Industrial Court of New South Wales CITATION: Inspector Ken Kumar v David Aylmer Ritchie [2006] NSWIRComm 384 PROSECUTOR: Inspector Ken Kumar PARTIES: DEFENDANT: David Aylmer Ritchie FILE NUMBER(S): IRC 150 of 2005 CORAM: Haylen J CATCHWORDS: Occupational Health and Safety Act 2000 - s 8(1) - s 26(1) - director and Group CEO found guilty in contested proceedings - diversity of Group's business interests - specialist container wash operation - use of combustible chemicals - explosion results in death of employee - comprehensive failure of safety system - serious breach established - general deterrence considered - specific deterrence of little significance - defendant resident in New Zealand - no intention to engage in similar high risk enterprise in future - substantial steps taken after accident to address risk to safety - flaws demonstrated in otherwise established system of safety - parity in sentencing - differences in roles of two directors - culpability very similar despite differences in roles - no previous convictions - good record and good citizenship demonstrated - contrition and co-operation with authorities - defendant unlikely to offend again - penalty imposed Inspector Kumar v David Alymer Ritchie [2006] NSWIRComm 323 CASES CITED: Inspector Kumar v John Julian Rose [2006] NSWIRComm 325 Inspector Kumar v Owens Containers Services Pty Ltd [2006] NSWIRComm 324 Inspector Page v Walco Hoist Rentals Pty Ltd [2000] 99 IR 163 HEARING DATES: 6/12/2006 EXTEMPORE JUDGMENT DATE: 12/06/2006 PROSECUTOR: Mr R Reitano of counsel SOLICITORS: WorkCover Authority LEGAL REPRESENTATIVES: DEFENDANT: Mr A Gotting of counsel SOLICITORS: Corrs Chambers Westgarth JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Haylen J 6 December 2006 Matter No IRC 150 of 2005 INSPECTOR KEN KUMAR v DAVID AYLMER RITCHIE Prosecution under ss 8(1) and 26(1) of the Occupational Health and Safety Act 2000 EX TEMPORE JUDGMENT [2006] NSWIRComm 384 1 Owen Container Services Australia Pty Ltd pleaded guilty to a breach of s 8(1) of the Occupational Health & Safety Act 2000 in relation to a fatality occurring on the 15 January 2003 at the company's Auburn facility. Two Directors, Mr Rose and Mr Ritchie, were also charged with breaches of section 8 (1) of the Act by operation of s 26(1) of the Act. Both directors pleaded not guilty but early in the hearing Mr Rose altered his plea, entering a plea of guilty. The company had at an early stage entered a plea of guilty. 2 Mr Ritchie, a director of the company and the Chief Executive Officer of the Owens Group, continued with his plea of not guilty and was ultimately found guilty by the Court (see Inspector Kumar v David Alymer Ritchie [2006] NSWIRComm 323, a decision delivered on 12 October 2006). On the same day judgment was delivered regarding the sentencing of the company and Mr Rose. In the matter of Inspector Kumar v Owens Containers Services Pty Ltd [2006] NSWIRComm 324, the company (having no prior convictions) was fined $160,000 with a 25 per cent discount for an early plea and further discount for substantial subjective factors. In the matter of Inspector Kumar v John Julian Rose [2006] NSWIRComm 325 Mr Rose, (having no prior convictions) was fined $18,500 with a discount of five per cent for the guilty plea and a further discount for substantial subjective factors. 3 The present matter involves the sentencing of Mr Ritchie. The finding of facts and the penalties imposed in relation to the company and Mr Rose and the finding of facts regarding Mr Ritchie form part of the relevant background for this sentencing exercise. In relation to Mr Ritchie the agreed facts are annexed to the judgment dealing with liability and are not repeated in this judgment. 4 Shortly stated, Owens Containers was part of the Owens Group of Companies. It operated a number of ISO tank washing facilities within Australia, New Zealand and Fiji. The fatal accident that occurred on 15 January 2003 involved the company's Auburn (NSW) site and the death of Mr John Howie, who was the Auburn depot manager. Mr Howie was in the course of cleaning a tank using a highly combustible solvent when there was an explosion, ultimately killing Mr Howie. 5 Following an investigation by the WorkCover Authority Owens Containers and the two directors, Mr Rose and Mr Ritchie, were charged with the breaches of the Occupational Health and Safety Act 2000, earlier referred to. At the time of the accident Mr Rose was the Divisional General Manager of Owens Containers and a director of the company. Mr Ritchie was the Chief Executive Officer of the Owens Group and a director of the company, having taken up that position in October 2001. Mr Ritchie resigned from that position in November 2003, having been made redundant as a result of a takeover of the business. Mr Rose retired from the work force at approximately the same time and in the same circumstances. 6 In the judgment on liability Mr Ritchie is referred to as describing the Owens Group as a public company, itself owning 30 companies and operating in New Zealand, Australia, United States of America, Fiji, Delhi and Papua New Guinea. The Owens Group employed approximately 1600 staff, and whilst he was the Chief Executive Officer he resided and worked in New Zealand. Prior to taking up that appointment Mr Ritchie had spent approximately 21 years with Shell International, working in the oil industry. He had no prior experience of the operation of cleaning containers or ISO tanks. 7 The Owens Group operated in the road transport, international movement, customs clearance/shipping and perishable air and sea freight business. In his position as Chief Executive Officer, Mr Ritchie was responsible for the entire business and all 1600 employees. The business had a number of operating divisions and Mr Ritchie received reports from each division, including the Containers Division. Mr Rose was responsible for the Container Division and reported to Mr Ritchie. 8 Mr Ritchie, being resident in New Zealand, visited the Australian operation of the Group every two months and spent two to three days in Australia on each visit. Only part of that time was spent at depots such as the Auburn wash facility. Mr Ritchie estimated he spent between half a day to one day a month dealing with the container services business of the Group in relation to the Australian, New Zealand and Fijian operations. About a third of that time was spent dealing with the Australian business. As Chief Executive Officer, Mr Ritchie said he dealt with brokers, analysts, major shareholders, banks, customers, suppliers and global partners, as well as the media. 9 In the judgment on liability the following was observed: Mr Ritchie gave quite detailed evidence of his involvement in developing the occupational health and safety policy of the corporation. He relied on his background in prior employment to indicate his experience of occupational health and safety systems and had taken steps to have occupational health and safety placed on the agenda of meetings at various levels of the corporation. Indeed, on commencement with the Group he had reviewed the safety system. He had used his site visits to make inquiries about safety relevant to the work being performed at that site and had wanted to give the appearance to employees of a person committed to promoting safety in the workplace. Despite what was submitted as his remoteness from day-to-day work performed at the various sites and in the various businesses conducted by the Group Mr Ritchie, nevertheless, placed himself as being active at both a macro and micro level in the development of the company's safety policies. 10 With that brief background it is appropriate to recite the essential particulars of the offence of which Mr Ritchie has been found guilty. Those particulars, so far as it is immediately relevant, commence with paragraph (h) of the particulars supplied with the charge: (h) At all material times in the conduct of cleaning activities in the tank wash facility at the site Owens required its employees to use, or failed to prevent its employees from using, methyl ethyl ketone (MEK) a highly volatile and highly flammable substance, as a cleaning agent. (i) Owens failed to provide safe system of work for the conduct of tank cleaning activities as part of the business at the site in that: (i) It failed to ensure that MEK or any other volatile and flammable substance was not used within the confined space of a tank at a temperature above its flash point at a point when potential sources of ignition were brought into or were present in the vicinity of the open hatches of the tank. (ii) It failed to control the conditions permitting the ignition of MEK or any other volatile or flammable substance at the tank wash bay facility at the site in that it failed to ensure presence of a sufficiently oxygen-depleted atmosphere in the vicinity of MEK or any other volatile flammable substances so as to prevent the risk of ignition. (iii) It failed to ensure employees were not located above or near the hatch of the tank at the time the tanks were being cleaned. (j) Owens failed to ensure that plant provided for use by its employees at work was safe and without risk to health in that: (i) It failed to ensure the tank wash bay facility was earthed so as to prevent the possibility of ignition of MEK or any other volatile or flammable substance used for the purpose of cleaning tanks. (ii) It failed to ensure that the tank wash bay facility provided means to effect the earthing of tanks present in the said facility so as to prevent the possibility of ignition of MEK or any other volatile and flammable substance used for the purpose of cleaning tanks. (k) Owens failed to provide adequate information, instruction and training to its employees working in the tank wash bay facility so to ensure their health and safety. (l) Owens failed to provide such supervision as was necessary to ensure the health and safety of its employees working in the tank wash bay facility. (m) Owens failed to provide or ensure the use by employees of such footwear as was necessary for the safe performance of work activities involving the use of materials or substances liable to ignition and/or explosion. (n) As a result of the abovementioned failures employees of Owens including John Howie, Francis James, and John Kaleopa were placed at risk of injury. 11 In these matters, the Court has made a finding that the s 8(1) offence of the Corporation was extensively particularised and amounted to a comprehensive failure by the company to ensure a safe system of work. In relation to this sentencing exercise, the Court has been provided with affidavits of Mr Nicholson, Miss Woods, and Mr Rose, being affidavits that were before the Court in the previous proceedings. There have been a number of submissions repeated in this sentencing hearing as were put before the Court in the related matters having relevance to this particular matter as they did to the other matters. 12 There is also in these proceedings an affidavit of Mr Ritchie. In that affidavit he states that he is currently employed as a chief executive officer of a company that is publicly listed in New Zealand and he has held that position since August of 2004. It appears from the affidavit that the business of that company is quite unrelated to the work that he performed for the Owens Group as Chief Executive Officer and appears to be quite different to his earlier experience with Shell. It gives the appearance of an industry with less well known inherent risks for those who are engaged in it. 13 Mr Ritchie, again, canvasses his employment history, some of which was dealt with in the judgment on liability. He does state that since his employment with the Owens Group, on the termination of that employment, he has had no further involvement with the container industry or with tank cleaning. He expresses an intention of not again working in any business associated with the container industry or having any involvement in tank washing. He has no intention of ever working again in Australia, nor residing in Australia. It is to be observed, however, that Mr Ritchie is now 48 years of age, a young man in the line of work which he has assumed at a high corporate level and in my view those expressions of future intention have to be accepted with that fact in mind. I do, however, accept that there is no present intention to be involved in a similar industry or of working in Australia in the foreseeable future. 14 In relation to the incident concerning the death of Mr Howie, Mr Ritchie recalls speaking with Mr Rose, having arrangements made for Mr Howie's wife and family as well as the employees working at the container site in Auburn and particularly those of Mr Howie's team. He suggested to Mr Rose that support such as counselling be available for Mr Howie's wife and family as well as the members of the work team at that site and he also ensured Mr Rose had sufficient financial resources as well as skilled and specialist employees available to assist WorkCover in the investigation of the incident. There were steps taken to immediately rectify any issues that were identified. The WorkCover Authority accepts that there was that level of cooperation with its investigation by the defendants, including Mr Ritchie. 15 Mr Ritchie then speaks of his community involvement, his own history and character. He is currently involved as the Honorary Consul for Malaysia in Auckland. He describes briefly that role. He has, over the past five years, sponsored a child in Bangladesh through World Vision. He has regularly donated to local and international charitable causes, and he names some of those bodies. He then speaks about taking great care and pride in his life in being a law abiding citizen and apart from this matter has never been previously charged with any type of criminal offence: he notes in 33 years of regular driving of motor vehicles he has received only two traffic infringement fines. They both occurred more than 20 years ago in New Zealand. His counsel confirmed that they were of a minor nature. In this affidavit, Mr Ritchie expressed his genuine sadness at the loss of Mr Howie and extended his personal condolences to Mr Howie's widow and daughter on the loss that they had suffered. 16 Essentially, that is the material upon which I then come to consider the appropriate penalty to be imposed in relation to Mr Ritchie. I should note at this point the particulars of the charge which has been found proved, indicate the wide-spread nature of the failures exposed in the company's safety system. I note the measures to address the risk exposed by this incident quickly taken by the company, and those steps were taken under the direction, not only of Mr Rose but also, Mr Ritchie as the Chief Executive of the Group. Those steps, however, indicate the simple remedial measures that were available. The risk was reasonably foreseeable. As with the finding made against Owens Containers these matters lead to the conclusion that this was a serious breach of the Act. 17 In relation to general deterrence that is a necessary consideration in setting a penalty. In relation to Owens Containers there were significant resources made available to establish a safe system of work but there were assumptions about that system that left it significantly flawed in certain areas. I have found in relation to the company, and I repeat it here, that the system was not merely a paper system but derived from a Group policy dealing with a number of undertakings and that may, in part, explain why in this particular and special area there were the gaps that had been exposed in the adequacy of that system. This case should serve as a general warning to larger companies with diverse interests of their need to pay particular attention to each operation so as to ensure the safety of that operation and the safety of persons who work in connection with that operation. 18 In relation to specific deterrence, Mr Ritchie has left the industry; has no intention of being involved in that industry again; resides in New Zealand and does not intend to work in Australia again. I have already observed that at 48 years of age and now being involved at senior management levels it may be too early to firmly conclude that Mr Ritchie will never be again employed in these particular industries, or in industries which have inherent and serious risks to those who are engaged in it. There is not, however, that element about his particular behaviour which would lead to a conclusion that he would bring to that type of work, even if it involved inherently dangerous undertakings, a lack of consciousness of the need to attend to safety matters and be diligent about it. There is some force in the submissions put on his behalf that he is unlikely to offend again. That combination of circumstances leaves, in my view, slight room for the application of specific deterrence but that slight consideration will nevertheless be taken into account. 19 In relation to subjective factors, unlike Mr Rose or Owens Containers, no discount is available because of a plea of guilty but Mr Ritchie is not to be punished more severely because he contested the alleged breach. Mr Ritchie has no relevant prior record of convictions, although he has held senior management positions for a number of years, including this period with the Owens Group, a group of considerable size involving a number of distinct businesses and involving a large work force. His evidence is that he habitually obeys the law and in a lifetime of driving he has incurred only two minor offences. His record is to be regarded as a good record. In his affidavit he spoke of his personal involvement in charity work. In relation to this incident with the company he gave support to Mr Howie's family, and there is evidence of Mr Ritchie personally being a good citizen in conducting his business interests. Contrition has been shown in relation to the assistance extended to Mr Howie's family, the expression of corporate and personal regret for the accident, and indirectly, by the speedy steps taken to address the risks exposed by the accident. 20 It is of some importance that under Mr Ritchie's guidance that the company cooperated with the WorkCover Authority and other authorities. Those steps were undoubtedly authorised by Mr Ritchie, although some of them, on the evidence, were personally taken by Mr Rose. These matters are all to be considered in mitigation of penalty. 21 The prosecutor, in submissions, deals with the principle of parity. The parity principle concerns consistency in punishment and operates as a caution against unjustifiable discrepancies in the sentencing of co-offenders. The principle does not require co-offenders to receive precisely the same sentence, although such a result may occur where all other things may be regarded as equal. Sometimes differences between the offenders will lead to, and justify, a quite different penalty being imposed. 22 In this case there have been a number of submissions as to the level of culpability of Mr Ritchie and comparisons made with the role of Mr Rose. It was noted in the judgment on liability that the President, Wright J in Inspector Page v Walco Hoist Rentals Pty Ltd [2000] 99 IR 163, addressed the issue of culpability of an individual defendant where the charge arose from a breach by the corporation of which the individual was a director and by operation of the Act (in this case, s 26(1) of the Occupational Health and Safety Act, 2000). 23 In Walco, his Honour stated that the level of culpability of a personal defendant deemed to have committed an offence could not be greater than that of the corporation. Indeed, the culpability of the personal defendant may be less. Particular weight had to be placed on the role of the defendant in the management of the corporation. The penalties imposed on both the company and Mr Rose have been referred to earlier in this judgment. The offences were regarded as comprehensive and constituted serious breaches of the Act. The resultant penalties reflect what might be described as mid-range penalties, bearing in mind differences brought about primarily by subjective factors and the timing of the guilty pleas. 24 Mr Ritchie's case was that he was the Chief Executive Officer of a group involving a large number of companies; there were many people employed; the group conducted a number of businesses in a number of countries. He relied on specialists in the field including divisional managers such as Mr Rose. 25 Similar submissions were made, at a different level of involvement, by Mr Rose in his case. Mr Rose was not only a divisional manager of Owens Containers but was a director of Owens Containers and was able to make and influence decisions on safety. He was certainly in a position to be hands on, although it is likely that he also acted through or sought to act through skilled specialists in the divisional hierarchy. As noted earlier, he reported to Mr Ritchie. Mr Ritchie was not hands on, nor was it necessary for him to be so engaged. He had, however, involved himself in the group safety policy and its development, as earlier noted, acting at both a macro and micro level in fashioning the company's safety rules. 26 Although the roles of Mr Ritchie and Mr Rose were therefore understandably different I am not able to find a significant difference in their level of culpability. I accept that Mr Ritchie's penalty should not exceed that of the company and should bear an appropriate relationship to the penalty imposed on Mr Rose, having regard to the matters referred to above. That penalty, of course, will ultimately be different because of different subjective factors. ORDERS 27 Bearing all those matters in mind the Court makes the following orders: (1) The defendant is found guilty of a breach of s 8(1) of the Occupational Health and Safety Act 2000 by operation of s 26(1) as particularised in matter IRC 150 of 2005. (2) The defendant is to pay a penalty of $22,500 with half that sum to be paid to the prosecutor by way of moiety. (3) The defendant is to pay the costs of the prosecutor in a sum agreed or in the absence of agreement, as ordered by the Court. 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.