 The particulars of the charge were that:

A. On 26 July 2006 the defendant failed to ensure that the system of work used by its employee Kevin Trier Hansen when taking samples of solcenic emulsion from the Re-Power Mining International Pty Ltd longwall pump station located underground at the Angus Place Colliery (“the pump-station”) was safe and without risk to health. Further particulars include:

i. The defendant failed to have a system of work that would prevent its employee Kevin Trier Hansen from attempting to take a sample by opening a hydraulic fitting at a point where the hydraulic fluid was pressurised, and in particular failed to have a system that would prevent him attempting to take a sample by opening the hydraulic fitting between the high pressure delivery manifold and the system pressure drain hydraulic line where a straight swivel female to BSPP mate P3115-10-06 joined to an ‘Elbow Adapter’ P376-10 (‘the Incident Fitting’);

ii. The defendant permitted the work to be done on that day without having conducted any or any adequate job safety analysis in respect of that work;

iii. The defendant failed to ensure that it had a system of work that only permitted samples of solcenic emulsion to be taken from identified safe sample points;

iv. The defendant failed to ensure that there was an adequate written safe work method developed and used by Kevin Trier Hansen when undertaking the said work, including a failure to ensure he had a safe work method document that identified the safe sample points to use; and

B. On 26 July 2006 the defendant failed to ensure the pump station was safe and without risk to health and safety when its employees, and namely, Kevin Trier Hansen, were taking samples of solcenic emulsion. Further particulars include:

i. The pump station was not fitted with a device in order to obtain a sample from the bulk tank that:

a. was labeled and dedicated; and

b. ensured that when opened fluid would only be released gradually.

C. On 26 July 2006 the defendant failed to provide such information, instruction, training and supervision as was necessary to ensure Kevin Trier Hansen’s health and safety at work. Further particulars include:

i. Kevin Trier Hansen was not adequately informed or instructed in respect of the pump station as to the appropriate sample points and the safe method for taking samples from those sample points;

a. That failure included a failure to set out in the document provided by the defendant to Kevin Trier Hansen to be used to record samples taken by him from the pump-station, the location of the sample points he was to use to obtain each of the samples indicated on that document;

ii. Kevin Trier Hansen received no training specific to that pump-station and in particular received no or no adequate training as to how to locate appropriate sample points and the safe method for taking samples from those sample points; and

iii. The defendant failed to have a system of work that ensured that Kevin Trier Hansen was adequately supervised.

As a result of the said failures Kevin Trier Hansen’s safety was placed at risk and he was fatally injured.

4 The defendant pleaded guilty to the amended charge.

Evidence

5 An agreed statement of facts was tendered by the prosecutor, annexing the following documents:

(i) plans of the accident scene;

(ii) diagrams of the relevant machinery;

(iii) photographs of the work area, pump station, glass jars placed at the pump station, hose and connection point, heavy duty shifter, simulation of extraction of staple, overview of equipment at the pump (ball valve, lock out plates, staple, straight swivel female to BSPP male, dowty washer and elbow adaptor);

(iv) CENT Service Site Report dated 26 June 2006 and signed by the deceased;

(v) Department of Industry & Investment: Certificate of Prior History recording no prior convictions under the relevant occupational health and safety legislation; and

(vi) WorkCover New South Wales: Certificate of Prior History recording no prior convictions under the relevant occupational health and safety legislation.

6 In addition, the prosecution adduced into evidence a DVD, which was viewed by the Court. The DVD was filmed after the incident, and ran for some three minutes. The scene was of the area in which the incident occurred, displaying the conveyor belt and pump in the room. The footage provided a close up view of the pump station and various parts contained therein. Mr Agius SC for the prosecutor, highlighted significant aspects of the footage as it ran, such as pointing out the fitting, block, passage for hydraulic fluid, hose and its connection to the fitting and the staple sliding into the fitting to affix it to the block. Mr Agius stated that the lighting in the footage was artificial for the purposes of visibility; however, the area would have much darker at the time of the incident. Nevertheless, Mr Hansen would have been assisted by a helmet light and other lighting in the area and the Court is satisfied that poor lighting did not contribute to Mr Hansen’s death. The prosecution adduced a replica of the incident fitting into evidence. The fitting had attached a metal staple.

7 The defendant relied on an affidavit of Mr Stewart Knight, sworn in his capacity as Deputy Managing Director of the company (and its predecessor company). Mr Knight was not required for cross-examination. Annexed to his affidavit were the following documents:

· Fuchs' Contract with Centennial Coal
· Documents evidencing Kevin Hansen's trade qualifications
· Diagram showing reporting structure at Fuchs at the time of the incident
· Records from Kevin Hansen's personal diary and Fuchs daily report computer system
· Kevin Hansen's Personal Performance Review
· Reassessment of Induction to work underground
· Kevin Hansen's Underground Induction Assessment Books
· Diary note of Kevin Hansen
· Fuchs Health and Safety Policy
· Fuchs Safety Management Plan relating to the collection of oil samples from mine site equipment in respect of Mandalong Colliery
· Fuchs Risk Assessment in respect of the collection of longwall emulsion samples from longwall equipment
· Fuchs Risk Assessment in respect of the collection of oil samples from mining equipment (miners/shuttle cars)
· Fuchs Risk Assessment in respect of the collection of longwall emulsion samples from longwall supports
· Fuchs New Safety Management Plan for collecting samples from mine site equipment
· Fuchs Oil/Coolant Sampling Policy
· List of Safe Work Procedures (SWPs) developed since the Incident
· Safe Work Procedure for collecting oil samples from mine site equipment at the Beltana Longwall
· Product Safety Sheet Example "Anticorrosive Oils 2"
· Fuchs Job Safety and Environment Analysis (JSEA) Procedure
· Job, Safety and Environment Analysis Worksheet for "Emulsion Sampling of Longwall Equipment" and a list of JSEAs currently in place relating to the Underground Mining Division
· Fuchs Health and Safety Management Policy
· Fuchs Health and Safety Management Plan
· Fuchs Petrolub Group – Guideline – Occupational Health and Safety (OHS) at Fuchs Petrolub AG
· Screen shot of the Fuchs Intranet Site
· Fuchs National Occupational Health and Safety Committee Charter
· Fuchs Site Safety Rules
· Fuchs Induction Process and Induction Checklist
· Fuchs Corporate Training Calendar 2009
· Montie Training DVDs list
· Graph of LTIF rate
· Quality Environment Safety Template (QUEST)

8 Mr Hansen was employed as a service engineer by the defendant and had worked for the company since January 1997. He commenced work in the coal mining industry in January 1985. The defendant supplies oil products and related services including raw ‘Solcenic 2020’ hydraulic oil to collieries in New South Wales. At the time of the incident, the defendant had contracted with Centennial Coal to supply oil products, including solcenic emulsion, and services used in relation to the operation of hydraulic equipment in its longwall operations at Angus Place colliery, as well as other collieries operated by that company. Part of the contract involved the regular taking and analysing of samples of the solcenic emulsion contained within the hydraulic system, including within the pump station (which could be affected by dirt and bacteria), the purpose of which was to test the quality of the fluid and allow for the monitoring of the performance of the filters at the pump station. The role of service engineer required, in part, Mr Hansen to take samples from hydraulically operated plant at various underground mines. The role also required Mr Hansen to provide technical advice, including ‘trouble shooting’ on the hydraulic plant he serviced as part of his duties.

9 The agreed facts described the circumstances leading to the death of Mr Hansen:

· At approximately 2.45pm on Wednesday 26 July 2006 Mr Hansen entered the Angus Place Colliery in order to take the monthly samples. At about 3.00pm he travelled underground with the afternoon shift crew. On arrival at the Longwall Mr Hansen collected three solcenic emulsion samples from chocks at the face line of Longwall 930.

· Mr Hansen then walked from the face line to a location known as cut-through number 9 of the 930 Panel, where the Pump Station was located. This was approximately 482 metres away (outbye) from the operating Longwall face line.

· Mr Hansen had with him at that time, inter alia, three labelled bottles used to sample fluid from the Longwall chocks plus a further five empty, labelled sample bottles to be used to contain fluid to be taken from the Pump Station.

· Mr Hansen was at this point working alone without supervision.

· At approximately 4.l4pm the Pump Station, which was running, suffered a sudden loss of pressure consistent with a fitting being opened releasing pressurised fluid.

· The Pump Station ran for approximately 40 seconds after the sudden loss of pressure before automatically shutting down as a result of sustained hydraulic oil pressure loss in the system.

· At about 4.30pm the Afternoon Shift Maintenance Crew Leader, John Sheehan, an employee of Centennial Angus Place, entered the number 9 cut-through to investigate why the Pump Station had shut down. He found Mr Hansen lying on the ground adjacent to the delivery end of the Pump Station. Mr Hansen had severe facial injuries; he had no pulse and did not show any sign of breathing. A 375mm shifter was located nearby.

· Placed on the Pump Station adjacent to where Mr Hansen lay were three empty sample bottles labelled “Post HP Filter”, “Bulk Tank”, and “Mixing Unit”. Also on the Pump Station was a bottle labelled diluent water containing already sampled fluid. Mr Hansen’s bag contained inter alia three labelled bottles containing fluid taken from the Longwall chocks; namely the maingate support, mid face support and tailgate support samples. It also contained a labelled bottle containing the return line sample apparently taken from the Pump Station.

· Directly adjacent to where Mr Hansen lay was an open fitting between the high pressure delivery manifold and the system pressure drain line, where a straight swivel female to BSPP male (Part No PS115-10-06) had been connected to a swivel male female 90° elbow (Part No Ps76-10) (“the Incident Fitting”). The Incident Fitting was of a type that was opened by the removal of a 10mm staple.

· When the Pump Station was operational and at full pressure, as it was at 4.14pm on 26 July 2008, upon that fitting being opened by removing the staple, solcenic emulsion fluid pressurised to 305bar would have been ejected at approximately 200 metres per second or 720km per hour, reducing to about 160 metres per second after approximately 60 seconds.

· Mr Hansen suffered a serious injury to his face consistent with being struck in the face by solcenic fluid at high pressure while his face was in the trajectory of the ejecting fluid. Immediately above the Incident Fitting there was found a 50mm deep hole in the roof 2.6m above the Incident Fitting consistent with high pressure solcenic fluid being released and hitting the roof.

· There were no eye witnesses to the event.

· It appears that Mr Hansen’s death occurred as a result of him using the shifter to remove the staple from the Incident Fitting whilst the Pump Station was operating. Upon the staple being removed the Incident Fitting would have separated under high pressure causing the emulsion fluid to eject straight up striking Mr Hansen in the face and killing him. The force necessary to remove the staple from the Incident Fitting whilst the Pump Station was under full operational pressure was found to be well within the forces a person could exert. The required force to remove the staple would not have been so great as to be likely to indicate to Mr Hansen that the system was in fact under pressure.

· It appears Mr Hansen removed the staple from the Incident Fitting in order to obtain the bulk tank and/or the post HP filter samples. On an earlier occasion Mr Sheehan had observed Mr Hansen removing a staple from another similar fitting attached to the same hydraulic line close by to obtain a bulk tank sample. That similar fitting was not under pressure. It would appear that on 26 July 2006 Mr Hansen opened the Incident Fitting by mistake.

· Prior to 26 July 2006 Mr Hansen had taken the monthly samples from the Pump Station on six occasions commencing on 9 January 2006.

· Fuchs required Mr Hansen to obtain the following monthly samples from the longwall hydraulic system:

a. Five samples from six different locations on the Pump Station, namely:

i. Diluent water;

ii. Post HP filter;

iii. Mixing unit;

iv. Bulk tank;

v. & vi. Return line (pre-return line and/or post-return line); and

b. Three samples to be taken from the longwall chocks namely:

vii. Maingate

viii. Mid face.

ix. Tailgate.

10 The prosecution submitted that Mr Hansen perhaps had in mind to take a sample. He removed the staple from the high pressure end. With the intense pressure in the system, the removal of the staple resulted in the fitting coming apart. There was then nothing to retain the pressure fluid, as it rose up in a column and fatally injured Mr Hansen.

11 The Statement of Agreed Facts set out the instructions, safe work procedures and risk assessments in place prior to the incident:

Mr Hansen was not informed or instructed as to what points on the Pump Station he should obtain the samples.

On 26 July 2006 Mr Hansen had with him a one page document titled ‘Cent Service Site Report’ (“the Cent sheet”), identified by Fuchs to be the relevant instruction or work procedure for the task of sampling at the Angus Place Colliery. The Cent sheet identified the Fuchs customer as being Angus Place Colliery but was otherwise a generic document applicable to any longwall system. The Cent sheet listed sample points by generic references, namely:

Bulk Tank;

Mixer;

Maingate;

Midface;

Tailgate;

High pressure Filter;

Return Line Filter; and

Water

The Cent sheet did not identify sample points specific to the RMI Pump Station from which Mr Hansen was required to take samples. The Cent sheet did not provide instructions as to the specific sample locations on the Angus Place Longwall System and in particular on the Pump Station nor the work method to be adopted to take such samples. The Cent sheet incorrectly recorded the pump type as ‘Hauhinco’, which was the previous pump station.

Before the Pump Station had been commissioned underground, Mr Hansen and Mr Neil Moore, employed by Centennial Angus Place as the Longwall Superintendent, together inspected the Pump Station above ground. Mr Moore pointed out the valve on the hydraulic hose leading off from the mixer from which a sample could be obtained.

In January 2006 Mr Hansen met with Mr Neil Moore. In that discussion Mr Hansen and Mr Moore examined a schematic diagram of the new Pump Station and discussed sampling points for three of the five monthly samples to be taken from the Pump Station, namely bulk tank, mixing unit and diluent water. No document was created recording the sample points.

When Mr Moore discussed sampling points with Mr Hansen no arrangements were made for either Fuchs or Centennial Angus Place to provide safe work procedures for the sampling. At no time prior to the incident had Mr Moore seen, or been provided with, any safe work method documents from Fuchs for sampling.

No risk assessment was conducted by Centennial Angus Place in respect of the operation of the Pump Station. It appears this was because a view was taken that the new Pump Station was, other than the crawler tracks, sufficiently similar to the previously used pump station to not require a fresh risk assessment. This view failed to recognise that it was a different pump station with inter alia different sample points. The Pump Station had larger capacity pumps to those of its predecessor. The pump unloader system was also different. With the installation of the Pump Station, an entirely new monorail system was installed. Previously the hydraulic supply was delivered from a pump station located close to the longwall face. The new system allowed the Pump Station to be located farther away from the longwall face. The hydraulic supply from the Pump Station was now delivered by means of hoses mounted on a monorail. Fuchs did not enquire as to whether Centennial Angus Place had conducted an adequate risk assessment in respect of the operation of the Pump Station.

The Contract required Fuchs to comply with Centennial Coal’s “Standard Contractor’s Site Regulations” contained in Annexure A to the Contract. Those Site Regulations required Fuchs inter alia “prior to commencing site works” to “document the work activities to be employed and the system(s) of the work to be used, including specific details of the safety precautions to be adopted to minimise the risk of injury or damage” and “conduct a risk review on site involving the Contractor and their appropriate employees who are going to undertake the site works to ensure that as far as possible all safety risks have been identified, appropriate safety precautions have been developed and the Contractor and their employees understand the risks and safety precautions (Risk Review)”. The Clause also required Fuchs to provide to Centennial Coal a “formal copy of the Risk Review, together with any supporting documentation”. That Risk Review process “would be expected to take not less than one hour and not more than two days”. The Contract also required Fuchs to conduct regular site inspections to identify risks.

Fuchs’ Health and Safety Policy stated under the heading “Risk Assessments” that such assessments were to be “completed on annual basis or for new procedures, plant or equipment”.

Fuchs did have a risk assessment for the job of collecting emulsion samples from a similar RMI pump station at a different colliery, namely Mandalong Colliery. It identified as a “hazard” collecting samples under high pressure. It set out as the ‘control measure’ isolating energy sources and dissipating stored energy before removing any plug or hose. This was not the usual procedure at Angus Place Colliery. Kevin Hansen did not isolate the machinery at Angus Place Colliery, nor did he have any authority to do so. Fuchs also had a safety management plan for Mandalong Colliery for the purpose of “Collecting oil samples from Mine site equipment.” This document also instructed the worker to isolate and test equipment before taking a sample. The sampling at Mandalong Colliery was not conducted by Mr Hansen. It is not clear whether Mr Hansen ever saw that material. In any event the RMI pump station at the Mandalong Colliery was not identical to the Pump Station at the Angus Place Colliery.

Fuchs had a generic Safety Management Plan for “Collecting oil samples from Mine site equipment”. This document was dated 17 January 2006 and was in almost identical terms as the Mandalong document with the same title. Also in almost identical terms to the Fuchs Risk Assessment document for Mandalong Colliery, was a generic Fuchs Risk Assessment for “Collecting Longwall emulsion samples from Longwall supports”. The documents were not applicable to Mr Hansen’s tasks at the Angus Place Colliery because the documents specified isolation should be conducted and Mr Hansen did not have the authority nor was he expected to isolate equipment at Angus Place Colliery. Further, the document did not instruct or inform the user as to how to identify the sample points.

Fuchs has not been able to produce any document recording the risks and risk controls for the work that Mr Hansen was doing at Angus Place Colliery. Minutes of a meeting held on 5 May 2006 at Lithgow between Mr Hansen and another Fuchs employee, Mr Craig Roberts, recorded that Mr Hansen reported on various matters relating to the work he was doing. Matters that Mr Hansen reported in respect of various collieries, including Angus Place Colliery, appear under headings which are the names of each of the collieries. At the end of the document under the heading “Other Matters” it records: “Kevin advised that he has completed a “Task Analysis” (sic) for all sampling so to ensure a safe working environment and compliance to mine site regulations”. Mr Hansen did not provide Mr Roberts with any copy of such a task analysis. The records do not identify if this ‘task analysis’ was generic or one specific to the Pump Station. Mr Roberts did not ask to see the ‘task analysis’ and never saw it. Fuchs has not been able to find the task analysis. Fuchs did not have a system to check that risk assessments were being completed and were appropriate.

Fuchs did not ensure that there was a safe work procedure (“SWP”) providing the specific method by which Mr Hansen would do the sampling work from the Pump Station in a safe manner. Fuchs did not have a document which identified the specific sample points and specified the procedure to be used to take samples at each of those points. There was no document which required Mr Hansen to not take any sample from a fitting under pressure without first removing that pressure. There was no document which made clear that samples were not to be taken from any point other than an identified safe sample point, including a point where a staple would need to be removed in order to obtain the fluid. Further, Fuchs had no documented procedure requiring Mr Hansen to conduct the tasks in a particular way, which would have limited the risk that he would depart from an established safe procedure.

Mr Hansen had identified occupational health and safety as an area in which he may need additional training in January 2006 in his performance review for 2005/2006.

Centennial Angus Place was responsible for the operations within the mine and had in place a number of standard work procedures. One standard work procedure was entitled; “Oil Sample from Face Chocks”, “Sampling Solcenic Fluid from Hydraulic Control Panel” and “Sampling Solcenic Fluid from Storage Tanks”. There is no evidence that these standard work procedures were provided to Mr Hansen. The standard work procedures provided by Centennial Angus Place did not apply to each point from which Mr Hansen was obtaining a sample; specifically there was no standard work procedure applicable to the return line, diluent water, and mixer samples. The procedure for taking a sample from the storage tanks was written in approximately 1996 for the previous pump station operated by Centennial Angus Place. The procedure to sample from the longwall chocks was not applicable to taking samples from the Pump Station and did not address hydraulic isolation, nor did it address verification that any pressure in the hose had dissipated before the hose was removed.

A risk assessment completed by Centennial Angus Place after the incident shows a high risk of fatality from an uncontrolled release of pressurised fluid where staple lock fittings are released by human error. It identified the importance of having a safe work procedure and appropriate training and a check sheet.

12 Further agreed facts were that the defendants had not ensured Mr Hansen was provided with specific training with respect to the particular pump station, and was, therefore, untrained as to the appropriate sample points and the safe method for obtaining samples from those sample points. The defendant had not sent any person other than Mr Hansen to view the pump station or to train or supervise Mr Hansen. It was also an agreed fact that there was an absence of any, or any adequate, risk assessment and any, or any adequate, safe work procedure or other instructions in relation to the pump station:

The investigation into the incident in relation to the Pump Station revealed an absence of any, or any adequate, risk assessment and any, or any adequate, SWP or other instructions being provided in circumstances where:

a. The Pump Station did not have each of the sample points to be used to obtain the monthly samples clearly indicated.

b. The Pump Station did not have high pressure staple lock fittings guarded with an engineered barrier nor were they secured with a device to prevent inadvertent removal. A staple from a fitting under pressure could be removed easily and without any indication that doing so would cause uncontrolled release of pressurised hydraulic fluid. In particular there was nothing to prevent Mr Hansen removing from the Incident Fitting the staple located closest to the high pressure delivery manifold.

c. The Pump Station did not have warning signs on those valves on the delivery and return side which, if opened under pressure, would release fluid at full pressure, for example stating that they should only be opened after the unit has been isolated and the user has verified that the energy has dissipated. Pursuant to the Contract between Fuchs and Centennial Coal appropriate conforming warning and caution signs were to be provided and used by Fuchs and its employees at the site.

d. There was no pressure gauge on or by any valves on the delivery and return side of the Pump Station, including the Incident Fitting, which would allow a person to identify the pressure level of the fluid that would come out of a valve.

e. Not every fitting that might be used to obtain a sample was fitted with a valve which could only be opened to release fluid gradually, and in particular the Incident Fitting was not fitted with such a valve. After the incident the Incident Fitting was fitted with a red valve with a padlock. Such a step could have been taken prior to 26 July which may have reduced the risk of an employee such as Mr Hansen opening the Incident Fitting under pressure.

f. There was an absence of physical guarding of the delivery manifold that would have provided a hard barrier preventing access to the Incident Fitting.

g. The Pump Station was connected with staple lock fittings that when removed would suddenly release pressure, rather than fittings that would gradually release fluid while being opened.

13 Mr Hansen was considered to be able to work ‘unaccompanied’, according to his induction at level 3 at Angus Place Colliery. In relation to the provision of supervision at Angus Place, it was the case that:

The Longwall Superintendent for Centennial Angus Place, Mr Neil Moore, was responsible for the overall supervision of the longwall. In that role he had input into the planning and supervision of mechanical engineering activities, including the development of safe work procedures and instructions. The Longwall Superintendent reported to the Mine Manager. To conduct the sampling at the Angus Place Colliery, Mr Hansen would contact the Longwall Superintendent each month and arrange a time to attend the mine. The Longwall Superintendent met with Mr Hansen and Craig Roberts from Fuchs on an as needs basis to discuss particular issues regarding the hydraulic fluid in the longwall system. The Longwall Superintendent could not recall seeing Mr Hansen conduct sampling at the longwall.

The usual procedure at Angus Place Colliery was for an oil sampler to be accompanied by the fitter of the relevant crew from the surface to the underground work area. However in the case of Mr Hansen, Centennial Angus Place permitted him to work unaccompanied because of the length of time he had been attending the mine.

The afternoon shift maintenance crew leader, Mr John Sheehan had accompanied Mr Hansen once to the Pump Station to take samples. On that occasion Mr Sheehan saw Mr Hansen remove staples to obtain samples, including a staple from the low pressure side of a valve on the system pressure drain hydraulic line leading to the Incident Fitting. Mr Sheehan did not report that Mr Hansen’s actions were inappropriate. Mr Sheehan was not able to provide adequate supervision because he had not been trained in relevant procedures. Nor had he seen documents or safe work procedures relating to obtaining samples from the Pump Station. Mr Sheehan had attended training on the basic layout of the machine and the location of the isolation taps, he could not recall if the training had included sample points from the Pump Station.

14 Mr Knight, in his affidavit, acknowledged that the defendant had placed too much reliance on its customer's systems of occupational health and safety:

When its employees were at mining customers' sites, Fuchs relied in part on the individual mining companies' safety systems and procedures which was assumed to have been developed by those companies taking into consideration the unique requirements of each mine and matters that were not within the knowledge or control of Fuchs. ...We drew a false sense of comfort from this, by assuming that any Fuchs employee who visited the Angus Place Colliery would be protected by the mine's safety policies and procedures. The Incident caused Fuchs to recognise that its biggest failing was its over-reliance on its customer's OHS systems.

15 Mr Knight described the systems and procedures the defendant had in place at the time of the incident:

Fuchs had the following systems and procedures in place relevant to the duties that Kevin was required to perform:

· a safety management plan relating to the collection of oil samples from mine site equipment in respect of Mandalong Colliery;
· a risk assessment in respect of the collection of longwall emulsion samples from longwall equipment;
· a risk assessment in respect of the collection of oil samples from mining equipment (miners/shuttle cars); and
· a risk assessment in respect of the collection of longwall emulsion samples from longwall supports.

Each of these documents was available to all Fuchs' employees through the company's intranet. Every employee had access to the intranet and was shown how to access the documents....

On 17 January 2006 a new safety management plan relating to the collection of oil samples from mine site equipment was issued....

In early 2006, as business expanded, Fuchs brought in senior staff with expertise in risk management and in operating in larger companies. Of the eight key management roles in Fuchs, four were replaced with the emphasis in recruitment on engaging senior staff that could manage the process of improving the systems and procedures, including the risk management systems, to bring them in line with that of a larger company. The first person we recruited was the Human Resources Manager, Karen Trakakis, who had expertise and experience in OHS. She commenced employment in July 2006 and was responsible for recruiting to fill the other positions, including the National Operations Manager, the Information Technology Manager and the Financial Controller. The risk management system in place was undergoing review and improvement as at the time of the Incident.

16 Mr Knight described the processes that were implemented by the defendant following the incident:

Fuchs faced limitations in undertaking its own investigation into the Incident. On 31 July 2006 Craig Roberts and Bernie Michaelson attended Angus Place Colliery and, accompanied by DPI investigators and a number of other people, went underground to the site of the Incident. They were only allowed to view the scene and to take photographs. After that visit Fuchs was not permitted by either the Department of Primary Industries (while they had control of the site) or Centennial Coal to have access to the site. It was not possible for Fuchs to undertake its own investigation without access to the site, the Pump Station and the exhibits. From the outset, Fuchs provided the DPI investigators with such assistance as it could in order to understand in due course what might have caused the Incident.

OBJECTIVE FACTORS

Prosecution’s submissions

17 Mr Agius submitted that the absence of any risk assessment, the serious nature of the risk, the serious nature of the injury and the relatively easy and straightforward way in which the risk could have been avoided, amounted to an objectively serious offence at the high end of the scale of seriousness. The prosecutor's case regarding objective seriousness was based on five major factors:

1. It was a routine/ordinary task: Mr Hansen was employed to take samples, and he visited some 8 mines and a coal preparation plant, taking up to 400 samples per month. In respect of such tasks an employer has a high onus to ensure that it has adequately assessed the risks of such work and established a safe system to remove those risks as far as is practicable.

2. It was an obvious risk and so foreseeable: The risk of injury from unplanned release of hydraulic fluid under high pressure is obvious and foreseeable. The defendant may well assert that it was not readily foreseeable that a highly experienced employee would make a mistake and open the wrong fitting. However it is well established that an employer has an obligation to guard against inadvertent error. That is all the more so when considering work being undertaken underground, in the dark, where there is very noisy machinery, by a person who is required to take up to 400 different samples a month. It is particularly required where one is dealing with such a serious risk of injury.

The fact that Mr Hansen was an experienced service engineer does not make the risk to health and safety unforeseeable. As Boland J said in Inspector Simpson v Tomago Aluminium Company Pty Limited [2005] NSWIRComm 117 at [28].

It cannot be assumed that because a worker, even an experienced one, has received extensive training and instruction in relation to safety procedures that such training and instruction cancels out any possibility that he that he or she will not place themselves at risk in relation to a dangerous piece of machinery that is not guarded to the maximum degree. Workers may act foolishly, as demonstrated in cases such as WorkCover v TRW Steering & Suspension Australia Ltd [2001] NSWIRComm 52 at [13] and Inspector Woodington v Thiess Services Pty Limited [2004] NSWIRComm 20 at [70]. That is why the obligations on an employer under the Act require that employer to actively search out and, where it is at all possible, eliminate any risk to health and safety.

3. There was a failure to identify the risk by having an adequate risk assessment: The defendant had a risk assessment, but it was conducted for a different pump station at a different colliery, Mandalong, which had different sample points. There was no evidence that Mr Hansen had seen that document. Most importantly, it was inapplicable because it stated that before taking a sample the energy source should be isolated and stored energy dissipated, but this was not possible in respect of the Angus Place colliery. The incapacity to isolate meant a significant risk arose which was not considered by the generic risk assessment....

4. The risk was a risk of serious injury: Although the damage or injury caused by a breach does not of itself dictate the seriousness of the offence, 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 seriousness of the relevant risk. Section 21A(g) of the Crimes (Sentencing Procedure) Act 1999 (NSW) states that an aggravating factor in sentencing is that the “injury, emotional harm, loss or damage caused by the offence was substantial”. Section 21A(ib) states a further aggravating factor is that “the offence involved a grave risk of death to another person or persons”.

5. There were simple and straightforward remedial steps that were available that could have avoided the accident: A system that: a) provided clear instruction as to the location of sample points; and b) prohibited opening any fittings held by a staple, would have gone a long way to removing the risk of a mistake. Such a system has now been introduced.

Defendant’s submissions

18 The defendant provided written submissions outlining several factors that the Court should consider in mitigating the culpability of the defendant with respect to Particular A of the charge. The essence of those submissions were:

(i) The defendant was one of a number of contractors working at the site and required to take samples from the longwall system and pump station.

(ii) The defendant had no role in the design, manufacture, installation, or commissioning of the RMI pump station.

(iii) Centennial Coal did not make arrangements for a safe work procedure for sampling, and no plan of the pump station or any other information regarding the pump station was provided to the defendant.

(iv) The defendant was unaware that RMI provided training to several contractors working at Centennial Angus Place colliery on the safe operation of the pump station. Mr Hansen was not provided with such training.

(v) The defendant had previously experienced a positive working relationship with Centennial Coal with respect to matters of workplace safety, relying on the risk management systems and procedures implemented by the operational owner. ‘It was submitted that ‘[t]hat experience allowed an assumption, albeit mistaken in this instance... that the systems in place would have secured the safety of its employees employed to take samples underground.’

(vi) Centennial Coal did not perform a risk assessment on the pump station from the time of its installation to the date of the incident, nor did RMI. It was submitted that this was in part due to the misplaced belief that the new station was ‘sufficiently similar to the replaced Hauhinco pump’. The new pump had different sample point, a larger capacity, a different unloader system and a monorail system. In this respect, the defendant submitted the following in relation to its culpability:

The mistaken belief of both RMI and Centennial Coal that the new pump station was similar to that of the replaced Hauhinco pump station such as not to require a separate risk assessment, is relied upon by the Defendant in mitigation and relation to the measures it failed to implement in relation to the risks presented by the RMI pump station and the sampling work undertaken by Mr Hansen. The said failures are found in Particular A (i) to (iv). It is relied upon in the sense that if the designer, manufacturer and installer and the owner and operator of the pump did not regard it as necessary to conduct a separate risk assessment the likelihood of a contractor who attends the pump station on a monthly basis is likewise unlikely to take a different approach in relation to the system of work provided to employees for sampling from the new pump. It is accepted by the plea that at the same time, the Defendant had made no inquiries as to whether Centennial Coal or RMI had conducted a risk assessment of the pump station prior to the incident.

19 The defendant submitted that the ‘qualifications held and the level of competence of Mr Hansen together with his experience at the Angus Place colliery, are factors relevant in the Court’s consideration of the nature and quality of the offence in that they go generally to Particular C and the level of training supervision and instruction necessary to secure Mr Hansen’s safety at work’. The defendant relied on the following facts in support of its submission:

As a Service Engineer, Mr Hansen was required to provide weekly reports and to meet with his supervisors on a regular basis. Mr Hansen also recorded and submitted up to 30 June 2006 daily reports of his activities. Mr Hansen had two supervisors employed by the Defendant at the time of the incident. He reported to Mr Craig Roberts and to Mr Bernie Michaelson. Mr Michaelson was responsible for underground mining and technical matters. It was Mr Michaelson who kept a check on whether Mr Hansen held a current induction for each mine he attended.

Safety issues raised at the monthly meetings between Service Engineers and their supervisors were, if appropriate, passed onto the Defendant’s directors or its quality and environment managers. Reports were also made by mine managers and other involved parties to the supervisors of the Service Engineers and/or directors Mr Knight and Mr Hoiles. At the time of the incident no concerns had be raised by Fuchs employees in respect of safety issues at coal mines and in particular, no concerns were raised about sampling.

Mr Roberts attended the Angus Place colliery once, or twice, every month prior to the incident. Mr Moore would meet with Mr Hansen and Mr Roberts on a needs basis to discuss issues regarding hydraulic fluid used in the longwall operations.

Mr Hansen last met with Mr Roberts at Lithgow on 5 May 2006 for the purpose of reporting on various matters he had been working on. Notes made by Mr Roberts of that meeting refer to Mr Hansen advising that he had completed a task analysis for sampling underground. However, no copy was provided to Mr Roberts and Mr Roberts did not seek to inspect the document. No document was located that met with this description after the incident. However, the records extracted after the incident from the daily reports made by Mr Hansen indicate that on 12 May 2006 the following entry was made: “Completed update on task analysis, generic, to be carried on site and underground to show when necessary.”

After the incident, records made by Mr Hansen in his personal diary and computer were extracted and provided to the Department of Primary Industry investigators. That record gives a clear indication of the work activities conducted by Mr Hansen since November 2005 and puts into perspective the reference to the number and frequency of his sampling activities stated in the Agreed Facts at [11] where it is said that: “Kevin Hansen’s sampling records indicate that as at July 2006 his job required him to take up to 400 samples including solcenic emulsion, gear box and motor oils from approximately eight mines and a coal preparation plant.”

Whilst working underground Mr Hansen was subject to the rules and procedures provided by Centennial Angus Place colliery. Mr Moore, the Longwall Superintendent was responsible for the overall supervision of the longwall operations, including the development of safe work procedures and instructions relating to the longwall mining operations. Mr Hansen’s records indicate that he met with Mr Moore in early January and that he: “Looked at the schematic diagram of new pump station and revised sampling points for bulk tank, mixing unit and water”. The same records show that Mr Hansen met with Greg Pottinger, the Mine Development Engineer, “regarding sampling arrangements for the next 6 months.”

As Mr Hansen was assessed by Angus Place colliery to be competent to work alone, it was the practice that no fitter was provided by Centennial Coal to accompany Mr Hansen while he was underground. It is believed that this did not occur for other contractors working underground. Prior to conducting sampling at the Angus Place colliery Mr Hansen would contact Mr Moore and arrange a suitable time.

After taking samples from the pump station Mr Hansen would forward the samples with a document titled “Cent Services Site Report” to the laboratory operated by the Defendant for analysis. A copy of the document showing an analysis of the samples taken on 25 June 2006 was found in the bag used by Mr Hansen on the day of the incident. See Prosecution tender bundle for sentencing. The document shows that the report is required by Mr Moore.

The Agreed Facts show that Mr Moore could not recall ever seeing Mr Hansen taking solcenic emulsion samples in his presence. However, the Angus Place colliery’s afternoon shift maintenance crew leader, John Sheehan stated after the incident that he had accompanied Mr Hansen on one occasion when he took a sample from the pump station. On that one occasion, Mr Sheehan saw Mr Hansen remove a staple from the low pressure side of a valve on the system pressure drain hydraulic line leading to the incident fitting. Mr Sheehan did not report that Mr Hansen’s actions were inappropriate. In any event, Mr Sheehan was not able to provide adequate supervision because he had not been trained in the relevant work procedures for sampling that were created by Centennial Coal. But Mr Sheehan had attended the training provided by RMI at the time the pump station was installed.

In addition, the Defendant had in place prior to the incident a Health and Safety Policy and procedures developed in 2002 as part of its risk management system. The safety system provided for employee concerns to be raised with senior management.

The Defendant’s structure was undergoing change in the years prior to 2006. It both increased its senior management structure and implemented a more centralised structure as the operations of the company expanded.

The Defendant was aware of its obligations under the OHS Act and had taken steps to discharge those obligations by having in place settled safety procedures and instructions, albeit inadequately, in relation to the RMI pump station at Angus Place colliery. This is not a case where it could be asserted that the Defendant was indifferent to its obligations and had taken no steps to comply with its duty of care to its employees. See generally Morrison v Powercoal (No 3) (2005) 147 IR 117; [2005] NSWIRComm 61 at [83] where the Full Bench stated: “The existence of a system of work that evidences a defendant's concern with, and regard for, safety may mitigate the seriousness of an offence: see, for example, Department of Mineral Resources of NSW (McKensey) v Kembla Coal & v Coke (1999) 92 IR 8 at 25; Warman International Limited v WorkCover Authority (Inspector Riley) v Broken Hill Pty Co Ltd (1998) 83 IR 427 at 429; and WorkCover Authority (Inspector Penfold) v Fernz Construction Materials Ltd (2000) 100 IR 23 at 34.”

It is accepted by its plea that the Defendant had the responsibility to arrange for the identification of the sampling points on the pump station; provide a safe work procedure for sampling; identify any risks arising out of that sampling, in particular, the risk of taking a sample from a high pressure fitting and; specify the controls to be used while carrying out sampling so as to ensure safety. The Defendant also accepts its obligations pursuant to s8 (1) of the OHS Act required it to be aware of the method used by Mr Hansen to take samples from the RMI pump station after its installation.

Consideration

20 There are a number of matters relevant to a consideration of the objective seriousness of the offence: the nature and quality of the offence; the nature of any injury; the degree of foreseeability of the risk to health and safety; whether there were simple and straightforward remedial steps that were available that could have avoided the accident; the need for general and specific deterrence; and the maximum penalty for the offence.

21 Dealing firstly with the nature and quality of the offence, the defendant was charged with, inter alia:

· a failure to have a safe system of work, including, inter alia, permitting work to be done without an adequate job safety analysis and without proper instruction as to the safe sample points and a safe method to undertake the sampling work;

· a failure to ensure the pump station was safe and without risks to health and safety, in particular allowing the work to be done in circumstances where the pump station was not fitted with a device in order to obtain a sample from the bulk tank that was labelled and dedicated and which ensured that when opened fluid would only be released gradually;

· a failure to provide such instruction, training and supervision as was necessary, including a failure to adequately inform and instruct Mr Hansen as to the location of safe sampling points.

22 These failures meant that Mr Hansen was exposed to the risk of mistakenly releasing hydraulic fluid under high pressure and given the danger associated with doing so, there was the high probability of serious or fatal injuries.

23 Given the nature of these failures one is led irresistibly to the conclusion that the offence was objectively serious. This is confirmed by the following considerations identified by the prosecutor:

a. Mr Hansen was not instructed or informed as to what points on the Pump Station he should obtain the samples;

b. no risk assessment was conducted in respect of the work of taking samples from that pump station;

c. the only risk assessment that the Defendant had was for a different pump station and which had different sampling points (in any event it is not clear that Mr Hansen had seen that document);

d. the Defendant had a safety management plan instruction, but it specified that the energy source should be isolated which was not relevant since Mr Hansen did not have authority nor was he expected to isolate equipment at the Angus Place Colliery;

e. the Defendant did not have a system to check that risk assessments were being completed and were appropriate;

f. while there were standard work procedures developed by the Mine, there was not one for each sample point, they were developed for the previous pump station which had different sample points and in any event there is no evidence that they were ever provided to Mr Hansen;

g. the failure to undertake a risk assessment, to develop clear instructions and to check they were being followed occurred in circumstances where the pump station did not have clearly marked sample points, nor any hard barriers preventing staples being removed, nor warning signs on the relevant valves, nor a pressure gauge to indicate that a fitting was under pressure;

h. Mr Hansen was not provided with specific training in respect of the pump station; and

i. the Defendant did not send any person to supervise Mr Hansen to assist him to ascertain the best sample points and to check he was using them.

24 Mr Agius further submitted that the objective seriousness of the offence was evidenced by the fact that the incident arose from the carrying out of a routine task, namely, the collection of oil samples from a mine site. It was submitted that the fact it was a routine task imposed on the employer ‘a high onus to ensure that it has adequately assessed the risks of such work and established a safe system to remove those risks as far as is practicable’.

25 That a task may be routine does not automatically mean that any offence relating to the performance of that task will be more objectively serious than otherwise might be the case; the frequency of the task does not increase or decrease the seriousness of an employer’s failure to identify and assess the risk and implement safe work procedures. On the other hand, that a task is routine should act as a ‘red flag’ for employers. As the present case would appear to demonstrate, even experienced and skilled workers make errors of judgment, become careless, attempt dangerous shortcuts or become so inured to the routine they may overlook obvious risks to their health and safety. It is particularly important where the work to be done is of a routine or repetitive nature that the employer is alert to the prospect of the worker becoming de-sensitised to the need for safety and that adequate safeguards are built into the system of work so that all that is reasonably practicable to be done is done to ensure the worker does not, consciously or unconsciously, expose himself or herself to harm. That will necessarily require a risk assessment to be done, a safe work procedure to be implemented and will involve regular safety auditing and monitoring.

26 The defendant raised a number of matters that it submitted mitigated the objective seriousness of the offence. Whilst conceding the absence of a risk assessment on the use of the RMI pump station at Centennial Angus Place colliery, the defendant made submissions regarding its ability to put in place measures to remove the risk to their employee:

Many of the measures available to remove the risk of an employee or, contractor, being struck by fluid under high pressure by the inadvertent removal of a staple fitting on the high pressure side of the pump station manifold, were not measures available to the Defendant. For example, the control and capacity to arrange for the placement of signs, the fixing of physical barriers such as padlocks, the changing of valves to slow the release of fluid under pressure, the adding of an additional pressure gauge, the changing of the type of relief valves, and the movement of the location of the high pressure hoses and such like, lay with Centennial Angus Place and RMI, not the Defendant. Indeed, these were the measures in fact implemented by Centennial Angus Place after the incident.

27 If the defendant had undertaken a risk assessment and, as a consequence, requested Centennial Angus Place to, for example, arrange for the placement of signs, the fixing of physical barriers such as padlocks, the changing of valves to slow the release of fluid under pressure, the adding of an additional pressure gauge, the changing of the type of relief valves and the movement of the location of the high pressure hoses, and Centennial Angus Place had declined or failed to do these things, Fuchs may have had a stronger case to argue in mitigation. As it did none of these things it could not expect to succeed in its contention that it was hindered in its ability to provide a safe workplace.

28 Whilst Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432 was concerned with a contravention of the Occupational Health and Safety Act 1983 by a labour hire firm, the observations by the Full Bench in that case are apposite. Here, as in Drake, an employee of the defendant was exposed to a risk at the client's workplace. At 455 - 456 the Full Bench observed:

A labour hire agency does not employ people to work for itself but to work for a client, it does not directly on a day to day basis supervise the tasks carried out by the employee and it is usually not in control of the workplace where the work is done. However, these circumstances do not obviate, or diminish, the obligation of the employer under s 15(1) of the OH&S Act to "ensure the health, safety and welfare at work of all the employer's employees". Indeed, in our view, an employer who sends its employees into another workplace over which they exercise limited control is, for that reason, under a particular positive obligation to ensure that those premises, or the work done, do not present a threat to the health, safety or welfare of those employees. Certainly, there is no basis to consider that such an employer has a lesser liability or obligation under s 15(1).

The obligations of a labour hire company under the OH&S Act have been considered on a number of previous occasions by this Commission and its predecessors. The judgment of Hungerford J in WorkCover Authority of New South Wales (Inspector Ankucic) v Drake Personnel Ltd t/as Drake Industrial (No 1) (1997) 89 IR 374 concerned a prior prosecution of the appellant. That prosecution arose from an incident in which an employee of the appellant, Mr Douglas, sustained an injury whilst operating a woodworking machine at the premises of another company, Warman International Ltd. The appellant pleaded guilty in that case and was fined a total of $25,000. Considering the question of penalty, his Honour commented (at 382):

The failure here to ensure the safety of Mr Douglas arose in a situation where he was directed by his employer, the defendant, to perform work for a third party, Warman, at that third party's premises. In such a situation, my view is that an employer has a special responsibility to ensure the health, safety and welfare of its employees at the other workplace for no reason other than that that workplace is removed from the employer's direct management and control and would usually be at a location foreign, or at least unfamiliar, to the employees concerned. The evidence established that the defendant did not satisfactorily attend to this aspect and it was not until Mr Davey was engaged that specially designed safety policies and procedures were implemented. But that was in July 1997, at least two years after the present offences were committed; Mr Douglas thereby suffered injury resulting in absence from employment for a period of at least two months and with a permanent deficit in the use of his right hand. It is no answer, in my view, in reduction of penalty otherwise considered appropriate for the defendant to plead reliance on Warman as the client to take appropriate steps to ensure safety in the workplace for all persons engaged at its premises. True it may be that Warman itself may have offended against the Occupational Health and Safety Act, but that does not, it seems to me, lessen the seriousness of the offences committed here by the defendant as the employer. It is that feature of this case which gives to the assessment of penalty such a degree of importance as will encourage employers in a business similar to that of the defendant to implement appropriate steps to ensure the safety of their employees whose labour is hired to third parties and at the same time to deter employers for failing to take such steps.

See also WorkCover Authority of New South Wales (Inspector Dubois) v Industry Staffing Services Pty Ltd t/as Action Workforce (1999) 89 IR 430.

The observations of Hungerford J set out above were made in the context of determining the appropriate penalty to be imposed following a plea of guilty. However, we consider that they are equally applicable when considering the liability of a labour hire company under the OH&S Act. A labour hire company cannot escape liability merely because the client to whom an employee is hired out is also under a duty to ensure that persons working at their workplace are not exposed to risks to their health and safety or because of some alleged implied obligation to inform the labour hire company of the work to be performed. In our view, a labour hire company is required by the OH&S Act to take positive steps to ensure that the premises to which its employees are sent to work do not present risks to health and safety. This obligation would, in appropriate circumstances, require it to ensure that its employees are not instructed to, and do not, carry out work in a manner which is unsafe.

Degree of foreseeability of the risk

29 The prosecutor submitted that the risk in this case was ‘obvious and foreseeable’ thereby rendering the offence more serious than what otherwise would be the case: It was submitted the degree of foreseeability was:

[A] significant factor to be taken into account when assessing the level of culpability of the defendant (see Capral Aluminium Limited at [81], confirming the approach taken by Walton J, Vice President, in Department of Mineral Resources of New South Wales (McKensey) v Kembla Coal and Coke Pty Limited (1999) 92 IR 8 at 27; Inspector Mayo-Ramsay (WorkCover Authority of NSW) v The Crown in the Right of the State of New South Wales (NSW Fire Brigades) (No 2 182; Inspector Short v The Crown in the Right of the State of NSW (NSW Police) [2007] NSWIRComm 138). It will be a serious offence where there is an obvious or foreseeable risk to safety against which appropriate measures were not taken, in circumstances where such measures were available and feasible (Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464).

In Capral Aluminium (2000) 49 NSWLR 610 at [82] the Full Bench held:

The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J President in Ferguson v Nelmac in these terms:

... reliance on hindsight must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy.

30 It was further submitted for the prosecutor that:

... [A] key failing was to essentially rely on the experience of a senior employee to ensure the work was undertaken safely. The defendant provided Mr Hansen with no more than a generic document... which contained no instruction as to how the work was to be done. It relied on the experience of the individual to determine the safe sample points. Further, the defendant failed to audit or check that Mr Hansen was adopting a safe system, including by identifying safe sample points.

31 Both the prosecution and defendant acknowledged the Court’s approach towards situations where experienced employees may act in such a way as to place themselves in danger. In this respect, the prosecutor referred to Inspector Simpson v Tomago Aluminium [2005] NSWIRComm 117 at [28]:

[28] It cannot be assumed that because a worker, even an experienced one, has received extensive training and instruction in relation to safety procedures that such training and instruction cancels out any possibility that he or she will not place themselves at risk in relation to a dangerous piece of machinery that is not guarded to the maximum possible degree. Workers may act foolishly, as demonstrated in cases such as WorkCover v TRW Steering & Suspension Australia Ltd [2001] NSWIRComm 52 at [13] and Inspector Woodington v Thiess Services Pty Ltd [2004] NSWIRComm 20 at [70]. That is why the obligations on an employer under the Act require that employer to actively search out and, where it is at all possible, eliminate any risk to health and safety.

32 Nevertheless, Mr J Phillips, SC for the defendant submitted that the risk:

... being one associated with high pressure fluids, was identified by the defendant in its generic document “Collecting oil samples from Mine site equipment” dated 17 January 2006 and in the risk assessment conducted by the Defendant for the pump station at the Mandalong colliery. It was a well known risk in the industry and it was a risk known to both the Defendant and Mr Hansen, a qualified Mechanical Fitter who had many years of experience working with hydraulic plant and equipment at the Angus Place colliery and other mines.

33 The defendant further submitted:

It is accepted by the plea that even an experienced and well trained person such as Mr Hansen may make an egregious error of judgment and may mistakenly attempt to take a sample from a high pressure point. That is particularly the case where the safe sample points were not adequately identified by the Defendant, Centennial Angus Place, or RMI, the designer, manufacturer and installer of the pump station.

The control measures identified by the Defendant for the risk of being struck by high pressure fluid included the isolation of the plant and evacuation of any residual pressure that had built up, before the taking of any sample. While this control may at first appear to be a simple and straightforward measure, the level of control over the pump station available to the Defendant and the practicalities associated with longwall mining should be taken into account to obtain a more accurate assessment of the not insignificant difficulties with such a measure.

34 The experience and qualifications of Mr Hansen were claimed to be a mitigating factor in the prosecution of Centennial Coal and Centennial Angus Place: Morrison v Centennial Coal. At [49]-[50] the Court stated:

[49] It is, indeed, difficult to understand how Mr Hansen came to remove the incident fitting. In the circumstances, one would not have expected an experienced person such as Mr Hansen to make such a tragic mistake. Protective measures against harm to persons in the workplace, however, cannot be based solely on an assessment of the likelihood or otherwise of whether a person will make a mistake or misjudgement. The question the Court must ask itself is that where there is a risk to health and safety present, was it reasonably foreseeable that a person might be exposed to that risk and, if so, did the employer do all that was reasonably practicable to avoid exposure to the risk? The test is to be applied having regard to the normal human frailties people may exhibit at work: that individuals, even highly skilled and experienced personnel, might become careless, they might be pre-occupied, they may act inadvertently, they may seek shortcuts to escape the routine or mundaneness of a job.

[50] In the present case, it was not obvious that Mr Hansen might remove a staple holding in place a fitting under high pressure and thereby expose himself to the risk of being killed. It follows that the defendants may be regarded as less culpable than if the risk was obvious. However, I am of the view it was reasonably foreseeable that in the absence of adequate instruction, training and supervision, a sufficiently rigorous safe system of work (including a safe work method statement being provided to Mr Hansen), a dedicated, labelled point for sampling emulsion from the bulk tank and auditing to ensure the correct sampling point was being used, a person in the position of Mr Hansen who, unaccompanied, was regularly taking samples of hydraulic fluid from machinery that contained the fluid, which was under such pressure that its unplanned release could cause death, might become exposed to a risk to his health and safety.

35 I take the same view in assessing the culpability of Fuchs in the context of foreseeability.

Risk of serious injury

36 It is well settled that any injury caused by a breach will not, of itself, reflect the seriousness of the breach. It may, however, be indicative of the seriousness of the risk cause by the defendant’s failures. The prosecutor submitted that ‘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 seriousness of the relevant risk. (Section 21A(g) of the Crimes (Sentencing Procedure) Act 1999 states that an aggravating factor in sentencing is that the 'injury, emotional harm, loss or damage caused by the offence was substantial'). Section 21A(ib) provides that a further aggravating factor is that 'the offence involved a grave risk of death to another person or persons'. See also Maddaford v CSR Ltd [2004] NSWIRComm 337 at [17]- [18]; Capral Aluminium Ltd v WorkCover Authority of New South Wales [2000] NSWIRComm 71; (2000) 49 NSWLR 610 at [94] and [95]; WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd [2000] NSWIRComm 1123; (2000) 95 IR 383 at 428; Morrison v Powercoal Pty Ltd [2003] NSWIRComm 416; (2003) 130 IR 364 at [32]; Inspector Mayo-Ramsay (WorkCover Authority of NSW) v The Crown in the Right of the State of New South Wales (NSW Fire Brigades) (No 2) [2007] NSWIRComm 168 at [34]; Inspector Legge v Intercast & Forge Pty Ltd [2006] NSWIRComm 182; and Inspector Short v The Crown in the Right of the State of New South Wales (NSW Police) [2007] NSWIRComm 138; (2007) 164 IR 198.

37 The prosecution directed the Court to Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 at 204, where Wright J, President said:

... [A]lthough the result of the offence does not necessarily reflect the nature and quality in a case such as the present where a fatal injury had occurred, that is a factor to be taken into account and is often, of itself, reflective of an offence the nature and quality of which is serious.

38 The consequence of fatal injuries to Mr Hansen is a manifestation of a high-end risk caused by the defendant’s failures.

Remedial steps

39 The prosecutor contended that the following procedures were simple and straightforward steps that could have remedied the risk:

A system that:

a) provided clear instruction as to the location of sample points; and

b) prohibited opening any fittings held by a staple, would have gone a long way to removing the risk of a mistake. Such a system has now been introduced.

40 The defendant made the following submission regarding its ability to put in place measures to remedy the risk:

Many of the measures available to remove the risk of an employee or, contractor, being struck by fluid under high pressure by the inadvertent removal of a staple fitting on the high pressure side of the pump station manifold, were not measures available to the Defendant. For example, the control and capacity to arrange for the placement of signs, the fixing of physical barriers such as padlocks, the changing of valves to slow the release of fluid under pressure, the adding of an additional pressure gauge, the changing of the type of relief valves, and the movement of the location of the high pressure hoses and such like, lay with Centennial Angus Place and RMI, not the Defendant. Indeed, these were the measures in fact implemented by Centennial Angus Place after the incident.

41 The defendant's submission is misplaced. Indeed, in his submissions to the Court, Mr Phillips conceded the following:

My friend quite rightly pointed out that what your Honour has to deal with here is a company which contracts its services and its employees to visit other sites over which they do not have the control of the plant and equipment and they are left to deal with what is provided to them.

It is recognised that is not an answer - to say they are in the control of somebody else. One has to satisfy oneself under this legislation and as a matter of commonsense one has to satisfy oneself that one’s employees are going to be safe and in order to do that you need to make totally sure that the places and the plant your employees have access to are safe.

When one crystallises the events which happened here, it is not necessary merely to rely on the employer, no matter how big or how experienced, and particularly this principal. In the submissions and in Mr Knight’s affidavit, it is obvious there had been significant dealings with this employer in the past.

Because of its inherent dangers, this is an industry which is highly regulated and led us to fall into a false sense of security that it had been done properly. Your Honour will see that the measures which have been put in place reveal that the employer will not accept at the places where there has been no problem in the past - will not simply accept it is a safe place. They will satisfy themselves that anything that is being done which lead to changes will be the subject of adequate scrutiny, analysis and risk assessment.

As far as this new pump is concerned, your Honour will see the principal believed it was similar to the others. It wasn’t. Mr Hansen was shown it by a senior official from Centennial as to how it worked. There was no evidence of anything beyond “Mr Hansen was informed”. As far as Fuchs was concerned, there was a new pump which required a different way in which it was operated.

42 As discussed earlier in this judgment, it is not enough for an employer to rely on employees and/or clients to conduct their own assessments of particular risks at a client’s premises. The authorities demonstrate that delegating to others, or expecting others, to take over the responsibility for safety, in respect of workers for whom an employer has such responsibility under the Act, is not defensible. It remains that a particular of the charge against Fuchs was that it permitted the work carried out by Mr Hansen to be done without having conducted any, or any adequate, job safety analysis, it failed to ensure a safe system of work for the sampling procedures and it failed to ensure that there was a written safe work method for the task Mr Hansen was carrying out when he was fatally injured. Fuchs has pleaded guilty to this charge. That Fuchs did not have control of the mine where the incident occurred and that it relied on an expectation that the mine owner/operator would have implemented measures to ensure Mr Hansen was not exposed to risk are not mitigating factors.

43 In Morrison v Centennial Coal it was submitted for the defendants in mitigation that they had a reasonable expectation that Fuchs would provide a safe work system for its employee. In that respect, the Court stated:

It was a reasonable expectation that Fuchs would have provided a safe working environment for its employee, Mr Hansen. However, it did not. Whilst the defendants might have held an expectation that Fuchs would have met its obligations regarding the safety of its employee, the defendants were not entitled to rely on that expectation. They had an independent duty to ensure Mr Hansen was not exposed to any risk whilst he was working at the Angus Place mine. In other words, it was not open to the defendants to adopt an attitude that it was reasonable to expect that Fuchs would act appropriately and, therefore, that relieved them, in whole or in part, from having to actively search out and, where it was at all possible, eliminate any risk to health and safety.

44 It is also the case that Fuchs was not entitled to rely on the expectation that the mine owner/operator would ensure safety.

Maximum penalty

45 The prosecutor submitted that the maximum penalty applicable to the offence be considered in the imposition of penalty, in accordance with the principles laid down by the High Court in Markarian v R [2005] HCA 25; (2005) 228 CLR 357:

[30] Legislatures do not enact maximum available sentences as mere formalities. Judges need sentencing yardsticks. It is well accepted that the maximum sentence available may in some cases be a matter of great relevance. In their book Sentencing, Stockdale and Devlin paras 1.16–1.18. observe that:

A maximum sentence fixed by Parliament may have little relevance in a given case, either because it was fixed at a very high level in the last century ... or because it has more recently been set at a high catch-all level ... At other times the maximum may be highly relevant and sometimes may create real difficulties ...

A change in a maximum sentence by Parliament will sometimes be helpful [where it is thought that the Parliament regarded the previous penalties as inadequate].

[31] It follows that careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick. ...

46 The maximum penalty for a corporation with no prior convictions, which is the case here, is $550,000.

Deterrence

47 The prosecution referred to the authority of Capral at [72]-[80] in emphasising the importance of general and specific deterrence in the role of sentencing. There is no need for the Court to revisit the principles expounded in Capral, other than to reiterate the requirement of this Court to consider both general and specific deterrence in the process of sentencing. In highlighting the issue of general deterrence, the prosecutor submitted the present case underlined the dangers associated with working with hydraulic equipment under pressure. In addition, the circumstances before the Court emphasised the obligation for employers to provide a safe system that is not reliant on the experience of an employee, nor reliant on the safety systems adopted by clients. The defendant agreed that general and specific deterrence were relevant considerations in this case.

48 As the prosecutor correctly pointed out, this is a case that highlights the serious consequences that potentially flow from an employer’s dependence on a client’s safe work practices, or lack thereof. It is further a tragic reminder for the industry generally of the inherent dangers associated with pressurised hydraulic equipment. For these reasons, general deterrence will form a significant basis in sentencing the defendant.

49 Whilst acknowledging the need to apply specific deterrence in sentencing, the defendant submitted that:

[T]he Court will be satisfied that the significant steps taken after the incident by the Defendant are such as to control the risks associated with pressurised fluids. However, it is accepted that the Defendant’s operations in the mining field continue and that the risk that arose in the present matter is an ongoing risk in the mining industry where longwall operations are carried out.

50 The implementation of substantial remedial measures reflect the defendant's commitment to avoid a recurrence of the incident that led to the charge against it. However, it does not eliminate entirely the occupational health and safety risks associated with continuing to run what is generally regarded as the dangerous business of underground mining. I note the Full Bench’s comments in this respect in Capral:

[77] In sentencing, a court may disregard the element of specific deterrence if satisfied that the risk of re-offending is low or non-existent. The court may form such a view as a result of the rehabilitation of the offender: R v Corner (unreported, Court of Criminal Appeal, 19 December 1997) or because the offender will not have the opportunity to commit a similar offence in the future: R v Macdonell (unreported, Court of Criminal Appeal, 8 December 1995). However, we think it unlikely that the weight to be attached to specific deterrence could be reduced to zero in case of offences under the Act. At least where the offender continues to be an employer, risks to the safety of its employees or contractors may exist or be possible. Breaches of the duties imposed by the Act may occur both by commission and omission. Employers are required to maintain constant vigilance and take all practicable precautions to ensure safety in the workplace. They must adopt an approach to safety which pro-active and not merely re-active: WorkCover Authority of New South Wales v Atco Controls Pty Ltd (1998) 82 IR 80 at 85. In view of the scope of these obligations, in most cases it will be necessary to have regard to the need to encourage a sufficient level of diligence by the offender in the future. This is particularly so where the offender conducts a large enterprise which involves inherent risks to safety: see WorkCover Authority of New South Wales (Inspector Glass) v Kellogg (Aust) Pty Ltd [2000] NSWIRComm 53 at 46.

51 The need for specific deterrence will, therefore, be an element of the penalty, although not a significant element.

Objective seriousness

52 The Court has considered the nature and quality of the offence, the risk which was foreseeable, the simple and straightforward steps available to avoid the risk, the fact that the employee was fatally injured as a consequence of the failure to ensure safety and the requirement for general and specific deterrence. The Court concludes that the offence is at the high end of objective seriousness.

SUBJECTIVE FACTORS

Early Plea

53 Mr Phillips submitted that the defendant be given the benefit of an early plea in relation to mitigation. It was submitted that there were 37 volumes of documents provided in the prosecution brief that required the assistance of a number of experts in analysing the material. In its written submissions, the defendant stated:

The Defendant entered the plea at an earliest time after the Prosecutor amended the charge. This matter has involved much technical analysis not only of the pump station but also of the use of hydraulic fluids for longwall mining operations. The Prosecution brief consisted of 37 volumes of documents, much of which was of a technical nature which required the assistance of experts. Time was also allowed at the interlocutory stage for submissions to be made to the Prosecutor. Those matters and the Amended Application for Order support the finding that the plea was entered at the earliest possible time, in all of the circumstances, and a discount is sought for the utilitarian benefit accorded by the plea.

The utilitarian benefit of an early plea allows the Court to exercise its discretion in relation to allowing the maximum benefit for the Defendant. The discount of between 10 to 25% outlined in R v Thomson; R v Houlton (2002) NSWLR 383 provides guidance as to the maximum benefit that may be allowed for the utilitarian value of a plea in criminal matters before the Industrial Court (Inspector Lai v Rexma Pty Ltd and Another [2008] NSWIRComm 78 at [28]).

54 With respect to the timing of the guilty plea, Mr Agius submitted:

The plea was not entered at the first opportunity. It was entered on 3 August 2009 to an amended charge. While there were amendments to the charge, they were not of themselves so significant as to warrant a view that the plea was entered at the first available opportunity. Of more significance is the fact that the plea to the amended charge was entered shortly after the defendant completed an expert investigation into an aspect the incident and made a submission to the prosecutor relying on that expert material. The Prosecutor accepts that in those circumstances the plea can be properly viewed as an early plea, one that reflects the defendant’s contrition and which has a substantial benefit to the administration of justice.

55 The prosecution accepts that the plea can be viewed as an early plea, however, not one that was entered into at the first opportunity.

56 In Inspector Kent v Duct Master Pty Ltd [2009] NSWIRComm 143, the Court stated:

[36] Based on the authorities, in considering the amount of discount to be given for the utilitarian value of a plea of guilty it is clear the Court must have regard to the contribution that the timing of the plea makes to avoiding the waste of time and resources of the sort referred to in R v Thomson and that some explanation of how the discount was arrived at should be provided. The discount of 25 per cent should, in the majority of cases, be reserved for those cases where the timing of the plea provides the greatest utilitarian value. In assessing that value regard would need to be had to the complexity of the issues about which evidence would have to be gathered and adduced.

...

[41] The indication by the defendants that they were prepared to enter a plea subject to amendments to the particulars and such amendments were subsequently made, suggests that the defendants should receive the benefit of a substantial discount. However, the defendants' objections to the particulars were not entirely resolved until early August and after the matter had been set down for a two day hearing over contested particulars. One of the particulars to which the defendants objected was that alleging there had been no risk assessment. That was amended to 'no adequate risk assessment'. In my view that was a significant amendment, having the effect of mitigating the objective seriousness of the offences in this case.

[42] Having regard to all of the circumstances, I consider that the discount for the utilitarian value of the guilty pleas should be at the high end of the scale.

57 The defendant provided to the Court details of the original application for order, filed in the Court on 23 July 2008, together with a document outlining the differences between the original application and amended application. The defendant pleaded guilty to a charge in the amended application for order, filed in the Court on 3 August 2009. According to registry’s record of proceedings, this matter was before the Court for directions and/or plea seven times before a plea was entered. Given the lapse of some 12 months, one may assume there was a considerable amount of time and resources expended by the prosecutor, although the prosecutor did not submit anything in this respect. Having the benefit of being able to compare the applications, I accept that the amendments were not insignificant and that the changes to the order could potentially affect the objective seriousness of the offence. The defendant was also faced with an extensive matrix of evidentiary issues. Considering the timing of the plea and factual circumstances of these proceedings, I will apply a discount for early plea in the high range.

Prior record, good corporate citizenship & co-operation with prosecuting authority

58 Both parties submitted that the Court should view favourably the actions of the defendant in co-operating with the prosecutor, and its clean record. The defendant’s assistance to the prosecutor with his investigations is a mitigating factor: Alcatel Australia Ltd v WorkCover Authority of New South Wales (1996) 70 IR 99 at 106-107.

59 The Court will allow the defendant a degree of leniency given its clean record, in accordance with s 21A(3)(e) of the Crimes (Sentencing Procedure) Act. The defendant submitted that the Court should consider its record as an excellent record, ‘when one considers the size, scope and the nature of its operations’: Haynes v CI & D Manufacturing Pty Ltd (No 2) (1995) 60 IR 455 at 486-487. It further submitted that the length of time over which the defendant has operated should be a relevant consideration, inferring from the prior record that the present offence is an ‘uncharacteristic aberration’. Mr Phillips relied on Veen v R (No 2) [1988] HCA 14; (1988) 164 CLR 465; (1988) 77 ALR 385 where it was stated (at [34]):

[34] ... [T]he antecedent criminal history of an offender is a factor which may be taken into account in determining the sentence to be imposed, but it cannot be given such weight as to lead to the imposition of a penalty which is disproportionate to the gravity of the instant offence. To do so would be to impose a fresh penalty for past offences: Director of Public Prosecutions v Ottewell.

[35] The antecedent criminal history is relevant, however, to show whether the instant offence is an uncharacteristic aberration or whether the offender has manifested in his commission of the instant offence a continuing attitude of disobedience of the law. In the latter case, retribution, deterrence and protection of society may all indicate that a more severe penalty is warranted. It is legitimate to take account of the antecedent criminal history when it illuminates the moral culpability of the offender in the instant case, or shows his dangerous propensity or shows a need to impose condign punishment to deter the offender and other offenders from committing further offences of a like kind. Counsel for the applicant submitted that antecedent criminal history was relevant only to a prisoner's claim for leniency. That is not and has never been the approach of the courts in this country and it would be at odds with the community's understanding of what is relevant to the assessment of criminal penalties.

60 It is well settled that the antecedent criminal history of a defendant may be relevant to the determination of an appropriate sentence, provided it does not result in a penalty that is otherwise disproportionate to the objective seriousness of the offence. The issue was considered in Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464; Workcover Authority of New South Wales (Inspector Stobo) v State Rail Authority of New South Wales [2002] NSWIRComm 72; (2002) 115 IR 130; WorkCover Authority of New South Wales (Inspector Ian Batty) v Graincorp Operations Ltd [2001] NSWIRComm 127; and Inspector Mayo-Ramsay v Rail Infrastructure Corporation [2002] NSWIRComm 217.

61 This Court will take into account the period of time a defendant has been operating in proportion to its record, a factor which is often linked with the concept of ‘good corporate citizen’: see for example WorkCover Authority of NSW (Inspector Sequeira) v Foti's International Fireworks (Displays) Pty Limited [2003] NSWIRComm 471; Inspector Swadling v Empire Talkies Pty Ltd [2003] NSWIRComm 191; Inspector Przibilla v Hyne & Son Pty Limited [2004] NSWIRComm 384; and Inpector Amanda Templeton v Pirelli Cables Australia Limited [2003] NSWIRComm 177. The defendant adduced evidence of its sponsorship of a study undertaken through the Australian Coal Association Research Program, the objective of which was to determine whether different hydraulic fluids have different effects on tissue damage in the event of a high pressure injection injury. The study aimed to provide information that will improve injury management in addition to supporting findings as to safer alternative fluids.

62 The defendant relied on Haynes v CI & D Manufacturing Pty Ltd in submitting that the nature of its operation be taken into account in assessing its corporate character. The Full Bench stated in that case:

We consider that the extent of the operations of defendant enterprises is to be taken into consideration when coming to conclusions having regard to the past record. Human experience indicates that the larger the number of industrial transactions a company is involved in the larger the number of industrial accidents which occur as a matter of statistical expectation. The safety record of a very large company with some prior convictions may, on analysis, be better than that of a smaller company with fewer such convictions. However, we again emphasise that in the context of the OHS Act the record is only one of the factors to be taken into account in assessing penalty and the essential inquiry must remain the circumstances of the breach in question.

See also WorkCover Authority of New South Wales (Inspector Ankucic) v Crown in the Right of the State of New South Wales (Department of Education and Training) [2001] NSWIRComm 313; (2001) 112 IR 1 at [61]; Inspector Howard v Baulderstone Hornibrook Pty Ltd [2009] NSWIRComm 92; (2009) 186 IR 125 at [270].

63 Given the defendant’s business has been operating for some twenty-four years in a dangerous industry with no prior convictions, I will afford an appropriate degree of leniency.

Contrition and remorse & assistance to the victim’s family

64 The defendant provided evidence to the Court of its support given to Mr Hansen’s family following his death. Such assistance was as follows:

a. the Managing Director and Deputy Managing Director visited Mrs Hansen on the evening of 26 July 2006 and Mr Knight did so again on 28 July 2008 to express their personal and corporate condolences, offer support and assistance in any way needed;

b. payment of funeral and wake expenses;

c. provision of counselling to Mr Hansen’s family;

d. wages for August 2006 and bonus paid to Mrs Hansen, and the defendant facilitated the payment of outstanding annual and long service leave entitlements to Mrs Hansen;

e. assistance to the family in liaising and organising the payment of workers compensation, benefits under the death and disability insurance and superannuation fund;

f. the continuing provision of a company-owned computer and payment of internet access for the benefit of the family;

g. collection amongst Fuch’s staff each Christmas for the provision of a cash and hamper gift to the Hansen family;

h. the defendant’s Christmas function in 2006 was held at the Newcastle Harness Racing Club, and Fuch’s sponsored a race in Mr Hansen’s name. Several of Mr Hansen’s family members attended the event; and

i. continued contact with Mrs Hansen since July 2006 to offer assistance as required.

65 Mr Knight deposed in his affidavit that the ‘directors of Fuchs feel genuine remorse at Kevin’s death’. The prosecutor submitted that the remorse expressed by the defendant should, indeed, be considered as a subjective factor in the Court’s assessment of the penalty. The provision of assistance to the victim’s family is a factor that may contribute to the genuine expression of remorse and contrition: Inspector Patton v Western Freight Management Pty Ltd (No 2) [2009] NSWIRComm 124 at [78]. The worthy tangible and intangible expressions of remorse and contrition by the defendant are important subjective considerations. The penalty will be fixed having regard to these matters.

Remedial measures

66 Following the incident on 26 July 2006, the defendant implemented a number of remedial measures in relation to its occupational health and safety systems and procedures. The measures were extensive. It may be thought unnecessary to describe these changes. However, a purpose of judgments such as this is to educate and where defendants have responded to prosecutions by reviewing and remedying the flaws in their occupational health and safety arrangements, particularly where the response is innovative or considered by the Court to be instructive, there is a public interest to be served in explaining the changes.

67 The more significant remedial measures implemented by the defendant are summarised below.

(i) Immediate Suspension of all underground work whilst a review of all of its Safe Work Procedures (‘SWPs’) was undertaken.

(ii) A new policy for Oil/Coolant Sampling was developed.

(iii) Safe Work Procedures

In consultation with management, OHS Committee and an external safety consultant, a comprehensive review of its internal documentation for its operations the review of its SWPs with the aim to make the documents even more effective. Since that time, approximately 207 SWPs have been reviewed, include greater detail, diagrams and photos to clarify the instructions contained in each document. Training in those SWPs and Competency Testing has also been developed.

SWPs have been developed for each individual mine that the defendant operates, documents clearly identifying the sample points to be used by employees.

Fuchs has developed Product Safety Sheets, outlining the risks in producing each product and the type of Personal Protective Equipment (‘PPE’) and precautions that must be undertaken.

(iv) Job Safety and Environment Analyses

A new company-wide risk assessment process identifies all of the potential risks, rating those risks and putting control mechanisms in place to reduce the rating. The analysis and forms were further reviewed in 2009 and were renamed Job, Safety and Environment Analysis forms (‘JSEAs’) in line with the terminology used in the mining industry. Fuchs has committed to review and update all JSEAs throughout 2009.

In the Underground Mining Division, JSEAs were developed by a Fuchs manager in engineering services and an external consultant in collaboration with all employees in the Division. Fuchs ensured that the JSEAs were consistent with the procedures that applied at each mine.

Fuchs no longer conducts sampling at Angus Place Colliery. Fuchs has created a JSEA specifically for emulsion sampling of longwall equipment for use at other mines. All sampling is now conducted from pre fitted sample points and at low pressure. The JSEA highlights the potential risk of hydraulic injection and states that staples are not to be removed from roof supports, high pressure feed lines or hosing. The aim of this requirement is to ensure that no employee would deliberately or inadvertently try to take a sample from a high pressure point, as a staple would not be used on a low pressure sample point.

The JSEAs have been developed to ensure the safety of Fuchs' employees, with the expectation that in complying with the JSEAs the employees will also satisfy any mine-specific requirements. Fuchs' employees have been told that they must comply with the JSEAs, regardless of any contrary requirement at a mine. They have been authorised not to work under any system at a mine that is inconsistent with the relevant Fuchs JSEA and to refer any problems in this regard to Bernie Michaelson, Manager – Engineering Services. Further, the employees understand that any such matter raised must be solved before any work is carried out.

(v) Foundations, Culture and Communication

The implementation of training to educate managers on their obligations under the OHS Act and regulations. This included additional training to existing employees at management level in new OHS matters and revised procedures, conducted by an external training facilitator.

Fuchs Petrolub AG developed in response to the Incident a safety guideline to demonstrate its commitment to safety globally. The guideline is known as “The Fuchs Petrolub Group Guideline – Occupational Health and Safety (OHS) at Fuchs Petrolub AG”. This was the first global policy guideline developed on safety in the Group and was officially released in July 2007.

Increased communication strategies, including:

· "OH&S" is now placed as the first tab on the Company’s internet system to demonstrate its importance. Safety was also given its own announcements bubble on the front page of the intranet.

· Safety Meeting Minutes and Statistics are communicated to all staff on a monthly basis by email and that the noticeboard of each site must display this information. General housekeeping audits also assist to ensure this takes place at each site.

· All Senior Management and Divisional Meetings conducted a review of safety issues and safety performance in their areas.

· A communication document was developed and implemented in 2007 that allowed Senior Management to communicate divisional issues to all staff and to allow feedback from staff to Senior Management.

· Quarterly updates from the Managing Director and Deputy Managing Director in person on several issues, including a section dedicated to safety.

· The sales staff of Fuchs (which includes the service engineers) attend the annual Sales Conference, at which there is included on the agenda safety as a main topic for discussion.

(vi) OHS Committees and Meetings

Fuchs revised its OHS Committees structure to allow for better consultation and communication, and to provide the committees with more power and the ability to execute decisions and make a greater impact on safety issues than previously.

(vii) Safety Policies and Procedures

Fuchs has reviewed and updated where necessary, the OHS policies it previously had in place, including:

· Health and Safety Policy;
· Incident/Accident Reporting Procedure
· Company Car Policy,
· Heat Policy;
· Molten Salt Sampling Policy;
· Return to Work Policy;
· Oil/Coolant Sampling Policy; and
· Personal Protective Equipment Policy.

Fuchs has implemented a number of other safety policies. A summary of the policies implemented is set out below:

· Drugs and Alcohol Policy was developed, including testing guidelines;
· Fatigue Management Plan was developed for the single Fuchs transport vehicle in Kalgoorlie;
· Fatigue Management Plan – Guidelines for all staff on managing fatigue whilst driving long distances;
· Safe Fluid Sampling Policy
· Smoking Policy; and
· Working Alone Guidelines.

Each new or amended policy has been communicated to employees, through different methods, via toolbox talks, Fuchs Australasia Communication Template, emails and noticeboards. All of the policies are made available to all employees via the Fuchs intranet.

(viii) Contractors and Visitors

Rules have been developed for the entry of non-Fuchs personnel into Fuchs' sites. Through the National OHS Committee, it was decided that non-personnel will enter in only one of two ways: as a contractor or as a visitor. In either case, the person is required to sign and date Site Safety Rules. Contractors that enter Fuchs' sites undergo a greater exchange of information and approval prior to entering. A letter is sent out to each contracting company, prior to entry as a contractor, providing a copy of the Fuchs Health and Safety Management Plan and the Health and Safety Policy.

(ix) Training and Competency Testing

Training at Fuchs is divided into two main categories: On the job (Safe Work Procedure) training, which includes Employee Induction Training; and Safety Training.

On the Job Training

The Corporate Induction Program has expanded since 2006, to ensure that the new employee's introduction to the Human Resources Manager includes an overview of the Fuchs safety system. Fuchs has also developed an Induction Checklist to ensure that new employees are provided with the necessary information to help ensure their health and wellbeing.

Employees are given copies of all relevant SWPs to reference whilst learning a new procedure. Competency tests ensure that employees have a degree of competency before performing specific tasks and operating machinery.

Safety Training

Fuchs has identified both the key risk areas for the company as well as the need to implement a more structured program of safety training for the whole company. In 2008, Fuchs implemented a Corporate Training Calendar that is developed by the Training and Development Committee on an annual basis.

Safety training has been increased since 2006 to include annual manual handling training and forklift refresher training, compulsory Defensive Driver Training for all staff who are required to drive a company vehicle and toolbox talks throughout 2007 on a range of topics throughout the Operational Divisions. The topics for toolbox talks cover several safety issues, and involve an interactive style of meeting, including of viewing of DVDs and question and group work time.

In 2009 the Fuchs Senior Management Team decided to expand the DVD Training to all divisions, including office personnel, in order to further improve general safety awareness and the safety culture.

(x) The following audits have been implemented and / or improved by the defendant:

· A Health and Safety System Audit Checklist was introduced in 2009. It measures the company’s performance in its OHS system with items such as minutes of OHS Meetings being displayed on noticeboards of sites, ensuring that fire extinguisher checks have been completed, ensuring previous audit actions have been followed up, and ensuring incident/injury investigation actions have been completed.

· General Housekeeping/OH&S Hazard Audit – Manager and Operator audits have been further developed since 2006 and now include both a manager’s assessment and an operator’s assessment.

· Safety and Housekeeping Audit – Melbourne and Newcastle Laboratory audit is similar to the one referred to in the last paragraph, however it applies and relates to each laboratory. The audits are allocated to a different staff member each month for completion.

· Warehouse Observation Checklist Audit/Checklist is completed on a monthly basis for each Fuchs Warehouse.

· Monthly Racking Audit is a map of all storage racks for products throughout the company and must be audited for damage or bows on a monthly basis.

All audits on completion are sent to the area/divisional manager and then to the Human Resources Manager and Quality and Environmental Coordinator. These are placed on the intranet for all staff to access. They are reviewed at OHS Committee Meetings.

(xi) Incidents and Accidents

A new Incident and Accident Reporting procedure and Form was implemented soon after July 2006 and launched throughout all Fuchs sites. Fuchs uses the data collected from the centralised reporting system to assist in decisions relating to purchasing, training, staffing levels, in addition to encouraging staff to be ‘safety aware and committed’ to help the defendant achieve safety milestones.

As a result of the centralisation of the Incident and Accident Reporting System, Fuchs began analysing data and using that information to make decisions on expenditure decisions, such as purchasing mechanical pallet moving machines, training, staffing levels and so on.

Fuchs also implemented "Flash Reports", to allow the company to share information and to learn from safety issues that are identified across the company. Flash Reports include diagrams or pictures that are sent out to each site and placed on noticeboards for all staff to read.

The Accident and Incident Reporting procedure is subject to continued review and scrutiny, by a committee comprising of the Quality and Environmental Coordinator, the Human Resources Manager, the Payroll and HR Administrator and the National Operations Manager.

(xii) External Advice

Since July 2006, the defendant has relied heavily on the expertise of external consultants to assist it to both develop and implement improvements to its safety systems. Consultants have been used to obtain assistance to Underground Mining and Open Gearing Divisions on the development of SWPs and JSEAs, a review of Fuchs' current asbestos procedures and status in Newcastle, an analysis of the racks in the warehouse in Melbourne, Personal Protective Equipment analysis in Melbourne, air monitoring in Melbourne and confined spaces in Melbourne. Fuchs also conducts an annual Employee Opinion Survey, and uses the resulting statistics to develop strategic plans and budgets for the coming years.

The Fuchs Safety Budget has increased from $32,388 in 2006, to $36,066 in 2007, $74,954 in 2008 and $101,695 in 2009. Against these budgeted amounts, which total $245,103 Fuchs has in fact spent $324,641 on the initiatives described above.

68 It is evident that the defendant has taken comprehensive and commendable steps to ensure there is no recurrence of such an incident, a factor that will go to mitigating the offence: WorkCover Authority of NSW (Inspector Lyons) v Warman International Ltd [2001] NSWIRComm 62; (2001) 105 IR 236.

Parity

69 Mr Phillips submitted for the defendant that its culpability for this charge was at a lesser level than that of the two other defendants charged in relation to the incident: Centennial Angus Place and Centennial Coal. It was submitted that the penalty imposed on Fuchs should reflect a lesser culpability, the defendant relying on the principles of parity espoused in Postiglione v The Queen [1997] HCA 26; (1997) 189 CLR 295 at 301-303 and Warman International Ltd v WorkCover Authority of New South Wales (1998) 80 IR 326 at 340-341 where the Full Bench of this Court stated:

We also accept that the principle of parity in sentencing as discussed by the High Court in Postiglione v The Queen has application to sentences imposed under the O H & S Act. In that context it is appropriate to have some regard to the sentences imposed by Hungerford J on Drake Personnel Ltd, the direct employer of two of the injured workers. In Postiglione the High Court was concerned with an appeal against sentence which raised questions of comparison between the sentence imposed on a principal party in a conspiracy compared with that imposed on the appellant, who was subordinate in that conspiracy. Dawson and Gaudron JJ (at 411-412) said:

The parity principle upon which the argument in this court was mainly based is an aspect of equal justice. Equal justice requires that like should be treated alike but that, if there are relevant differences, due allowance should be made for them [Lowe v The Queen [1984] HCA 46; (1984) 154 CLR 606 at 610-611 per Mason J]. In the case of co-offenders, different sentences may reflect different degrees of culpability or their different circumstances. If so, the notion of equal justice is not violated. On some occasions, different sentences may indicate that one or other of them is infected with error [Lowe at 617-618 per Brennan J]. Ordinarily, correction of the error will result in there being a due proportion between the sentences and there will then be equal justice. However, the parity principle, as identified and expounded in Lowe v The Queen, recognises that equal justice requires that, as between co-offenders, there should not be a marked disparity which gives rise to `a justifiable sense of grievance' [Lowe especially at 610 per Gibbs CJ, 613 per Mason J and 623 per Dawson J]. If there is, the sentence in issue should be reduced, notwithstanding that it is otherwise appropriate and within the permissible range of sentencing options.

Discrepancy or disparity is not simply a question of the imposition of different sentences for the same offence. Rather, it is a question of due proportion between those sentences, that being a matter to be determined having regard to the different circumstances of the co-offenders in question and their different degrees of criminality.

That principle was referred to by Mason J in Lowe v The Queen (at 610) as follows:

Just as consistency in punishment — a reflection of the notion of equal justice — is a fundamental element in any rational and fair system of criminal justice, so inconsistency in punishment, because it is regarded as a badge of unfairness and unequal treatment under the law, is calculated to lead to an erosion of public confidence in the integrity of the administration of justice. It is for this reason that the avoidance and elimination of unjustifiable discrepancy in sentencing is a matter of abiding importance to the administration of justice and to the community.

While the offences with which we are dealing under the O H & S Act do not involve the notion of co-offenders, the fact is that the same circumstances have given rise to prosecutions for offences under ss 15 and 16 of the O H & S Act of the direct employer, Drake Personnel Ltd t/as Drake Industrial which supplied the labour involved, and the defendant here who utilised that labour in relevant circumstances. While those defendants have been found guilty of different offences, nevertheless the factual circumstances giving rise to the charges justify an approach to sentencing which shows consistency and not disparity in punishment in the same way as discussed by Mason J in Lowe.

70 The Court addressed the question of the relative culpability of the three defendants in Morrison v Centennial Coal at [92]-[96]. At [93] the Court found as follows:

It is also necessary to consider the relative culpability of Mr Hansen's employer and in that respect it is accepted that both defendants are less culpable than Fuchs:

· Fuchs undertook the sampling pursuant to the contract with Centennial Coal and, to that end, provided an expert sampler, Mr Hansen, and the laboratory facilities to analyse the samples;

· Fuchs identified the various samples which it required be taken by Mr Hansen;

· by the Contractors’ Site Regulations and Policies which were part of its contract with Centennial Coal, Fuchs accepted an obligation to conduct and retain risk assessments of the tasks it performed at Centennial Coal’s sites where it supplied oil sampling services;

· Fuchs had a responsibility to ensure that its employee received training and instruction on how to perform sampling tasks on the new pump station and to ensure he was adequately supervised in the performance of his duties;

· Centennial Coal arranged for compulsory workshops to be presented to contractors on its sites, the subject-matter of which included OHS obligations. Fuchs attended one such workshop; and

· as Mr Hansen’s employer, Fuchs bore primary responsibility for ensuring the health and safety at work of its employee. Fuchs' primary responsibility in relation to Mr Hansen’s safety, as his employer, was reinforced by the terms of the contract between Centennial Coal and Fuchs and, in particular, by the Contractors’ Site Regulations and Policies which formed part of that contract.

71 Nothing the defendant has put in these proceedings leads the Court to take a different view to that expressed in Morrison v Centennial Coal as to relative culpability. However, I would add that I consider the margin by which Fuchs was more culpable that Centennial Angus Place is not great.

72 In relation to RMI, whilst that firm built the pump station it did so to the design specifications provided by Centennial Angus Place. This was perhaps the reason RMI was not prosecuted. In any event, I do not have sufficient information to make a judgment about whether the grievance Fuchs submits it feels, at the failure to prosecute RMI, is justifiable.

Penalty

73 Having regard to the objective and subjective considerations I have decided that the appropriate level of penalty to be applied to Fuchs is $320,000. This amount is to be discounted by 20 per cent for the utilitarian value of the guilty plea.

Orders

74 The Court makes the following orders:

(1) The defendant is found guilty and convicted of the offence.

(2) The defendant is fined an amount of $256,000 with one half of the fine to be paid as a moiety to the prosecutor.

(3) The defendant shall pay the prosecutor's costs as agreed or assessed.

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LAST UPDATED:
2 February 2010