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Industrial Relations Commission of New South Wales |
Last Updated: 15 March 2011
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Case Title:
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Medium Neutral Citation:
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Hearing Date(s):
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Decision Date:
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Jurisdiction:
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Decision:
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(i) the defendant, Parker Hannifin (Australia) Pty
Limited, is found guilty of a breach of s 10(1) of the Occupational Health and
Safety Act 2000 as particularised in the Amended Application for Order to which
it entered a plea of guilty;
(ii) the defendant is fined the sum of $110,000 with half that sum to be paid to the prosecutor by way of moiety; (iii) the defendant is to pay the costs of the prosecutor in a sum as agreed and in the absence of agreement, as assessed and ultimately ordered by the Court. |
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Catchwords:
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OCCUPATIONAL HEALTH AND SAFETY ACT 2000 - s 10(1)
- tri-partite franchise arrangements - defendant franchises service centres -
defendant and service centres franchise territory for
Hose Doctor business -
Hose Doctor business services customers with defendant's products - defendant
has substantial control over
Hose Doctor franchisees but regards them as
independent contractors responsible for their own occupational health and safety
systems
- Hose Doctor provides and fits out own trucks to provide service to
defendant's clients - defendant lays down no safety rules for
operation of Hose
Doctor - Hose Doctor transports dangerous gases but without provision of proper
ventilation - explosion in Hose
Doctor's truck - widespread damage and injury to
driver - guilty plea entered - serious breach established - simple steps
available
to address risk - general and specific deterrence considered -
numerous subjective factors - early plea - first offender - good safety
record
having regard to the nature and size of business and length of operation -
co-operation with WorkCover investigation - defendant
good corporate citizen -
contrition and remorse established on evidence - penalty imposed
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Legislation Cited:
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Cases Cited:
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Inspector Townsend v Carrier Air Conditioning Pty Ltd
[2008] NSWIRComm 74
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Texts Cited:
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Parties:
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Representation
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- Solicitors:
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File number(s):
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Publication Restriction:
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1 Parker Hannifin (Australia) Pty Ltd ("Parker Hannifin") has entered a guilty plea to a charge brought by Inspector Estreich that the defendant was guilty of a breach of s 10(1) of the Occupational Health and Safety Act 2000. Although the plea of guilty was entered on the first return date of the summons, at the sentence hearing the prosecutor proceeded on an Amended Application for Order. That course was not opposed by the defendant and was said to arise from the course of the negotiations over an Agreed Statement of Facts.
2 The prosecution of the defendant arose out of an incident that occurred in June 2008 at Wetherill Park. On that day, Mr Michael Pascoe, a director of Maintenance and Contracting Pty Ltd ("MCP"), was driving an Isuzu truck in the course of pursuing his business operation known as Hose Doctor, being a franchised business with Riomore Pty Ltd ("Riomore"), itself a franchisee of the defendant company. On this day an explosion occurred in the Isuzu truck driven by Mr Pascoe.
3 Arising from this incident, Inspector Estreich brought prosecution proceedings against the defendant alleging a breach of s 10(1) of the Act in that the defendant, having had control in the course of its trade, business or other undertaking, of premises, being premises used by persons not in the employ of the defendant and in particular, Michael Verne Pascoe, as a place of work failed, by its acts of omissions particularised in what followed, to ensure that the premises were safe and without risk to health contrary to s 10(1) of the Act. The particulars of the charge were as follows:
(a) At all material times the premises:
i were not used only by the employees of the defendant;
ii were not occupied solely as a private dwelling;
iii were controlled by the defendant in the course of a trade business or other undertaking of the defendant;
(b) At all material times the defendant had control or limited control of the premises by reason of a contract between it and MCP Maintenance & Contracting Pty ltd ("MPC").
(c) The risk was the risk of an explosion as a result of the ignition of oxygen and acetylene that had built up in the vehicle.
(d) The defendant failed to impose as a condition in its mandatory specifications, standards, operating procedures and manuals for the operation of independent businesses contracted to it and known as 'Franchised Hose Doctors', a requirement that:
i gas cylinders containing oxygen and acetylene stored in motor vehicles must only be stored in vehicles which were well ventilated so as to prevent the prospect of gas build up and explosion;
ii Australian Standard 2430.3.4 - 2004, Australian Standard 4289 -1995, Australian Standard 2439.3.4 - 2004 and Australian Standard 4332 - 2004 be complied with at all times;
iii all ignition sources in the vicinity of cylinders containing oxygen and acetylene be eliminated or alternatively that risks arising from the storage of oxygen and acetylene and their proximity to ignition sources be controlled in a manner so as to eliminate or reduce the risks so arising; and
iv before using oxygen and acetylene Material Safety Data Sheets were to be obtained and followed in respect of the storage and transportation of those gases.
(e) The defendant failed to impose, as a condition in its mandatory specification standards, operating procedures and instruments for the operation of independent businesses to which it was contracted known as '"Franchised Hose Doctors' a requirement that the natural person conducting work as an employee or proprietor of a Franchised Hose Doctor undertake an appropriate Tertiary and Further Education certification programme dealing with the use, storage and transportation of dangerous goods.
The
defendant failed to require that any motor vehicle used by a Franchised Hose
Doctor contained a ventilation system (such as the
use of metal grills or mesh
and whirly birds) that would eliminate the possibility of oxygen and acetylene
building up.
As a result of the defendant's acts and omissions people not in its employ and in particular, Michael Verne Pascoe, were placed at risk of serious injury.
4 The evidence for the prosecutor comprised of a Statement of Agreed Facts and a number of supporting documents contained within a prosecution folder. Those documents were as follows:
(a) 67 colour photographs taken by
three Inspectors on 20 June 2008; 7 January 2009 and 15 January 2009;
(b) 48 photographs taken by the New South Wales Fire Brigade on 22 June
2008;
(c) 24 photographs taken by a senior Police Constable on 20 June
2008;
(d) a Factual Inspection Report prepared by Inspector Wayne James
dated 31 July 2008;
(e) 2 Factual Inspection Reports prepared by
Inspector Pamela Estreich dated 20 April 2009;
(f) a BOC incident
investigation report;
(g) Fire Scene Examination Field Notes of the Fire
Investigation and Research Unit, New South Wales Fire Brigade, dated 23 June
2008;
(h) a COPS report prepared by New South Wales Police;
(i)
an initial report from the Forensic Services Group of the New South Wales Police
dated 20 June 2008;
(j) an Occupational Health and Management System for
ENZED franchises dated 1 November 2005;
(k) ENZED Occupational Health
and Safety Policy;
(l) Occupational Health and Safety Management System
for ENZED "Hose Doctors" dated 13 February 2006;
(m) ENZED Job Safety
Analysis Sheet;
(n) ENZED Writing a Safe Work Method Statement (SWMS);
(o) ENZED Hazard Identification, Risk Assessment and Control Worksheet;
(p) OHS Management System provided in Hose Doctor vehicles, including
policies and statements, management plans, risk assessments,
SWMS, First Aid,
Accident reports, workers compensation insurance forms, MSDS information;
(q) Parker Hose and Fitting Training;
(r) PowerPoint
presentation - Hose Doctor Safety - The Basics;
(s) BOC Safety
Information - Cylinder Safety Precautions, Guide to Safe Handling of Compressed
Gases and Guide to Safe Handling of
Cryogenic Liquefied Gases;
(t)
Material Safety Data Sheet, HYSPIN AWH 68;
(u) Material Safety Data
Sheet, Wurth Brake Cleaner;
(v) Material Safety Data Sheet for oxygen,
compressed;
(w) Material Safety Data Sheet for Acetylene;
(x)
Hose Doctor Franchise Agreement, ENZED Wetherill Park and MCP Maintenance and
Contracting Pty Ltd between Parker Hannifin (Australia)
Pty Ltd, Riomore Pty Ltd
and MCP Maintenance and Contracting Pty Ltd;
(y) Australian Standard AS
4289-1995, Oxygen and acetylene gas reticulation systems;
(z) Australian
Standard AS 4332-2004, Storage and handling of gases in cylinders;
(aa)
WorkCover Fact Sheet "Transporting of Small Gas Cylinders", 2002;
and
(ab) Statement of David Vern Chamings, 7 May 2009.
5 The prosecutor also tendered a certificate of previous breaches indicating that the defendant had no prior convictions. The Statement of Agreed Facts appears as an annexure to of this judgment.
6 The evidence for the defendant was provided through an affidavit of Mr Dennis Johnson, the franchise manager of the defendant. The affidavit exhibited a large number of documents dealing with the franchise system that operated between the defendant, Riomore and Mr Pascoe's company, MCP, as well as numerous documents showing the defendant's attention to safety through its variously documented safety systems and the steps taken to address the risks shown to exist arising from the incident involving Mr Pascoe.
7 Mr Johnson provided personal details in relation to his qualifications and positions held with the defendant and prior to that, his employment with ENZED Pty Ltd ("ENZED") from 1987. He noted that, in 1989, ENZED was taken over by Parker Hannifin and he had continued to work for them since that time. He noted that Parker Hannifin operated two businesses: firstly, manufacturing new hydraulic valves, pumps, motors, cylinders, hose fittings and other equipment that was sold through the Parker Hannifin distribution network and made available to ENZED users for hydraulic machinery such as earthmoving equipment and dealing directly with clients, including Volvo and Kenworth trucks; secondly, operating a hose and fitting replacement service business through ENZED and also using the Parker Hannifin distribution network.
8 Prior to the acquisition of ENZED by Parker Hannifin in 1989, the defendant was involved in the replacement hose and fitting business but not to the same extent that it was currently involved in that business. After the defendant acquired ENZED in 1989, the ENZED business was developed throughout Australia. Since 1989 the defendant had increased the number of franchise service centres and the number of franchised mobile Hose Doctors. At the time of Mr Johnson giving evidence, the defendant had 61 franchised ENZED service centres throughout Australia, 129 franchised Hose Doctor operating throughout Australia, and, 67 employees working directly for ENZED franchise service centres throughout Australia. It was part of the defendant's business to also sell hose and fittings and some new hydraulic machine parts to ENZED franchises. The Hose Doctor franchisees then used those machine parts when providing replacement hose and fittings to their customers.
9 The relationship and contractual arrangements between the defendant, service centres and Hose Doctor was then dealt with by Mr Johnson. These franchise arrangements were contained within written agreements with the intention of linking the Hose Doctor with a service centre in the area in which the Hose Doctor was to operate so that the Hose Doctor would utilise the products such as hose, fittings and machine parts that were supplied by the service centre. The service centre in turn obtained those parts from, amongst others, the defendant. In this way, ENZED could provide an efficient hose and fitting replacement service to its customers in the territory in which the particular Hose Doctor operated. Mr Pascoe was still a working director of MCP, being a company he owned and operated. MCP owned the Hose Doctor franchise for the Wetherill Park territory and under the franchise agreement, MCP utilised an ENZED franchised service centre located at Wetherill Park. That centre was operated by Riomore. A copy of the franchise agreement between the defendant and Riomore was before the Court. The recitals recorded that Riomore had requested ENZED to grant it the right to establish and continue in business as "an independent franchisee selling products principally supplied by ENZED using the ENZED system". Later in the agreement it was stated that Riomore was an independent proprietor and was not an agent, partner or employee of ENZED although there were certain controls exercised over the way in which the service centre was presented to the public. Riomore was obliged to attend and to ensure key persons attended ongoing training seminars, programmes and refresher courses organised by ENZED when reasonably required to do so.
10 A copy of the franchise agreement between the defendant, Riomore and MCP was also before the Court. The recitals of that agreement recorded that MCP, as the Hose Doctor, had requested ENZED to grant to it the right to establish a business and to continue a business as an independent franchisee operating an ENZED Hose Doctor franchise. The recitals further noted that the service centre franchisee, being Riomore, agreed to the Hose Doctor being appointed as the operator of an ENZED Hose Doctor franchise. The agreement defined "ENZED 'Hose Doctor' franchise" as meaning a retail business using mobile van units providing on-site sales and servicing of hydraulic hose fittings and accessories to customers, that operated from the franchised ENZED service centre. The Hose Doctor was to service the immediate needs of customers located within the territory on behalf of the service centre franchisee and was to utilise in the operation of its franchise business certain equipment that had been developed and manufactured by ENZED or its affiliates.
11 The terms of the franchise agreement required a Hose Doctor to lease or purchase a Hose Doctor van for the operation of the franchise and that van was to be painted and customised at the cost of the Hose Doctor and stocked by the service centre franchisee. There were obligations on the Hose Doctor to maintain the van in good repair. It was pointed out that there was nothing in the franchise agreement requiring the defendant to approve of the vehicle to be used by a Hose Doctor. There was, however, a requirement for the service centre to approve a particular Hose Doctor when the Hose Doctor franchise was first purchased.
12 Through the affidavit of Mr Johnson, the Court was provided with copies of the defendant's occupational health and safety management system for ENZED franchisees and ENZED Hose Doctors. These provisions were set out in two documents, the first dated in November 2005 and the second dated in February 2006. There were a number of supporting management system documents dealing with audit, training and vehicle servicing and copies of those documents were also placed before the Court. Mr Johnson noted that those documents demonstrated that the focus of the defendant's occupational health and safety management system prior to this incident centered on the health and safety aspects of handling the ENZED products such as hoses, fittings and accessories that were to be carried and sold in their trucks by the individual Hose Doctor.
13 Prior to the incident in June 2008 and following the investigation conducted by WorkCover, the defendant had not considered it had any responsibility to ensure that trucks used by the Hose Doctor complied with relevant State occupational health and safety laws or Australian Standards regarding such matters as the carriage of dangerous gases. Prior to the date of this incident the defendant understood that, because individual franchisee Hose Doctor had purchased, owned and operated their trucks, each Hose Doctor was responsible under the Hose Doctor franchise agreement, for ensuring that their trucks complied with relevant occupational health and safety laws. The defendant also believed that the service centre, conducted by Riomore, had responsibility for ensuring this occurred. Mr Johnson noted that the defendant accepted that it was mistaken about this understanding of its responsibility for ensuring the health and safety of their Hose Doctors. He placed on record that the defendant was truly sorry for the incident that had occurred and regretted any harm or risk of harm that was caused to Mr Pascoe, his company, MCP, and any employee or representative of MCP as a result of the explosion that took place on 20 June 2008.
14 Mr Johnson then gave details of the steps taken immediately after the accident. He had received a telephone call from the general manager of Riomore informing him that there had been an explosion involving a Hose Doctor and that the driver had been taken to hospital. There was a belief that brake cleaner stored in the truck was responsible for the explosion. Mr Johnson undertook to immediately email all ENZED service centres and inform them of what had occurred. Later in the day, the general manager informed Mr Johnson that Mr Pascoe had been released from hospital with seven stiches to a cut to his head received as a result of the accident. He also understood that Mr Pascoe suffered abrasions and some bruising. Although steps were taken to send an email to all ENZED service centres informing them of the explosion and the cause being the brake cleaner, the Riomore general manager later informed Mr Johnson that the likely cause was an acetylene cylinder. On receiving this information, Mr Johnson undertook to send another email to the service centres informing them of this development. Four days after the accident Mr Johnson sent an email to all ENZED service centres informing them that the cause of the explosion was almost certainly acetylene and he provided information on how the vehicles of the Hose Doctors should be ventilated to reduce or eliminate the risk of explosion.
15 Following these initial steps and after the WorkCover investigation, the defendant took steps to improve its occupational health and safety management system regarding Hose Doctor franchises and the health and safety issues concerning the carriage of gases in their trucks. The defendant recognised that it was mistaken about its occupational health and safety obligations to ENZED Hose Doctor franchisees, especially in relation to the use of their trucks. The defendant was now aware and understood that it must ensure that the franchisee ENZED Hose Doctor trucks were safe for use by the drivers.
16 The defendant then took a number of steps to address this issue which included: in late October 2008, at the request of the defendant, all Hose Doctor franchisees were provided with Material Safety Data Sheets for oxygen and acetylene and for future reference, all Hose Doctor franchisees were directed to insert these documents into the folder they carried in their truck; the defendant amended its training programme for all new Hose Doctor franchisees to include the use and transportation of oxygen and acetylene during the course of which this incident was to be discussed in detail during the training programme; on 1 March 2010, the defendant developed and implemented a new vehicle standard procedure for ENZED Hose Doctor franchisees under its Occupational Health and Safety Management System and this was introduced and implemented across the ENZED Hose Doctor businesses. The new procedure outlined details for the safe transportation of oxygen and acetylene by reference to Australian Standards and the need for floor ventilation. The defendant's mandatory policy was that Hose Doctor franchisees must not transport oxygen and acetylene in an enclosed truck and if the gases were to be transported, they were to be transported in accordance with Australian Standards; lastly, the defendant was in the process of implementing a system of compulsory auditing of ENZED Hose Doctor trucks throughout Australia to ensure compliance with the defendant's Occupational Health and Safety Management System as well as compliance with health and safety laws in the relevant State or Territory. This system involved an audit and a Hose Doctor compliance checklist. It was anticipated that this programme would be implemented throughout Australia over the next six to twelve months having regard to the large number of Hose Doctor franchisees throughout Australia.
17 Mr Johnson then spoke of the defendant's co-operation with WorkCover during its investigation of this incident and emphasised that the defendant had not been prosecuted for any occupational health and safety offence in any State or Territory and had no prior convictions. Reference was made to the defendant's community involvement and the fact that it supported a large number of charitable events on an annual basis. The defendant had recently arranged fundraisers for the Cancer Council Daffodil Day and Australia's Biggest Morning Tea and the Childrens Medical Research Institute's Jeans for Genes Day, as well as the Red Cross and Salvation Army appeals for the New South Wales and Victorian Bushfires in January 2009 and the recent Queensland floods. The defendant also supported community projects such as the Lions Club of Australia's "World Festival of Magic" and "Circus Quarkus for Kids" for children with special needs. During the January 2009 New South Wales and Victoria bushfires the defendant emailed all those involved in ENZED to offer reimbursement to those in New South Wales and Victoria both in relation to labour and parts for any maintenance or repair work carried out urgently on emergency service vehicles. In the response to the recent Queensland floods, the defendant sent an email to affected ENZED persons offering heavily discounted rates for hoses and other parts. Mr Johnson was not required for cross-examination.
DELIBERATION
18 It is necessary, firstly, to consider the objective seriousness of the offence. Counsel for the prosecutor, accepted that there were no aggravating factors involved in this breach, nevertheless, there was a risk of serious injury and possibly death arising from the possibility that transporting gases in trucks that were inappropriately ventilated couldlead to an explision. Secondly, the objective seriousness of the offence was demonstrated by the fact that simple and straightforward steps were available by following published Australian Standards that would avoid the risk by ensuring appropriate ventilation of the trucks. The risk of transporting dangerous gases was well known.
19 Counsel for the prosecutor pointed out that this incident took place on 20 June 2008, approximately two months after Marks J had delivered judgment in Inspector Townsend v Carrier Air Conditioning Pty Ltd [2008] NSWIRComm 74, being a judgment in an occupational health and safety prosecution relating to the storage and handling of dangerous goods, including acetylene and oxygen, in circumstances where service technicians carried these dangerous gases in vehicles provided by the defendant in order to carry out their service work. It was submitted that, although the industry in which this work took place was different to the present case, the circumstances of travelling servicemen conveying dangerous gases in motor vehicles was very similar to the type of work being carried out by the defendant through the Hose Doctor franchises. The existence of Australian Standards requiring proper ventilation in the carrying of dangerous gases and the judgment of Marks J some two months prior to the accident was said to demonstrate the foreseeability or obviousness of the risks, the serious consequences of dangerous gases exploding and the simple remedial steps of ventilation available and so underlined the objective seriousness of the offence.
20 In specific terms, the defendant did not address whether this was a serious breach but drew to the Court's attention those matters that were said to mitigate the seriousness of the breach. It was in this context that the defendant drew attention to the fact that it had been in business in Australia since 1968 and had not been in breach of safety legislation throughout Australia. Mr Pascoe had suffered minor injuries as a result of the incident and was himself the owner and working director of MCP, the company that owned the mobile franchise ENZED Hose Doctor business. Mr Pascoe had purchased, owned and operated the truck from which MCP's mobile ENZED Hose Doctor business was conducted in the allocated territory and the defendant had no right to approve the truck purchased by Mr Pascoe and that was solely a matter for Mr Pascoe. The truck was registered to MCP. The defendant had incorrectly understood that Riomore was responsible for the health and safety of the trucks being used by the ENZED Hose Doctor franchisees and thought that it was only responsible for the health and safety aspects of the products it supplied to the ENZED service centres, who then supplied them to ENZED Hose Doctors. The defendant accepted that those assumptions were incorrect. After the incident on 20 June 2008, the defendant accepted it was mistaken about these matters and took steps to improve its Occupational Health and Management System in the ways set out in the Agreed Statement of Facts. It was submitted that, before the incident, MCP could have, but did not, put in place any additional safety systems. Mr Pascoe, after 25 years in the trade, was aware of the dangers of oxygen and acetylene. The independent report of BOC, commissioned by WorkCover after the incident, found that the root cause of the explosion was poor trade practice on the part of the last person to use the bottles by leaving the valves open, but found that the exact cause of the explosion was unknown.
21 During submissions it was clarified on behalf of the defendant that the company's misunderstanding as to its occupational health and safety obligations to the Hose Doctor franchisees was not a view reached by taking advice on the subject but was basically an assumption made because of the fact that the Hose Doctor franchises were independent businesses who had been sub-contracted to perform service functions using the defendant's product. It is difficult to accept that these matters should reduce the seriousness of the offence. The defendant was a well-developed corporation with, admittedly, a comprehensive safety system mainly in relation to its own employees and in relation to the use to be made of its products but it had neglected to make safety arrangements concerning the operation of the Hose Doctor franchises who were a significant part of the manner in which the defendant undertook its business. Even a superficial review of the many occupational health and safety prosecutions dealt with in this part of the Court's jurisdiction would have quickly shown that the Court had consistently and frequently drawn attention to the fact that occupational health and safety obligations could not be delegated and especially could not be delegated to sub-contractors, even though those arrangements might have widened the field of persons to whom the defendant had obligations in relation to the safety of the people involved.
22 The Court accepts the submissions for the prosecutor as to the extent of control able to be exercised by the defendant and the fact that the defendant was in a position to require the vehicles to be properly ventilated if they were to carry dangerous gases. The company was also in a position to give directions as to turning off all connections on dangerous gas cylinders after their use so as to reduce the chance of the gases leaking inside the vehicle, especially when it was left locked for extended periods such as overnight parking. The numerous photographs presented to the Court dramatically demonstrate the force of the blast that destroyed not only the Hose Doctor van but also severely damaged nearby vehicles and buildings. Having regard to the size of heavy pieces of equipment that were expelled from the van, it may be concluded that Mr Pascoe was extraordinarily lucky to have received relatively minor injuries. The Court accepts the prosecutor's description that, in other circumstances, an explosion of this nature could have led to fatal injuries being received by non-employees in the area as well as the driver of the van: indeed, that was the finding of the independent report provided to WorkCover by BOC. Having regard to these matters it can be concluded that this was a serious breach by the defendant.
23 In relation to deterrence, the Court accepts the prosecutor's submission that, in this case, general deterrence has a significant role to play in the setting of an appropriate penalty but that, having regard to the record and subsequent actions of the defendant, specific deterrence has a much-reduced role. In the context of general deterrence the prosecutor drew attention to the case dealt with by Marks J a few months before this incident. Although there were relevant Australian Standards, this case demonstrates the need to reinforce adherence to those Standards and the simple steps that may be taken to avoid the risk of explosion while transporting dangerous gases. Considering all the matters disclosed about the defendant, the Court accepts that in this case specific deterrence has a relatively minor role to play.
24 There are a number of subjective factors that are required to be considered in mitigation. The Court record indicates that the defendant entered its plea on the first occasion that the matter was in the Court's list - it is therefore appropriate that the defendant receive a twenty-five per cent discount for its early plea. The evidence establishes that the defendant has a good safety record and this is its first offence despite its size and the reach of its operation after many years of business. The defendant is thereby entitled to the leniency afforded to a first offender. The defendant's good safety record occurs in the context of an established safety system that could be rightly described as being comprehensive except for the defendant's erroneous view as to its obligations in relation to Hose Doctor franchisees. On the evidence. had the defendant realised that its assumption as to liability for franchisees was erroneous, it is likely that it would have embarked upon the same type of comprehensive approach as adopted towards its own employees. It is uncontested that the defendant co-operated with the WorkCover investigation and that is a matter of some significance in considering mitigating factors. It is also significant that, from shortly after the accident, the defendant embarked upon investigating and implementing measures that would address the risk shown to exist by the occurrence of this incident. The evidence also establishes the defendant to be a good corporate citizen, not only by its good safety record, but also through its involvement with numerous charities and worthwhile causes.
25 Two further matters need to be addressed. Firstly, the defendant submitted that it had demonstrated its contrition not only by the actions it had taken in relation to and in response to the incident but also by the statements made by Mr Johnson on its behalf in his affidavit expressing the defendant's sorrow that the incident had occurred and expressing its regret at any harm or risk of harm caused to Mr Pascoe and any employee of representative of MCP as a result of the explosion. It was also pointed out at the beginning of the submissions for the defendant that present in Court were senior executives of the defendant as well as senior legal representatives from the solicitors acting for the defendant and this level of attendance was a firm demonstration of how seriously these proceedings and their occupational health and safety obligations were regarded by the defendant. Section 21A(3)(i) of the Crimes (Sentencing Procedure) Act 1999, however, provides that the Court may only take into account remorse shown by the offender if the offender has provided evidence that he or she has accepted responsibility for his or her actions and the offender has acknowledged any injury, loss or damage caused by his or her actions or there has been reparation for such injury, loss or damage or both. In precise terms, the defendant's evidence and submissions did not address these provisions but the Court accepts the submission for the prosecutor that the specific statement of regret in the evidence of Mr Johnson taken with the detail of his evidence, in substance, meets the statutory requirement. The Court will therefore proceed on the basis that the defendant has exhibited remorse and contrition in these sentencing proceedings.
26 The second matter that should be mentioned is the case of Inspector Townsend v Carrier Air Conditioning Pty Ltd considered by Marks J and referred to earlier in this judgment. The prosecutor drew attention to the similarity of the offence, although occurring in another industry. While the Court has accepted that analysis, there are differences in the circumstances of the two defendants and those differences should be reflected in the penalty imposed upon the defendant in this matter. What is most significant about the Inspector Townsend case is that: the defendant had provided Material Safety Data Sheets for its drivers dealing with the dangers of transporting dangerous gases and the need to adequately ventilate the vehicles; and, the defendant required the service technicians to carry compressed gases in their vehicles but did not have a policy in place in relation to how those gases were to be stored or ventilated in the vehicle. There was no procedural policy in place whereby the defendant required the material safety data sheets to be followed. Further, in that case the Court drew attention to the fact that there was a considerable and unjustified delay in the defendant complying with WorkCover requirements that in turn necessitated the issuing of improvement notices. There was also criticism of the defendant commencing to install whirlybirds for ventilation in its national fleet but only in respect of new vehicles ordered after mid-2005 and the fact that those devices did not appear to have been installed in existing vehicles until after the incident that prompted the prosecution.
ORDERS
27 Having regard to the above matters, the Court makes the following orders:
(i) the defendant, Parker Hannifin (Australia)
Pty Limited is found guilty of a breach of s 10(1) of the Occupational Health
and Safety Act 2000 as particularised in the Amended Application for Order,
to which it entered a plea of guilty;
(ii) the defendant is fined the
sum of $110,000 with half that sum to be paid to the prosecutor by way of
moiety;
(iii) the defendant is to pay the costs of the prosecutor in a
sum as agreed and in the absence of agreement, as assessed and ultimately
ordered by the Court.
**********
ANNEXURE
STATEMENT OF AGREED FACTS
1. At all material times the
Prosecutor was an Inspector duly appointed under Division 1 of Part 5 of the
Occupational Health and
Safety Act 2000 (Act) and empowered under section
106(1)(c) of the Act to institute proceedings in the within matter.
2. At
all material times Parker Hannifin (Australia) Pty Limited (ACN 008 446 893) was
a corporation whose registered office is situated
at 9 Carrington Road, Castle
Hill in the State of New South Wales (Parker Hannifin) and was an employer.
3. At all material times, Parker Hannifin was a company that was registered
with ASIC on 14 August 1967. Parker Hannifin are in the
business of supplying
motion control products inclusive of, but not limited to, fluid connector
products, hydraulic components, filtration
and automation products. Parker
Hannifin acquired the ENZED Group in June 1989 and have developed the ENZED
network further with
59 franchised territories throughout Australia, which it
sold to franchisees, for the right to operate a mobile hose and fitting
service.
Parker Hannifin operates under the trademark ENZED. Parker Hannifin manages the
franchise system and provides business systems,
including occupational health
and safety systems, and product, including hoses, fittings and accessories, for
its franchisees to
purchase.
4. At all material times Riomore Pty Ltd
(Riomore), trading as Enzed Wetherill Park, was a company that was registered
with ASIC on
4 September 1997 and had around 18 employees. Riomore is a
franchisee of Parker Hannifin and manages territory it purchased from
Parker
Hannifin. Riomore provides support to Hose Doctors by way of administration and
product sales. Riomore is a Service Centre
franchisee. Before Hose Doctors are
permitted to purchase the franchise, they are required to be approved by Riomore
and Parker Hannifin.
Riomore currently has 5 Franchised Hose Doctors reporting
to the Service Centre at Wetherill Park, and 5 employees operating vehicles
as
Hose Doctors. The Service Centre at Wetherill Park is one of three separate
franchised "territory areas" managed by Riomore and
Wetherill Park provides the
administration for all the other Service Centres under its control.
5. At
all material times Mr Michael Verne Pascoe (Mr Pascoe) was the working director
of MCP Maintenance & Contracting Pty Ltd
(ACN 078 897 024) (MCP). MCP was
registered with ASIC on 13 June 2007. MCP is a franchisee Hose Doctor of Parker
Hannifin.
6. A Hose Doctor undertakes mobile servicing, removal, repairs,
maintenance and installation of high-pressure hoses and hydraulic
hose
assemblies on machinery at the premises of clients. There are no formal
qualifications required to become a Hose Doctor, although
Parker Hannifin
requires that all Hose Doctors must complete a two week TAFE certified course
conducted by Parker Hannifin in Wodonga
prior to commencing work either as an
employed Hose Doctor or a franchise Hose Doctor. Parker Hannifin developed the
two week course
to meet the requirements of their industry. The course includes
practical and theoretical aspects, including identification of products,
making
hose assemblies, sales and basic business skills.
7. Mr Pascoe worked as a
franchisee Hose Doctor. Mr Pascoe had 25 years experience as a boilermaker,
including relevant qualifications.
MCP purchased the Hose Doctor franchise as a
going concern in March 2007, including the vehicle registered number ENZ-307,
racking
inside the vehicle and a hose crimping press and a hose cutting saw.
Everything in the vehicle, including tools of trade, is the
property of MCP,
with the exception of the stock, such as hoses and fittings, which are supplied
on consignment to MCP by Riomore.
MCP purchased the business from Julian
Tullier, who then became a Service Centre manager at the Wetherill Park Service
Centre. Mr
Pascoe had earlier commenced working as a Hose Doctor in 1998, with a
3 year break prior to resuming work as a Hose Doctor in 2007.
8. The Hose
Doctor prepares and provides clients with an invoice once work is completed and
the clients pay Riomore directly. MCP
is paid via a commission structure and
gets a commission fee and a labour fee for each job. MCP prepares and submits
invoices to
Riomore for its commission and labour. Riomore then pays the invoice
amount directly to MCP's nominated bank account once each month.
MCP does not
receive payments from any other company or entity. Existing clients are able to
contact MCP direct, or via the Service
Centre, and Riomore allocates any new
clients to Hose Doctors via a rotating system. Hose Doctors are not allowed to
undertake work
for any other entity besides Riomore.
9. The ENZED franchise
system was established in New Zealand and adapted for the Australian marketplace
in the early 1990s when Parker
Hannifin acquired the business named ENZED.
Parker Hannifin is the franchisor, and it enters into agreements with the
Service Centre,
Riomore. Parker Hannifin also enters into agreements with Hose
Doctors to perform services. Each Hose Doctor operates a proprietary
limited
company in the conduct of its business. The service centres utilise the services
of Hose Doctors as well as doing their own
over the counter sales. Riomore
purchases product from Parker Hannifin in the conduct of its business and pays
Parker Hannifin to
support advertising and branding activities as well as a
management service fee. The contract required MCP to comply with all of
the
mandatory specifications, standards and operating procedures and to utilise the
techniques as set out in the various manuals
produced by Parker Hannifin and as
communicated by Parker Hannifin from time to time to MCP in writing. Riomore
allocates the work
and makes product available on consignment to Hose Doctors,
and MCP undertakes the Hose Doctor jobs.
10. The contractual arrangements
between MCP, Parker Hannifin and Riomore are by way of a three-way contract. The
contract/deed was
signed on 8 May 2007. The contract required MCP to comply with
all of Parker Hannifin's mandatory specifications, standards, operating
procedures and manuals. Parker Hannifin required MCP to attend and complete its
initial training program and any other training programs
it required. Although
the contract required Mr Pascoe to attend the training program he did not
undertake this training in 2007.
He had attended the training in 1998 during his
earlier work period as a Hose Doctor (initial training).
11. Parker Hannifin
had documented occupational health and safety procedures, which, under the terms
of the contractual arrangements,
MCP is required to follow. These were part of
the mandatory specifications, standards, operating procedures and manuals that
franchised
Hose Doctors were required to comply with.
12. The contract
required MCP to lease or purchase a Hose Doctor vehicle for the operation of its
franchise, which was to be stocked
by the Service Centre Franchisee (Riomore).
The contract gave Parker Hannifin authority to conduct inspections and audits of
the
vehicle without notice. Parker Hannifin required the vehicle to be kept in a
clean, attractive condition and in good repair. The
vehicle was not to be used
for business other than as specified in the contract or Parker Hannifin's
manuals, without the prior written
permission of Parker Hannifin.
13. At all
relevant times, Hose Doctors such as MCP had a right to set up the vehicle
according to the anticipated needs of its customers.
Parker Hannifin were aware
that some Hose Doctors carried dangerous goods, including gases, in their vans.
Parker Hannifin's operating
procedures, mandatory specifications, standards and
manuals did not specify ventilation requirements for franchisee vehicles At the
time of the incident MCP's vehicle was carrying oxyacetylene and the ventilation
did not comply with the Australian Standard AS 4289/19995
in relation to floor
venting.
14. MCP is a franchisee Hose Doctor and works from the Service
Centre at Wetherill Park in New South Wales. Hose Doctors work from
an assigned
Service Centre, however they are able to access other Service Centres, for
example, if they are required to pick up product.
15. MCP owned and operated
a vehicle as part of its work. The vehicle was an lsuzu NKR 200 truck,
registration ENZ-307, with a 2 door
cabin at the front and a rear workshop
compartment covered by a fixed canopy. The workshop compartment had limited
ventilation that
consisted of a 200mm x 100mm grill located on the floor on the
passenger side of the compartment. The vehicle had been serviced about
1 month
prior to the incident, and that there had been no electrical work or problems.
Fuel had been added to the vehicle a few days
prior to the incident on 20 June
2008. The rear workshop area of the vehicle was fitted out in the same
configuration at the time
of the incident as it was when MCP purchased the
franchise and vehicle in 2007.
The Incident
16. On 20 June 2008 Mr Pascoe drove approximately 25
kilometres from his home at Glenmore Park to the premises of a client located
at
Arndell Park in order to determine what parts were required to complete the job.
Mr Pascoe then commenced to drive from Arndell
Park to Advanced Industrial
Products (AlP), a supplier of low pressure fittings located in Ormsby Place,
Wetherill Park, to purchase
the required parts. Mr Pascoe turned into Ormsby
Place, Wetherill Park, where AlP is located.
17. As Mr Pascoe was turning
into Ormsby Place, Wetherill Park, he recalls turning on the indicator and
hearing a "bang". Approximately
25 metres into Ormsby Place there was an
explosion in the rear workshop compartment of his vehicle, the force of which
rendered Mr
Pascoe dazed and suffering minor injuries. Mr Pascoe exited the
vehicle from the driver side door. Mr Pascoe states that he saw a
small fire in
the driver side rear workshop compartment after he exited the vehicle.
18.
The force of the explosion resulted in the vehicle being significantly damaged,
with all the rear workshop compartment windows
being destroyed and the metal
cladding being blown off and spread along Ormsby Place. The rear workshop roof
beam was bent upward
and there were no roof panels left on the rear of the
vehicle. The passenger door and window was smashed and the driver door was
damaged. The force of the explosion sent metal into the cabin of the vehicle,
blew the front windscreen out and tore the grille.
Debris from the explosion was
strewn up to 100 metres along Ormsby Place, the window of a building was damaged
and there was significant
damage to another vehicle was badly damaged by the
force of the blast.
19. At the time of the incident there were two Size E
gas cylinders in the rear of the vehicle, one cylinder containing oxygen and
one
containing acetylene, as well as small quantities of other flammable substances,
including Hyspin AWH68 and Wurth Brake Cleaner.
The MSDS for the Wurth Brake
Cleaner states that the product is highly flammable and should be kept in a well
ventilated place. The
MSDS for acetylene states that it is extremely flammable
and that containers should be kept in well ventilated places and keep away
from
sources of ignition.
20. The gas cylinders were held upright in the workshop
compartment, clamped to and against the wall at the top and bottom. Mr Pascoe
did not hear or smell anything prior to the explosion. The vehicle was locked
overnight outside his home and he had not accessed
the rear compartment on the
day of the incident. Mr Pascoe stated that his last job using the cylinders was
approximately three weeks
prior to the incident. At that time, the oxygen
cylinder was empty and the acetylene cylinder was partially full.
21.
Following the incident, BOC employees, who had experience and qualification in
the storage of gases and dangerous goods, attended
the scene and checked the
cylinders to ensure they were safe. BOC employees placed the cylinders back into
their upright positions
in their racks. BOC stated that both cylinder valves
were in the open position and that the oxygen bottle was empty and the acetylene
bottle was about 60% full. The cylinders were tested by BOC at their premises,
and no faults were found with either cylinder.
22. BOC prepared a report,
which indicated that the oxygen valves were found to be open on both the
cylinder and the torch, the acetylene
valve was open and the valve on the torch
barely closed. The report also highlighted the wiring in the rear of the vehicle
was not
to a standard which was required by the risks of acetylene or oxygen
build up. The report also found the vehicle was an older design
that did not
have the venting installed in later model vehicles.
23. The BOC report found
the root cause of the incident was poor trades practice on the part of the last
person to use the bottles
by leaving the valves open. The exact cause of the
explosion is not known.
24. Mr Pascoe suffered minor injuries, including
lacerations and disorientation. Mr Pascoe had 7 stiches in his head and suffered
some bruising on his back. There was a high risk of serious injury or death
resulting from the incident. There was also a significant
risk of injury to the
public, with the debris from the incident being spread 100 to 150 metres from
the vehicle.
Systems of Work Prior to the Incident
25. The OHS system of MCP
consisted entirely of the system provided by Parker Hannifin as part of the
franchise contract agreement.
MCP could have but did not put in place any
additional safety systems.
26. Parker Hannifin could require the conduct of
the business to be undertaken in accordance with relevant manuals, mandatory
specifications,
standards and operating procedures. Parker Hannifin was able to
terminate the contract if the contract terms were not complied with.
Parker
Hannifin had the right to enter MCP's vehicle for the purpose of conducting
inspections to ascertain compliance with procedures,
rules and standards
prescribed in the manual. Parker Hannifin could also audit MCP's vehicle. Parker
Hannifin were unable to provide
a copy of a documented audit for MCP's vehicle.
27. Parker Hannifin provided MCP with an OHS system that MCP was required to
follow. The OHS system did not specifically state how
the vehicle was to be
fitted out or the way in which various gases and other dangerous goods were to
be stored in the vehicle. Parker
Hannifin did not do anything to ascertain
whether MCP's vehicle was suitable for carrying dangerous goods.
28. There
was no reference in the Parker Hannifin OHS System to relevant Australian
Standards for the Storage and Handling of Gas
Cylinders or Oxygen and Acetylene
Gas Reticulation systems, AS 4289-1995 and AS4332-2004. When interviewed
following the incident,
Mr Pascoe could not recall any training about dangerous
goods he may have received during his initial training. In the period between
his initial training and the date of the incident, no additional information was
provided to him in relation to the need to undertake
checks to ensure that gas
cylinders were turned off and that cylinders were adequately ventilated when
being transported. MCP's vehicle
was not adequately ventilated in compliance
with AS4289-1995 Oxygen and Acetylene Gas Reticulation Systems, 4.3B Cylinders
in Storage,
that is, venting in both the top and bottom of an area where oxygen
or acetylene bottles are kept. The workshop section of the vehicle
was fully
sealed with no airflow vent.
29. MCP purchased the oxygen and acetylene
gases from BOC Gases at Wetherill Park. After the incident, Mr Pascoe obtained
his MSDS
for acetylene from Riomore. MCP was not provided with a MSDS for
acetylene or oxygen and the MSDS for Hyspin AWH68 and Wurth Brake
Cleaner were
out of date, that is, outside the required 5 year legislative time frame. Mr
Pascoe was not aware of the required 5
year time frame for updating MSDS.
30. Parker Hannifin provided training to Mr Pascoe in the form of a two week
training program on commencement of his employment in
February 1998. In January
2005 the training was reviewed as the previous course was not aligned with
national competencies, and the
course is now a TAFE certified program. Parker
Hannifin did not ensure that Mr Pascoe attended the revised training program
prior
to recommencing his work as a Hose Doctor in 2007. The revised training
programs covered working with oxyacetylene in greater detail.
When interviewed
in connection with the incident, Mr Pascoe stated that after 25 years in the
trade he knew '...the dangers of chemicals
especially around acetylene'.
31.
The Parker Hannifin Operating Procedures required that a review was to be
undertaken every year by Riomore to identify training
requirements for Hose
Doctors. This was not done.
Systems of Work Following the Incident
32. Following the incident
Mr Pascoe took the exam for the revised Parker Hannifin certification program on
23 October 2008. The Service
Centre Manager for Wetherill Park got the exam from
the training centre in Wodonga. Mr Pascoe undertook the exam at Wetherill Park
and the completed exam was then returned to Wodonga.
33. Following the
incident Mr Pascoe determined the design of, and paid for, the workshop
compartment in his new work vehicle. The
ventilation system at the rear of the
workshop compartment in his new vehicle consists of an all metal interior with a
ventilation
system consisting of a 600 mm x 300 mm mesh grill in the floor, and
a 'whirly bird' in the roof. There is also an open mesh area
of approximately
350mm x 320mm located under the oxygen and acetylene tanks which leads to the
exterior of the vehicle. The front
of the workshop compartment has a ventilation
system comprising a 'whirly bird' in the roof and an open mesh area on the
driver's
side of approximately 350mm x 340mm.
34. MCP obtained updated MSDS
for the Hyspin AWH68 and Wurth Brake Cleaner from Riomore and they are located
inside the vehicle.
35. Following the incident Parker Hannifin advised all
franchise members via email of the incident and instructed the franchisees
to
remove products such as Wurth Brake Cleaner from their vehicles. OHS fact sheets
were also circulated outlining the requirements
for carrying gas cylinders. MSDS
were also distributed to franchise members and were advised that the MSDS must
be placed in the
folder in their vehicles.
36. Following the incident Parker
Hannifin also advised all franchise members that oxygen and acetylene cylinders
should no longer
be carried in Hose Doctor vehicles unless the vehicles were
adequately vented to atmosphere. If there was a requirement to use these
items
for repairs such as soldering, it was recommended that Hose Doctors should
return to a Service Centre with the relevant hose
fittings to undertake repairs.
Previously repairs that required the use of oxyacetylene were carried out at the
premises of clients.
37. The following supporting documentation is annexed:
a. 67 Colour photographs taken by Inspector Wayne James on 20 June 2008,
inspector Pamela Estreich on 7 January 2009 and Inspector
Andriano Grauner on 15
January 2009;
b. 48 Photographs taken by NSW Fire Brigade on 22 June 2008;
c. 24 Photographs taken by Senior Constable Bottle, NSW Police Force on 20
June 2008;
d. Factual Inspection Report of Inspector Wayne James dated 31
July 2008;
e. 2 Factual Inspection Reports of Pamela Estreich dated 20 April
2009;
f. BOC Incident Investigation Report, Incident Number NSW-08/0245;
g. Fire Scene Examination Field Notes, Fire Investigation and Research Unit,
NSW Fire Brigade, dated 23 June 2008;
h. COPS Report, NSW Police (not
including annexed photographs already reproduced at (c) above);
i. Initial
Report, Forensic Services Group, NSW Police Force dated 20 June 2008;
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