Industrial Court of New South Wales CITATION: Inspector Ken Kumar v John Julian Rose [2006] NSWIRComm 325 PROSECUTOR: Inspector Ken Kumar PARTIES: DEFENDANT: John Julian Rose FILE NUMBER(S): IRC 152 of 2005 CORAM: Haylen J CATCHWORDS: Occupational Health and Safety Act 2000 - s 8(1) - s 26(1) - director pleads guilty during course of trial - specialist container wash operation - use of combustible chemicals - explosion results in death of employee - lack of uniform wash procedures - work performed in confined space - risk of ignition of flammable cleaning agents - failure to conduct risk assessment - requirement for earthing of facility not observed - failure to provide information training and instruction of employees - failure to adequately supervise employees - failure to supply appropriate footwear - serious breach established - general deterrence considered - specific deterrence of little significance where defendant retired from workforce and facility sold - substantial steps taken after accident to address risk to safety - no prior record and good citizenship demonstrated - substantial subjective factors including clear contrition and remorse - co-operation with authorities - small discount in circumstances of lateness of plea - penalty imposed CASES CITED: Inspector Ken Kumar v David Aylmer Ritchie [2006] NSWIRComm 323 Inspector Ken Kumar v Owens Container Services Australia Pty Ltd [2006] NSWIRComm 324 HEARING DATES: 15/08/06, 16/08/06, 19/09/06 DATE OF JUDGMENT: 10/12/2006 PROSECUTOR: Mr R Reitano of counsel SOLICITORS: WorkCover Authority LEGAL REPRESENTATIVES: DEFENDANT: Mr A Gotting of counsel SOLICITORS: Corrs Chambers Westgarth JUDGMENT: - 30 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Haylen J 12 October 2006 Matter No IRC 152 of 2005 INSPECTOR KEN KUMAR v JOHN JULIAN ROSE Prosecution under s 8(1) by operation of s 26(1) of the Occupational Health and Safety Act 2000 JUDGMENT [2006] NSWIRComm 325 BACKGROUND 1 In mid-January 2003, Owens Container Services Australia Pty Ltd was part of the Owens Group of companies. This company operated a number of ISO tank washing facilities within Australia and also within New Zealand and Fiji. One such facility was located in Auburn and was known as the Race Container Park. At this site, the company carried on a business that involved the repair, cleaning and storage of shipping containers and tanks. At the Race site, Mr John Howie was employed as the Depot Manager and had been employed since approximately 1994 by Owens Container Services Australia Pty Ltd. 2 On 15 January 2003, Mr Howie was in the course of cleaning a tank using the highly combustible solvent known as MEK. While performing this task, there was an explosion and Mr Howie was fatally injured. Following investigation by the WorkCover Authority, proceedings were commenced alleging a breach of s 8(1) of the Occupational Health and Safety Act 2000 ("the Act") by Owens Container Services Australia Pty Ltd and, by operation of s 26 of the Act, proceedings were also commenced against two Directors, relying on the same breach of the Act. Those directors were David Aylmer Ritchie who was a Director of Owens Container Services Pty Ltd and the Chief Executive Officer of the Owens Group. John Julian Rose was also a Director of Owens Container Services Australia Pty Ltd and was the Division General Manager of the container companies. 3 At an early stage of the proceedings, the company entered a plea of guilty to a breach of s 8(1) of the Act, but the two Directors entered not guilty pleas. The contested proceedings against the Directors were listed for hearing and, after two days of evidence, Mr Rose altered his plea and entered a plea of guilty to the charge against him. The case against Mr Ritchie continued with the evidence being concluded and arrangements made for the filing of written submissions. Those related proceedings are the subject of separate judgments published as Inspector Ken Kumar v David Aylmer Ritchie [2006] NSWIRComm 323 and Inspector Ken Kumar v Owens Container Services Australia Pty Ltd [2006] NSWIRComm 324. THE EVIDENCE 4 This judgment deals with the evidence and submissions on sentence for the breach of s 8(1) by operation of s 26(1) of the Act by John Julian Rose. The prosecution evidence in this case comprised of an early Agreed Statement of Facts when the proceedings were contested and after the plea was entered, an extensive Agreed Statement of Facts with supporting annexures (including a variety of pictures of the tank wash bay facility and the particular tank involved in this accident), the Inspector's report, a specialist report prepared by Test Safe Australia dealing with the likely cause of the explosion, a variety of Standards and documents used in the company's business both before and after the accident. This agreed document was filed after Mr Rose altered his plea. The prosecutor also tendered the transcript of the evidence given in the contested proceedings concerning each of the Directors. The defendant company's evidence was constituted by the affidavits of Mr Rose, Ms Woods and Mr Nicholson. For convenience and to better understand the nature of the breach, the substituted statement of facts and the later Agreed Statement of Facts are an annexure to this judgment. 5 The charge particularised against Mr Rose was as follows: That Mr Rose being a director of Owens Container Services Australia Pty Ltd is deemed to have contravened s 8(1) of the Act by virtue of s 26(1) of the Act, in that on 15 January 2003 in Auburn the company failed to ensure the health safety and welfare at work of all its employees, in particular, John Howie, John Kaleopa and Francis James, contrary to s 8(1) of the Occupational Health and Safety Act 2000, the particulars being ... (h) At all material times in the conduct of cleaning activities in the tank wash area at the site Owens required its employees to use, or failed to prevent its employees from using, methylethylketone (MEK), a highly volatile and highly flammable substance, as a cleaning agent. (i) Owens failed to provide a 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 or flammable substance was not used within the confined space of a tank at a temperature above its flashpoint at a time when potential sources of ignition were brought into or were present in the vicinity of the open hatch of the tank. (ii) It failed to control the conditions permitting the ignition of MEK or any other volatile and flammable substance at the tank wash bay facility at the site in that it failed to ensure the presence of a sufficiently oxygen-depleted atmosphere in the vicinity of MEK or any other volatile and flammable substance so as to prevent the risk of ignition. (iii) It failed to ensure that 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 that the tank wash bay facility was earthed so as to prevent the possibility of ignition of MEK or any other volatile and flammable substance used for the purposes 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 purposes of cleaning tanks. (k) Owens failed to provide adequate information instruction and training to its employees working in the tank wash bay facility so as 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. 6 In his affidavit evidence, Mr Rose said that, at 15 January 2003, he was the Division General Manager for Owens Container Services Australia Pty Ltd. In 1987, he was employed by the Owens Group Ltd to establish the Owens Container Services Division. He started this Division and was responsible for its development and management until 2004. One of the companies within the Division was Owens Containers Australia. 7 After the death of Mr Howie the defendant deliberately wound down the operation at the Race Container Park and, by the end of September 2003, all operations at that site had ceased. The lease held on that site had expired and the defendant had vacated the site. 8 In October 2003, Mainfreight Ltd purchased the Owens Group and related bodies corporate of the Owens Group, including Owens Containers. Thereafter, Mainfreight restructured the various divisions of the Owens Group, and that restructure was implemented by November 2004. Mr Rose said that the overall effect of the restructure was that the operations forming the Container Services Division were either sold or closed down. Some of the tank cleaning operations of the Division, such as the Hyde Park operation, were sold to SEA Containers Australia Ltd. As a consequence of the restructure, Owens Containers had not operated a business since November 2004. 9 At the time of the accident, Mr Rose was in Melbourne. On learning of the accident he made arrangements to travel to the site in Sydney and contacted Mr Nicholson and Mr Crandles (Australian Manager of the company's container parks) and arranged for them to travel to the site. He also contacted Ms Woods, the Human Resources Health and Safety Manager of the Division and arranged for her to travel to the site. 10 Mr Rose was at the site on 16 January 2003 and stayed for the following three days. During this period he ensured that the Police, WorkCover and the Fire Brigade received all necessary assistance in their investigations of the incident, and ensured that the employees at the site received appropriate support and professional counselling, commenced measures to prevent a recurrence of the incident and to ensure that all other necessary safety requirements were being addressed on site and appointed Mr Nicholson to act as Manager of the site and to ensure that all necessary safety improvements were properly implemented on the site. 11 Soon after the incident, Mr Rose arranged for Brendan Greatrex, the Wash Manager of the Brisbane Container Park, to come to Sydney to assist Mr Nicholson. While in Sydney, Mr Greatrex conducted a general review of the site, including safety matters. Mr Greatrex arranged for a number of changes to be implemented at the site, including areas unconnected to the tank cleaning operations 12 After the incident, Owens Containers contributed to the expenses associated with the funeral of Mr Howie and also met the expenses of his family to fly from New Zealand to attend the funeral. At the time of the funeral, Mr Rose attended on Mr Howie's family on a number of occasions and attended the pre-funeral function at the family's home. Mr Rose also attended the burial of Mr Howie. Mr Rose spoke of his distress at the occurrence of this accident and the loss of person he regarded as a friend. They had worked together for 18 years and met socially. Mr Rose had recruited Mr Howie to the company. Mr Rose expressed his sadness at the loss of Mr Howie and extended his personal apologise to Mr Howie's family. 13 As a consequence of the restructure of the company, Mr Rose was made redundant in November 2004 and decided to retire from the workforce. He expressed no intention of working again within the container industry or at all. In his retirement he had become involved in volunteer work for a community group. Mr Rose stated that in his life he had taken great care to be a law abiding person and had never been charged with a criminal offence, nor had he infringed the traffic laws in forty years of driving. 14 David Nicholson was the Manager of the Hyde Park facility when operated through the defendant and he knew Mr Howie from approximately September 2001. Mr Nicholson had commenced employment at Hyde Park in August 2001 and had worked for Owens Containers until July 2004 when the business was sold to Hyde Park Tank Depot Pty Ltd. During this period he reported to Mr Crandles who was the defendant's Manager for the container park depots in Australia. Mr Nicholson was still employed as the Manager of Hyde Park under its new ownership. 15 As Manager of the Hyde Park facility under the ownership of the defendant, Mr Nicholson was required to oversee the operational aspects of the park, supervise employees at the park, develop and implement safe systems of work at the park, ensure employees were appropriately trained to perform their work safely at the park, attend occupational health and safety conferences and training sessions and induct employees at the park. 16 Prior to the accident involving Mr Howie, the defendant subscribed to a particular computer software programme that contained detailed information relating to chemicals, including MEK. That programme was on the defendant's computer server and Mr Nicholson had gained access to the programme from a computer at Hyde Park. Prior to the accident, the defendant had also developed the "Hyde Park Product Matrix (HPPM)". This was a ready reckoner that outlined safety procedures for removing product from an ISO tank and cleaning the tank. This matrix did not specifically mention a prohibition on the use of MEK but, prior to the incident at Race Park, MEK was not used as a cleaning agent. Mr Nicholson did not anticipate that any person would use MEK as a cleaning agent. The only solvents used as cleaning agents at Hyde Park were styrene and kerosene: Mr Nicholson regarded styrene and kerosene as much safer chemicals than MEK, but also regarded styrene as more effective for cleaning resins. 17 Prior to the accident, Mr Nicholson and the Wash Bay Manager at Hyde Park Mr Nguyen, were involved in developing standard procedures for cleaning ISO tanks. These procedures were kept in a document entitled "Work Instructions". Prior to the accident, a number of Work Instructions were prepared some of which were prepared by a previous manager at Hyde Park. Before developing the Work Instructions, Mr Nicholson obtained information concerning the product stored in the tanks. This information was obtained from the computer programme, MSDS's and other sources and took into account potential risks associated with removing the product, including the possibility of explosion and the possibility of inhalation of toxic fumes. Mr Nicholson determined ways to eliminate or minimise those risks including substituting one cleaning agent for another to eliminate risks. He often discussed the procedure with other experienced workers including Mr Nguyen. Mr Nicholson conducted a trial wash of a tank to determine whether the method was safe and effective: when satisfied with the procedure he prepared the Work Instructions. Having used the Work Instructions, he would send the instructions to other sites within Australia, including the Race site. 18 In mid-2002, Mr Howie requested a full copy of the Work Instructions and Mr Nicholson arranged for that to be done. In his discussions with Mr Howie from time to time, he referred to the Work Instructions when dealing with methods for removing a product from an ISO tank. The Work Instructions were also placed on the defendant's computer server and were accessible by other sites by using a computer connected to the server. Such a computer was located at the Race site. The Work Instructions did not specifically prohibit the use of MEK. Prior to the accident at Hyde Park, MEK was not used as a cleaning agent. Mr Nicholson did not anticipate that any person would use MEK as a cleaning agent and the only solvent used at Hyde Park as a cleaning agent was styrene. 19 The Work Instructions did not specifically mention clothing and personal protective clothing to be worn. Prior to the accident, however, all employees at the Hyde Park facility wore appropriate clothing while working in the wash area, including full body suits and rubber boots. Mr Nicholson understood that other depot managers within Australia had made arrangements for their employees to wear the same appropriate clothing. The defendant had documents relating to the provision of and wearing of appropriate clothing. 20 In relation to training, prior to the accident Mr Winter who was employed at the Race site came to Hyde Park for a period of one week's training. Mr Nicholson provided some of that training but the majority was provided by Mr Nguyen. That training was conducted using, in part, the Work Instructions developed for Hyde Park. After Mr Winter was assessed by Mr Nguyen or by Mr Nicholson as performing the cleaning of a product competently and safely, Mr Winter initialled a copy of the appropriate Work Instruction. Mr Winter took a set of Work Instructions with him when he returned to the Race facility. 21 It was estimated that Mr Winter was involved in cleaning at least 80 ISO tanks at the Hyde Park facility and as many as 10 of these contained flammable resins. At no time did Mr Winter use MEK as a solvent to remove resin from an ISO tank, but used styrene as the solvent. 22 Twice a year the defendant organised occupational health and safety conferences for its managers and occupational health and safety delegates. Mr Nicholson attended all the conferences during his employment with the defendant. 23 During 2002 and some months prior to the incident, Mr Nicholson was engaged in a telephone conference with Mr Howie and Mr Nguyen in which the use of MEK as a tank cleaning agent was discussed. Mr Howie had spoken about using MEK because it was cheap. Mr Nguyen had said that was not something to be used and did not work as well as other cleaners. Mr Nguyen warned Mr Howie that MEK was dangerous and explained that it was heavier than air vapour and therefore sat in cracks and crevices and did not move with normal evaporation as styrene did. Unlike styrene that evaporated with any movement of air, MEK would hang in the air. Mr Nicholson said that this was not the first time he had warned Mr Howie not to use MEK. In August 2002, at a safety conference in Christchurch, Mr Nicholson had told Mr Howie and others of stories about the use of MEK which he had heard some years previously where a tank silo had exploded and had taken off like a rocket when two people doing welding accidentally ignited MEK vapour that had been in the silo and had not been properly cleaned out: both were killed. 24 After being informed of Mr Howie's accident, Mr Nicholson travelled to Sydney with Mr Rose and attended the Race site the following day. During the morning, he met with representatives of WorkCover, New South Wales Police and New South Wales Fire Brigade and escorted the WorkCover representative on a tour of the site. Mr Nicholson said he was absolutely shocked to discover that Mr Howie had been using MEK on the day of the accident at the Race site. On previous occasions, Mr Nicholson and Mr Howie had spoken on the telephone in relation to the cleaning of ISO tanks - especially when Mr Howie was cleaning a tank which had previously stored a product that he had no experience in cleaning. Mr Nicholson would inform Mr Howie of the manner in which the tank was cleaned at the Hyde Park facility. Mr Nicholson regarded Mr Howie as experienced in the operations of container parks and was aware that he had, on behalf of the defendant, commissioned the wash area at the Brisbane container park as well as the wash area at the Race facility. Mr Nicholson was aware that Mr Howie had worked in the container park industry for approximately 16 years. 25 At the time of the incident, there was a "No Smoking" policy in operation at Hyde Park in areas around its tank wash facility, an occupational health and safety committee that met regularly and an occupational health and safety officer who was responsible (with Mr Nicholson) for implementation of the defendant's occupational health and safety management system. After the accident, Mr Nicholson was the Depot Manager responsible for the Race facility until it was closed in September 2003. From the time of the accident until its closure, the tank wash facility at Race was gradually wound down. During this period, Mr Nicholson also provided assistance to WorkCover, the Police and the Fire Brigade in respect of their investigations of the accident. 26 On the day after the accident when he was attending the Race site, Mr Nicholson used the computer in the site office that was connected to the defendant's computer server. He noted that the computer software programme that he used at the Hyde Park site was accessible from the Race site computer. During the morning, he also saw material safety data sheets located in the office, including one dealing with MEK. He saw two copies of the Hyde Park wash procedures and product matrix in the office, with one copy located in the general office area and the second copy located in an office used by Mr Sylva, the Operations Manager at Race. Mr Nicholson also saw a number of Work Instructions in the Race office. On the same morning, Mr Nicholson arranged for the MEK stored in the container to be removed from the site and, so far as he was aware, MEK was not brought to the site again as a cleaning agent. To his knowledge, MEK had not been brought to the Hyde Park site as a cleaning agent after the incident. 27 Together with Mr Greatrex, Mr Nicholson was responsible for implementing a number of safety improvements to the site after the accident. These improvements included: engaging an external OHS consultant; ensuring the facility was appropriately earthed; developing safe work method statements for tank cleaning; training the tank cleaning employees in the safe work method statements for that work; supervising employees conducting tank cleaning operations, including earthing of the tank at the first step, not using MEK as a cleaning agent, using cleaning agents with steam and wearing appropriate personal protective equipment and footwear; enforcing a ban on MEK as a cleaning agent; revising tank cleaning procedures; reinducting all employees; enforcing the policy prohibiting the use of mobile phones or smoking within 10 metres of the tank wash area; introducing and providing training to employees in respect of updated wash procedures; arranging for additional site employees to undergo confined space training; relocating the controls for the tank wash to avoid the need to have an employee at the top of a tank during the cleaning process; installing signs at the tank wash area prohibiting the use of mobile phones, using cigarette lighters and smoking within 10 metres of the tank; and installing a cable tray in the tank wash area. 28 Ms Woods had commenced employment with Owens Containers Ltd in September 1989 and remained so employed until July 2004. Ms Woods was the Australasian Human Resources Health and Safety Manager for the container companies at Owens. In this position she was responsible for six companies, including the defendant. In this employment Ms Woods was based in New Zealand and reported directly to John Rose, the Divisional Group Manager of Owens Containers. Ms Woods described her duties as including: planning and implementing the occupational health and management system; developing and improving training materials including the induction manual and toolbox material; training employees in occupational health and safety; researching and providing instruction to depot managers on occupational health and safety issues; researching and preparing occupational health and safety documentation; conducting occupational health and safety audits; overseeing compliance with occupational health and safety legislation and the occupational health and safety management system; communicating with depot managers and occupational health and safety officers about occupational health and safety issues; organising and presenting at occupational health and safety conferences; and advising on occupational health and safety issues at senior management and depot managers' meetings. 29 At the time of the accident, Owens Containers operated 15 container parks in Australia, New Zealand and Fiji. In Australia, Owens employed approximately 200-250 people and undertook the storage and repair of ISO containers, refrigerated containers and tank containers. Owens also undertook tank cleaning at a number of depots, including Hyde Park in Melbourne, the Brisbane Container Park and the Race site in Sydney. At the time of the accident, tank cleaning at the Race site had been operating for less than a year. The construction and commissioning of that facility had been under the supervision of Mr Howie, the Depot Manager at Race. Prior to that involvement, Mr Howie had been the Depot Manager at Brisbane Container Park and had been responsible for the successful construction and commissioning of a tank cleaning facility similar to the facility at Race. 30 At the time of the accident in 2003, Mr Howie had approximately 9 employees under his supervision. He had been working in the container park business including tank cleaning for over 20 years and had managed a number of container parks. Because of this experience and commitment to hard work, Mr Howie was highly regarded and well respected by the defendant and within the container park industry. In 2002, Mr Howie transferred from managing the Brisbane Container Park to the Race facility in order to manage the Race site and oversee the construction of a tank wash facility there. In relation to both the Brisbane and Race sites, Mr Howie reported on operational issues to the Australian Country Manager, Mr Crandles. Ms Woods had known Mr Howie since the early 1990s and had contact with him at least once a week, either through telephone conversations, emails or at company meetings. She considered Mr Howie a close work colleague and friend and was greatly saddened by his loss. 31 Ms Woods gave detailed evidence of the safety systems that operated within the defendant having regard to the Owens Group occupational health and safety management system. In addition to the Group occupational health and safety policy, Owens Containers had its own occupational health and safety policy that complied with the overall Group policy. It was a requirement for the policy to be provided to all employees on induction and it was on display at all depots. The defendant's occupational health and safety policy was subject to review and improvement and, at the time of the accident involving Mr Howie, the fifth revised version of that policy was in operation. 32 In 1999, the Group had produced a document entitled "Owens Global Logistics - New Zealand - Occupational Health and Safety Toolbox". The document set out the elements of the occupational health and safety management system for all Owens companies and was sent to New Zealand depots in 1999. The toolbox was adapted for Australia and sent to Australian depots in 2001. The purpose of the toolbox was to ensure that all Owens Group companies had an occupational health and safety tool to assist them to manage their occupational health and safety risks at a site level. The document was sent to the Race site. 33 There was an induction manual used for the induction of new employees. The manual was subject to review and improvement with reviews being conducted at occupational health and safety conferences by the senior occupational health and safety committee. In most cases, depot managers conducted induction of new employees and, by 2003, Owens Containers had produced an induction video. There had been an earlier occupational health and safety video produced by Owens Containers in 2002. 34 In relation to training, Mr Howie had arranged for Mr Winter to go to the Hyde Park site to undergo training in tank wash operations. The defendant had also developed an "awareness plan" to reinforce safety - especially for depot managers and employees. Under this plan, senior managers would be aware of what was to happen at depots in relation to health and safety, which members of staff would be trained and what was involved. This plan reinforced to depot managers that the defendant wanted employees' safety awareness to be kept at a certain level. Prior to the accident, the defendant provided occupational health and training to its occupational health and safety officers, although this had not been provided to Mr Sylva. There was also yearly re-induction for employees and a requirement to attend on-site occupational health and training sessions. 35 The defendant maintained a standard hazard register that was kept on the computer server. In 2000, the Race site occupational health and safety officer undertook hazard identification and, during Ms Woods' reviews and audits in July and November 2002, she examined those records and instructed both Mr Howie and Mr Sylva to update the hazard identification records being kept at Race. 36 The defendant provided written instructions on safe working methods to its employees and these were in operation prior to the accident. Work Instructions for tank cleaning had been developed at the Hyde Park site and were sent to the Race site. The instructions at the Race site dealt with cleaning tanks from a number of specific clients, working in the survey area, working in the wash bay area, fork hoist procedures and the use of cones when working in particular areas. The Hyde Park site had developed some wash procedures prior to the accident that were supplied to other depots in Australia, including the Race site. Those procedures arose out of discussions during a conference of Depot Managers' in July 2002 and was further discussed at a occupational health and safety conference for Depot Managers in August 2002. Ms Woods also dealt with written procedures for working in confined spaces that had been developed at Hyde Park and were present at the Race site prior to the accident. There were also instructional videos dealing with working in confined spaces and that had been shown to Depot Managers during 2002, including Mr Howie. Depot Managers' conferences were a critical part of the safety management system and safety was always a part of the agenda. Such conferences were held two or three times a year and were of two or three days' duration: the occupational health and safety discussions could range from two hours to a whole day. Apart from Depot Managers' conferences there were also occupational health and safety conferences and training sessions which Mr Howie and other Depot Managers attended. These conferences were held on average twice a year and usually lasted two days. Ms Woods would deliver presentations to those conferences on occupational health and safety issues and aspects of improvement to the safety management system of the defendant. 37 The defendant had a senior occupational health and safety committee comprising of Mr Rose with one or other of the Australian or New Zealand country managers, either two Australian Depot Managers or two New Zealand Depot Managers, other senior officers (such as Operations Managers) and Ms Woods. This committee met during the course of Depot Managers' conferences and occupational health and safety conferences attended by Depot Managers. Each Depot also had an occupational health and safety officer as part of the safety management system. The duties of that person were to assist the Depot Manager in implementing the occupational health and safety management system, organising and chairing regular safety committee meetings and attending occupational health and safety training. At the time of the incident the occupational health and safety officer at the Race site was Mr Sylva. Ms Woods had discussed occupational health and safety matters with Mr Sylva and had enquired whether safety meetings were being held at the site and how Mr Sylva was progressing with the list of safety issues at the Depot that Ms Woods had identified in November 2002 as requiring action. Ms Woods understood after Mr Sylva's appointment while the occupational health and safety committee meetings were being held the previous occupational health and safety officer was not keeping Minutes. That had become clear to Ms Woods in her November audit of the Race site. 38 In the July 2002 occupational health and safety conference, Mr Rose told Depot Managers that the Australian depots had to achieve the same safety accreditation that the New Zealand depots had achieved under the regulation of the workers compensation system. How this was to be achieved was discussed at the conference. Those discussions included staff training and depot auditing. It was Mr Rose's direction that the initial level be achieved by March 2003. Ms Woods understood this requirement to be part of the wider push from senior managers of the Group to improve the standard of occupational health and safety throughout the companies within the Group. Ms Woods had organised the Depot Managers' conference for mid-January 2003 where the progress of the Australian Depots in achieving accreditation was to be discussed. Because of the death of Mr Howie, that conference did not proceed. 39 Prior to the accident, Mr Rose gave Ms Woods the responsibility of improving the occupational health and safety management system for the Australian Depots by March 2003 and she had developed a programme to that end in 2002. Depot Managers were required to directly supervise the implementation of the safety management system so that procedures were kept up to date and followed and safety meetings were being regularly held. The defendant had paid for Ms Woods to attend professional development courses prior to the accident such as a May 2001 two day safety conference held in Australia which included a session on Australian safety legal issues. 40 The defendant used audits to identify ways to improve its safety management system and ensure compliance with that system. In 1999 the occupational health and safety officer at Race had carried out a safety audit and had produced an audit report. In 2000, a safety audit was conducted and a report produced and in 2001 Ms Woods conducted two audits of the Race site. In July 2002, at the request of Mr Rose, Ms Woods conducted a review of the tank cleaning operations at Race. 41 In August 2002, Ms Woods assisted in organising an occupational health and safety conference in Christchurch, New Zealand during which Depot Managers were taken to a container park to receive training in safety auditing. All Depot Managers were required to attend and Mr Howie attended. The training was hands-on and involved Depot Managers conducting an audit of the Park and then convening to discuss the results of their audits so that they could gain knowledge and insight from seeing the results of each others audit. In November 2002, Ms Woods conducted training in Melbourne for the Australian safety officers including training in the completion of workplace inspection check sheets. After completing this training, safety officers were required to complete monthly audits at their depots. In late 2002, Ms Woods conducted another audit of the Race site that involved walking through each area of the depot and discussing relevant issues but as she did not have specialist knowledge of the tank wash operations, she was unable to audit this aspect of the site. 42 In late November 2002, at the request of Mr Howie, Ms Woods trained Mr Sylva and Mr Mataiti in the use of the Owens workplace inspection sheets, used for monthly audits. After that training Ms Woods prepared a report for Mr Sylva and Mr Howie identifying matters requiring a follow-up. Ms Woods was due to return to the Race site in March 2003 to verify that the check sheets were being used. She had discussed with Mr Crandles the use of either Mr Nicholson from Melbourne or Mr Greatrex from Brisbane to conduct the final audit because they were Depot Managers having expertise in relation to tank washing. 43 From time to time the defendant also arranged for independent safety reviews to be conducted at the Race site. Such reviews were conducted in October 1999 and March 2001 and involved other sites including the Race site. After these external audits, Mr Rose directed the conduct of a full risk management audit by the then Health and Safety officer for Owens transport. In March 2001, a full report of the health and safety management review was provided to the defendant. 44 Prior to the accident the defendant used a number of strategies to communicate safety issues to their employees, including the issuing of statements that were required to be acknowledged in writing concerning particular safety obligations, the proper display at depots of critical safety procedures, the provision of safety signage and posters at depots and the provision of access to a library of safety videos. In the course of her visits to the Race site, Ms Woods had a number of meetings with Mr Howie and she was able to monitor the adherence to and implementation of changes to the safety management system of that site. She regularly discussed with Mr Howie his progress in implementing the safety management system at Race and during 2002, on average, spent two hours every week assisting Race with safety issues. A number of matters were discussed including safety gear, working at heights, the use of harnesses, personal protection equipment, attendance at training, confined spaces training and induction. Ms Woods referred Mr Howie to the Hyde Park personnel and the computer programme dealing with chemicals in relation to the use and storage of chemicals and the content of work procedures and took this course because those matters involved specialist knowledge which the people at Hyde Park possessed or through which Mr Howie could inform himself by using the computer programme. The computer system allowed each site to access and print off material safety data sheets. After the accident, a ban was reinforced on the use of MEK as a cleaning agent. This was achieved by way of written notice from a senior Manager to all depots within a fortnight of the accident. In 2003, there was a specific health and safety conference for Depot Managers and health and safety officers from Australia and New Zealand where the incident was discussed as well as how it could be prevented from occurring in the future. SUBMISSIONS 45 The prosecutor drew attention to the number of defects in the safety system to which the company and Mr Rose had pleaded guilty. The use of volatile and flammable substances in confined spaces was not limited to MEK. In this case there was a lack of appropriate earthing, there was a failure in relation to the provision of information, instruction and training, there was a failure of supervision and there was a failure to provide appropriate personal protective equipment. The Agreed Statement of Facts referred to specialist reports identifying how the explosion could have been avoided. Three matters were identified as appearing to directly contribute to Mr Howie's death, namely: i. That a flammable solvent (MEK) was used within the confined space of the ISO tank at a temperature above its flashpoint. ii. That potential sources of ignition were brought into the vicinity of the open hatch on the ISO tank, and iii. That Mr Howie was physically located above the hatch at the moment of the explosion. An expert report noted that excluding any one of these three contributing causes would have averted this tragedy. It was considered that a safe operating procedure for the routine cleaning of ISO tanks would be expected to address at least two of these three contributing factors. Examples of safe procedures were provided as follows: (1) If a flammable solvent was to be used at a temperature above its flashpoint, then all potential sources of ignition would need to be excluded, and these cleaning operations would need to be conducted remotely. (2) If the operator was to be present during the cleaning process, then all sources of ignition would need to be excluded and the flashpoint temperature of the solvent should not be exceeded. (3) If the operator was to be present during the cleaning process, and a solvent was to be used at a temperature above its flashpoint, then all sources of ignition should be excluded and the tank should be sufficiently purged of oxygen with an inert gas prior to the introduction of the solvent. This purge would need to be maintained while ever there was a flammable solvent within the tank. It was concluded that the most likely fuel involved in the explosion was the MEK. 46 It was noted that Ms Woods had concerns about safety at the Race site and that there had been no auditing of the wash facility at that site. No risk assessment had been conducted and for a long period of time there were real concerns about the site: there was lots of talk but nothing much was done to address the issues that had been identified. The nature of the risk was extreme - the clear possibility was that employees could be fatally injured and that was the potential risk that the defendant had to address. 47 The risk of using the substance MEK appeared to be well know to Mr Nicholson and Mr Nguyen at the Hyde Park facility and they had discussed its dangers with Mr Howie. Despite this level of knowledge, nothing was put in place to guard against or prohibit the use of MEK or similar products and MEK was stored at the Race site. The material safety data sheet showed that the substance was obviously extremely dangerous and volatile - therefore the risk was reasonably clear and obvious. 48 The remedial steps taken were to earth the facility, to engage in retraining, to ban the use of MEK as a solvent and to enforce the safety policies. None of these steps were difficult to take and were readily available. The breach constituted a serious offence that was at the higher end of the scale. 49 In relation to Mr Rose, it was accepted that the absence of prior convictions meant that the maximum penalty that could be imposed was $55,000. Here, there were some subjective factors including the fact that Mr Rose had entered a guilty plea, but at a time when there was little utilitarian value flowing from that changed plea. As to specific deterrence, it was to be noted that Mr Rose had retired. 50 Mr Rose submitted that the offence had to be considered against a factual background that showed that the company had an extensive safety system and training but unfortunately the Race operation had become somewhat out of kilter with the other wash bay facilities. In particular, the methods used at the Hyde Park facility were safe - the containers were earthed, MEK was not used as a cleaning agent and pressurised steam was used in combination with the cleaning agent. These steps had not been followed at Race although Mr Howie was a very experienced operator who had been warned of the dangers of using MEK. The Hyde Park procedures were available on the company's computer server and had been downloaded at the Race site. After the accident the company wound down operations at the site and by the end of September 2003 had ceased all operations at the site. Since November 2004, Owens had not operated a business including a tank cleaning operation. 51 It was emphasised that this was not a situation where the company had failed to perceive an obvious risk - the risk was perceived and responses were prepared but those responses, regrettably, were not followed on 15 January 2003. The Hyde Park procedures were known and available and while MEK was not prohibited, its dangers were known and were known to Mr Howie. 52 Emphasis was laid on the company's existing system, prior to the accident where the safety management system was administered by a health and safety manager, where there was a group and company occupational health and safety policy, where there was an occupational health and safety toolbox designed to assist in managing risks at each site, where there were employee inductions and re-inductions and an induction manual in operation, where there was an awareness plan for identifying occupational health and training needs and the preparation envisaged of a hazard register. In addition, there was the preparation of work instruction and wash procedures for the cleaning of tanks, the provision of practical safety training at Depot Manager conferences and occupational health and safety officer conferences and general safety conferences, an established senior occupational health and safety committee, the appointment of safety officers at its site, the requirement for there to be regular safety committee meetings at each site, the use of internal, external audits on a periodic basis and the plan to achieve occupational health and safety accreditation levels specified within New Zealand. This system was not static and was regularly reviewed. 53 After the accident, senior and experienced officers of the company were sent to Sydney and took control of the Race site. The company banned the use of MEK as a cleaning agent and revised its work procedures for tank cleaning. In February 2003 the safe work method statement was introduced requiring wash bay operators to wear proper safety boots and cotton clothing rather than wool to minimise static. Under the terms of this document there was to be no smoking in the wash tank area. The operators were not to take mobile telephones or other items capable of creating an ignition source into the wash tank area, the wash bay supervisor was to observe adherence to the procedure by approving and closing out each ISO tank work permit form, the bay operator and supervisor were to inspect the earthing of the tanks, where the operator and the supervisor were to ensure that appropriate personal and protective equipment was worn, where the wash bay supervisor was to approve the opening of the tank and where the wash tank operator was not to proceed unless a safe work platform was in place. It was submitted that these steps addressed some of the concerns arising from the accident. In addition, the company installed earthing leads in the wash tank area of the site and provided training in the revised procedures at the site and working in confined spaces. 54 Apart from the facts relevant to the operation of the company, Mr Rose pointed to a number of facts that were relevant to his position: at January 2003 he was the Divisional General Manager for Owens Container Services; he was then responsible for 16 container parks and 33 sites located in three countries and employing about 400 people; at that time Mr Rose did not have a day-to-day role at any of the parks or sites; he was a director of 13 or 14 other companies within the Owens Group; he was responsible for other businesses within the Owens Group of companies, including a refrigerated freight business; he had a number of direct reports, including reports from Mr Crandles (the Australian Country Manager of Owen Container Services); Mr Swain (the New Zealand Country Manager of Owen Container Services) and Ms Woods (the Human Resources Health and Safety Manager of Owen Container Services); he lived and principally worked from Melbourne; at the time of the incident he was not at the site and was not in New South Wales; he had visited the site on two occasions, with one visit being part of a familiarisation tour for directors; he had no actual knowledge of the detail of tank washing such as cleaning methods or cleaning agents; he had no knowledge of the earthing of tanks; he was aware that persons employed at the Hyde Park facility, including Mr Nguyen and Mr Nicholson, had knowledge concerning the detail of tank washing; he was aware that risks associated with cleaning methods for tank washing were identified by persons employed at the Hyde Park facility; he was aware that Owens Container Services had prescribed methods of cleaning for tank washing and prescribed cleaning agents; he was aware that training of employees in tank washing, including the prescribed method of cleaning, was conducted by the Hyde Park facility; he had not heard of MEK and had no knowledge of its features; he had not undertaken any formal training in occupational health and safety but had attended a number of seminars and workshops over a number of years; he was aware of the features of the Owen Container Services occupational health and safety system, including the use of an occupational health and safety policy, the creation of an induction manual, the presence of an auditing system, the conferral of occupational health and safety responsibilities on management, the discussion of occupational health and safety issues at management meetings, the reporting by management on occupational health and safety issues, the establishment of occupational health and safety committees at each site, the appointment of occupational health and safety officers at each site, the conduct of occupational health and safety conferences for management and occupational health and safety officers and the plan to achieve tertiary level occupational health and safety accreditation; he had received direct reports on occupational health and safety, including a section where as particular issue could be identified that was not being addressed. Further, from January 2003 to September 2003, Owens Container Services wound down the operations at the site and in September 2003, ceased all operations at the site and closed that site although the tank washing ceased at the site prior to that time. 55 In relation to specific deterrence, it was submitted that Mr Rose was no longer a director or employee of the company: he had retired and had no intention of returning to work. In those circumstances, it was submitted, that here there was no need for specific deterrence to form any part of the penalty to be imposed. 56 It was further submitted on behalf of Mr Rose that he had a lower level of culpability than Owens Container Services because here he was deemed, by his position as a Director of Owens Container Services, to have contravened the same provision of the Act. In addition, he was not at the site at the time of the accident and he did not work at the site and was not directly responsible for establishing the system of work, or determining the cleaning agents or providing the instruction, training or supervision or ensuring that appropriate footwear was worn at the site. Mr Rose had no knowledge of or experience in cleaning procedures for an ISO tank, for cleaning agents stored in an ISO tank, or MEK or the risks associated with MEK and the earthing of an ISO tank. 57 As to subjective factors, although Mr Rose had entered a plea of guilty after giving evidence in contested proceedings, a plea is nevertheless a factor to be taken into account in mitigation because of the terms of s 21A(3)(k) of the Crimes (Sentencing Procedures) Act 1999. The plea was also an indication of contrition by Mr Rose. Mr Rose did not have a prior conviction and was unlikely to re-offend given that he had retired and had no intention of resuming work. He was of good character and had not otherwise been charged with a criminal offence, not even a traffic infringement in 40 years of driving. He had co-operated with the WorkCover Authority, including the preparation of an Agreed Statement of Facts. He had a good safety record in the light of his length of involvement in the logistics industry for some 46 years and his 15 years in the container parks industry as well as the breadth of his responsibilities and the number of sites and number of employees for whom he was responsible. Mr Rose was involved in volunteer work for his local community and had indicated genuine and sincere regret over the incident. He had organised for the company to contribute to the expenses associated with Mr Howie's funeral as well as meeting the costs of the family of Mr Howie flying from New Zealand to Sydney to attend the funeral. Mr Rose had met Mr Howie's family on a number of occasions after the incident. It was accepted that a small discount would be appropriate in recognition of the guilty plea but that other subjective factors should be given full weight in mitigating the penalty. DELIBERATION 58 Many of the considerations appropriate to the offence committed by the company are relevant to Mr Rose's offence. In assessing the objective seriousness of his offence, it is appropriate to have regard to the particulars of the charge to which the defendant company has pleaded guilty. The use of the highly volatile MEK as a cleaning agent, the failure to ensure that MEK and other volatile and flammable substance was not used within confined spaces of a tank at a temperature above its flashpoint at a time when potential sources of ignition were brought into or were present in the vicinity of the open hatch of the tank, the failure to control conditions permitting the ignition of MEK or other volatile flammable substances at the tank wash bay facility at the site, the failure to ensure that employees were not located above or near the hatch of the tank at the time the tanks were being cleaned, the failure to ensure that the tank wash bay facility was earthed so as to prevent the possibility of ignition of MEK and other volatile and flammable substances used in the cleaning of tanks, the failure to ensure that the tank wash facility provided means to effect the earthing of tanks present so as to prevent the possibility of emission of MEK or other volatile and flammable substances, the failure to provide adequate information, instruction and training to employees working in the tank wash bay facilities so as to ensure their health and safety, the failure to provide supervision as necessary to ensure the health and safety of employees working at the tank wash bay facility and the failure to provide or ensure the use by employees of such footwear as was necessary for the safe performance of work when using materials of substances liable to ignite or explode, demonstrate the widespread nature of the failures exposed in the safety system. I accept the prosecutor's submission that having regard to the steps taken after the accident to address these issues and having regard to the finding of the expert report as to the means to overcome the risk, these steps were not difficult to take. I also accept the prosecutor's submission that the risk was "reasonably foreseeable", a suitably restrained submission but one well founded on the evidence. The combination of a variety of failures in the safety system, the reasonable foreseeability of the risks that were posed and the simple steps that could have been taken to avoid those risks mark this breach as a serious offence. 59 As with the company, Mr Rose relied on extensive evidence as to the resources made available to establish and review the company's safety policy and on their face those systems, involving video training aids, manuals, internal and external audits, certainly gave the appearance of a comprehensive and effective safety system. The flaws in that system, however, were clearly exposed by the incident in which Mr Howie lost his life. It is difficult to understand how the Race facility had largely escaped direct intervention in relation to its work practices. Despite internal and external audits, the evidence suggests that MEK was being used for a considerable period of time at the site and was being stored at the site. Although the Hyde Park facility had produced work procedures, these were not adopted as the mandatory standard for all facilities even though those procedures were made available by way of information to other sites. There is nothing in the evidence that satisfactorily answers the query why such a step was not taken. Nor does the evidence provide a satisfactory explanation why Mr Sylva was appointed as the safety officer at the site without having any training in that area, although that was a requirement of the company's policy. There was nothing in the system of safety and its enforcement that would bring such a position to the attention of Ms Woods, Mr Crandles or Mr Rose. There appears to have been an acceptance that Mr Howie's long experience in the container industry and his involvement with tank wash facilities meant that he had formal safety qualifications in this specialist area, yet there was nothing in his file to support such an assumption. The total absence of earthing also escaped detection under the system of internal and external auditing: Ms Woods accepted that she did not have the expertise to audit this part of the operation and having regard to the chemicals used, closer attention needed to be paid to the special nature of this work. 60 The objective seriousness of Mr Rose's offence was said to be properly considered against the system for cleaning tanks that had been established, although, regrettably, that system had not been followed on 13 January 2003. The evidence simply does not support a conclusion that, for all the company's facilities, there was a single comprehensive system regulating the manner in which tanks were to be washed. The apparently effective system in operation at the Hyde Park facility was not mandatory for all facilities: the Race site seemed to operate in a quite different way and with recognised problems that were not addressed. Nor is Mr Rose's case advanced by reliance on the fact that he had duties to other companies, that he was remote from the site and knew nothing about MEK or the wash procedures. He gave evidence of his involvement with occupational health and safety issues and was obliged to ensure that the company safely operated these facilities. Given his Divisional role he should have been aware, through the system of safety, of the methods of cleaning adopted and the steps taken to address the safe use of chemicals. 61 General deterrence has an important role in the setting of a penalty for offences under the Act. This case provides another example of significant resources being made available to establish a safe system but assumptions about the operation of that system left it significantly flawed in certain areas of its operation. I do not regard the company's system as being merely a paper system but it derived its form from a Group policy dealing with a number of undertakings having regard to the wide corporate interests of the Owens Group and that fact may have masked the need for particular steps to be taken in relation to the creation and continuance of an effective safety system for the operation of the tank wash facility section of the business. As a director, Mr Rose was required to be diligent in such matters. 62 The special circumstances of this case supports Mr Rose's submission that there is no real role for specific deterrence in relation to this offence. In addition, this particular facility was allowed to wind down over a number of months until closed in September 2003 and since late 2004, the company has not continued in business and has no intention of doing so and, in particular, in the future will not be operating a business in the speciality of tank wash operations. 63 In relation to subjective factors, counsel for Mr Rose accepted that the plea of guilty was entered during the hearing and warranted only a modest discount. It is to be kept in mind that there was co-operation in producing an Agreed Statement of Facts for the purposes of the proceedings involving the two directors and that they had accepted that there was a relevant breach by the company but wished to pursue the statutory defences available to them. The hearing of all of these matters has not been without its complications and I am prepared to allow a discount of 5 per cent in recognition of the limited utilitarian value of the plea. 64 In relation to other subjective matters, Mr Rose has an exemplary record that appears to reflect his good citizenship and general observance of the law. He is now in retirement and appears to be active in community affairs. His expressions of regret at this incident and the loss of Mr Howie who was also a friend indicate contrition as does the steps he took to attend to the needs of Mr Howie's family immediately after his death. Mr Rose was active in co-operating with all of the authorities in relation to this incident, ,and was proud of the company's response when it made a number of decisions to take steps to address the risks exposed by this accident - they appeared to be both prompt and effective. There is no reason why these matters should not receive full recognition by way of mitigation of the penalty. ORDERS 65 After considering all of the above matters, 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 No IRC 152 of 2005, to which he has pleaded guilty. 2. The defendant is to pay a penalty of $18,500 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. ANNEXURE AGREED STATEMENT OF FACTS 1. The prosecutor is an Inspector duly appointed under Division 1 of Part 5 of the Occupational Health and Safety Act 2000 and empowered under Section 106(1)(c) of the said Act to institute proceedings in this matter. 2. Owens Container Services Australia Pty Limited [ACN 065 914 472] is a body corporate and can be sued by its corporate name. 3. At all material times the defendant was a director of the company. 4. At all material times the company was an employer and employed (amongst other people) John Howie, Francis James, Willie Mataiti and John Kaleopa. 5. At all material times the company occupied premises located at the corner of Carnarvon and Newton Streets, Auburn in the State of New South Wales ("the site"). The site was known as Race Container Park. 6. At all material times the company conducted at the site a business involving the repair, cleaning and storage of shipping containers and tanks ("the business"). 7. At all material times in the conduct of the business, the company operated an International Shipping Organization ('ISO") tank wash bay facility at the site. 8. The company was one of a group of companies known as the Owens Group which operated a series of ISO tank washing facilities in Australia, New Zealand and Fiji. In Australia, such tank washing facilities were operated in Sydney, Melbourne and Brisbane. The companies in the Owens Group operated interdependently of one another. The company within the Owens Group that operated the tank washing facility in Melbourne was Hyde Park Tank Container Holdings Pty Ltd. The company owned Hyde Park Tank Container Holdings Pty Ltd. The Melbourne facility was known as Hyde Park. 9. The company commenced operation of a tank wash bay facility as part of the business at the site in February 2002. 10. Mr Howie was employed as the depot manager for the company at the site. The company had employed Mr Howie since about 1994. He had worked as the depot manager at the site for about two years before his death. His duties were to manage the site. This involved him in running and overviewing the company's operations at the site, ensuring that the site ran smoothly, that trucks were loaded correctly, that the wash bay ran smoothly and that accounts were up to date. 11. The tank wash bay facility at the site occupied an area approximately 15 metres long by 6.5 metres wide. The facility comprised a steel frame structure that permitted the placement of 5 ISO tanks at any one time. The bank of tanks was straddled by a gantry, which was accessed by a set of stairs. This gantry constituted a working platform and was located at a height of 3.03 metres above the ground. Attached to the gantry were various pipes and conduits that conveyed steam and electrical cabling. Also attached to the gantry were various couplings designed for permitting the attachment of devices operated by means of steam and electricity that were used in the tank cleaning process. Located adjacent to the tank washing facility was a shipping container in which was located a boiler which produced steam to be used in the tank washing process. 12. On 14 and 15 January 2003, ISO Tank CTC 9197636 ("tank 9197636") was in the tank wash bay at the site. Prior to being forwarded to the company for cleaning tank 9197636 had contained resin solution. 13. On 14 January 2003, Mr James, who was employed as a labourer and who undertook cleaning tasks in the wash bay facility, began the cleaning process in relation to tank 9197636. Mr James had been employed by the company since about June 2002, had undertaken container cleaning since about August 2002 and was 18 years of age at the time. 14. Mr James began the task of cleaning tank 9197636 by reviewing the paper work relating to the tank and identifying the contents of the tank, the category of wash required and PPE to be worn. Mr James saw from the paper work that the container had previously contained resin solution. Mr James then went to the tank and opened its manhole hatch to ascertain the amount of resin residue that was present. He then drained the residue into 25-litre plastic drums. Once the residue was drained Mr James used a gernie high-pressure water spray gun to clean the top of the tank of dust. He then set up the spinner plate over the manhole cover and inserted the spinner. Mr James then commenced a cold water and detergent wash of the tank. When the cold wash was completed he commenced a hot water, steam and detergent wash. When this was completed Mr James withdrew the spinner and its attachment plate and inserted a flexible air duct connected to an industrial air fan. The fan was activated and the tank was cleared of steam and dried. The duct and fan were removed and the tank allowed to cool. 15. Mr James then inspected the tank by placing an aluminium ladder through the manhole and entering the tank to conduct an inspection. Mr James estimates that he was inside the tank inspecting it for about a minute. Mr James found that there was still some residual resin in the tank. He formed the view it required further cleaning. After talking to Mr Howie, Mr James brought a 200-litre drum of methyl ethyl ketone ("MEK") to the tank. Mr Howie then used a spray gun to spray an amount of MEK from the said drum into the tank. This took about 5 minutes. Mr James was present while Mr Howie did this. About 20 or 30 minutes later Mr James decanted the residue MEK from the bottom outlet valve of the tank and then washed the tank using detergent. Mr James conducted another inspection of the inside of the tank. On this occasion he did not enter the tank. Mr James saw that there was still some residual resin inside the tank. He told Mr Howie about the resin that was still in the tank. No further cleaning of the tank took place on 14 January 2003. 16. The next day Mr James and Mr Howie resumed cleaning of tank 9197636. Mr James again obtained a 200-litre drum of MEK and took it to the tank. Mr Howie proceeded to again spray the inside of the tank with MEK for about 5 minutes. Mr James was present throughout. About 20 or 30 minutes later Mr Howie returned to the tank. Mr Howie asked Mr James to put on some personal protective equipment and go into the tank by means of a ladder for the purpose of using the gernie high-pressure water spray gun to remove the residual resin. Mr Howie then changed his mind. Mr Howie told Mr James that due to the danger involved he would undertake the task himself. 17. Mr Howie walked along the platform on the tank towards the walkway. Mr Kaleopa passed a gernie high-pressure pressure water spray gun to Mr Howie. Mr Howie then received a call on a two-way radio carried by him. Mr Kaleopa and Mr James then left the immediate vicinity of Mr Howie. A short time later an explosion was heard. A number of people including Mr James and Mr Kaleopa saw Mr Howie being propelled into the air to a point about 7 metres from the opening of the tank. Mr Howie sustained severe injuries and died a short time later. 18. The method for cleaning resin from an ISO tank at Hyde Park involved the insertion of a "spinner" through the man-hole of the tank and the securing of the spinner by positioning it on a stand affixed to a metal plate positioned within the manhole opening. A solvent, styrene monomer, was then fed through a line into the tank with the concurrent introduction of low-pressure steam. After that high-pressure steam would be introduced together with detergent and high pressure cleaning undertaken. At the conclusion of the high pressure cleaning the steam would be cut off and the tank allowed to cool. The tank would then be inspected. If any resin residue remained inside the tank the same process would be repeated. If resin residue were unable to be removed by this method of cleaning, its removal by mechanical means buffing with emery paper and an air-operated buffing tool would be undertaken. 19. A pre-requisite to the performance of the method of cleaning work set out above was the (electrical) earthing of the tank. This was to be achieved by attaching an earthing lead/ static line to the tank. 20. As at 15 January 2003 a document existed at the site entitled "Race Container Park Wash Procedures & Product Matrix". This document records 15 separate cleaning procedures for tanks identified by alphabetical letters commencing at "A" and finishing at "P". This document was similar to a document created and followed at Hyde Park. It was originally titled "Hyde Park Wash Procedures & Product Matrix". The documents are identical with the exception that they had different cover pages. 21. The cleaning procedure recorded for resin solution is identified with the letter "F". Procedure F nominates five steps to be undertaken as follows: solvent spray, steam preheat, hot water detergent wash, hot water rinse and hot air blow dry. 22. The Race Container Park Wash Procedures & Product Matrix document identifies solvents as 1 of 3 categories of cleaning agents. It specifically nominates resin as an example of a product requiring pre-cleaning. Under the heading "What to do when—the product is dried onto tank surface" it states "(t)he dried on remains have to be made soft before cleaning. Spray on suitable solvent and allow reaction time." The document makes no reference to the ignition/ explosion risks associated with the use of flammable solvents, especially in a confined space, or the need to control possible ignition sources of flammable solvents including the control of static electricity. It instances acetone as a solvent to be used in tank cleaning operations where streaking within the tank is found. 23. The company had produced a document setting out standard operating procedures for the cleaning of tanks entitled "Procedures on Tanks -Race Container Park". This document did not identify any product-specific cleaning techniques to be used in respect of ISO tanks. In particular, this document did not identify the cleaning technique to be used in respect of an ISO tank containing resin. The document did not refer to the need to earth tanks before commencing cleaning operations. 24. A material safety data sheet ("MSDS") in respect of polyester sheeting resin produced by the company to the police investigating the death of Mr Howie bears a handwritten annotation "cat 3 wash". The MSDS states: Fire/ Explosion Hazard Flash Point: 31 C Explosive air-vapour mixture may form. Explosive when mixed with oxidising substances. Earth and bund all transfer equipment. Keep away from heat, naked flames or sparks … The MSDS was kept in the main office at the site, the office of the wash bay supervisor on the site and some in the wash bay area. 25. Mr James knew only 3 tank-cleaning procedures. These procedures were known to him as wash categories 1, 2 and 3. Mr James understood a category 1 wash to involve the use of hot water, detergent and steam. He understood a category 2 wash to be identical to a category 1 wash except that it lasted longer and might have involved some subsequent scrubbing of the interior of the tank. A category 3 wash was understood by Mr James to be identical to categories 1 and 2 except that it lasted longer again and might have involved scrubbing or buffing of the interior of the tank. In respect of category 2 and 3 washes, Mr James would notify either John Howie or Mr Mataiti, the site supervisor who was not at work at the time of Mr Howie's death, if he discovered the presence inside the tank of residual product. Mr Howie or Mr Mataiti would then make a decision as to whether a gernie high-pressure water spray gun and/ or solvents would be used to remove the residue. 26. Mr James' understanding and experience was that a tank containing resin solution would be categorised as requiring a category 2 or 3 wash. 27. Mr Willie Mataiti was the supervisor of the company's tank wash facility and reported to Mr Howie. Mr Mataiti was on scheduled leave on 15 January 2003. Three tank-cleaning procedures were known to Mr Mataiti being wash categories 1, 2 and 3. Mr Mataiti understood a category 1 wash to require no decanting of product residue and involve the spinner applying high-pressure hot or cold water together with detergent. He understood a category 2 wash to require the decanting of product residue with the balance of the wash procedure being identical to category 1. A category 3 wash was understood by Mr Mataiti to require multiple washes, entry into the tank and possible scrubbing with a scourer and cleaning chemicals. 28. When interviewed on 20 March 2003, Mr Mataiti outlined the procedure he knew and would use for the cleaning of a tank containing resin solution as involving an initial rinse with cold water applied with a garden hose, then a wash with cold water and detergent applied through the spinner followed by a wash with hot water and detergent also applied through the spinner. 29. Mr John Kaleopa was employed by the company as a labourer and as at 15 January 2003 had been employed for a period of about 3½ weeks. Mr Kaleopa's duties included the cleaning of ISO tanks. He had received hands-on training from Mr Howie, Mr Mataiti and Mr James and was still undergoing training as at 15 January 2003. Mr Kaleopa was provided with some safety training on commencement of his work, spread over a week, including induction training and instruction concerning the MSDS. 30. Mr Kaleopa's understanding and experience of the procedures employed for cleaning ISO tanks was that a solvent with explosive characteristics would be manually sprayed into the tank (if the tank was not used for food products) and then left for a period of time to dissolve any residue product. The solvent was then drained. Thereafter the tank would be washed with the spinner apparatus and steam. Three tank-cleaning procedures were known to Mr Kaleopa being wash categories 1, 2 & 3. He understood a category 1 wash to involve an internal scrub, a steam wash and then buffing. A category 2 wash as understood by Mr Kaleopa was identical to a category 1 wash with the exception that less buffing was involved. He understood a category 3 wash to involve a scrub and wash. 31. MEK was regularly used as a solvent in the conduct of the company's ISO tank cleaning operations at the site. Mr Mataiti was aware of the use of MEK since approximately September 2002 at the site. He was aware that Mr Howie and Mr James were using it. Mr Richard Sylva, the company's occupational health and safety officer at the site was aware that Mr Howie used MEK. 32. MEK is a highly volatile and highly flammable substance. MEK was not used at Hyde Park for cleaning. A MSDS concerning MEK in the possession of the company as at 15 January 2003 states as follows: Liquid and vapour are highly flammable Severe fire hazard when exposed to heat, flame and/ or oxidisers Vapour forms an explosive mixture with air Severe explosion hazard, in the form of vapour, when exposed to flame or spark Vapour may travel a considerable distance to source of ignition. Heating may cause expansion/ decomposition with violent rupture of containers … 33. Mr Howie informed both Mr James and Mr Kaleopa that MEK was highly explosive and flammable. Mr Howie informed Mr Kaleopa that when using MEK he should ensure that "there was no spark from any machinery used close by". Mr Howie verbally warned Mr James not to smoke while using MEK. 34. The work procedures prescribed by the company for the cleaning of ISO container tanks in the wash bay facility provided, amongst other things, for the use of acetone to act as a solvent where streaking was observed within the tanks. The use of acetone presents similar problems to those arising in relation to the use of MEK as acetone is also highly flammable and highly volatile. Both MEK and acetone form explosive mixtures with air at ambient temperatures. The safe use of such substances in confined spaces requires both the exclusion of potential sources of ignition and the control of the surrounding atmosphere by way of flooding the confined space with an inert gas to ensure oxygen-depletion. 35. A gernie high-pressure water spray gun was regularly used in the conduct of the company's tank cleaning operations. Such a device had been used since the company began tank-cleaning operations in February 2002. 36. Investigations have indicated that there were present at the tank wash bay facility at the site on 15 January 2003 a variety of potential ignition sources of the MEK present in tank 9197636. These potential sources of ignition included: a. static electrical discharge from the flow of water from the Gernie high-pressure water spray gun. The Gernie operates at a pressure of 2500 pound per square inch. b. static electrical discharge from the nozzle of the Gernie high-pressure water spray gun; [when placed on or near the top of the tank] c. a static electrical discharge from Mr Howie given the highly insulating footwear being worn by him; d. a spark caused by a stray current to which, as a result of its inadequate earthing, tank 9197636 was susceptible; e. a spark from the flint contained in a cigarette lighter that was subsequently found inside the tank. It was well-known that Mr Howie was a heavy smoker; and f. a spark from possible metal-to-metal contact between the said cigarette lighter and the inside of the tank. 37. Australian/New Zealand Standard AS/ NZS 1020: 1995 The control of undesirable static electricity ("AS/ NZS 1020") published 5 March 1995 states: Static often causes the inadvertent ignition of flammable mixtures . (Clause 1.2) Section 6 of AS/ NZS 1020 deals with the issue of static electricity in liquids. It states: Liquids can become electrostatically charged while flowing past the walls of pipes or vessels, while impinging upon obstacles, during jet or propeller mixing, and when released as a spray ." (Clause 6.1.1) Static generated by liquids may give rise to fire or explosion dangers if ignitable mixtures are present." (Clause 6.1.2) ... a relatively conducting liquid sprayed at high speed from an earthed nozzle or pipe will probably be electrostatically charged. For example, some of the supertanker explosions of the late 1960s were due to the very high electrostatic field built up by high pressure spraying of water from earthed nozzles. (Clause 6.1.4) 38. AS/ NZS 2865: 2001 Safe working in a confined space ("AS/ NZS 2865") states: The following general precautions should be observed when hydrojetting is undertaken in a confined space: … (d) Where there is a possibility of a flammable environment, the nozzle of the hydrojetting equipment should be earthed to decrease the generation of static electricity (see also AS/ NZS 1020)" (Appendix G, Clause G2.2 ) Section 5 of AS/ NZS 1020 deals with the issue of the accumulation of static electricity on the human body. It states: The human body is a conductor and, when insulated from earth, can become electrostatically charged. (Clause 5.1) Clause 5.3 of AS/ NZS 1020 prescribes certain resistance requirements for footwear "for use in areas where it is necessary to prevent the accumulation of electrostatic charge on a person". The footwear worn by Mr Howie on 15 January 2003 failed to comply with those requirements. Clause 5.4 of AS/ NZS 1020 identifies other means to earth persons to ensure the adequate discharge of static electricity. These means include the use of an antistatic-earthed wrist strap and flexible lead and ionized air sources. 39. Neither tank 9197636 nor the steel platform forming part of the wash bay facility at the site was earthed by an earthing line or otherwise. The tank wash bay facility at the site provided no means to effect the earthing of ISO tanks present including tank number CTC9197636. 40. The work method statements adopted by the company after 15 January 2003 prescribe as the first step in the method of cleaning an ISO tank the need to earth the tank. Such work method statements prescribe as the last step in the method of cleaning such a tank the removal of the earth line/ lead. 41. The need to exclude potential sources of ignition (including static electricity) when using certain flammable cleaning agents (including acetone) in the tank-washing process is recognised in work method statements adopted by the company after 15 January 2003. 42. After 15 January 2003 the company's work method statement relating to the washing of a tank that had contained MEK (that is as the product rather than the cleaning agent) describes MEK as posing a "VERY HIGH RISK". The risk is described as "Explosion Risk - Highly Flamable (sic)- Heavier Than Air Vapour Means it Does Not Disperse as Easily as Lighter Hydrocarbon Solvents". 43. Mr James had been performing ISO tank washing duties for the company since approximately October/ November 2002. He had not seen the document entitled "Race Container Park Wash Procedures & Product Matrix" until after 15 January 2003. James' training was entirely "hands on", watching and learning from John Howie, Willie Mataiti and another employee known as "Danny". 44. Mr John Connolly was employed by the company to perform duties involving the receipt and dispatch of containers and ISO tanks but not to clean the ISO tanks. Mr Connolly also performed the role of occupational health and safety officer and first aid officer until October/ November 2002 when he resigned those positions. In August 2002, over two weekends, Mr Connolly undertook OHS Committee member training. During his time as occupational health and safety officer at the site, Mr Connolly: a. Was not provided with any position description for his role b. Did not carry out any site safety inspection at the company's premises c. Was unaware whether any procedures were in place for the conduct of tank cleaning operations at the time of his resignation d. Was not aware of the company conducting any risk assessment of tank washing activities e. Was not consulted regarding the company's tank washing activity 45. Mr Richard Sylva was employed as the company's operations manager at the site and reported to Mr Howie. Mr Sylva assumed Mr Connolly's role as occupational health and safety officer in October 2002. As at 15 January 2003 Mr Sylva had not received any occupational health and safety training for his role as occupational health and safety officer at the site. Mr Sylva had no knowledge of any instruction or training being provided to employees in the safe use and handling of MEK. 46. Mr Howie frequently needed to contact staff at Hyde Park for advice in relation to the cleaning of tanks. When interviewed by Police on 17 January 2003, Mr John Julian Rose, then a director of the company, stated that "…each employee is trained in the specific area in which they are working and this training is recorded on their employment record." The personnel file of Mr Howie contains no records of training. 47. The company did not conduct a risk assessment regarding the use of MEK in the ISO tank cleaning process. The company did not monitor static electricity in the tank wash facility. The company did not have any policy in relation to the control of potential ignition sources in the tank wash facility other than a no-smoking policy. As at 15 January 2003 the company did not have in place any "no-smoking" signs in the tank wash facility. An inspection of the wash bay facility at the site on 16 January 2003 revealed the presence of a number of cigarette butts on the ground. 48. Both Francis James and John Kaleopa were required during the course of their employment to enter ISO container tanks at the wash bay facility at the site from time to time. 49. As at 15 January 2003 Mr James had not received training in relation to the performance of work in confined spaces such as the interior of ISO container tanks. Mr Mataiti had undertaken confined space training as at 15 January 2003. 50. On 15 January 2003 the company contravened section 8(1) of the Act. oo00oo ANNEXURE EARLY AGREED STATEMENT OF FACTS 1. The defendant has no prior convictions under the Occupational Health and Safety Act 2000, its predecessor or associated legislation. 2. In mid-2002, Mr. Nicholson, the Hyde Park Manager, prepared wash procedures in respect of tank cleaning operations for certain dangerous, flammable, corrosive or poisonous products including MEK, acetone, styrene, kerosene and resin solution. These wash procedures prescribed as the first step in the method of cleaning an ISO tank the need to earth the tank. The wash procedures prescribed as the last step in the method of cleaning such a tank the removal of the earth line/lead. The wash procedure for resin solution required that steam be introduced at the same time as the chemical cleaning agent, styrene monomer. 3. The wash procedures were made available to the Site via the computer server for the site. On 26 September 2002, the wash procedures were printed off at the Site printer by a person who used the computer password for the Site. 4. The wash procedures referred to in paragraphs 2 and 3 made no reference to the risks, including the risk of explosion, associated with the work in question. 5. After the preparation of some of the wash procedures, Mr Daniel Winter, an employee at the Site, attended Hyde Park to be trained in relation to tank cleaning operations. 6. The work method statements constituting annexure 14 were adopted by the company after 15 January 2003. 7. After 15 January 2003, the defendant co-operated with the WorkCover Authority. oo00oo 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.