Industrial Relations Commission of New South Wales in Court Session CITATION : Inspector Elizabeth Benbow v Mirotone Pty Limited [2003] NSWIRComm 95 PROSECUTOR Inspector Elizabeth Benbow PARTIES : DEFENDANT Mirotone Pty Limited ACN 000 041 136 FILE NUMBER: 1176 of 2002 CORAM: Peterson J CATCHWORDS : Occupational Health and Safety - s15(1) - Risk from presence of empty drums - Ignition of gases whilst employee moved welding equipment - Plea of guilty - Penalty imposed LEGISLATION CITED : Occupational Health and Safety Act 1983 Crimes (Sentencing Procedure) Act 1999 WorkCover Authority of New South Wales (Inspector McKenzie) v Waste Recycling and Processing Services of New South Wales (2000) NSWIRComm 218 WorkCover Authority of New South Wales v Waugh (1995) 59 IR 89 at 101 CASES CITED : WorkCover Authority of New South Wales v Profab Industries (2000) 100 IR 64 at 71 Wong v Melinda Group Pty Limited (1998) IR 118 at 113 Independent Cargo Wool Services Pty Ltd v Inspector Mingare (unreported, 10 March 1994) Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (1999) 90 IR 464 HEARING DATES: 09/26/2002 DATE OF JUDGMENT: 04/04/2003 PROSECUTOR Mr D Chin of counsel SOLICITOR Mr G Henderson Philips Fox LEGAL REPRESENTATIVES: SYDNEY DEFENDANT Mr D Gardner Cutler Hughes & Harris SYDNEY JUDGMENT: - 16 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: PETERSON J DATE: 4 April 2003 Matter No. IRC1176 of 2002 INSPECTOR ELIZABETH BENBOW v MIROTONE PTY LIMITED Prosecution under s15(1) of the Occupational Health and Safety Act 1983. JUDGMENT 1 Inspector Elizabeth Benbow, an Inspector appointed under and empowered by the Occupational Health and Safety Act 2000 to institute proceedings in this matter has brought a prosecution under s15(1) of the Occupational Health and Safety Act 1983 ('the Act') by operation of Schedule 3 of the Occupational Health and Safety Act 2000 against the defendant, Mirotone Pty Limited. The prosecution arises out of an accident in a welding bay constructed at the defendant's Revesby plant in order to construct new steel mixing tanks. An employee, Lesley Riley, was injured when he stood on a plastic milk crate in order to remove the welding equipment hanging on the side of a tank. The welding gun slid down the edge of the tank causing ignition of vapours emitted from a nearby empty storage drum. This caused Mr Riley to fall from the milk crate sustaining fractures to his left wrist and left heel bone and lacerations to his head. He was hospitalised for approximately eight days before being rehabilitated by the defendant. 2 Section 15(1) of the Act provides that an "employer shall ensure the health, safety and welfare at work of all the employer's employees". 3 The offence with which the defendant is charged is that it on 3 March 2000 at premises 21 Marigold Street, Revesby failed to ensure the health, safety and welfare of its employees at work, in particular Leslie Riley. The particulars provided in relation thereto were as follows: "in particular the Defendant failed a To provide and maintain a safe system of work for the construction of mixing tanks. b To provide and maintain a safe system of work for the conduct of welding activities at the premises. c To conduct a risk assessment in relation to the undertaking of welding activities near flammable goods. d To adequately train an employee, Mr Leslie Riley, in relation to the hazards of working on a site where Class 3 Dangerous Goods were manufactured and stored. e To provide and maintain adequate supervision to ensure safe working conditions and systems were enforced. f To ensure that empty Class 3 dangerous goods containers were stored in an appropriate area. g To provide a safe system of work for working at height at the premises in that a plastic milk crate was inappropriately used to stand on to access a height above arms length." 4 Apart from certain formal matters, including authority in Inspector Benbow to prosecute, the status of the defendant as the employer and Mr Riley as an employee, the agreed facts included the following: "The defendant employs approximately 125 employees in Australia. Approximately 80 of those employees work at the premises. On 13 August 1999 the Prosecutor issued the defendant with an Improvement Notice requiring the defendant to adequate by guard dispensers used with mixing tanks. The defendant requested additional time to comply with the relevant Improvement Notice and the request was agreed by the Prosecutor. The relevant Improvement Notice or subsequent Improvement Notices did not require the defendant to manufacture mixing tanks on the premise or otherwise. On 3 March 2000 at approximately 2.30pm Riley was cleaning up the welding bay where he had been constructing mixing tanks in the course of his work at the defendant. There were half-completed mixing tanks stored which Riley was to move. To perform his duties he needed to move a welding gun, which was on a lead on top of a tank. He stood on a milk crate to reach the welding gun. As he tried to remove the welding gun, the welding gun slid down the edge of the tank resulting in an explosion (accident). As a result of the accident Riley sustained fractures to his left wrist and left heel bone and lacerations to his head. He was hospitalised at Bankstown Hospital for approximately 8 days. On 3 March 2000 the Prosecutor attended the premises in the company of Senior Inspector Paul Mansell, and met Jose Hernandez, the Production Manager, and Blair Boden, the General Manager of the defendant. Boden and Hernandez identified the scene of the accident as the welding bay. At the scene of the accident, the Prosecutor observed the following: 1 The welding bay was a section of the rear yard area that was enclosed on 3 sides and had been roofed with transparent and opaque corrugated roofing sheets; 2 Three metal tanks approximately 1.8m high by approximately 1.7m in diameter were observed. Two of these tanks were standing on their legs. The third tank was inverted with its legs in the air; 3 An MIG welding wire uncoiler was in front of the tank; 4 An earth line was attached to the tank; 5 The MIG welding gun was hanging from one of the tank legs; 6 A milk crate was approximately beneath the welding gun; 7 A welding mask was near the milk crate; 8 Three empty 205L drums with Class 3 diamonds on the labels were in the welding bay. Two of the empty drums were standing upright. There were tools and auxiliary equipment on top of the drums. The third drum was on its side and had damage that was consistent with an explosion and fire within the drum; 9 The first upright empty drum was approximately 1.3m from the inverted metal tank under construction. The bung hole in the top of the drum was open. The label on this drum indicated that the drum had contained 'Mirotone Miorbild 831 class 3 Packaging Group II White Gloss Concentrate Part A'; 10 The second upright drum was approximately 1.7m from the inverted metal tank under construction. The bung hole in the top of this drum was also open. The label on the drum indicated that the drum had contained UN number 1263 B31 white concentrate product code 10060; 11 The damaged drum was on its side approximately 676mm from the inverted metal tank under construction. Sections of the outside and inside of the drum were blackened consistent with fire damage and the bottom of the drum was deformed outwards consistent with an explosion. A deformed drum top was nearby. This drum top was deformed outwards. The bung hole in the unattached deformed drum top was open. The label on the damaged drum identified it as 'Mirocat PC 3210/60 Class 3 Packaging Group II product code 3210-6'; 12 At the back of the welding bay was a 3-step step ladder and 2 gas cylinders that were not in use. These gas cylinders were secured by means of rope around the necks of the cylinders; 13 Loose angle iron was observed near the gutter. As a result of her observations and investigations the prosecutor found as follows: 1 At the time of the accident, Riley was assisting in the construction of mixing tanks at the direction of the defendant. In order to enable the mixing tanks to be fabricated on site, the defendant used a section of the rear yard for use as a welding bay and provided welding equipment, oxy-cutting equipment, 2 ladders for tank entry, and a small 3-step ladder; 2 At the time of the accident, 3 labelled empty 205 litre drums which had previously contained Class 3 PG II and PG III dangerous goods were stored in the welding area. Equipment was stored on top of 2 of the drums. The bungs in the top of the 3 drums in the welding bay were opened; 3 At the time of the accident, the earth was still attached to the welding tank and the welding gases were on. Riley followed no particular procedure for the securing of welding equipment when he finished work for the day; 4 The defendant did not adequately train an employee, Riley, in relation to the hazards of working on a site where Class 3 Dangerous Goods were manufactured and stored. 5 No documented instructions were given to Riley about the nature of material which should not be stored in the welding bay while welding was being carried out. The defendant was aware of the hazardous nature of the site and the quantity of flammable goods stored on the site. No adequate risk assessment was conducted prior to the commencement of the welding work that was to be performed; 6 Riley's immediate supervisor was Still and Still's supervisor was Smith. Neither had adequately assessed the risk of welding near flammable goods. Still had not directed the removal of the dangerous goods drums from the welding area; 7 Riley stood on a milk crate in order to reach the welding gun and he had used a milk crate on previous occasions to gain access to a height. After the accident, the Managing Director of the defendant immediately stopped any further fabrication of tanks on site. All welding equipment was secured and the tanks being fabricated were removed off site. In addition, the defendant undertook a review of work platforms required on site and additional work platforms were obtained. The defendant undertook to enforce systems for working at heights." 5 The defendant has pleaded guilty to the charge. The prosecution's case proceeded upon the basis of an agreed statement of facts; a series of photographs of the work scene at which the accident occurred and a material safety data sheet produced by the defendant in relation to Mirocap PC3210, a clear pre-catalysed nitro-cellulose lacquer for timber which had formerly been stored in the drum which exploded. 6 The evidence in the defence case consisted of affidavit material from Donald Miller Dennis, the Group Managing Director of the defendant and Ross Arthur Smith, the Australasian Manufacturing Co-ordinator thereof. 7 The prosecutor, for whom Mr Chin of counsel appeared, submitted that the facts demonstrated a breach of the Act, the nature and quality of which was serious. It was submitted that the judgment of Walton J in WorkCover Authority of New South Wales (Inspector McKenzie) v Waste Recycling and Processing Services of New South Wales [2000] NSWIRComm 218 might be of some assistance in the assessment of penalty. 8 Mr Gardner, solicitor, for the defendant relied upon the affidavit material to which I have referred, the essential aspects of which seem to me to be as follows: Mr Donald Miller Dennis is the Group Managing Director of the defendant. He has been employed by it since April 1985 and was appointed Group Managing Director in July 2001 having been a Director of the defendant since 1997. The defendant is a company founded by Mr Dennis's father and the family represents the major of shareholders. 9 Mr Dennis holds a Bachelor of Commerce Degree majoring in Accounting, Finance and Systems from UNSW and a Masters Degree in Business Administration from Macquarie University. He has undertaken the four day Occupational Health and Safety Committee training course accredited by the WorkCover Authority of New South Wales. Mr Dennis deposed that ensuring the safety of all who work for or visit the defendant company is a business imperative. 10 Mr Dennis's affidavit included the following: "Mirotone's coating have been used to achieve the frosted look on the old KB beer can, on scratch-off lottery tickets, to coat tubes of Colgate toothpaste tubes and on most items manufactured in Australia from wood for interior use (furniture, kitchens, bars, timber floors, coffins). Mirotone is one of the world leaders in the research and development on 100% solids (solvent free) coatings that are cured by ultraviolet light. Unlike a lot of Australian companies, Mirotone reinvests a significant portion of its sales revenue in research and development. This commitment allows it to offer an extensive range of surface coating products and systems for a wide range of applications in the industrial wood finishing, building, metal fabrication and maintenance, printing and packaging industries. Mirotone is the Australian market leader in the market segment that it serves. The products manufactured by Mirotone include: · Thinners and reducers · Wood stains · Nitrocellulose lacquers (solvent based) · Pre-catalysed lacquers (solvent based) · Acid Catalysed lacquers (solvent based) · Polyurethane coatings (solvent based) · Polyester coatings (solvent based · Ultraviolet Light (UV) cured coatings · Waxes and other Aftercare products to maintain coated items made from wood. · Metal primers (solvent based) · Waterborne coatings for wood and metal · Epoxy coatings (solvent based) Almost all of Mirotone's products are solvent based. On average, 75% of every litre Mirotone sells is comprised of highly flammable solvents. The manufacture and storage of Mirotone's raw materials and products poses an extreme fire risk. Managing fire risk is therefore Mirotone's number one priority. All work procedures, site signage and induction and training of employees is focussed upon minimising the potential for explosion and fire. At Mirotone's Revesby site it manufactures and stores all of the products listed above. In summary, Mirotone stores approximately 250,000 litres of solvents in underground storage tanks (UTS's), 26,000 kg of bulk resin, 300,000 litres of finished goods and a number of other raw materials in both liquid and powder form. The Revesby site is approximately 9,000 square meters in size, with a 2 story (sic) administration building (360 x 2 m²), 3 story R&D building (240 x 3m²), factory (1,600m²), warehouse (1,000m²), plus another 8 licensed raw material dangerous goods bulk & drum storage area (~400m²). In total Mirotone has 39 licensed dangerous goods depots at Revesby. At the Revesby site there is: · Licensed finished goods warehouse with maximum capacity of 300,000 litres · Bundled storage areas part of which is licensed to store 25,00kg of nitrocellulose, a designated dangerous goods Class 4 Explosive · Licensed underground storage tanks for bulk solvents with maximum storage capacity of 250,00 litres · Dangerous Goods licensed storage tanks for bulk resins with maximum capacity of 26,000 litres · Licensed production facility with a variety of pigment grinding and mixing equipment and mixing and storage vessels · Other storage facilities At the time of the accident Mirotone was licensed to store dangerous goods, including the following Class 3 Dangerous Goods: · Normal-Butanol · Petroleum product X3B · Methylated Spirits · Methyl Iso Butyl Ketone (M.I.B.K.) · Methyl Ethyl Ketone (M.E.K.) · Iso propanol (Isopropyl Alcohol) · Mineral Turps · Iso Butanol · Nitrocellulose Solution (N/C Solution) · Petroleum Product Solvesso 100 · DiAcetone Alcohol (DAA) · Acetone · Xylene · Toluene · Bulk Resin 11 Mr Dennis also deposed that the defendant and he personally have had a very good cooperative relationship with WorkCover. He first sought WorkCover's assistance in 1984 when he was appointed Managing Director of Polycure Pty Limited which had only been recently acquired by the defendant. He found Polycure had no Dangerous Goods License and was concerned that it did not comply with a significant number of regulations. After requesting assistance from WorkCover advice was supplied and implemented. 12 In 1985 he also sought the view of WorkCover in relation to the suitability of a warehouse Polycure was considering leasing to store dangerous goods. That proposal was abandoned in light of the advice received. 13 Mr Dennis also deposed: "As a manager and shareholder it is therefore of some personal comfort to me when WorkCover inspects our operations and provides Mirotone with advice. Mirotone has received some improvement notices over the years and many of these notice apply to the implementation of new equipment or infrastructure for legislation or work practices that were not even envisaged at the time Mirotone's original site was developed. While these changes are usually expensive and not very easy to retrofit, I certainly understand the necessity to improve occupational health and safety standards and Mirotone has always willingly cooperated with WorkCover to implement any required changes in the interests of work safety. At all times Mirotones has given its best endeavours to cooperate fully with WorkCover both generally and in relation to this particular incident. Mirotone submitted its internal Accident Investigation Report to WorkCover despite the fact that this report exposed Mirotone to potential financial risk. No facts were hidden. This report was completed in a genuine attempt to identify the root cause of the incident and to prevent future occurrence." 14 Mr Dennis also identified a series of documents provided to WorkCover which included a warning letter to the relevant manager identifying the particular matters which led to the warning that he, having been negligent in the performance of his duties, could be subject to instant dismissal for any future failure to comply with the OHS policy in relation to on-site conduct of hot work. 15 Mr Dennis's affidavit also dealt extensively with the steps taken by the defendant after the accident to ensure there would be no reoccurrence. In particular it terminated the supervisor of Mr Riley who had failed adequately to supervise his work. Subsequent to the accident, in March 2002, Mr Dennis also terminated the employment of three Australian managers and accepted the resignation of another due to the poor financial performance of the company. He deposed that the defendant had made a significant financial loss in the financial year to June 2002 part of which was due to the restructuring associated with the closure of a production plant. The defendant's capacity to pay a substantial fine he said was limited and, it presently being in breech of two financial covenants in relation to loans it has outstanding, being related to shareholders' as funds and times interest cover. 16 The affidavit material also included that of Ross Arthur Smith the Australasian manufacturing co-ordinator of the defendant. Mr Smith's affidavit dealt with the circumstances which led up to the accident involving Mr Riley. 17 In late 1998 the defendant planned to upgrade 18 existing portable manufacturing tanks at the Revesby tanks. The tanks, which were high speed disperser tanks, varied in size from 2400 litres to 1200 litres. The upgrade was initially proposed for July 1999 but was to be carried out by external contractors over a nine month period from September 1999 to June 2000. 18 In or about August 1999 WorkCover issued an improvement notice on the defendant to rectify issues relating to exposure to rotating shafts/blades from the eight high-speed dispersers at Revesby. This was a matter already contemplated in the upgrade proposal. The time frame imposed by WorkCover was unreasonably short and Mr Smith sought and obtained an extension of time to complete the work. This was initially an extension of two weeks until 10 September 1999 but was again extended by WorkCover at the defendant's request, it committing itself to a very tight three month timetable. 19 The site engineer proposed, in order to meet the deadline, to manufacture the tanks on-site. This entailed the manufacture of a welding shed and the purchase of a MIG welder. The engineer assured Mr Smith that Mr Riley had the expertise to manage the tanks. The engineer decided to recommend they be manufactured internally after considering the risks that might be involved. In that respect he took into consideration: · The location of the engineering workshop and the proposed welding shed. The welding bay would be approximately 150 metres from the factory building. It would be 18 metres from the closest licensed Dangerous Goods store facility (the minimum separation distance being 13 metres). · The design of the welding bay had full metal cladding down to ground level on all sides and the rear. This would eliminate the possibility of any welding sparks igniting any combustible material outside the boundary fence (e.g. grass). Provision was made for the escape of fumes and the free-flow of fresh air. · His being satisfied that Mr Riley could do the work safely as he had a previous unblemished work history of five years with the defendant and a longer work history as a sheet metal worker and fabricator. 20 Mr Smith deposed that the main contributing cause of the accident seemed to be that three empty drums had "appeared" in the welding bay. No one knows or will admit how they arrived there. Those drums were normally stored at least 25 metres from the welding shed awaiting reuse or removal for disposal. They are normally stored with all bungs replaced to prevent rainwater entering. 21 It appears that Mr Riley was using the drums by placing equipment on top of them on previous days. He was moving the drums out of the area when the accident happened. The welder was in the way, he stopped moving a drum and went to move the welder which some how became activated causing the explosion. 22 Mr Gardner submitted that the circumstances of the case are such as to justify the court applying, for the benefit of the defendant, s10 of the Crimes (Sentencing Procedure) Act (1999) or, in the alternative, to impose a penalty at the lower end of the scale. Conclusions 23 Section 10 of the Crimes (Sentencing Procedure) Act (1999) permits relevantly a court that finds a person guilty of an offence to direct that the charge be dismissed. There is nothing in this matter which seems to me to attract s10 considerations. 24 In WorkCover Authority (NSW) v Waugh (1995) 59 IR 89 at 101, the Full Court (Fisher CJ, Bauer and Cullen JJ) of the former Industrial Court considered the application of S.556A of the Justice Act (the forerunner provision of S.10 of the Crimes (Sentencing Procedure) Act) and said: "we consider that in serious cases where, as found by her Honour, the risk of injury from an accident was not one difficult to foresee, where the breach could and did result in serious consequences to the health of the injured man, where the risk of injury was preventable and where a safety fence with an isolation device was installed without difficulty after a second inspection, the operation of s556A of the Crimes Act to such proceedings would seldom be appropriate. If such an application is pressed but opposed it should normally be supported by evidence subject to cross-examination rather than the untested assertions made from the bar table." 25 In WorkCover Authority (NSW) v Profab Industries (2000) 100 IR 64 at 71, the Full Bench (Wright P, Walton VP and Hungerford J) referred to Waugh as: "clear authority for the propositions that the discretion under s556A would rarely be available in significant offences against the legislation and any application for the benefit of the provision should be rigorously tested." 26 Both Waugh and Profab involved "significant breeches". In Waugh, a serious sawmill accident concerning dangerous machinery which caused injury to a worker, followed by a second breach three months later, when the justification for the unaltered state of the machinery, contrary to WorkCover advice, was "I never got round to it". In Profab a death occurred when a tradesman welder was crushed when a large, unsupported steel truss on which he was working fell upon him. In Profab, after referring to a case involving the application of s556A (Wong v Melinda Group Pty Ltd per Hungerford J. (1998) IR 118 at 113) the Full Bench said of that case: "It exemplifies the rare cases in this Court where s556A might be applied in occupational health and safety prosecutions. Although the exercise of prosecutorial discretion determines the jurisdiction in which proceedings are commenced: see s 47 of the Occupational Health and Safety Act , experience indicates that the most serious prosecutions are usually commenced in this Court. Accordingly, when an application is made to a judge f this Court in sentencing proceedings under the Occupational Health and Safety Act for the exercise of the discretion under s556A, that will invariably occur in relation to a serious breach of the Act." 27 It is somewhat difficult to see how the present case could meet the description imputed by the Full Bench to any case brought to this Court. The facts establish a breach as I have described but it could not be considered, in my view an illustration of a serious breach. Nevertheless, I do not consider a case has been made out to establish as appropriate the application for the defendant's benefit of s10. Here, it is clear that this is a first offence, the defendant having no prior convictions under the Act. However, the circumstances of the case seem to me to require the imposition of a penalty. 28 Here, the defendant has had an exemplary safety record save for the offence with which it is charged. It has operated in the paints and lacquers industry for 64 years since 1938 with only this one incident bringing it to attention. It has employed approximately 128 employees at the date of the accident including approximately 80 at its Revesby plant. The evidence of Messrs Dennis and Smith shows that the industry is a highly dangerous one having regard to the fire and explosion risks of the chemicals which are handled. Its history of safety audits, safety committees, routine inspections and the like redound to its credit. 29 On the other hand, the incident the subject of the charge demonstrates a failure in the system and the satisfaction of the particulars of the offence with which it is charged. 30 I am prepared to accept that this incident is an aberration in an otherwise safe working system. The features of that aberration are relatively simple. The work which was required to be done as a result of a work improvement order imposed on the company by WorkCover was chosen to be done in-house for reasons of both expedition and economy. The work was to be done over a period of time which was extended after discussion with the prosecuting inspector. The work was done in circumstances which would appear to have been quite adequate save for two features: the presence without explanation of three storage drums which should not have been in the welding bay, one of which of course exploded, and the presence of milk crates utilised conveniently by Mr Riley as a platform upon which to stand rather than a three-step ladder which was standing nearby. The drums were said by Mr Riley to have been used on the few days prior to the accident to place objects upon. Those drums should have been many metres away in a drum storage area. No explanation is able to be given for their presence, nobody admitting to having placed them in the welding bay. 31 There is no doubt that the positioning of the drums and the use of the milk crates should have been obvious to anybody in authority observing them as inappropriately placed. Mr Still, the supervisor of Mr Riley, should have been aware of the risks inherent in those matters and should have restrained their use. He, on the other hand, appears to have been incapable of bringing his authority to bear upon Mr Riley, as he had earlier informed his supervisor, Mr Smith. There thus followed a double failure in supervision in that neither Mr Still nor Mr Smith either observed or, if they did observe the working area and its condition, took any steps to rectify the position. 32 I consider the circumstances of this case does not illustrate a breach of the Act, which, in the range of circumstances commonly experienced in these matters, would be properly described as serious. Its nature and quality put it towards the lower end of the scale, the maximum penalty being $550,000. 33 In WorkCover Authority of New South Wales (Inspector McKenzie) v Waste Recycling & Processing Services of New South Wales [2000] NSW IRComm218 the Vice President dealt with a prosecution under Section 16(1) of the Act where the defendant had contracted a welding company to carry out welding work, the result of a safety survey conducted by an arm of WorkCover. One task involved the removal and relocation of an access ladder on a waste oil storage tank. While the welding process was being undertaken vapour in the tank ignited resulting in an explosion. Later investigation revealed that the tank contained only fifty three percent non-volatile lubrication oil, the remainder being made up of various other volatile C1 type contaminants such as petrol, kerosene and diesel. The inclusion of those contaminants lowered the flash point of the material in the tank to forty four degrees Celsius. 34 It was held that the detriment to safety lay in the failure to identify and advise a contractor that the tank contained material other than waste oil so as to substantially increase the volatility and risk of ignition and explosion in the circumstances of the work contracted. There was also a failure to adopt a procedure as to the receival and storage of waste oils and other materials to avoid contamination and also a failure to supervisor the work of its contractor including the laying down of procedures for hot work. 35 The defendant in that matter had no prior convictions, entered an early plea of guilty, demonstrated contrition, cooperated and assisted authorities and took steps to remedy defects. A discount of 30% on penalty was allowed in those regards and a further discount for the good prior record and good industrial citizenship. The defendant was there fined a sum of $90 000. 36 I consider that judgment, while involving an explosion resulting from gases in a tank in the vicinity of welding equipment, does not provide an appropriate indication of penalty in the circumstances of this case, which I would put at a lower level of culpability. 37 The guiding principle in the assessment of penalty is the seriousness of the offence having regard particularly to its nature and quality (Independent Cargo Wool Services Pty Ltd v Inspector Mingare (unreported, Fisher CJ, Glynn and Peterson JJ, CT92/1041, 10 March 1994) cited with approval by a Full Bench of this Court in Lawrenson Diecasting Pty Ltd v WorkCover Authority of NSW (1999) 90 IR 464). 38 Here the accident arose from the accidental activation of the welding equipment in the presence of drums, which should not have been there. I would infer on the balance of probabilities in the defendant's favour, that the drums had been moved there for the purpose identified in Mr Smith's evidence, mainly for use by the welder, a person of mature years, to rest equipment upon. 39 In these circumstances the relevant detriment to safety by the defendant was occasioned by the failure to observe the presence of the drums, there being knowledge of their contamination and the relevant and obviously foreseeable risk, and also the presence of the milk crate able to be used as a stand. 40 The defendant is entitled to the benefit of a reduction in penalty for its early plea which I assess at the maximum 25 percent and also recognition for its co-operation with WorkCover, its first offence status and excellent prior history, its contrition and remorse as evidenced by its support of Mr Riley in terms of rehabilitation and its actions in response to the incident. I also take into consideration the need for deterrence to be a factor in the assessment of penalty. 41 I assess penalty at $65,000 which I reduce, after taking into account those matters and allowing an appropriate level of discount, to $39,000. 42 The defendant is convicted of the offence charged and fined the sum of $39,000 with a moiety of penalty to the WorkCover Authority of NSW. The defendant shall pay the Prosecutor's cost in a sum agreed, or, if not agreed, as may be assessed by the court. Liberty to apply. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.