Inspector Dugdale v Weldlok Industries Pty Ltd [2011] NSWIRComm 89 (7 July 2011)

Last Updated: 14 July 2011

Industrial Relations Commission New South Wales

Case Title:	Inspector Dugdale v Weldlok Industries Pty Ltd
Medium Neutral Citation:	[2011] NSWIRComm 89
Hearing Date(s):	27 June 2011
Decision Date:	07 July 2011
Jurisdiction:	Industrial Court of NSW
Before:	Marks J
Decision:	1) A monetary penalty of $60,000 is imposed on Weldlok Industries Pty Ltd with a moiety to the prosecutor. 2) The defendant is to pay the costs of the prosecutor in an amount assessed in default of agreement.
Catchwords:	OCCUPATIONAL HEALTH AND SAFETY - breach of s 8(1) of the Occupational Health and Safety Act 2000 - guilty plea - appropriate penalty - objective seriousness - relative culpability - general deterrence - commitment to occupational health and safety obligations - remorse and contrition - cooperation with the WorkCover Authority - Victim Impact Statement - penalty imposed - orders made
Legislation Cited:	Occupational Health and Safety Act 2000 - s 8(1)
Cases Cited:
Texts Cited:
Category:	Principal judgment
Parties:	Inspector Edward Dugdale of WorkCover Authority of New South Wales (Prosecutor) Weldlok Industries Pty Ltd (Defendant)
Representation
- Counsel:	Mr R Reitano of counsel (Prosecutor) Mr M Cahill of counsel (Defendant)
- Solicitors:	Criminal Law Practice, Legal Group, WorkCover Authority of New South Wales(Prosecutor) Sparke Helmore Solicitors (Defendant)
File number(s):	IRC 1484 of 2008
Publication Restriction:

Judgment

1. The prosecutor, Inspector Edward Dugdale of the WorkCover Authority of New South Wales, has charged the defendant, Weldlok Industries Pty Ltd, with a breach of s 8(1) of the Occupational Health and Safety Act 2000 ("the Act").

2. The defendant has pleaded guilty to the charge and this judgment is concerned only with the question of penalty.

3. Section 8(1) is in the following terms:

8 Duties of employers

(1) Employees

An employer must, so far as is reasonably practicable, ensure the health, safety and welfare at work of all the employees of the employer.

That duty extends (without limitation) to the following, so far as is reasonably practicable,:

(a) ensuring that any premises controlled by the employer where the employees work (and the means of access to or exit from the premises) are safe and without risks to health,

(b) ensuring that any plant or substance provided for use by the employees at work is safe and without risks to health when properly used,

(c) ensuring that systems of work and the working environment of the employees are safe and without risks to health,

(d) providing such information, instruction, training and supervision as may be necessary to ensure the employees' health and safety at work,

(e) providing adequate facilities for the welfare of the employees at work.

4. The charge brought against the defendant is that being an employer, between about 5 September 2006 and about 13 October 2006 at premises occupied by it in Yagoona, New South Wales, it failed to ensure the health, safety and welfare at work of all of its employees and in particular Hasib Kamenjasevic, contrary to s 8(1) of the Act.

5. The particulars of the charge as contained in a second amended application for order, which was filed in Court during the course of the hearing on 27 June 2011 and which, by leave of the Court, now constitutes the charge brought against the defendant, are as follows:

(a) The defendant was an employer.

(b) The defendant employed Hasib Kamenjasevic.

(c) The risk was the risk of employees of the defendant being injured by a high pressure oxygen line and its components exploding and the high pressure oxygen transfer hose and connector (elbow) separating and coming away from the gas cylinder bank manifold piping and striking them.

(d) The defendant failed to undertake and implement a risk assessment in relation to employees working with or near a high pressure oxygen transfer line and associated equipment in its gas storage area in that it failed to:

(i) Identify, by testing or otherwise making enquiries, the risk associated with the use of incompatible components in the high pressure oxygen transfer line;

(ii) Control the risks indentified by not using incompatible components in the high pressure oxygen transfer line.

(e) As a result of the defendant's omissions Hasib Kamenjasevic was placed at risk of injury.

6. All of the evidence given in the sentencing proceedings was documentary. There was an amended agreed statement of facts, which is in the following terms:

(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 ("the Act") and empowered under Section 106(1)(c) of the Act to institute proceedings in the within matter.

(2) At all material times Weldlok Industries Pty Ltd (ACN 000 175 379) was a corporation whose registered office is situated at 115-137 Rookwood Road, Yagoona in the State of New South Wales ("the defendant").

(3) Weldlok Industries Pty Ltd ("Weldlok") was incorporated on 8 May 1956.

(4) At all material times, Weldlok undertook the business of manufacture and supply of galvanised steel products.

(5) Weldlok operated a welding fabrication workshop at its premises located at 115-137 Rookwood Road, Yagoona ("the premises"). The premises consisted of a number of buildings. A gas storage area was located within the premises.

(6) Mr Hasib Kamenjasevic was employed by Weldlok and undertook duties at the premises. Mr Kamenjasevic commenced his employment with Weldlok on the 18 October 1996 and has been in the position of shift supervisor for 6 years. Mr Kamenjasevic's main duties included welding, cutting and moving material. He also regularly undertook the task of changing of gas cylinder packs. Mr Kamenjasevic was 63 years old at the time of the incident referred to below.

The incident

(7) At approximately 1.30pm on Friday, 13 October 2006. Mr Kamenjasevic sustained a traumatic brain injury, eye injury (no vision in both eyes) and multiple facial fractures as the result of an incident which occurred whilst he was working in the oxygen storage compartment at the premises.

(8) The oxygen storage compartment was located on the south side of the gas storage building. The gas storage building was located at the eastern side of the premises behind the metal fabricating factory.

(9) Three types of gases namely Corgon, Acetylene and Oxygen were stored in the gas storage building. Each type of gas was stored in a separate compartment (bay). Each compartment (bay) measured approximately 2.7 metres wide x 4.1 metres deep x 2.6 metres high. The oxygen cylinder storage compartment was located to the left of the other gas storage compartments. The other compartments held high pressure cylinders containing Corgon (Argon) (centre bay) and acetylene (right hand bay) along with their associated regulators and piping.

(10) A high pressure oxygen cylinder pack was located at the back of the oxygen cylinder storage compartment. The manifold and regulator were located on the side wall of the storage compartment adjacent to the pack.

(11) At approximately 1.30 pm Mr Kamenjasevic was working alone in the oxygen gas storage compartment (bay) at the premises. Mr Ahmad Issa, a production labourer employed by Weldlok was undertaking duties in gas storage building. Mr Issa heard a "pop noise" and ran outside the compartment he was in and to the oxygen gas storage compartment where he thought someone must be due to the door being open. Mr Issa found Mr Kamenjasevic lying on the floor in the oxygen gas storage compartment. Mr Issa called out Mr Kamenjasevic's name but got no response.

(12) When he first entered the compartment, Mr Issa noticed that oxygen was coming out of the valve of the oxygen pack manifold within the compartment.

(13) Two other workers then also arrived on the scene and Mr Issa proceeded to the office to call an ambulance. After calling the ambulance he returned to the oxygen gas storage area to assist Mr Kamenjasevic.

(14) When Mr Issa returned oxygen gas storage area, Mr Kamenjasevic had been moved to outside the compartment.

(15) Mr Omar Issa, another worker who had arrived at the scene of the incident, turned off the open valve on the oxygen bank manifold.

(16) Mr Ahmad Issa turned off the isolation valve for the oxygen located on the wall of the compartment.

(17) Mr Kamenjasevic has no recollection of what he was doing at the time of the incident and there were no witnesses to the incident.

(18) It appears that Mr Kamenjasevic had connected the high pressure oxygen cylinder bank transfer line up to the oxygen bank manifold (8 cylinders). As Mr Kamenjasevic turned the valve on, the high pressure oxygen transfer hose and connector (elbow) separated and came away from the gas cylinder bank manifold piping and Mr Kamenjasevic was struck on the head. It is unclear whether it was the end of the hose or the elbow that came into contact with Mr Kamenjasevic.

(19) After the incident, Mr Kamenjasevic was transported to Liverpool Hospital by the Ambulance Service of New South Wales (Re: Patient Health Care Record E780086) where he was examined. Acute Management occurred at Liverpool Hospital between 13 October 2006 and 16 November 2006 and included a decompressive bifrontal craniectomy, insertion of ICP monitor, repair of facial fracture, removal of (R) eye, insertion of tracheostomy tube. Mr Kamenjasevic was then transferred to the Brain Injury Rehabilitation Unit, Liverpool Health service (BIRU) for inpatient rehabilitation on 16 November 2006. Mr Kamenjasevic was discharged home on 24 May 2007. BIRU provides Mr Kamenjasevic with ongoing support and follow up. Mr Kamenjasevic has not returned to work since the incident on the 13 October 2006.

(20) Following the incident Inspector Desmond Lai inspected the site of the incident. His observations of the incident site included observing on the floor a right hand industrial glove, a hard hat, and an open ended spanner. A damaged silver coloured metal elbow was located on the ground in front of the oxygen pack and a damaged hose was connected to a metal lever type isolation valve on the southern wall.

High Pressure Oxygen Pack

(21) The 8 Cylinder high pressure oxygen gas pack, which was in use at the time of the incident, is assembled from a standard 48-litre capacity "G" sized cylinder and is filled to a pressure of approximately 176 bar. All cylinders are manifolded together to allow all cylinders to be simultaneously exhausted through the two outlets provided. The high pressure oxygen pack supplied the oxygen to the Weldlok Workshop via a transfer line. The transfer line included the flexible hose which connected the pack to the manifold located on the wall of the brick structure. The oxygen was used for cutting activities in the workshop.

(22) Linde Gas Pty Ltd (Linde) supplied the Oxygen Cylinder Pack Serial # 6676 prior to the 13 October 2006 incident.

(23) The gas cylinder pack was changed once every one to two days.

(24) The maximum pressure inside the cylinder pack would be 176 Bar. The maximum pressure inside the cylinder is determined during the filling of the pack. There are no regulators to control the delivery pressure to the customer, built into the pack. The regulator that controls the delivery pressure to the customer pipeline is installed inside the stainless cabinet on the wall of the compartment and adjacent to the cylinder pack.

(25) All hoses and pipeline installed prior to the regulator are deemed to be high pressure. All hoses after the regulator are deemed to be low pressure, around 4 bar. The maximum pressure released to the hose would be approximately 176 bar, this would be reduced as the contents are consumed, then the cycle would re-start with each new pack connected to the system.

The Installation of the High Pressure Oxygen Hose and Pipeline

(26) Fluid Tech Hydraulics Pty Ltd ("Fluid Tech") installed the hose and pipeline for the high-pressure section prior to 13 October 2006.

(27) Fluid Tech was a corporation which undertook the business of fluid power systems, mechanical, welding, fabrication and on site service and maintenance. Fluid Tech was incorporated on 2 January 1997.

(28) Weldlok was a customer of Fluid Tech. Weldlok had been a customer of Fluid Tech for about fifteen years. During that time Fluid Tech had attended to the repair and maintenance of various kinds of hydraulically powered machinery at the premises.

(29) In about February 2006 Fluid Tech inquired whether Alfagomma, a supplier of hoses and fittings, could supply hose suitable for high pressure oxygen applications.

(30) In about April 2006 Fluid Tech agreed to install the high pressure oxygen line for Weldlok at the premises. The cost of supply and installation of the high pressure oxygen line was about $1,400.

(31) Weldlok originally approached Nathan Watson, plumber, of Nathan Watson Plumbing to install the new high pressure oxygen line. Mr Watson declined the job as he considered he did not have the qualifications and suggested Fluid Tech do the job.

(32) Weldlok then retained Fluid Tech to install the new high pressure oxygen line. Phil Wall, Production Manager for Weldlok, agreed with Fluid Tech doing the job as they did work for Weldlok from time to time. Mr Wall did not conduct any reference or background check on Fluid Tech's experience with respect to the installation of high pressure oxygen lines.

(33) The installation was undertaken by Mr Charles Woolf, an employee of Fluid Tech, on 5 September 2006.

(34) Mr Woolf had a trade qualification as a fitter/machinist. Also, Mr Woolf had seven years experience working with high pressure gas and air lines. But, Mr Woolf's duties did not include the installation of high pressure oxygen lines and he had received no formal training in these installations and Mr Woolf had no experience in high pressure oxygen installations at the time he undertook the installation at Weldlok's premises.

(35) Mr Woolf was responsible for obtaining all of the components (including the hoses) for the high pressure section.

(36) The hose and components chosen for this installation by Mr Woolf were ordered by Fluid Tech from Alfagomma Australia Pty Ltd ("Alfagomma") on 24 August 2004. At this time Mr Wolf from Fluid Tech advised Mr Wilson from Alfagomma, by phone, that the hose and components were to be used for high pressure oxygen and Mr Wilson responded "not a problem".

(37) The hose (8A6AA) as supplied by Alfagomma was a wire braided rubber hose. The 8A6AA hydraulic hose was built primarily for hydraulic application and not for the transfer of gases, particularly oxygen. The hose is not recommended for use in high-pressure oxygen application. To recommend any product for high-pressure oxygen transfer, a product must be suitably assessed and type tested to ensure its suitability for the application.

(38) Alfagomma were not asked to confirm that the hose, as supplied, was suitable for use as a high pressure oxygen line.

(39) The work done by Fluid Tech in installing the high pressure oxygen line included: measuring up all the pipes to be cut and bent; cutting and bending the pipes; bending and flaring the pipes to go to the manifold; mounting the pipes to the wall; cleaning all parts as they were assembled; using thread tape; assembling all of the components; fitting the hose; and making sure the whip checks were on the hose and were secured to the wall and the oxygen bottles.

(40) There was no risk assessment undertaken of any of the high pressure oxygen line components, as selected and installed by Mr Woolf, before or after installation.

(41) There were no tests of the hose, or other components, undertaken prior to the supply and installation of the high pressure oxygen line.

(42) Prior to commissioning the system Mr Woolf tested the external areas of the system with soapy water, opening up the ball valve on the wall and slowly releasing the pressure into the line by the needle valve on the oxy pack. No leaks were identified. The testing was not documented.

(43) Fluid Tech did not provide Weldlok with a certificate or letter with respect to the commissioning of the installation.

(44) Mr Woolf's supervisor was Mr Phillip Walker, a director of Fluid Tech.

(45) Neither Mr Woolf, nor Mr Walker, told anyone from Weldlok that there would be a need to undertake an assessment or test of the plant so as to ensure it was safe when used. Nor did Fluid Tech provide any information to Weldlok about this plant.

(46) Alfagomma did not have a hose within their available range that they would recommend for high pressure oxygen transfer.

(47) Alfagomma considered that oxygen ageing of the liner material is a type test that would be performed if evaluating the hose for oxygen service. The hose is a hydraulic hose and as such the liner had been tested primarily for oil resistance and not for oxygen service.

System of Work Prior to the Incident

(48) Prior to the 13 October 2006 incident the gas cylinders need to be changed once every one to two days.

(49) Mr Kamenjasevic was provided with on the job training for the changing of gas cylinders progressively over each stage of the construction of the gas storage area. His training was not documented. Mr Kamenjasevic had also received some training conducted by Linde Gas Pty Ltd. At the time of the incident Mr Kamenjasevic's duties had included changing of the gas cylinders for 4 to 5 years. He undertook this task approximately once every day or two.

(50) Prior to the 13 October 2006 incident Weldlok state they had conducted a risk assessment, by way of visual inspection, on the high-pressure oxygen gas line. The risk assessment was not documented.

(51) Prior to 13 October 2006 Weldlok failed to undertake an adequate risk assessment of the high pressure oxygen transfer line which had been installed on 5 September 2006. Weldlok did not identify the risks posed by the newly installed high pressure oxygen transfer line and associated equipment. Weldlok failed to devise adequate controls to eliminate the risks associated with the use of incompatible components in the high pressure oxygen transfer line installed on 5 September 2008. Weldlok did not establish Fluid Tech's suitability to supply and install the components in its high pressure oxygen line system. Weldlok did not conduct a job reference or background check on Fluid Tech's experience in installations of high pressure oxygen lines. Mr Wall who had responsibility for arranging the installation of the high pressure oxygen line relied on the installer undertaking the job to the have the relevant expertise. Prior to the installation no written quotation was given for the job. Prior to the installation Mr Wall did not contact Fluid Tech in relation to the installation. Prior to the installation Mr Wall did not discuss with Fluid Tech the selection of the hose and components for the high-pressure oxygen line. Fluid Tech was known to Weldlok having previously performed satisfactory work at the site. Fluid Tech had never undertaken work involving the installation of a high pressure oxygen transfer line for Weldlok or any one else.

(52) Prior to the 13 October 2006 incident, weekly safety checks of the oxygen gas line were carried out by means of soapy water test and visual check. No documentation was able to be produced by Weldlok in respect of the safety checks on the high pressure oxygen line and its components.

(53) Prior to the 13 October 2006 incident the company had a verbal operating procedure for the changing of gas cylinder banks. There was no documented system of work. The verbal procedure consisted of the person undertaking the task to make sure they thoroughly washed their hands and to perform the task without gloves. The person undertaking the task was to fully close the valve on the expired oxygen pack, then fully close the workshop valve located on the wall. The feed line from the valve on the expired oxygen pack is then removed with a spanner. The feed line is then reconnected to a full oxygen pack. The workshop valve is then slowly opened. Once the workshop valve is opened the oxygen pack valve is slowly opened.

(54) High pressure oxygen has oxidising and explosive properties and strict cleanliness levels are required when handling the system to prevent the ingress of contaminates. The Chemwatch Material Safety Data Sheet for Oxygen notes that "concentrated oxygen turns most materials, including metals, into a fuel. Never use oil or grease on oxygen cylinder valves or regulators. It readily causes an explosion." The Linde Gas Material and safety Data Sheet for oxygen notes "oxygen vigorously accelerates combustion".

System of work subsequent to the incident

(55) A Prohibition Notice number 153307 was issued to Weldlok on 16 October 2006 requiring the company to cease operating the gas storage compartment area until a competent person carried out a documented risk assessment and implement control measures.

(56) After the 13 October 2006 incident, Weldlok contracted Linde Gas Pty Ltd ("Linde") to replace all hose and components in the gas storage area. The high-pressure hose and fittings in the oxygen gas bay were replaced. New valves, pipe work, regulators, flash back arrestor and non-return valves on the oxygen bank were fitted. The new installation by Linde was carried out in accordance with A.S 4289-1995 Oxygen and Acetylene gas reticulation system. Linde followed directives from their then parent company, Linde AG, in hose and component selection. The directive stated that only convoluted stainless steel hose was acceptable for high-pressure oxygen application. The new hose as fitted is a: 6mm NB, 1500mm long, female end connections, test pressure 45800Kpa, cleaned and bagged for oxygen service and a copy of test certificate supplied. Weldlok obtained a certificate of commission from Linde prior for the commissioning of the new system.

(57) Subsequent to the incident Weldlok carried out a documented risk assessment in relation to the connection and disconnection of the cylinder banks within the oxygen cylinder store and also for the corgon and acetylene cylinder store.

(58) Subsequent to the incident Weldlok has established a written safe work instruction regarding disconnection/reconnection of high pressure feed line for oxygen cylinder banks (and also for the corgon and acetylene cylinder banks). The new procedure included having an observer present when the cylinders were changed to monitor the operator. Weldlok has established a written safe work instruction regarding forklift driver removing and replacing of oxygen cylinder banks by forklift (and also for the corgon and acetylene cylinder banks).

(59) After the incident Weldlok conducted training to all relevant staff on the new safe work instruction on changing of cylinder banks.

(60) After the incident Weldlok introduced face masks as additional personal protective equipment to be worn whilst changing cylinder banks.

(61) The following documentation is attached:

(a) Factual Inspection report of Inspector Lai dated 13 October 2006.

(b) 23 Colour photographs taken by Inspector Lai on 13 October 2006

(c) 10 Colour photographs taken by Inspector Lai on 13 October 2006

(d) 6 Colour photographs taken by Inspector Lai on 3 September 2007

(e) Chemwatch Material Safety Data Sheet for Oxygen

(f) Linde Gas Material and safety Data Sheet for oxygen

(g) Report "Failure of Compressed Oxygen Hose - Observations"

(h) Prior convictions certificate.

7. The documents referred to in [61] were attached to the amended agreed statement of facts.

8. For the defendant, there was admitted into evidence an affidavit of a Quality, Safety and Environment Manager, Hope Fiona Shepherd, and a letter from the Managing Director of the defendant addressed to the Court expressing regret for the incident which occurred and for the breach by the defendant of the Act, and detailing certain tangible support afforded to the injured employee.

9. The affidavit of Ms Shepherd focussed on the activities of the defendant, its systems and procedures prior to the incident, and changes made to those systems and procedures after the incident.

10. The defendant was established in 1955. It manufactures and supplies galvanised steel products. It employs about 66 people at a site in Yagoona, including 50 production employees and 16 office employees. Industrial gases, including oxygen, corgon and acetylene, are used by it in its manufacturing processes.

11. The incident which was the catalyst for the institution of these proceedings occurred after the defendant had determined to carry out improvements to its premises and in particular to shorten the high pressure oxygen line so as to avoid the hose touching the ground and becoming contaminated.

12. The defendant initially approached a plumber to carry out this work. He declined, indicating that he did not have the expertise in this area. The defendant then contacted Fluid Tech Hydraulics Pty Ltd ("Fluid Tech"). That company had been a contractor to the defendant for approximately 15 years, had demonstrated a record of good workmanship and was considered by the defendant "to be a trusted and reliable contractor." Fluid Tech had been recommended by the plumber.

13. Paragraph 35 of Ms Shepherd's affidavit sets out in summary form communications between the defendant and Fluid Tech concerning its capacity to perform the installation work.

14. The affidavit of Ms Shepherd sets out the occupational health and safety protocols, procedures and systems used by the defendant both before and after the incident. I am persuaded on the basis of the evidence that prior to the incident the defendant had a commitment to the discharge of its obligations under the Act and that it had protocols, systems and procedures in place of a comprehensive and thorough kind, albeit that certain matters were changed after the incident that would constitute an improvement.

15. Furthermore, immediately following the incident, the defendant took steps to improve its occupational health and safety procedures by way of formal risk assessment, changes made to a number of fittings, the introduction of documented work instructions and new procedures, the use of additional personal protection equipment, the provision of formal and documented training, the introduction of regular safety inspections and the replacement of flexible hoses every six months, whether damaged or not.

16. In 2010, the then existing facility was replaced by a bulk gas storage facility installed by, commissioned by and maintained by Air Liquide. There is now no need for employees to become involved in the connection and disconnection of hoses from gas cylinders because the new bulk gas storage facility is connected directly to the defendant's factory with a dedicated and fixed metal tubing to carry the gas.

17. Significantly, for the assessment of the culpability of the defendant, Ms Shepherd, in her affidavit, said:

[60] In the course of the WorkCover investigation of the subject incident, Weldlok became aware that the flexible hose and metal fittings attached thereto, as supplied and installed by Fluid Tech, were not compatible for use with oxygen. Prior to the disclosure of this information as part of the WorkCover investigation, Weldlok, acting in reliance on Fluid Tech, was of the belief that the flexible hose and metal fittings supplied and installed by Fluid Tech were compatible for use with oxygen.

[61] Nonetheless, Weldlok accepts that the flexible hose, if compatible for use with oxygen, should have been labelled in accordance with the relevant Australian Standard as and from the time of its installation.

18. The defendant has three prior convictions for breaches of the former Factory Shops and Industries Act dating back to 1970, 1981 and 1985. Each of the prosecutions was taken before the Chief Industrial Magistrate and it may be assumed that they were for offences of a minor kind.

19. Overall, given the nature of the defendant's undertaking, and the period it has been in business, the defendant has a good safety record. The prosecutor did not contend otherwise.

20. The defendant readily made available to the WorkCover Authority of New South Wales a report that it obtained from Connell Wagner Pty Ltd, Engineers, dated 17 December 2008. That report became evidence in the proceedings, being attached to the amended agreed statement of facts. The expert report was unable to identify with precision any particular cause of the explosion that gave rise to the failure of the hose and the component parts fitted to it. The report identified as "likely causes" for the explosion a contaminant which had lodged itself within one of the fittings or a dislodged particle which happened after repeated opening and closing of a nut each time that a cylinder exchange occurred. There were other possible factors identified, including the mass of the failed hose fitting, which was less than that of the existing replacement hose.

21. In addition to the inability of the expert report to point to any particular cause of the incident, I note the following matters which impact on the assessment of the culpability of the defendant:

1) There was a possibility of contamination in the hose prior to its installation due to lack of cleaning.
2) The type of hose fitting provided could have given rise to particle impingement.
3) There was a likelihood that the components that were provided by Fluid Tech were a contributing factor but it was not possible to state conclusively whether the components were the causative factor.
4) The system of work used by the defendant was not a contributive factor.
5) Oxygen ignition accidents will occur in systems that are designed and approved for oxygen service. The likelihood of oxygen explosions can be reduced and contained but it is not reasonable to assume that the likelihood of oxygen explosions can be completely prevented. If an approved hose had been used, it is reasonable to assume that it could "better contain an ignition should it occur."

22. The starting point for the assessment of an appropriate penalty is the characterisation of the objective seriousness of the offence. The prosecutor in submissions stressed that the charge as framed was directed to the risk of injury that was created by the installation of the new hose and its component parts by Fluid Tech and was not directed to the particular incident itself in which the defendant's employee sustained very serious injuries.

23. Although the submissions of the parties converged in one area, to which I shall shortly refer, they were apart about the culpability of the defendant in terms of the retention by the defendant of Fluid Tech. It was the prosecutor's position that given the nature and extent of the defendant's business, given that the utilisation of oxygen gas under high pressure is a known and inherently dangerous process, the defendant should have satisfied itself about the expertise of Fluid Tech to have undertaken the work and about the component parts that it intended using, independently of being assured by Fluid Tech that it was capable of performing the work.

24. The defendant rejected this submission. It emphasised that its relationship with Fluid Tech had existed for many years and that there was no indication given to it that Fluid Tech was incapable of performing the work that it had undertaken over that time other than in a competent and effective manner. It was not necessary, in those circumstances, for the defendant to do anything other than receive an assurance from Fluid Tech as to its capability to perform the work.

25. I find myself in some difficulty in determining which of these competing submissions should be accepted for the purpose of considering the objective seriousness of the offence and the culpability of the defendant. The prosecutor's submission was put on instructions from the prosecutor himself, an inspector with the WorkCover Authority of New South Wales. Whilst I accept that the defendant's submissions were put on instructions by its counsel, nevertheless, they were made in the context of argument during the course of the hearing.

26. It is fundamental to the sentencing process that any inference that is to be drawn which is adverse to the interests of the defendant must be demonstrated beyond reasonable doubt. Whilst this is a specialised Court and is entitled to have regard to certain matters that might otherwise be regarded as being at the outer limits of the range of judicial notice, I am reluctant to deal with this aspect of the matter on the basis of assertions made from the bar table without some clear evidentiary material. Such material could conceivably take the form of opinion expressed by engineers about custom and practice in the industry and about the desirability, practicability and appropriateness of making enquiries of a supplier and, perhaps, enquiries independent of a supplier to ensure that what was being supplied represented an acceptable product in terms of occupational health and safety responsibilities. In making this observation, I am conscious that the prosecutor confined his proposition to one which arose in the context of an obviously and inherently dangerous operation, such as the use of oxygen in a high pressure line. In all the circumstances, however, I am not persuaded that I should draw any inference adverse to the defendant in assessing its culpability because it sought confirmation from Fluid Tech as to its capability of performing the work, as opposed to carrying out some form of inquisition of Fluid Tech or obtaining a third party opinion. I accept that the defendant did not become aware that the flexible hose and metal fittings attached to it that were supplied and installed by Fluid Tech were not compatible for use with oxygen until the investigation had been commenced by the WorkCover Authority of New South Wales after the incident occurred.

27. However, the parties were ad idem as to the failings of the defendant that occurred at the time that the work carried out by Fluid Tech was being commissioned. As the defendant said in its submissions, it accepted that if it had undertaken an adequate risk assessment as part of the commissioning process, it would have appreciated that the hose and fitting supplied by Fluid Tech were incompatible with high pressure oxygen and that there were risks associated with the use of that which had been supplied. The defendant conceded that by reason of its expert knowledge and experience of the use of processes involving industrial gases and including high pressure oxygen, it should have recognised that the hose would be labelled in some way as being compliant with applicable Australian and international standards, standards of which it was aware.

28. Accordingly, the defendant conceded that it breached the Act by failing to undertake and implement a risk assessment at the time that the new high pressure oxygen transfer line was provided and that it should have, firstly, recognised that the hose may not have been compliant and, secondly, taken steps to identify all relevant risks associated with the use of the non-compliant hose.

29. The defendant stressed, however, that what occurred was in the nature of an aberration. It was said that this was a real departure from the way in which it approached the handling of gas lines, including the high pressure oxygen line, and occurred in circumstances where the defendant was seeking to avoid any risk to minimise the possibility of the hose becoming contaminated.

30. The prosecutor noted that the breach by the defendant was confined to the particulars to which it had entered a plea of guilty. That is, it was confined to the undertaking and implementing of a risk assessment associated with the new high pressure oxygen transfer line and its component parts as supplied by Fluid Tech. It was submitted on behalf of the prosecutor that in terms of the objective seriousness of the offence and the culpability of the defendant, it should be characterised as "not above the mid range". The defendant made no specific submission in this regard.

31. The assessment of the objective seriousness of this offence needs to be undertaken in the context of the defendant's business operations. That is, it used a number of industrial gases including, relevantly, oxygen under high pressure, a process that, as I have already commented, is inherently dangerous and that requires particular controls to minimise the risk of injury. Although the culpability of the defendant arose out of limited circumstances, namely the failure to identify that the line and its component parts as supplied by Fluid Tech were not suitable and their use inherently dangerous, the breach must nevertheless be regarded as a serious one in all the circumstances. I would not characterise it as low range, but I think that it falls something below mid range. I shall proceed accordingly.

32. In assessing penalty, the Court should also take into account the general and specific deterrent effect that the imposition of a penalty will have. However, in assessing the need for specific deterrence, I shall proceed on the basis that the demonstrated commitment that this defendant has to its occupational health and safety obligations will lessen the need to take this aspect into account, as will the fact that the defendant no longer is involved in the direct operation of a high pressure oxygen line, having contracted that out to an independent business operation.

33. There are a number of subjective matters that can be taken into account in favour of the defendant. As was properly and appropriately conceded by the prosecutor, it pleaded guilty at the earliest appropriate opportunity, it co-operated fully with the WorkCover Authority of New South Wales in and about its investigations of the incident, it has expressed contrition and remorse for its breach, it has provided tangible support for the injured employee, it has been in business for a long time conducting industrial activities that realistically involve potential for industrial accidents and yet has an excellent safety record and its own work procedures did not contribute in any way to the incident.

34. The prosecutor sought a moiety of the penalty and an order for costs, neither of which was opposed.

35. At the conclusion of the hearing on 27 June 2011, I formally found the defendant guilty of the charge and convicted it accordingly. The Court then received from the prosecutor a Victim Impact Statement completed by Hasib Kamenjasevic. That statement outlines the severe injuries suffered by him both physical and psychological and the impact that this has had not only on Mr Kamenjasevic but also, understandably, on his wife, children and grandchildren. The serious injuries sustained by Mr Kamenjasevic are referred to in the amended agreed statement of facts set out at [6] above.

36. The maximum penalty is $550,000. Having regard to all of the matters to which I have referred above, including a consideration of the objective seriousness of the offence, the need to accommodate deterrence, and the subjective matters to which I have referred, I am of the opinion that an appropriate penalty is the sum of $60,000.

Orders

37. I make the following orders:

1) I impose a monetary penalty of $60,000 on Weldlok Industries Pty Ltd with a moiety to the prosecutor.
2) The defendant is to pay the costs of the prosecutor in an amount assessed in default of agreement.



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