Industrial Court of New South Wales CITATION: Inspector Dugdale v Sara Lee Australia & NZ Pty Ltd [2009] NSWIRComm 133 Inspector Edward Dugdale (Prosecutor) PARTIES: Sara Lee Australia & NZ Pty Ltd (Defendant) FILE NUMBER(S): IRC 1487 of 2008; IRC 1488 of 2008 CORAM: Boland J President CATCHWORDS: OCCUPATIONAL HEALTH AND SAFETY - prosecutions under s 8(1) of Occupational Health and Safety Act 2000 - guilty plea - risk of injury to persons operating packaging machine - no sufficient system to identify risk - objective and subjective considerations - general and specific deterrence - remedial measures taken - conviction - discount for early plea - principle of totality - penalty imposed. LEGISLATION CITED: Occupational Health and Safety Act 2000 CASES CITED: Capral Aluminium Ltd v WorkCover Authority of New South Wales [2000] NSWIRComm 71; (2000) 99 IR 29 HEARING DATES: 5 August 2009 DATE OF JUDGMENT: 12 August 2009 Mr I Taylor of counsel (Prosecutor) WorkCover Authority NSW LEGAL REPRESENTATIVES: Mr M L Shume of counsel (Defendant) Moray & Agnew JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: BOLAND J, President Wednesday 12 August 2009 Matter No IRC 1487 of 2008 INSPECTOR EDWARD DUGDALE v SARA LEE AUSTRALIA & NZ PTY LTD Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 Matter No IRC 1488 of 2008 INSPECTOR EDWARD DUGDALE v SARA LEE AUSTRALIA & NZ PTY LTD Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 JUDGMENT [2009] NSWIRComm 133 1 This matter concerns two prosecutions by Inspector Edward Dugdale of the WorkCover Authority of New South Wales under s 8(1) of the Occupational Health and Safety Act 2000. It was alleged by the Inspector in Matter No IRC 1487 of 2008 that the defendant, Sara Lee Australia & NZ Pty Ltd, had failed to ensure the health, safety and welfare of an employee, Victoria Gay Egtberts, who was placed at risk of injury and was injured on 7 September 2006 by a packing machine's 'kicker arm' at the defendant's place of work at Lisarow in the State. Ms Egtberts suffered grazing to her head and a headache but required no ongoing medical attention. 2 Similarly, in Matter No IRC 1488 of 2008, it was alleged that the defendant failed to ensure the safety of another employee, Denise Ann Lowe, who was also placed at risk of injury and injured by the kicker arm on 17 October 2006. Ms Lowe sustained a fracture of her right cheek bone requiring surgery including insertion of metal plates, the reconstruction of her cheek bone and the retrieval and reconnection of her optic nerve. 3 The particulars of the charge in Matter No IRC 1487 of 2008 were that: 1. The defendant failed to ensure that plant, in particular the Fibre King Solari Packaging Machine, serial number 97-06-10 ("the packaging machine") provided for use by its employees at work was safe and without risks to health, and in particular failed to ensure that the kicker arm on the packaging machine could not activate when an employee was close enough to be struck by it. 2. The defendant failed to ensure the provision and maintenance of a safe system of work that ensured an employee would not approach the vicinity of the packaging machine's kicker arm to clear a jam until the stored energy (air pressure) in the kicker arm was released. 3. The defendant failed to have proper systems in place to identify, assess and control risks to health and safety of employees, in particular by failing to conduct any adequate risk assessment in respect of the packaging machine to identify potential risks. 4. As a result of the said failures, Victoria Gay Egtberts was placed at risk of injury and was injured whilst employed at the site. 4 The particulars of the charge in Matter No IRC 1488 of 2008 were that: 1. The defendant failed to ensure that plant, in particular the Fibre King Solari Packaging Machine, serial number 97-06-10 ("the packaging machine") provided for use by its employees at work was safe and without risks to health, and in particular failed to ensure that the kicker arm on the packaging machine could not activate when an employee was close enough to be struck by it. 2. The defendant failed to ensure the provision and maintenance of a safe system of work that ensured an employee would not approach the vicinity of the packaging machine's kicker arm to clear a jam until the stored energy (air pressure) in the kicker arm was released. 3. The defendant failed to have proper systems in place to: a. Identify, assess and control risks to health and safety of employees, in particular by failing to conduct any adequate risk assessment in respect of the packaging machine to identify potential risks; and b. Take adequate remedial action after the previous incident on 7 September 2006 and ensuring there was no subsequent risk to health and safety of employees. 4. As a result of the said failures, Denise Ann Lowe was placed at risk of injury and was injured whilst employed at the site. 5 The defendant pleaded guilty to both charges. Evidence 6 The prosecutor's evidence in the proceedings consisted of an agreed statement of facts attached to which were: (1) a factual inspection report of Inspector Wall dated 7 January 2007; (2) six colour photographs taken by Inspector Wall on 9 November 2006; and (3) a WorkCover prior conviction certificate dated 24 June 2009 showing that the defendant had been convicted in the Chief Industrial Magistrate's Court under s 8(2) of the Act in relation to an offence that occurred on 6 May 2003 at the Lisarow plant. 7 Additionally, there were a number of other documents tendered by the prosecutor: (1) Australian Standard AS4024.1-1996 (Safeguarding of Machinery) and AS4024.1-2006 (Safety of Machinery); (2) Court Attendance Notice and agreed statement of facts relating to the 6 May 2003 offence; (3) ten Improvements Notices issued by Inspectors of the WorkCover Authority between May 2003 and December 2006; and (4) a facsimile transmission from Mr Norm Cuthbert, engineering manager of the defendant, to Mr Denis Solari dated 2 April 1998 advising Mr Solari of an incident that occurred on 1 April 1998 whereby the kicker arm on the packing machine manufactured and supplied by Mr Solari's firm had caused a facial injury ('probable fracture') to an operator. 8 For the defendant, an affidavit (with 32 annexures) of Eugene Scholten was tendered. Mr Scholten was a director of the defendant and managing director of Sara Lee Bakery Australia. Mr Scholten was not required for cross-examination. Mr Scholten's affidavit was extensive and addressed relevant matters including: § the structure and history of the defendant; § the nature of the defendant's operations; § the defendant's vision mission and values; § the defendant's commitment to occupational health and safety; § changes instituted to current management of occupational health and safety practices, policies and procedures including training, risk assessment, incident and near miss reporting, resources and auditing; § a description of the packing machine; § the 1997 injury to Mr Barr; § the Smith incident; § the Egtberts incident; § the Lowe incident; § remedial action taken by the defendant; § capital expenditure on OHS compliance; § participation in community activities; § assistance provided to injured workers; and § contrition. 9 The packaging machine was supplied by Solari Packaging Systems Pty Ltd to specifications provided by the defendant on 23 July 1997. The defendant installed the packaging machine, fitting the defendant's own air system and electrical system. The installation was carried out by the defendant's own engineer and maintenance crew. Thereafter the defendant's employees maintained the packaging machine. 10 The packaging machine mainly comprised of stainless steel construction with see-through Perspex guard doors along both sides of the machine separating employees from the machine and conveyor when it was operating. The packaging machine had a series of conveyor rollers that allowed the packaging boxes to move through sections of the process. 11 The part of the packaging machine that inflicted the injuries on Ms Egtberts and Ms Lowe was an air operated lever referred to as a kicker arm. The kicker arm was a steel object that was approximately 300 mm long, 33 mm wide and 19 mm thick. At the end of the straight section was what appeared to be another section attached at a right angle bent at approximately 90 degrees. This section was approximately the same thickness and width of the first section, however its length was shorter. The kicker arm had an overhang at the end. The operation of the kicker arm was described in the agreed facts: The kicker arm was activated by pneumatic (air) pressure. The kicker arm was operated by an air cylinder with a steel rod that moved in and out depending on the air pressure being supplied through it. When the packaging machine was operating, open boxes would move on a conveyor underneath the kicker arm. The kicker arm would come down, closing the flaps on the top of the box and then retract up after the box moved underneath. When the conveyor belt was operating workers would stand separated from the machine by clear guard doors. The conveyor belt occasionally jammed. When the conveyor jammed workers would need to enter into the area of the conveyor belt to clear the jam. They entered through the clear doors. On and prior to 17 October 2006 opening the clear doors automatically stopped all electrical power to the conveyor belt but did not cause the air pressure in the kicker arm to be dumped. If the air pressure in the kicker arm was not dumped, and the conveyor had stopped or jammed at a point when the arm was down with a box underneath it, then upon that box being moved, the arm would automatically release up because the air pressure had not been dumped. 12 The Egtberts incident occurred on 7 September 2006. Ms Egtberts was packing cartons when a carton jammed. She opened the guard doors to the packaging machine and began pulling the carton, as she did this she was struck on the side of the forehead by the kicker arm. 13 Following that incident, Mr Terry Cartwright, the defendant's area supervisor and Mr Wayne Hughes, the defendant's maintenance engineer, inspected the packaging machine and concluded that the packaging machine was operating normally. What had occurred was regarded as an aberration. No modifications were made to the operation of the packaging machine or to the systems of work as a result of the incident. 14 The Lowe incident occurred some six weeks later on 17 October 2006. Ms Lowe opened the guard doors to the packaging machine to enter in the code to the labeller. The guard door was closed and the line commenced operating again causing the cartons to jam along the line. Ms Lowe tried to push the cartons back when she was struck in the face by the kicker arm. 15 The Egtberts and Lowe incidents were not the first occasions the kicker arm had presented a risk to safety at the plant. The agreed facts revealed that on 1 April 1998, there had been an incident in which Mr Graham Barr, an employee of Manpower Services (Australia) Pty Limited, was performing contract work at the defendant's premises. He attempted to release a jammed product and sustained injury when the kicker arm on the same packaging machine unexpectedly retracted. Mr Barr sustained an undisplaced fracture of the right jaw requiring medical treatment. No modifications were made to the packaging machine to prevent re-occurrence following the incident. There was no evidence as to what steps were taken by the defendant after the Barr incident so as to avoid what occurred in relation to Ms Smith, Ms Egtberts and Ms Lowe. The defendant said that because of changes in personnel the incident became lost in the defendant's corporate memory. 16 In 2006, prior to 7 September of that year, Ms Wendy Smith, who was employed by the defendant as a production worker, entered the packaging line area to try and clear a jam on the line. While she was there the kicker arm on the packaging machine released nearly hitting her. No report was made of the near miss incident involving Ms Smith and it appears the defendant was not aware of that incident prior to the investigation by WorkCover into the Lowe and Egtberts incidents. 17 It was an agreed fact that prior to the Lowe incident, the defendant had no adequate risk assessment conducted on the packaging machine, and the kicker arm in particular, to identify a risk that when the kicker arm became jammed down on a carton, there was a possibility that it could retract when the carton was released, creating the risk of injury. The defendant conducted a written risk assessment of the machine after the Lowe incident. 18 It was also an agreed fact that the defendant had no sufficient system to ensure that the risk identified by the incident on 7 September 2006 was appropriately assessed and steps taken to remove that risk and further that: On and prior to 17 October 2006 the defendant did not have a system in place by which stored energy (air pressure) in the kicker arm was dumped automatically or otherwise released prior to an employee being able to come within range of the arm's operation. In particular there was no mechanism in place whereby upon the clear doors being opened, air in the kicker arm was automatically released. The kicker arm was not fitted with an appropriate air valve which would automatically dump air pressure; Australian Standards AS4024.1-1996 and AS 4024.1-2006 were the standards applicable for the packing machine. The two Australian Standards referred to in the agreed facts addressed the dangers associated with unexpected start up from stored energy such as compressed air and how those dangers might be avoided. 19 Steps were taken by the defendant after the Lowe incident to rectify the problem with the kicker arm. In particular: a. A new valve system was installed along with signage and a green warning light that informed workers that the stored air pressure of the kicker arm air cylinder had been exhausted and that the packaging machine was now safe for persons to enter; b. A sign was placed on the see-through door with the instruction "do not enter until green light is on"; c. The see-through Perspex doors had magnetic safety switches attached to the door frames with a second part of the magnetic switch attached to the machine so that when the doors were opened it would trigger the valve in the kicker arm to dump the air preventing it from retracting. Consideration 20 It is not the seriousness of the injury to persons that will determine the seriousness of the offence in prosecutions under s 8(2) (or s 8(1)) of the Act. To focus on the injury is a mistake. The obligation under s 8(2) is to ensure persons are not exposed to risk. What needs to be done at the outset is to identify the risk in order to make any assessment of the seriousness of the offence. In this case the risk was that when the kicker arm became jammed down on a carton, there was a possibility that when a person sought to release the carton the kicker arm could retract when the carton was released, creating the risk of injury to the person. 21 The manner in which the risk arose is described in the particulars of the charge. In this case, the particulars of the charges are the same except that in Matter No IRC 1488 of 2008 it was additionally alleged that the defendant failed to have proper systems in place to take adequate remedial action after the previous incident on 7 September 2006 and ensuring there was no subsequent risk to health and safety of employees. 22 The first particular alleged that the defendant failed to ensure that the packaging machine was safe and, in particular, failed to ensure that the kicker arm on the packaging machine could not activate when an employee was close enough to be struck by it. The second particular alleged the defendant failed to ensure the provision and maintenance of a safe system of work that ensured an employee would not approach the vicinity of the packaging machine's kicker arm to clear a jam until the stored energy in the kicker arm was released. The third common particular was that the defendant failed to conduct a risk assessment in respect of the packaging machine to identify potential risks. 23 In assessing the objective seriousness of the offences by reference to the particulars it is relevant to consider what occurred prior to 2006. In 1997 the defendant installed the packaging machine and in doing so took steps to ensure it built into the machine an interlocking device whereby upon any person opening the clear Perspex doors that action automatically stopped all electrical power to the conveyor belt. However, it did not cause the air pressure in the kicker arm to be dumped. 24 In 1998 Mr Barr was injured by the kicker arm and beyond a communication to the supplier of the machine at the time there is no evidence of what action the defendant took to eliminate the risk posed by the kicker arm. Mr Scholten said in his evidence that despite extensive searches, no details of the incident had been located and that: I further understand that the labour hire employee commenced legal proceedings against the Company's predecessor. Therefore I expect that the whole matter would have been handed to the Company's insurer and the Company was not involved. 25 Even assuming the defendant took action to address the problem, it is quite clear that action was inadequate because the same problem re-emerged in 2006 in circumstances where an Australian Standard had existed since 1996 warning of the very danger constituted by the kicker arm. 26 The Court is unable to conclude that the defendant simply ignored the problem of the kicker arm in 1998 and took no remedial action. If the Court were able to come to that conclusion it would constitute a grossly aggravating factor. But the Court is able to take into account that the problem was not remedied and, moreover, that it was reasonably foreseeable that unless some system was adopted that caused air to be dumped from the air cylinder that operated the kicker arm before any person came within range of the arm's operation for the purpose of releasing a jammed carton, it constituted a serious risk to safety. That the risk was foreseeable is a significant factor to be taken into account when assessing the level of culpability of a defendant. A risk that is foreseeable and nothing is done to eliminate or mitigate the risk, will usually mean the level of culpability will be higher than if the risk was not foreseeable or not readily foreseeable. 27 I find it difficult to understand why the kicker arm remained for so many years a potent risk to safety in light of the Australian Standard and that in installing the machinery appropriate protective measures were taken in respect of electrical power. It seems that the need to provide protection from pneumatic power was completely overlooked. What this case highlights is the danger of stored energy in pneumatic powered machinery, which apparently, is not always so obvious given that the defendant's engineer and area supervisor inspected the kicker arm after the Egtberts incident and decided that despite Ms Egtberts' near miss of very serious injury, it was a one-off occurrence, which, of course, it was not. 28 An employer is required to take reasonable care to identify and assess any foreseeable hazard that may arise from the conduct of the employer's undertaking in order to eliminate or control the risk: clauses 9, 10 and 11 of the Occupational Health and Safety Regulation 2001. The usual method by which this is done is a risk assessment. If no, or no adequate, risk assessment is carried out a defendant employer faces the likelihood that the Court will find the failure to do so as a major aggravating factor in the offence. 29 In relation to the Egberts incident, whilst the kicker arm was apparently inspected and the problem dismissed as aberrant, no adequate risk assessment was undertaken at or prior to that incident. It seems to me that if an adequate risk assessment was undertaken as to why the kicker arm retracted upwards after a jammed carton was freed, it would have led inevitably to the conclusion that the kicker arm constituted an ongoing risk to safety which needed to be eliminated. 30 At the time of the Egtberts incident, inadequate though they were, the defendant did take steps to investigate the matter and I should have regard to that fact in the defendant's favour. However, the failure to undertake an adequate risk assessment at the time of the Egtberts incident demonstrated a lax approach to safety on the defendant's part but more particularly, increased the seriousness of the offence relating to Ms Lowe's injuries. 31 The failure to undertake an adequate risk assessment in the circumstances of this case was a serious failure by the defendant and the penalty will need to reflect this. 32 I note the incident concerning Ms Smith that went unreported and that the defendant was unaware of it. That incident demonstrated a flaw in the defendant's reporting system, perhaps because of inadequate training and instruction, but that is not a particular of the charge. 33 It is settled law that a breach, such as occurred here, where there was every prospect of serious consequences, may be assessed on a different basis to a breach unlikely to have such consequences. In such a case, the occurrence of death or serious injury may manifest the degree of seriousness of the relevant risk. Undoubtedly, the injuries suffered by Ms Lowe were serious and manifest the seriousness of the risk both to her and to Ms Egtberts. 34 The existence of simple and straightforward remedial steps that could have been taken by the defendant to avoid the risk to safety are relevant to assessing the seriousness of the offence. Clearly, those steps were available (but not taken), as evidenced by the action taken by the defendant after the Lowe incident, as described in Mr Scholten's affidavit. 35 General and specific deterrence are matters to be taken into account in sentencing under the Act. One of the objects of punishment is to deter others tempted to commit the same crime (general deterrence) and to deter the offender from re-offending (specific deterrence). In respect of general deterrence it was submitted for the prosecutor that: [T]here are two factors which are particularly relevant to general deterrence. The first is there is a public interest in those who use machinery which use pneumatic or air pressure understanding the dangers associated with any stored or unreleased air pressure. Dangers from electrical equipment are, one hopes, now well understood but there are general deterrence reasons why this court would be wishing to demonstrate the potentially serious risk that arises from stored or unreleased air pressure and the importance of complying with the Australian Standard to ensure that machinery operated by air pressure is constructed in a way that ensures that that air pressure is either dumped or neutralised before persons can come into contact with the piece of equipment. The second issue… is the fundamental importance of employers acting when an incident occurs for the first time to ensure that the risk that gave risk to that incident is removed to prevent any further injury from arising from that same piece of machinery. 36 I agree with the prosecutor. The penalty will give appropriate weight to the need for general deterrence. In relation to specific deterrence the defendant continues to carry on business and to operate machinery including pneumatic powered machinery, at its Lisarow plant. It would also need to continue to conduct regular risk assessments of its machinery and to train staff as to safe methods of work and, in particular, safe methods of dealing with any jamming of lines or other risks that might arise from coming into close proximity with machinery. Accordingly, consistent with the Full Bench decision in Capral Aluminium Ltd v WorkCover Authority of New South Wales [2000] NSWIRComm 71; (2000) 99 IR 29 I intend to include an element for specific deterrence. However, I should add that given the steps taken by the defendant as described in Mr Scholten's affidavit to very significantly upgrade its focus on occupational health and safety, I do not regard the risk of the defendant re-offending as very high at all. 37 I note the prosecutor's submission that the earlier prosecution and conviction of the defendant involved a failure to adequately guard, failure to provide safe work procedure and failure to provide adequate information, instruction, training and supervision. These failures occurred on the same production line as that which is the subject of proceedings in this matter. If it had not been for the extensive makeover of occupational health and safety procedures and practices in the past two years I may have given the earlier offence more weight in the context of specific deterrence but I consider the changes made have neutralised the need to do so. 38 I am required to give, and have given, give careful attention to the maximum penalty applicable. In this case it is $825,000 for both offences by virtue of the defendant's prior conviction. 39 I turn to the subjective considerations. The defendant entered a plea of guilty. The plea was not have been entered at the earliest opportunity but it was entered within six weeks of the prosecution being commenced. I believe the utilitarian value of the plea to be high and I will discount the penalty by 22.5 per cent. 40 The prosecutor accepted that the defendant and its directors fully co-operated with WorkCover in its investigations and assisted WorkCover to investigate the matter. The prosecutor also accepted that the defendant took appropriate measures to avoid recurrence of injury and to remove the risk and had taken them prior to WorkCover attending the scene. Also accepted by the prosecutor was that the defendant had accepted responsibility for the incidents that led to the charges, that it was genuinely contrite, that it had taken positive steps to improve its occupational health and safety policies and practices and that it was a good corporate citizen. There is no basis for the Court to take a different view to the prosecutor about these matters. 41 The principle of totality is a relevant consideration. The offences clearly contain common elements. The nature of the offences as they are described in the particulars and the agreed facts is virtually identical except for the fact that the defendant accepts by its plea that it failed to take adequate remedial action after the incident on 7 September 2006 and to ensure there was no subsequent risk to health and safety of employees. But for this fact the penalties would have been the same. 42 I have decided, having regard to the objective factors - including the high maximum penalties applicable - and the subjective considerations, that the penalty in Matter No IRC 1487 of 2008 should be $220,000. In Matter No IRC 1488 of 2008 the penalty should be $300,000. Having regard to the totality principle, the total penalty, having regard to the overall criminality of the defendant, should be $260,000 making the penalty in Matter No 1487 $110,000 and in Matter No 1488, $150,000. Orders 43 The Court makes the following orders: (1) The defendants are convicted of each offence. (2) In Matter No IRC 1487 of 2008 the defendant is fined an amount of $110,000. (3) In Matter No IRC 1488 of 2008 the defendant is fined an amount of $150,000. (4) In each case, one half of the fine is to be paid as a moiety to the prosecutor. (5) The defendant is to pay the prosecutor's costs, as agreed or assessed. Failing agreement, the matter may be referred to the Registrar for assessment. _________________________________ 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.