Industrial Court of New South Wales CITATION: Inspector Charles v Penrose Pine Products Pty Ltd (No 2) [2010] NSWIRComm 186 PARTIES: Inspector Steve Charles (Prosecutor) Penrose Pine Products Pty Ltd (Defendant) FILE NUMBER(S): IRC 353 and 354 of 2009 CORAM: Staff J CATCHWORDS: OCCUPATIONAL HEALTH AND SAFETY - prosecutions under s 8(1) and s 8(2) of the Occupational Health and Safety Act 2000 - sawmilling industry - fire in shavings bin - non-employee suffered fatal injuries - objective seriousness - Australian Standard - contributors to incident - third parties - general and specific deterrence - subjective factors - financial position of defendant - victim impact statement - remorse - contrition - totality - penalty imposed - COSTS. LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999 Occupational Health and Safety Act 2000 Abigroup Contractors Pty Limited v WorkCover Authority of New South Wales (Inspector Maltby) [2004] NSWIRComm 270 Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 Inspector Glass v Foamex Polystyrene Pty Ltd [2004] NSWIRComm 100 Inspector Sharpin v A Team Concrete (Aust) Pty Ltd & Ors [2004] NSWIRComm 182 Inspector Simpson v Tomago Aluminium Co Pty Ltd (unreported) Haylen J 27 April 2004 Matter No IRC 5351 of 2003 Morrison v Coal Operations Australia Ltd (No 2) (2005) 141 IR 465 Nesmat Pty Ltd v WorkCover Authority of New South Wales (1998) 87 IR 312 CASES CITED: Pearce v The Queen (1998) 194 CLR 610 Previtera (1997) 94 A Crim R 76 R v Mansour [1999] NSWCCA 180 R v Thomson; R v Houlton (2000) 49 NSWLR 383 Wong v Melinda Group Pty Ltd (1998) 82 IR 118 WorkCover Authority (NSW) (Inspector Ankucic) v Lyndhurst Trading Co Pty Ltd (2000) 95 IR 462 WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd (2000) 95 IR 383 WorkCover Authority of New South Wales (Inspector Mansell) v Robert Josef [2004] NSWIRComm 323; (2004) 137 IR 241 WorkCover Authority of New South Wales (Inspector Mulder) v Yass Shire Council [2002] NSWIRComm 57; (2000) 99 IR 284 HEARING DATES: 26 November 2010 DATE OF JUDGMENT: 16 December 2010 Mr R Reitano of counsel (Prosecutor) WorkCover Authority of New South Wales LEGAL REPRESENTATIVES: Mr G Cush in person (Defendant) Penrose Pine Products Pty Ltd JUDGMENT: - 1 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: STAFF J Thursday 16 December 2010 Matter No IRC 353 of 2009 INSPECTOR STEVE CHARLES v PENROSE PINE PRODUCTS PTY LTD Prosecution under Section 8(1) of the Occupational Health and Safety Act 2000 Matter No IRC 354 of 2009 INSPECTOR STEVE CHARLES v PENROSE PINE PRODUCTS PTY LTD Prosecution under Section 8(2) of the Occupational Health and Safety Act 2000 JUDGMENT [2010] NSWIRComm 186 1 Penrose Pine Products Pty Ltd ("the defendant") operates a sawmill at 1 Forestry Road, Penrose in the State of New South Wales. 2 On 22 March 2007, Benjamin Pendergast, a 22 year old trade qualified boilermaker employed by Wollondilly Mobile Engineering Pty Ltd ("Wollondilly"), operated an electrically-powered angle grinder to remove a handrail around a wood shavings storage bin ("the shavings bin") at the defendant's premises. He also operated an electric arc welder (with an output of 140 amps) on the top of the shavings bin for approximately one hour performing welding tasks associated with changes to walkways on the side of the shavings bin which was required to allow a new access door to be fabricated into the side of the shavings bin. 3 The shavings bin was approximately half full of radiata pine shavings, a well known fire hazard in a sawmill. The pine shavings ignited whilst Mr Pendergast and Mr Jarrad Thornton, who was also employed by Wollondilly, were working on or near the top of the shavings bin. After both he and Mr Pendergast smelt smoke, Mr Thornton descended the shavings bin to seek assistance and to arrange for the shavings bin to be opened so that they could investigate the fire. When the shavings bin door was opened, a fireball engulfed the shavings bin. Mr Pendergast, who had begun to descend from the top of the shavings bin with his welding equipment was on the upper platform when the fireball engulfed the shavings bin surrounding him in flames. 4 Mr Pendergast jumped from the upper platform to the ground, a distance of approximately nine metres and received fatal head and chest injuries. 5 Mr Stanley Battersby, who was employed by the defendant as a leading hand, received burn injuries when he climbed to the lower platform of the shavings bin to operate the hydraulic controls to open one of the shavings bin doors. As a result of his injuries, Mr Battersby was unable to return to normal duties for a period of three months. The charges 6 The defendant was charged with breaches of s 8(1) and s 8(2) of the Occupational Health and Safety Act 2000 ("the OHS Act") by failing to ensure the health, safety and welfare at work of all its employees, in particular, Stanley Battersby (the s 8(1) charge). 7 The particulars of the s 8(1) charge were: (a) failed to inform itself about the work that was being undertaken at the site by contractors and their employees; (b) failed to manage and organise work being undertaken at the site by contractors and their employees; (c) failed to provide and maintain a safe system of work (including but not limited to a hot work permit system) in relation to work involving the use of welding, cutting, grinding and other electrical, heat or spark producing equipment being used at the site; (d) failed to undertake an adequate risk assessment in relation to work involving the use of welding, cutting, grinding and other electrical, heat or spark producing equipment being used at the site; (e) failed to provide adequate supervision of contractors and their employees performing work with welding, cutting, grinding and other electrical, heat or spark producing equipment being used at the site; (f) failed to provide such information, instruction and training as was necessary in relation to people undertaking work involving the use of welding, cutting, grinding and other electrical equipment being used at the site; (g) failed to provide or maintain adequate emergency procedures for people working at the site. As a result of the abovementioned failures, Stanley Battersby was placed at risk of injury. 8 In respect of s 8(2) of the OHS Act, the defendant was charged with failing to ensure that people other than its employees, in particular Benjamin Pendergast and Jarrad Thornton, were not exposed to risks to their health and safety arising from the conduct of its undertaking while at its place of work. The particulars to the s 8(2) charge were in identical terms to those relied upon in respect of the s 8(1) charge as set out above. 9 The defendant pleaded guilty to the offences charged at its earliest opportunity. I am satisfied, on the evidence, that the defendant is guilty of the offences as charged, and that it was appropriate for the pleas of guilty to be entered. It follows, therefore, that this judgment is concerned only with the question of penalty. Statutory provisions 10 Section 8(1) and s 8(2) of the OHS Act provide as follows: 8 Duties of employers (1) Employees An employer must ensure the health, safety and welfare at work of all the employees of the employer. That duty extends (without limitation) to the following: (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. (2) Others at workplace An employer must ensure that people (other than the employees of the employer) are not exposed to risks to their health or safety arising from the conduct of the employer's undertaking while they are at the employer's place of work. Prosecutor's evidence 11 Mr R Reitano of counsel, who appeared for the prosecutor, tendered agreed statements of facts, which provided: 3. At all material times the defendant was an employer conducting a business at 1 Forestry Road, Penrose ("the site") involving the manufacture of radiata pine timber products. 4. Wollondilly Mobile Engineering Pty Ltd ("Wollondilly Engineering") was a corporation conducting a business involving light engineering work. As at 22 March 2007 Wollondilly Engineering had about 10 employees. 5. Benjamin Pendergast ("Pendergast") was a 22 year old trade qualified boilermaker employed by Wollondilly Engineering. He had been so employed since 18 August 2004 and was Wollondilly Engineering's supervisor at the site. 6. Jarrad Thornton ("Thornton"), was a 17 year old second year apprentice boilermaker employed by Wollondilly Engineering since February 2007. 7. Stanley Battersby ("Battersby") was employed by the defendant as a leading hand. In that capacity he had supervisory responsibilities for the entire site including the wood shavings storage bin ("the shavings bin"). He had worked for the defendant for about 18 years. 8. Michael Cush ("Cush") was the managing director of the defendant and was present on the site on 22 March 2007. 9. Greg Blackburn ("Blackburn") was a self-employed occupational health and safety consultant engaged by Wollondilly Engineering. Blackburn had been engaged by Wollondilly Engineering in June 2006 to implement an occupational health and safety policy including the provision of training to its employees. The Work 10. The defendant had a long-term (in excess of ten years) ongoing commercial relationship with Wollondilly Engineering in which the latter would perform various construction and maintenance tasks at the site. As at 22 March 2007 Wollondilly Engineering had at least four jobs in progress at the site. 11. On 22 March 2007 Wollondilly Engineering was conducting work on two jobs at the site for the defendant. The first involved enlarging the opening of a door to the moulding mill. The second involved extending a platform/ walkway and handrails on the shavings bin. The latter job was preparatory work for a wider project of installing a second access door to a filtration unit on top of the shavings bin. Both jobs required the performance of tasks that included welding and the operation of angle grinders. 12. Wollondilly Engineering had four employees present at the site for the performance of the above work. Pendergast and Thornton were two such employees. The other two were Tom Mortimer "Mortimer" (aged 18 years) and Paul Weatherley "Weatherley" (aged 46 years; employed by Wollondilly Engineering two weeks prior to the incident). Weatherley was a qualified boilermaker, rigger, scaffolder who had been in the industry since 1992. The Wood Shavings Storage Bin 13. The shavings bin was a steel-framed structure approximately 12 metres in height. The top half of the structure was enclosed on all 4 sides and at the top by sheets of corrugated steel cladding. There were gaps in the cladding that formed the top of the shavings bin. Underneath the enclosed section were fitted hydraulically-operated clam-shell-style opening doors. These doors were positioned above a loading bay area designed to accommodate trucks which would be loaded with material from the bin for disposal as required. The bottom half of the structure was enclosed on 2 opposite sides by sheets of corrugated steel. Cylindrical exhaust ducting ran from the top of the shavings bin to the moulding building at the site. The moulding building housed a Weinig brand timber moulding machine/ planer that was used to manufacture timber products. The moulding machine was capable of processing about 7.5 cubic metres of timber per hour. In the course of its operation, the moulding machine would generate shavings and saw dust which was extracted from the machine by means of negative air pressure created by a high velocity exhaust fan located outside the moulding building and driven by a heavy duty electric motor. Each cutting head of the moulding machine had its own extraction duct. Wood shavings and saw dust were drawn into the ducting and after travelling along the length of the ducting were deposited into the shavings bin. The shavings bin had a storage capacity of 180 cubic metres (60 tonnes). 14. A series of three fixed metal ladders formed the means of access to the top of the shavings bin. The ladders were enclosed along most of their length. One ladder provided access from the ground to a platform ("the lower platform") located at a position approximately half-way between the ground and the top of the shavings bin. Another ladder provide access from the lower platform to a second platform ("the upper platform") located just beneath the roof of the shavings bin. A third ladder provided access from the upper platform to the roof of the shavings bin. The height of the roof of the shavings bin was approximately 10 metres. A series of hydraulic controls for the shavings bin doors were located on the lower platform. 15. Underneath the corrugated steel sheeting forming the top of the shavings bin was a screw augur powered by an electric motor located on the upper platform. The augur was designed to even-out the distribution of shavings and saw dust within the shavings bin. The augur was not in use at the time of the incident. 16. Attached to the side of the shavings bin was an air cannon. A series of outlet nozzles were affixed inside the shavings bin. When operated, the air cannon would discharge compressed air through the nozzles for the purpose of initiating the flow of wood shavings and dust adhering to the inside of the shavings bin when its doors had been opened to empty its contents. 17. The shavings bin had been constructed for the defendant by Wollondilly Engineering. The latter had also installed the air cannon and performed work on handrails on the shavings bin. The Events of 22 March 2007 18. Pendergast and Thornton arrived at the site at approximately 6am. Pendergast attended the site office and reported to Battersby. 19. Pendergast subsequently climbed to the top of the shavings bin with Thornton. Pendergast and Thornton spent about one-and-a-half hours cleaning sawdust from the top of the shavings bin. 20. Blackburn was engaged by Wollondilly Engineering to conduct a surprise safety audit of its employees at the site and other locations. The audit proceeded by way of Blackburn covertly observing employees working and then discussing with them any unsafe work practices and alternative safe work methods. 21. Blackburn observed Pendergast and Thornton cleaning the top of the shavings bin. Upon Pendergast and Thornton descending from the shavings bin, Blackburn discussed with them the work they were undertaking. Blackburn noted the need for them to wear safety harnesses, to ensure that the work area was wet in order to prevent fires and to have a fire extinguisher with them. 22. When speaking to Pendergast and Thornton, Blackburn ascertained that no safe work method statement existed for the work being undertaken by them on the shavings bin and that no documented risk assessment had been performed. Blackburn did not inform Pendergast that the work on the shavings bin should not proceed until a safe work method statement was implemented but rather indicated that he would go back to his office to prepare one. After leaving the site, Blackburn did not return to his office but proceeded to conduct an inspection at another location. Blackburn understood that it was the practice of Wollondilly Engineering to prepare a safe work method statement for every job. Blackburn prepared a safe work method statement on 24 April 2007 in response to an improvement notice issued by WorkCover on Wollondilly Engineering. 23. Blackburn was aware that Wollondilly Engineering did not have a hot work permit system as he had previously been asked to implement one but had not done so. He was also aware that hot work would be conducted on the shavings bin on 22 March 2007 but did not access the shavings bin to inspect its contents or the roof working area. Blackburn did not discuss hot work procedures with the defendant and did not discuss with the defendant or Pendergast the contents of the shavings bin. He was however aware that the moulder extraction system was running and on that basis assumed that the shavings bin contained sawdust/ shavings. Blackburn identified no issues of major concern to him at the site on 22 March 2007. 24. Pendergast and Thornton then collected tools and materials including (at the request of Blackburn) a fire extinguisher before returning to the top of the shavings bin. Pendergast operated an electrically-powered angle grinder to remove the existing handrail. After a series of further climbs up and down the shavings bin to transport additional tools and equipment to the top of the shavings bin, they cut and welded metal at ground level. This metal was then transported to the top of the shavings bin using ropes to pull up a series of bundles of such material. Pendergast then operated an electric arc welder (with an output of 140 amps) on the top of the shavings bin for approximately one hour performing welding tasks associated with the work being undertaken. The Fire 25. Pendergast and Thornton then smelled smoke. Pendergast used a water fire extinguisher, spraying initially underneath gaps in the roof of the shavings bin and then along the roof as the smoke increased. Pendergast then asked Thornton to descend for the purpose of seeking assistance from Battersby and getting him to open the shavings bin so that they could investigate the fire. 26. Battersby attended the shavings bin and climbed to the lower platform where he operated the hydraulic controls to open one of the shavings bin doors. When the shavings bin door opened, a fireball engulfed the shavings bin. 27. Pendergast who had begun to descend with welding equipment from the top of the shavings bin was at this stage located on the upper platform. Subsequent to the fireball engulfing the shavings bin, Pendergast was surrounded by flames. He then jumped from the upper platform to the ground, a distance of approximately 9 metres and received fatal head and chest injuries as a result. Battersby received burn injuries as a result of the fire and was unable to return to normal duties for a period of three months. The Cause of the Fire 28. Radiata pine shavings are a well-known fire hazard in a timber mill. The shavings bin immediately before the fire contained a large quantity of such shavings. 29. Hot work involves electrical welding, cutting and grinding. These processes produce hot particles, sparks and hot surfaces and are a common cause of ignition for industrial fires and explosions. 30. The likely cause of the initial fire within the shavings bin was the ignition of wood shavings and saw dust by hot sparks or molten metal from the grinding and welding work being performed by Pendergast and Thornton. The material ignited may have been within the shavings bin or, alternatively, may have been on the roof of the shavings bin and have subsequently fallen into and ignited other material within the shavings bin. 31. Further, the conditions within the shavings bin were conducive to rapid spread of fire across the surface layer of shavings. This was due to the turbulence caused by the operating extraction fan and the low bulk density of the shavings resulting in an enhanced availability of oxygen to sustain combustion. 32. Finally, the opening of the shavings bin doors by Battersby allowed the shavings to fall to the ground, in the process greatly increasing the degree of mixing between burning shavings, unburnt shavings and oxygen in the air. These conditions resulted in an eruption of flame in the fireball that engulfed Pendergast. Unsafe System of Work 33. The defendant had never been shown any risks assessments or safe work method statements ("SWMS") by Wollondilly Engineering in respect of work being performed on the shavings bin. No documented risk assessment/ job safety analysis was conducted for the work on the shavings bin. Pendergast and Thornton did not undertake a risk assessment before commencing work on the shavings bin. No SWMS existed for the work on the shavings bin. 34. Battersby did not review with Pendergast or any other Wollondilly Engineering personnel any safety aspects of the work to be performed at the site on 22 March 2007. Rather, he informed himself what work was to be performed and then handed over the shavings bin area to Pendergast and Thornton. 35. The defendant had a hot work procedure document, however no hot work permit procedure was in place at the site prior to the incident. Wollondilly Engineering did not have a hot work safety procedure. Accordingly, no hot work permit had been issued for the work on the shavings bin or in the moulding mill. 36. No confined space procedure had been put in place for the work on the shavings bin. 37. It was the defendant's usual practice when maintenance work was being performed on the shavings bin for the moulder and its extraction system to be shut down. 38. After the incident, Cush said that no agreement had been reached between the defendant and Wollondilly Engineering for the conduct of work on the shavings bin involving the installation of a second access door. He said that Wollondilly Engineering had been invited to discuss with him a safe procedure for the performance of such work before it was allowed to proceed. 39. Cush was the managing director of the defendant. As a result of this position he had the ultimate responsibility for the supervision of the site. However, his duties primarily did not involve the supervision of employees and contractors on a daily basis. 40. Cush had discussed with Turner that employees of Wollondilly would attend the site towards the end of the week to work on unfinished projects. Cush was aware that 2 employees from Wollondilly Engineering, Weatherley and Mortimer, were on site prior to the incident. Cush was unaware that Pendergast or Thornton were doing any type of work on the shavings bin. Cush was unaware that Blackburn was present on the site. 41. The operator of the moulder, Theo Jongsma, had not been informed and was unaware that hot work was being performed on the shavings bin on the day of the incident. He was aware that workers were present on the top of the shavings bin but assumed that such workers were taking measurements for work to be performed at a later date. Jongsma had understood that the work on the shavings bin was to have been performed the previous Saturday (17 March). The shavings bin had been emptied the previous Friday (16 March) so as to allow the work to be performed the following day. 42. Had Jongsma known that hot work was being performed on the shavings bin, he would have told the workers concerned that such work was not to proceed until the shavings bin was emptied. 43. On 22 March 2007 about 15 to 16 cubic metres of timber had been processed prior to the incident. At the time of the incident the shavings bin was more than half full. 44. Prior to the incident the defendant did not have any emergency procedure for a fire in the shavings bin. 45. A fire sprinkler system was not installed on the shavings bin. Supervision 46. Battersby had been told by Cush a couple of days prior to 22 March 2007 that Pendergast would be coming to look at the shavings bin. On 22 March 2007 Battersby asked Pendergast what work he was going to perform and was informed by Pendergast that he would be installing a railing on the shavings bin. Pendergast explained to Battersby that he proposed to perform cutting work for the new railing on the ground and then use rope/s to haul the new railing to the roof of the shavings bin. Battersby was unaware that welding work was going to be performed on the shavings bin, did not notice the presence of welding gear and did not see Pendergast performing welding work on the roof of the shavings bin on 22 March 2007. 47. Battersby had never been to the top of the shavings bin. 48. Battersby was unaware whether the defendant had a hot work permit system. He had not seen the defendant's hot work procedure document. 49. As at 22 March 2007 the defendant did not have in place a sign-in register or other system for the identification and recording/ registration of visitors to the site and the purpose of their visit. Instruction and Training 50. Pendergast and Thornton were not provided with any documented risk assessment or safe work method statement. No "tool-box" meeting was held in relation to the work on the shavings bin. hornton was unaware of any hot work procedure for the conduct of work on the shavings bin. 51 Wollondilly Engineering had not instructed Pendergast not to perform hot work on the shavings bin unless it had been emptied. 52 Pendergast received no training in hot work safety procedures from Wollondilly Engineering. 53 The defendant had not issued any written direction that work was not to take place on the shavings bin while the moulder and its extraction system were in operation. Prior to the incident Battersby had received no training in emergency procedures in relation to the wood shavings bin. Australian Standard 1674.1—1997 Safety in Welding and Allied Processes 54. Australian Standard 1674.1—1997 entitled Safety in welding and allied processes ("AS 1674.1—1997") was published on 5 September 1997 and specifies precautions to be taken prior to and during hot work to prevent the possibility of fire or explosion which may result in harm to persons or property. 55. AS 1674.1—1997 identifies sawmills and woodworking plants as hazardous areas in which, among other things, combustible dusts or other flammable or explosive substances may be present. 56. Under the heading "Section 2 General Precautions", AS 1674.1—1997 states: Off Cuts and Electrode Stubs Before any hot work commences, arrangements shall be made to prevent any work off-cuts, hot metal, slag or electrode stubs from lodging in places where there is any possibility of starting a fire. Timber Where any hot work is to be carried out adjacent to or above timber, the timber shall be protected, by wetting or other suitable means, from the direct heat of any flame or arc and from sparks, slag and hot metal particles. 57. Under the heading "Section 3 Fire Protection", AS 1674.1—1997 states: NOTE: Fires can be caused in locations remote from the actual working area by sparks or hot slag from hot-work operations or by transfer through metal walls or bulkheads. 58. Appendix A to AS 1674.1—1997 entitled "Guidelines for Hot Work" states; Hot-Work Area The area within a radius of 15m from the point where the hot work is to be undertaken, including the space above and below that area, should be made safe by various techniques, preparation and testing, to ensure that any risk of fire or explosion resulting from the hot work is eliminated. 59. AS 1674.1—1997 prescribes the implementation of a permit system controlling the conduct of hot work. 60. Appendix B to AS 1674.1—1997 produces a precedent permit which requires various multiple sign-offs. One such sign-off is to be from the person in charge of the location where the hot work is to be performed. 61. The precedent in Appendix B to AS 1674.1—1997 requires responses to the following questions: … 6.2 Have combustible materials been removed from the work area or made safe ? … 6.14 Has product movement been stopped in the area of hot work ? 62. The defendant's documented hot work procedure did not comply with the requirements of AS 1674.1—1997. Occupational Health and Safety Regulation 2001 63. Clause 62 of the Occupational Health and Safety Regulation 2001 (the OHS Regulation") provides: (1) An employer must ensure that risks associated with fire or explosion at a place of work are controlled by: … (b) eliminating potential ignition sources, including naked flame, hot work and electrical equipment, and sources of static electricity, including friction, welding and slipping belts, from proximity to flammable substances, combustible dusts or waste materials, and … (d) removing waste materials and accumulated dust on a regular basis, and … (f) any other measures necessary to control the risks. … 64. Clauses 209 and 227 of the OHS Regulation together operate to define the work performed by Pendergast and Thornton on the shavings bin as "high risk" so as to require that Wollondilly Engineering prepare a SWMS before the commencement of such work. Alternative Work Procedures Available 65. The shavings bin could have been emptied prior to the commencement of hot work upon it, thus removing its contents as a source of potential fuel for a fire. The hot work on the shavings bin could have been scheduled to be performed when the moulder and its extraction system were not in operation, thus removing the oxygen-enhancing turbulence created by the extractor fan. 66. Cutting work could have been performed using a hacksaw rather than an angle grinder and the new hand rails could have been attached by bolts or other fastenings rather than being welded in place, thus eliminating hot work as a potential source of ignition. 67. Upon the identification in a risk assessment of the risk of fire, an emergency evacuation plan that provided for evacuation rather than opening the shavings bin doors should have been implemented. Post-Incident Measures 68. Subsequent to the incident, the defendant ceased using the shavings bin as the means of storing wood shavings and saw dust. 69. The defendant commissioned a risk assessment for fire control at the site. Among other things, the risk assessment recommended the development of a hot work permit system. 70. In May 2007 the defendant introduced a hot work permit procedure. Among other things, this procedure required that a permit authorising the conduct of such work be issued by the sawmill supervisor before hot work could commence. Further, the supervisor was required to undertake a work site inspection to ensure that identified risk control measures were implemented. 71. Wollondilly Engineering prepared a SWMS in relation to the work to be conducted on the shavings bin. The SWMS adopted separate hot work procedure requirements. 72. In response to an improvement notice Wollondilly Engineering also implemented a hot work procedure and checklist and a confined space procedure. Both procedures implemented permit systems that, among other things, required signed authorisation before the conduct of hot work. 73. Wollondilly Engineering also employed a safety manager. Either the safety manager or Turner now visit intended work-sites to conduct risk assessments before the workers attend to conduct the work. 12 The prosecutor also tendered the following documentations: (a) A Factual Inspection Report of Inspector Stephen Charles dated 30 March 2007; (b) 42 colour photographs taken by Inspector Stephen Charles on 22 March 2007 showing the wood shavings bin/silo; the walls of the silo; the first platform level of access; the roof area of the shavings bin and railing; the doors known as "oyster clam chutes"; the timber yard; the electric arc welder; (c) two colour photographs taken by Inspector Stephen Charles on 22 August 2008 showing the temporary wood shavings bin adjacent to the disused shavings bin with the new shavings bin having a large opening at the front to enable access by trucks; (d) Australian Standard 1674.1-1997 Safety in welding and allied processes Part 1: Fire precautions ; (e) Penrose Pine Products - Hot work procedure. (f) Penrose Pine Products - Procedure - Hot work permit dated "as at May 2007". (g) TestSafe Australia expert report prepared by David Pearson and Daniel Massey on 10 November 2008; (h) WorkCover NSW Medical Certificates regarding Stanley Battersby dated 22 March 2007, 23 March 2007, 3 April 2007, 19 April 2007 and 13 June 2007; and (i) Prior Conviction Record for Penrose Pine Products Pty Ltd, which recorded that the defendant was convicted on 17 July 1990 of an offence pursuant to s 27 of the Factories Shops and Industries Act 1962 and an offence on 10 March 1999 pursuant to s 15(1) of the Occupational Health and Safety Act 1983 where the defendant was fined $7,500 by the Chief Industrial Magistrate. Defendant's evidence 13 Mr Greg Cush, the Acting Managing Director of the defendant, appeared on its behalf and read affidavits of the following: (a) Mr Greg Cush; (b) Mr Anthony Waugh, a licensed concreter/formworker, carpenter and builder who has been contracted to carry out work for the defendant since 1993/1994; (c) Mr Jim Schofield, a qualified chartered accountant and accountant for the defendant; and (d) Mr Wayne Lewis, the General Manager of the defendant from May 1998 until his resignation in February 2007. None of the above were required for cross-examination. Mr Cush tendered a plan of the defendant's site showing the location of the shavings bin and identifying other buildings. Evidence of Mr Greg Cush 14 Mr Cush detailed the history of the defendant which commenced timber milling operations at Penrose in 1939. Penrose is a small country town in the Southern Highlands in New South Wales with a population of approximately 250 people. The defendant employs approximately 40 people, the majority of whom reside in the local villages of Penrose, Wingello and Bundanoon. Mr Cush said that the defendant is involved in the community and supports many local businesses along with the Rural Fire Brigade. Over the last 10 years it has donated over $120,000 to local charities and organisations. 15 Over the last 12 years, the defendant has invested over $5 M in the business upgrading machinery and buildings. This investment was a commitment to the defendant's occupational health and safety and the notion of risks in its workplace. This investment did not include the costs expended to install or house the equipment or the costs of labour in researching and identifying the equipment. The cost of the investments were funded by the raising of finance through debt. 16 Mr Cush explained the relationship between the defendant and Wollondilly. Wollondilly played a vital part in the installation of the majority of the new buildings and plant over the past decade. He regarded Wollondilly as a highly professional organisation and said the planning of all major works involved detailed discussions between Mr Michael Turner, the owner of Wollondilly and Mr Peter Cush, the then Managing Director of the defendant. All work was planned within the framework of the occupational health and safety procedures which were continually developed and improved by the defendant's General Manager, Mr Wayne Lewis. The total value of machinery installed by Wollondilly was over $2.4 M and it erected buildings worth over $2.6 M. Wollondilly had performed in excess of 20,000 hours of work during this period without any accidents, which Mr Cush considered was a reflection of the planning that was undertaken with safety always a major concern. 17 Mr Cush set out his understanding of the work carried out by Mr Pendergast during the 18 months that he had carried out work for the defendant. He was a highly skilled tradesman who performed work in a professional and safe manner. 18 The shavings bin was installed in 2003 at a capital cost of approximately $1.2 M. The capital cost to install the bin was beyond the capacity of the defendant to service from its own production line so it secured additional custom processing work from Pine Solutions Australia to provide additional income. The bin was designed to house the sawdust and shavings at an elevated level so that trucks could drive underneath and have the sawdust dropped directly into the truck, reducing the need to use other equipment, including forklifts to load the trucks. 19 It was standard procedure that when maintenance work was to be carried out on the bin, it would be offline with the moulder and extraction system shut down and isolated and its contents emptied. The removal of the shavings from the bin and the work being carried out on a Saturday, when the moulding machine was not operating reduced, if not eliminated, the risk of fire. Wollondilly had used this procedure previously when they had installed an air cannon system into the bin after it was erected and operational. 20 Mr Cush stated that approximately one month before the incident, two employees of the defendant were cleaning out the bag house filter on the top of the shavings bin. This task was required to be undertaken approximately every six months as the filter "socks" became blocked over time as a result of the operation of the moulder dust extraction system. 21 Mr Peter Cush had observed two of the defendant's employees cleaning the "socks" and noticed how hot the employees were after carrying out the work. He had a discussion with the workers and asked them how the process could be improved. They identified the heat as being an issue and Mr Peter Cush decided that a second door on the opposite side of the bag house would allow flow-through ventilation and hence improve the working conditions within the bag house. 22 Mr Peter Cush discussed with Mr Pendergast the proposed modifications to the shavings bin. The discussions included Mr Peter Cush stating that the work would have to be done when the moulder was not working so that the bin could be emptied and off line and because there was a risk of fire, the area would have to be cleaned down. He also suggested that it may be necessary to cut the door into the bag house with a "nibbler" (a non spark producing cutting tool). He proposed that Mr Turner should have a meeting with him and provide a safe method to undertake the work. Mr Peter Cush had a standing arrangement with Mr Turner that he could contact the defendant to arrange to send its employees to complete non-urgent outstanding jobs when they were not engaged on other projects for other clients. Mr Turner contacted Mr Peter Cush on 19 March 2007 and advised that he had some employees available later in the week to carry out work for the defendant. The details of the jobs were not discussed. 23 Mr Cush stated that the defendant has a dedication to occupational health and safety which was clearly manifested in the large capital investment in both buildings and plant. This was emphasised by the Construction, Forestry, Mining and Energy Union in a letter dated 15 February 2008 annexed to Mr Cush's affidavit from Mr Craig Smith, Divisional Branch Secretary. The letter was written in full knowledge of the accident which took place on 22 March 2007. The letter relevantly read: The Union has seen the company grow steadily over the last decades. This growth has been based on the combination of the efforts of the workers and the willingness of the company to invest in safe, efficient and high quality equipment and processes. The amount of manual handling has been dramatically reduced by mechanical handling equipment such as the drop sorter in the greenmill and the vacuum stacker in the drymill. Whilst this type of equipment is common in the large corporate sawmills, it is unusual to see this level of mechanised handling equipment in a smaller mill such as Penrose Pine Products. It demonstrates the company's determination to provide jobs that are safe and sustainable for people over a long time. Over the later half of 2007 the timber industry had been through a very difficult trading period, of about two years. Several sawmills closed in this time due to financial difficulties with the resultant loss of jobs. I know that Penrose Pine Products were under significant financial pressure. They struggled through this difficult financial period and unfortunately their talented general manager took the decision to resign, in the best interests of the company, due to the poor viability of the company at the time. In spite of this I was pleased to see that the company continued with planned investments such as a high quality amenities block and a training and lunchroom to improve conditions for the workers. No forced redundancy of any worker of the company happened in that difficult period. Over award wages continued to be paid and bonus payments when any sale level made that possible. ... The Union and WorkCover have had a number of safety audits of the mill. Penrose Pine Products have responded to any issues raised in a diligent manner. The site OH&S committee meets on a monthly basis and are dedicated to continually improving all safety on the site. ... 24 Mr Cush stated that the defendant had fully co-operated with the WorkCover Authority of New South Wales ("WorkCover") and that the defendant was deeply remorseful for its failures which resulted in the death of Mr Pendergast and the tragic consequences for his family. All shareholders and directors of the company attended Mr Pendergast's funeral. Mr Cush said that the impact of Mr Pendergast's death had shaken "all at Penrose Pine Products." As a family, their first reaction was to close the operation. However, after the initial shock, it became clear that the business had to go on because there were 40 families that relied on it for their direct livelihood. Evidence of Mr Schofield 25 Mr Schofield has been the defendant's accountant for the past 10 years. He stated that over the last six years, the timber industry has struggled with extremely difficult trading conditions which have been compounded by the current global economic downturn. Prices of timber have fallen or remained static as a result of reduced demand for housing and an excess supply of timber. Costs, however, have increased significantly. 26 Mr Schofield stated that the defendant has suffered a significant reduction of cash flow over the past six years and has had to borrow to keep the company operating. In addition, it has taken out various forms of finance to improve its machinery and plant. The defendant currently owes approximately $1.389 M. The debts were particularised and supported by documentation showing the total loan facilities. Mr Schofield also set out the total expense commitments of the defendant, together with the anticipated monthly sales which resulted in a deficit of $51,000 per month. He annexed a copy of the company's accounts for the financial years 2008/2009 and 2009/2010, together with a summary sheet of the monthly wages for the defendant. 27 Mr Schofield stated that the current financial position of the defendant means that no increase in borrowed funds are available from banks. Mr Peter Cush borrowed $455,000 from his wife last year to keep the company liquid. This is shown in the company accounts as an unsecured loan. He stated that the stress that Mr Peter Cush has been under has affected his health and he has stood down as Managing Director. He stated that the shareholders and directors all have personal guarantees for the secured debts of the defendant and its failure would see all directors and shareholders bankrupt. Mr Schofield stated that management and staff were working very hard to turn the company around. He said that the best case scenario is a slow turnaround over the next three years. The plan for financial recovery has three bases: reduction in debt, improvement in efficiency from new technology and an improving market. 28 Mr Schofield concluded by observing that any fine is going to make trading and keeping the company solvent difficult. A substantial fine, he contended, will inevitably send the company into liquidation. Evidence of Mr Waugh 29 Mr Waugh has operated for over 23 years as a licensed concrete/formworker, carpenter and builder. In late 1993 or early 1994, he became associated with the defendant when he was engaged to undertake some minor capital works projects mainly concerning concrete work. He detailed his understanding of the history of the defendant. In good years he has been able to source 35 to 40 per cent of his turnover from the defendant. Mr Waugh described the extensive changes that have been undertaken by the defendant since 1993 in respect of the way their operation has developed and become more efficient. He provided detailed information in respect of all of the major projects undertaken by the defendant since he has been associated with it. 30 Mr Waugh annexed valuation reports of the land and buildings of the defendant which were undertaken by W.Mcl Carpenter & Associates, The total value of the land machines and buildings was $3.3 M. The buildings and machinery were assessed at $2.679,750 M and the land value at $675,000. 31 Mr Waugh set out his knowledge of Wollondilly, stating that he found it to be a very capable and hardworking contractor and he regarded Mr Pendergast as "a pleasant young man who was obviously competent as he was often running jobs on his own." 32 After the General Manager, Mr Lewis, resigned because of the financial hardship that the defendant was suffering, Mr Waugh volunteered to assist Mr Peter Cush two days a week. This included helping Mr Peter Cush to improve the occupational health and safety systems across the site. He detailed an impressive list of steps which were introduced after the incident to minimise the risks that, particularly contractors and employees, were exposed to. These steps included the induction of all contractors to the defendant's occupational health and safety policy; risk assessments to be undertaken in respect of all work; the "hot work" policy was upgraded to a "hot work" permit system, which was annexed to the affidavit; safe operating procedures for machines have been rewritten and all machines have been fitted with a new lockout system which means that they are locked out at all times, except when in production. Mr Cush and the Maintenance Supervisor, Mr Matthew Scard, have attended WorkCover OH&S courses. Fire awareness training has been provided to all staff and will be repeated on a yearly basis. A new first aid room has also been completed. 33 Mr Waugh said that since the death of Mr Pendergast, Mr Peter Cush has suffered great emotional trauma and has broken down in his presence on several occasions. In addition to the tragedy, he expressed concern with the difficult financial position of the defendant and if it fails, 40 employees will be out of work. He said Mr Cush's mother, sister, brother and Mr Peter Cush, due to the personal guarantees to secure company debts, would be made bankrupt. 34 Mr Peter Cush has recently stepped down as Managing Director and been replaced by Mr Greg Cush, due to medical advice. Mr Waugh said that the sawmill is much safer and provides a much healthier working environment than it did 17 to 18 years ago, prior to the substantial improvement in its machinery and facilities. It has an ongoing commitment to occupational health and safety which is constantly improving. It has put in place procedures since the accident which are designed to minimise all risks to either employees or contractors. Evidence of Mr Lewis 35 Mr Lewis is the former General Manager of the defendant. He held this position from May 1998 until he resigned in February 2007, leaving the defendant on 9 March 2007. He detailed his roles and responsibilities with the defendant, which included "production and safety." Mr Lewis stated that the defendant competes with sawmills that are 20 to 30 times bigger. The cost per unit is significantly higher in an operation of the defendant's size. He detailed the improvements made during the period he worked for the defendant, which were also dealt with in Mr Cush's and Mr Waugh's affidavits. 36 Mr Lewis stated that the commitments were "massive" and given the financials of the "PPP", he believed a "listed company would not invest with such returns." He stated that the defendant, on a monthly basis, stopped work to hold toolbox meetings. This was for the whole site. The meetings had only three items on the agenda which were: safety (either issues raised by employees or management or both and sometimes featured articles from WorkCover magazines, which often had articles about injuries or deaths in the industry); a good news story about an employee, or an area of the sawmill that had performed well and a bonus to the employees if certain goals were met. 37 Mr Lewis resigned in February 2007 for several reasons. He stated that the primary reason was that he had to reduce the costs of the defendant because selling prices had not gone up in his time and he had to get the costs down. The only area to move on was for him to resign. He said the impact of Mr Pendergast's death on Mr Peter Cush had been absolutely devastating. He could not remember a time since the tragedy that Mr Peter Cush had not broken down when he spoke to him. Relevant principles 38 The Full Bench in Morrison v Coal Operations Australia Ltd (No 2) (2005) 141 IR 465 succinctly summarised the principles to be applied in determining sentence for an offence under the OHS Act. Their Honours stated at [8] - [15]: [8] The overall approach to be followed in relation to the determination of sentence is to be found in the first instance within the statutory provisions of the Crimes (Sentencing Procedure) Act 1999 and in particular, in relation to these proceedings, ss 3A Purposes of Sentencing and 21A Aggravating, mitigating and other factors in sentencing. [9] In R v Way (2004) 60 NSWLR 168 it was emphasised that the provisions of the Crimes (Sentencing Procedure) Act referred to above are not to be construed as representing "a departure from settled principles of sentencing practice, or an abandonment of the discretion that is essential to any system calling for individualised justice". As was said at [59]: '[I]t is clear that the legislative policy ... so far as that can be discerned from the legislation itself, was not to create a straight jacket for judges ... but rather [was] intended to provide "further guidance and structure to judicial discretion.' [10] The starting point for consideration as to penalty is the objective seriousness of the offence. That is a well established sentencing principle and was conclusively affirmed in the Full Bench decision in Lawrenson Diecasting Pty Ltd v WorkCover Authority (NSW) (1999) 90 IR 464 at 474 as follows: '[I]t is important to reiterate that the primary factor to be considered when a judicial officer is determining the appropriate sentence to impose is the objective seriousness of the offence charged. In case of prosecutions under the OH&S Act, this proposition has often been expressed by saying that the "true measure of penalty lies in the nature and quality of the offence' ... [11] The principle of foreseeability as a factor in determining the objective seriousness of an offence as part of the sentencing process was considered in the Full Bench decision in Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at 646; 99 IR 29 at 62 as follows: 'The question of foreseeability is relevant to the assessment of the seriousness of the offence. We consider that the appropriate approach is that of Walton J, Vice President, in Department of Mineral Resources of NSW (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 at 27:' 'Whilst the reasonable foreseeability of an accident may not be relevant to the question of liability under the Act (see Drake Personnel Ltd t/a Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432), the degree of foreseeability is a significant factor to be taken into account when assessing the level of culpability of the defendant. The existence of a reasonably foreseeable risk to safety which is likely to result in serious injury or death is a factor which will be relevant to the assessment of the gravity of the offence.' [12] On the issue of foreseeability, the Full Bench in Capral also stated at 646; 62 - 63: 'The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However, the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J, President, in Ferguson v Nelmac Pty Ltd (at 209 - 210) in these terms: '... reliance on "hindsight" must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s 15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy. So much is clear from the structure and language of the section which is premised on the requirement to 'ensure ... health, safety and welfare at work' and the decided cases which make plain the nature of the obligation.' [13] It is also necessary to consider the damage and injury suffered in the context of the evidence and "in light of the principles which have been laid down in relation to the relationship between the seriousness of injuries which have been suffered, or which may have been suffered, and the gravity of the offence" ( Capral at 650; 66). On that point the Full Bench in Capral stated: 'We consider that the relevant principle can be stated in this way. The gravity of the consequences of an accident, such as the damage or injury, does not, of itself, dictate the seriousness of the offence or the amount of penalty. However, a breach where there was every prospect of serious consequences might be assessed on a different basis to a breach unlikely to have such consequences. The occurrence of death or serious injury may manifest the degree of seriousness of the relevant detriment to safety: Tyler v Sydney Electricity (1993) 47 IR 1 at 5, Inspector Hannah v Wonar Pty Ltd (1992) 34 AILR 377 at 378, Watson v Southern Asphalters Pty Ltd (1996) 83 IR 446 at 456, Wong v Melinda Group Pty Ltd (1998) 82 IR 118 at 131, WorkCover Authority of New South Wales v Albury City Council (1999) 90 IR 397 at 408 - 409, Lawrenson Diecasting Pty Ltd (at 476), WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd (at 428) and WorkCover Authority (NSW) v Walco Hoist Rentals Pty Ltd (No 2) (at [22]).' [14] The principles of general and specific deterrence are also relevant in sentencing. The approach to be taken on that issue was also dealt with in some detail in Capral at 643 - 645; 59 - 62. Without detailing all that the Full Bench had to say we consider the approach to deterrence in the sentencing process is encapsulated in the following passage from the Full Bench in Capral at 644; 60 as follows: '[B]oth aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Workcover Authority (NSW) v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39; (2000) 99 IR 163 at [40]- 43]) we would expect such cases to be very rare, and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted.' [15] In the context of the above well established sentencing principles it will also be necessary to have regard to those general matters going to aggravation, mitigation and other factors identified in s 21A of the Crimes (Sentencing Procedure) Act relevant to the respondents before the Full Bench. As was said in R v Way at [56]: '[I]t is not to be overlooked that there is a well established body of principles that have been developed by the courts over a long period of time. By providing guidance in the form of a list of aggravating and mitigating factors in s 21A, the Parliament did not intend to overrule or disturb those principles or restrict their application. In so far as those principles refer to factors, whether objective or subjective, that affect the "relative seriousness" of the offence, they are expressly preserved by s 21A(1)(c).' Consideration 39 These are prosecutions that present enormous difficulties in determining the appropriate penalty. On the one hand, serious breaches of the OHS Act have been identified by the risk that occasioned the accident. On the other hand, there is a defendant who, in my view, is a good corporate citizen and has, and continues to make, a significant contribution to employment in the local community of Penrose and its surrounding districts. In addition, there were other contributors to the incident. I am aware, in accordance with the principles that I have set out earlier, that the primary consideration in sentencing requires a determination of the objective seriousness of the offence. This involves examining the nature and quality of the offence, as set out in the agreed statements of facts, and the evidence. Without repeating what is contained in the agreed statements of facts, in considering the seriousness of the offences, it is relevant to set out the important matters. 40 The defendant entered into an arrangement with Wollondilly to enlarge the opening of a door to the moulding mill and extend a platform/walkway and handrails on the shavings bin. There was no safe work method statement for the work that was being undertaken by Mr Pendergast and Mr Thornton and no documented risk assessment had been performed. 41 Mr Greg Blackburn, a self employed occupational health and safety consultant was engaged by Wollondilly to implement an occupational health and safety policy for it. He was aware that Wollondilly did not have a hot work permit system, as he had previously been asked to implement one, but had not done so. He was aware that "hot work" would be conducted on the shavings bin on 22 March 2007, but did not access the shavings bin to inspect its contents or the roof working area. He did not discuss "hot work procedures" with the defendant. Nor did he discuss with the defendant or Mr Pendergast the contents of the shavings bin. He was, however, aware that the moulder extraction system was running and on that basis must have assumed that the shavings bin contained sawdust/shavings. However, and regrettably, he identified no issue of major concern to him in respect of the work to be undertaken at the site on 22 March 2007. 42 The ignition of pine shavings from sparks caused by electrical welding, cutting and grinding, was obvious and foreseeable. The operator of the moulding machine was Mr Theo Jongsma. This machine was capable of processing about 7.5 cubic litres of timber per hour. It generated shavings and sawdust which were deposited in the shavings bin. Mr Jongsma had not been informed and was unaware that "hot work" was being performed on the shavings bin on the day of the incident. He was aware that workers were present on the top of the shavings bin, but assumed that such workers were taking measurements for work to be performed at a later date. Mr Jongsma had understood that the work on the shavings bin was to have been performed the previous Saturday, 17 March 2007. The shavings bin had been emptied the previous Friday, 16 March 2007, so as to allow the work to be performed the following day. Had Mr Jongsma known that "hot work" was being performed on the shavings bin, he would have told the workers concerned that such work was not to proceed until the shavings bin was emptied. 43 The offences occurred in circumstances where the defendant had never been shown any risk assessment or safe work method statements ("SWMS") by Wollondilly in respect of work being performed on the shavings bin. No documented risk assessment or job safety analysis was conducted for the work on the shavings bin. Neither Mr Pendergast, nor Mr Thornton undertook a risk assessment before commencing work on the shavings bin. 44 Although the defendant had a "hot work" procedure document, no "hot work" permit procedure was in place at the site prior to the incident. Wollondilly did not have a "hot work" safety procedure. It was the defendant's usual practice when maintenance work was being performed on the shavings bin for the moulder and its extraction system to be shut down. Mr Cush's evidence was that this was the reason the work was to be done on a Saturday when the moulder was not operating. The standard procedure that had been used in the past was to empty the shavings bin. 45 However, prior to the incident, the defendant did not have any emergency procedures for a fire in the shavings bin. A fire sprinkler system was not installed on the shavings bin. No toolbox meeting was held in relation to the work on the shavings bin. Mr Pendergast had received no training in "hot work" safety procedures from Wollondilly. Furthermore, the defendant had not issued any written direction that work was not to take place on the shavings bin while the moulder and its extraction system were in operation, although, as I have observed, this was standard procedure. Mr Battersby had received no training in emergency procedures in relation to the shavings bin. He was unaware that welding work was going to be performed on the shavings bin on 22 March 2007. He did not notice the welding equipment, or observe Mr Pendergast performing welding work. 46 Australian Standard 1674.1—1997 entitled Safety in welding and allied processes identifies the obvious and known risks associated with hot work near timber. Under the heading "Section 2 General Precautions", AS 1674.1—1997 states: Off Cuts and Electrode Stubs Before any hot work commences, arrangements shall be made to prevent any work off-cuts, hot metal, slag or electrode stubs from lodging in places where there is any possibility of starting a fire. Timber Where any hot work is to be carried out adjacent to or above timber, the timber shall be protected, by wetting or other suitable means, from the direct heat of any flame or arc and from sparks, slag and hot metal particles. 47 Under the heading "Section 3 Fire Protection", AS 1674.1—1997 states: NOTE: Fires can be caused in locations remote from the actual working area by sparks or hot slag from hot-work operations or by transfer through metal walls or bulkheads. 48 Appendix A to AS 1674.1—1997 entitled "Guidelines for Hot Work" states; Hot-Work Area The area within a radius of 15m from the point where the hot work is to be undertaken, including the space above and below that area, should be made safe by various techniques, preparation and testing, to ensure that any risk of fire or explosion resulting from the hot work is eliminated. 49 AS 1674.1—1997 prescribes the implementation of a permit system controlling the conduct of hot work. 50 Appendix B to AS 1674.1—1997 produces a precedent permit which requires various multiple sign-offs. One such sign-off is to be from the person in charge of the location where the hot work is to be performed. 51 The precedent in Appendix B to AS 1674.1—1997 requires responses to the following questions: … 6.2 Have combustible materials been removed from the work area or made safe ? … 6.14 Has product movement been stopped in the area of hot work ? 52 The defendant's documented hot work procedure did not comply with the requirements of AS 1674.1—1997. 53 Clearly, the absence of any safety measures in respect of the work being undertaken at the shavings bin, particularly in light of the Australian Standard and the Occupational Health and Safety Regulations, created an obvious and foreseeable risk to all persons working on the shavings bin or in the vicinity of it. The defendant was aware of the risk that undertaking "hot work" near the shavings bin could cause and Mr Cush acknowledged the defendant's "negligence". 54 Furthermore, Mr Thornton was a 17 year old second year apprentice boilermaker who was not provided with any specific safety induction or risk identification by the defendant. The simplicity in avoiding the risk, that being, emptying the shavings bin, highlight how the risk was avoidable. There is also the consideration that Mr Pendergast sustained fatal injuries through the defendant's failure to ensure his health and safety. Such considerations manifest the overall objective seriousness of the offence. I agree with the submission of Mr Reitano that in light of the obvious and known risks, these offences fall within the high range of seriousness. 55 Mr Cush acknowledged "we accept the work done on that day was done in an unsafe manner". He submitted that the defendant had an established procedure for safe work on the shavings bin as noted in the agreed statement of facts (at paragraph 37). The procedure required that the moulding system was offline and the shavings bin emptied, so that the risk of fire could be eliminated. It was expected that Wollondilly would perform the "hot work" in a safe manner and it was anticipated that such work would be carried out on a Saturday. 56 Mr Cush submitted the shavings bin had been emptied on Friday 16 March 2007 to enable the work to be performed on the Saturday. Mr Cush was not aware why the work was not carried out. Mr Jongsma was aware if work was to be carried out on the shavings bin, such work should not be done with the shavings bin remaining full. Clearly, he must have obtained this state of awareness from the defendant. 57 Mr Cush also submitted that the modification work to be carried out on the shavings bin was proposed by Mr Peter Cush to improve the conditions that arose when employees were required to clean the "socks". The "socks" are part of the filtration system built into the shavings bin to help eliminate the movement of dust within the bin. From time to time, employees were required to remove the dust from the "socks". This was unpleasant work. After discussing the conditions with Mr Pendergast, it was agreed to make changes which included accessing the walkway and a new access to the bin being ventilated into the side of the bag house. 58 Mr Peter Cush advised that such work would have to be done when the mill was not working so that the shavings bin could be emptied. He believed that it was necessary to cut the door into the side of the bag house with a "nibbler", a non spark producing cutting tool. Mr Peter Cush proposed a meeting with Mr Michael Turner, the Managing Director of Wollondilly, so that a safe work method could be agreed upon. 59 Unfortunately, discussions regarding the safe work method with Wollondilly did not occur. Mr Peter Cush was unaware that work was being done on the shavings bin on 22 March 2007. 60 On the morning that the work was to be carried out, Mr Blackburn attended the defendant's site to undertake a covert safety audit. Mr Blackburn discussed with both Mr Pendergast and Mr Thornton, after they had descended from the shavings bin, the work that they were about to undertake. Mr Cush submitted that this was akin to a "toolbox" meeting regarding the tasks that Wollondilly were preparing to undertake that morning. Mr Blackburn's advice to Wollondilly's employees was for them to wear safety harnesses, to ensure that the work area was wet in order to prevent fires and to have the fire extinguisher with them. 61 Mr Cush contended that Mr Blackburn was "seriously negligent" in his responsibilities towards the defendant, Mr Pendergast, Mr Thornton and Wollondilly. He submitted that Mr Blackburn should have stopped Wollondilly's employees from proceeding in circumstances where he was aware that they were about to commence "hot work" on the shavings bin until all risks had been identified. It should be noted at this point that Mr Blackburn was charged with breaches of the OHS Act. However, according to Mr Cush, he has "disappeared off the face of the earth" and the charges were withdrawn. 62 These factors highlight how the tragic set of circumstances unfolded. However, as was emphasised by Mr Reitano, it is important to bear in mind the obligations that the defendant had under the OHS Act and in particular, the objective seriousness of the offences. There are obvious and known risks that arise from the conduct and operation of a sawmill. However, weight must be given to the defendant's dedication to occupational health and safety which manifested in the large capital investment made by the defendant. This was to ensure the sawmill operated in a safe efficient manner with high quality equipment and premises. 63 It is clear that there were a number of contributors to the incident. The defendant's failure is one, another is Wollondilly and a third is Mr Blackburn. In Nesmat Pty Ltd v WorkCover Authority of New South Wales (1998) 87 IR 312 and Wong v Melinda Group Pty Ltd (1998) 82 IR 118, a Full Bench and Hungerford J respectively, considered the principle of "equal justice" and its applicability to entities which had not been prosecuted. 64 In WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd (2000) 95 IR 383 at [159] - [160], Walton J considered the principles in Nesmat and Wong. In McDonald's, a contractor who had failed to carry out certain maintenance work, being an omission subsisting at the time of the accident which resulted in the prosecution of McDonald's and other contractors who also played a role, were not prosecuted. Walton J observed at [159] - [160] that: [159] ... The culpability of the defendants should be assessed in light of the systems which were in place and the reliance which was placed upon third parties to provide various services both in relation to the particular restaurant involved in this case and in the system of safety employed in the entire McDonald's system. The absence of a prosecution of another entity merely serves to emphasise the unfairness that may be occasioned to a defendant in the assessment of the objective seriousness of an offence if a proper assessment of their contribution to an accident is not undertaken. [160] ... Nothing in the decision in Nesmat warrants the adoption of the further approach contended for by the defendants that the Court should assess, in the context of the sentencing of the defendants, whether a prosecution should have been continued against Lennard and Mercer. Nor is it consistent with the principle of parity or the abovementioned decisions for the Court to embark upon an inquiry in sentencing proceedings which, in substance, would require the Court to make specific findings as to the culpability of such entities under s17 and the 'nature and quality' of any offence committed by them. 65 His Honour proceeded to observe that if such an approach was adopted, it would result in unqualified adverse findings concerning an entity which had no opportunity to answer the allegations made against it. 66 In these matters, although the contractor, Wollondilly, arrived at the site to carry out work on the shavings bin, together with its occupational health and safety consultant, Mr Blackburn, the Managing Director was unaware of their presence. However, the defendant had control of the site. Its attention to safety considerations in respect of the site over many years clearly emerges from the evidence and the agreed statements of facts. The defendant believed the work would be carried out on a Saturday. The evidence discloses it was unaware that this did not occur and the work was to be subsequently carried out on another occasion. This occurred when its safety policies had not been implemented. As Walton J observed "the culpability of the defendants should be assessed in light of the systems which were in place and the reliance which was placed upon third parties to provide various services". There exists therefore, in my view, extenuating circumstances which I have endeavoured to set out in these reasons. General deterrence 67 General deterrence is an important factor in this matter. The risk of a fire, as I have already observed, in a sawmill where there is welding, cutting, and grinding of metal that produces heat or sparks, creates an obvious risk to safety. This prosecution could have been avoided if simple protective measures had been put in place. I consider it is appropriate to once again draw attention to the need for employers and contractors in the sawmilling industry to be constantly vigilant of the need to ensure that workers are not exposed to the risk of fire. Employers must comply with the Australian Standard to ensure safety in welding and "hot work". The Occupational Health and Safety Regulation 2001, and in particular cl 62, should be implemented on all sites. I therefore include an element in the penalty for general deterrence. Specific deterrence 68 In relation to specific deterrence, I accept, in light of the evidence relied upon by the defendant, that this is not a case which calls for the imposition of some additional punishment aimed at deterring the defendant from further offending against the OHS Act and/or for the purpose of compelling the defendant's attention to occupational health and safety issues, so that persons are not exposed to risks to their health and safety. As the defendant is still operating, I include a small component in the penalty for specific deterrence. Subjective factors 69 The relevant subjective factors include that the defendant has been in operation since 1937 with one conviction arising under the 1983 Act for which it was fined $7500. As the defendant has a previous conviction under the OHS Act, the maximum penalty for the offence is $825,000. 70 Mr Cush expressed his personal remorse and that of the defendant during his submissions. He said: [F]irstly if I could just acknowledge Ben's family and friends. I would like to publicly express on behalf of Penrose Pine Products shareholders and directors how sorry we are that this tragedy did occur. For the last five years I have worked for Penrose Pine Products, having worked there previously when I had left school but prior to this last five years I was a local church pastor for 20 years. During my time as a pastor I conducted a significant number of funerals related to various circumstances. Some of these funerals involved children as young as one day old. I remember on two occasions seeing two different fathers having walked down with the casket in their arms. Some of the funerals were for adults in their nineties. Sadly some of the funerals were for teenagers and young adults. I personally have not lost a child however in my role as a pastor I have been intimately involved with mums and dads, brothers and sisters who were experiencing incredible pain and inconsolable grief as a result of their loss. In this perspective I sincerely express my regret to Ben's family and friends. I am acutely aware as well that no words or actions will bring Ben back. We have no means of filling the void within their hearts and your Honour I am also conscious of the news from New Zealand of 29 miners who are trapped and there are families there who are undertaking a similar journey to Ben's family. 71 The defendant entered a plea of guilty at the earliest opportunity and is entitled to a discount of 25 per cent in accordance with the principles in R v Thomson; R v Houlton (2000) 49 NSWLR 383. I also take into account the steps taken by the defendant to avoid the breach recurring and that the defendant co-operated with WorkCover. 72 I find that the defendant is a good corporate citizen. It is active in its local community, and has made significant donations to charities over the years. I also take into account the statements made by the Branch Secretary of the Construction, Forestry, Mining and Energy Union in determining penalty. 73 Mr Cush submitted that it would be difficult for the defendant to pay a significant fine in circumstances where it continues to operate at a loss and has already taken steps to reduce its overheads with the resignation of Mr Lewis. The defendant is currently operating at a monthly loss of $51,000. Mr Schofield's evidence was that a substantial fine would send the company into liquidation and result in the directors and shareholders who are members of the Cush family, being made bankrupt. Mr Cush emphasised that Penrose has a population of 250 people and that the defendant employs 40 people. Fourteen of those employees have a combined total of 245 years' service with the defendant. 74 Mr Reitano submitted that much of the material relied upon by the defendant in respect of its financial position focused on its cash flow problems which should not be equated with an incapacity to pay any fine. It appears to me that some of the defendant's difficulties appear to have been caused by the global financial crisis. 75 Mr Reitano drew the Court's attention to the decision of Wright J in Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 where his Honour observed that the mere difficulty a defendant has to pay a fine should not deter the Court from imposing substantial fines for breaches of the OHS Act. His Honour's approach was followed by Walton J, Vice-President in WorkCover Authority (NSW) (Inspector Ankucic) v Lyndhurst Trading Co Pty Ltd (2000) 95 IR 462. 76 I agree with the submissions of Mr Reitano that the defendant has not discharged the onus upon it in respect of an incapacity to pay argument. Much of the material relied upon by the defendant was imprecise. For example, it is not clear to me what principles have been applied in respect of the valuations relied upon in respect of land and buildings. However, what is clear is if the defendant is placed into liquidation, 40 employees in Penrose will lose their livelihood. Victim impact statement 77 Mr Reitano invited Ms Jamie-Lee Pendergast to read a victim impact statement. The Crimes (Sentencing Procedure) Act 1999 ("CP Act") relevantly provides under s 28(1): 28 When victim impact statements may be received and considered (1) If it considers it appropriate to do so, a court may receive and consider a victim impact statement at any time after it convicts, but before it sentences, an offender. ... 78 The Court of Criminal Appeal in R v Mansour [1999] NSWCCA 180 and Hunt CJ at CL in Previtera (1997) 94 A Crim R 76 (at [84] - [85]) stated that the Court in sentencing may bear in mind a victim impact statement and have regard to the particular effect of the deceased on members of the family. However, the Court should not give these considerations weight in determining the sentence imposed: Inspector Glass v Foamex Polystyrene Pty Ltd [2004] NSWIRComm 100 at [43]. See also Inspector Simpson v Tomago Aluminium Co Pty Ltd ((unreported) Haylen J 27 April 2004 Matter No IRC 5351 of 2003); Inspector Sharpin v A Team Concrete (Aust) Pty Ltd & Ors [2004] NSWIRComm 182 at [138]. 79 The statement read: My name is Jamie-Lee Pendergast and I am reading this on behalf of the Pendergast family. We are so very proud to call Benjamin James Pendergast our son and brother. The tragic events that have led me to stand before you today and read this statement. They have been by far the most difficult and painful that my mother, father, brother and myself have ever had the strength to endure. The tragic and needless loss of BJ devastated us all and still does to this very day. We don't know where to begin to express the pain in our hearts. There is not a day that we don't have a thought of our son and brother and these precious memories are all that are left to us now. What once was an amazing and loving and gentle young man is now and forever more just ashes. When BJ was taken from us a part of us also died that day with him. To wake up every day and have to face yet another day without him is such a struggle for my mother, father, brother and I and those who knew and loved him. To have our son and brother taken from us at such a young and tender age under such tragic circumstances is something we have been forced to live with against our will. We could tell you about BJ as a child or as a teenager or even as a young man, and all the happy and memorable and magic times we had with our son and brother over the 22 years but you would still not know him. BJ was a bright light, a warm, a happy, extremely lovable, funny, and deeply caring human being for which all our lives will be poorer having lost him. At only 22 he was an inspiration to many. To BJ his family and their happiness and their well-being meant everything. There are many things that we will never have the chance to see BJ accomplish; like getting married, starting a family or even buying a house. BJ's life was cut way too short. And, in closing, a young person should be able to go to work and come home safe because we never wish for another family to feel the pain our family is and will be for the rest of our lives. 80 The Court extended its sympathy to the Pendergast family. 81 It is also necessary to apply the principle of the totality. The principle was considered by Full Benches of this Court in Abigroup Contractors Pty Limited v WorkCover Authority of New South Wales (Inspector Maltby) [2004] NSWIRComm 270 and WorkCover Authority of New South Wales (Inspector Mansell) v Robert Josef [2004] NSWIRComm 323; (2004) 137 IR 241. These decisions, which are binding upon me, considered the statement of the totality principle by the High Court of Australia in Pearce v The Queen (1998) 194 CLR 610 at [45] - [46] where the Court stated: To an offender, the only relevant question may be "how long", and that may suggest that a sentencing judge or appellate court should have regard only to the total effective sentence that is to be or has been imposed on the offender. Such an approach is likely to mask error. A judge sentencing an offender for more than one offence must fix an appropriate sentence for each offence and then consider questions of cumulation or concurrence, as well, of course, as questions of totality: Mill v The Queen (1998) 166 CLR 59. Sentencing is not a process that leads to a single correct answer arrived at by some process admitting of mathematical precision: cf House v The King (1936) 55 CLR 499. It is, then, all the more important that proper principle be applied throughout the process. 82 The principle of totality requires consideration of the overall culpability or criminality attributable to the defendant from both convictions, and in the process ensures that there is no "double counting of the culpability of the defendant from the respective offences": WorkCover Authority of New South Wales (Inspector Mulder) v Yass Shire Council [2002] NSWIRComm 57; (2000) 99 IR 284 per Wright J at [37]. 83 Approaching the matters in this way, I consider that the overall culpability of the defendant, bearing in mind the significant overlap between the two offences, and the aggregate culpability arising from the effect of both breaches occurring at the same time (and being evidenced by a single incident) would result in a total fine of $220,000. Having regard to the separate assessments of the culpability of the defendant in relation to the two offences, fines of $60,000 should be imposed in each matter. 84 I observe that the penalties would have been greater but for the matters raised by the defendant, the steps it took immediately after the incident and its commitment to occupational health and safety operating in a dangerous industry for over 70 years. I would encourage the Industrial Registrar to consider granting any application to pay the fines by instalments. 85 The prosecutor seeks a moiety and costs, which I propose to grant. ORDERS 86 The Court makes the following orders: In Matter No IRC 353 of 2009: 1. The offence is proven and a verdict of guilty is entered. 2. The defendant is convicted of the offence, as charged. 3. The defendant is fined an amount of $60,000 with a moiety thereof to the prosecutor. 4. The defendant shall pay the prosecutor's costs of the proceedings in an amount as agreed, or if agreement cannot be reached, as assessed. In Matter No IRC 354 of 2009: 1. The offence is proven and a verdict of guilty is entered. 2. The defendant is convicted of the offence, as charged. 3. The defendant is fined an amount of $60,000 with a moiety thereof to the prosecutor. 4. The defendant shall pay the prosecutor's costs of the proceedings in an amount as agreed, or if agreement cannot be reached, as assessed. ---------------------------------------- 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.