Industrial Court of New South Wales CITATION: Inspector Prasad De Silva v Austral Brick Company Pty Ltd [2006] NSWIRComm 291 PROSECUTOR: Inspector Prasad De Silva PARTIES: DEFENDANT: Austral Brick Company Pty Ltd FILE NUMBER(S): IRC 1204 of 2006 CORAM: Haylen J CATCHWORDS: Occupational Health and Safety Act 2000 - s 8(2) - collapse of jib crane during maintenance - guilty plea entered - external maintenance provider identifies defects in crane over many months - not all defects rectified by defendant - defects easily rectified - numerous steps taken by defendant after accident to address risk associated with use of the crane - serious breach established - general and specific deterrence considered - early plea - numerous subjective factors - good industrial record for nature of the industry - penalty imposed HEARING DATES: 06/09/2006 EXTEMPORE JUDGMENT DATE: 09/06/2006 PROSECUTOR: Mr D O'Neil of counsel SOLICITORS: Phillips Fox LEGAL REPRESENTATIVES: DEFENDANT: Mr B Hodgkinson SC SOLICTIORS: Clayton Utz JUDGMENT: - 10 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Haylen J 6 September 2006 Matter No IRC 1204 of 2006 INSPECTOR PRASAD DE SILVA v AUSTRAL BRICK COMPANY PTY LTD Prosecution under s 8(2) of the Occupational Health and Safety Act 2000 EX TEMPORE JUDGMENT [2006] NSWIRComm 291 1 Austral Brick Co Pty Ltd has pleaded guilty to a breach of s 8(2) of the Occupational Health & Safety Act 2000. The particulars in short form of that charge are that on the 12 March 2004 at Plant 1 at Horsley Park in the carrying out of its undertaking as a manufacturer of bricks on that site the company failed to ensure that people other than employees of the employer, including Mr Michael Coleman and Mr Kevin Brand, were not exposed to risk to their health and safety arising from the conduct of that undertaking while at the employers place of work; in that the injured worker Mr Coleman and Mr Brand were using a jib crane known as the No. 4 crane to lift a slab of bricks in the premises when a 9.3 metre long jib of the crane fell on to a kiln cart from its mounting point, a distance of approximately 2.4 metres, striking Mr Coleman on the head. The company failed to ensure the plant, namely the crane provided for use by persons on the premises, was safe and without risk to health in that the slew pin of the crane was bent and had been identified as requiring replacement; that the base mounting brackets had been identified as needing remounting and welding; and the load beam was bent at the pivot end. The defendant failed to correct or authorise the repair or replacement of faults with the crane which had been identified since May 2002. As a result of those failures the injured worker, Mr Coleman, and Mr Brand were exposed to risk of injury and Mr Coleman in fact sustained injuries. 2 The prosecutor tendered a Statement of Agreed Facts setting out the essential matters and surrounding circumstances of this particular offence. Without recording the entire content of that document, the following matters require mention. 3 These particular premises consisted of a commercial building which contained a number of cranes including the jib crane known as number 4 crane. That crane had a lifting capacity of 125 kgs was owned by the defendant and it was also agreed that it weighed approximately 250 kgs. The defendant had entered a contract with Morris Powerlec to conduct regular maintenance and prepare inspection reports and carry out authorised repairs on the cranes at the premises. It also contracted George D Jones Co Pty Ltd referred to as "Jones" to repair kiln carts at the premises. Jones had been performing this work at the premises for approximately 8 years and that required the use of the crane for approximately two weeks per month, four months per year. Jones employed Mr Coleman, then aged 22, as a labourer and had done so from approximately 2002 and he had been performing work at the premises for approximately 8 months prior to the date of the incident. Jones also employed Mr Brand as a foreman and he had been performing work at the premises on a regular basis for approximately 8 years. 4 In relation to the incident on 12 March 2004, at approximately 8.00 am Mr Coleman and Mr Brand were using the crane to assist with repairing the kiln carts. In the process of using the crane to lift a slab of bricks, the jib beam of the crane fell to the ground striking Mr Coleman on the head as he bent to move out of the way. It was agreed that was a glancing blow. The injured worker was transferred to Liverpool Hospital was kept under observation for two hours and then released. He returned to work the following day. Both Mr Coleman and Mr Brand noticed that the crane had been difficult to swing in some directions and Mr Brand reported this to the defendant company on several occasions over the months preceding the incident. 5 Morris Powerlec performed regular maintenance on these cranes. Reports were prepared by Morris Powerlec on the 16 May, 24 May, 31 October, 11 November 2002, 30 April, 7 July 2003 and 16 December 2003 as well as 1 January 2004 which had identified a number of faults with the crane requiring repair or replacement. Morris Powerlec were not authorised to carry out repairs without express approval from the defendant company. The maintenance supervisor for the company, Mr Owen, said not all the faults identified in the crane had been repaired prior to the incident. The investigation of this incident was then undertaken by the WorkCover Authority and a number of factual findings were made that are set out in the Agreed Statement of Facts. 6 In relation to Morris Powerlec, it was agreed that the company conducted regular inspections of cranes at the defendant's premises. At the conclusion of each inspection Morris Powerlec prepared a written report of faults identified and suggested corrective action which were provided to the defendant. Those reports used a scale of seriousness and there was a method of identifying what action was required. The scale ran from 1 to 5, Number 1 being a safety related issue, number 5 being an issue raising the serviceability of the equipment. There were a number of extracts from the reports dating from November 2001 through to December 2003. Some five reports had identified over that time: the pivot pin being bent and needing to be replaced; the load beam being bent at the pivot end; a safety latch being damaged and requiring replacement; the jib being bent and slew pin possibly being bent; the base mounting plate requiring remounting and welding; the jib being bent and the possibly bent pin requiring repair; and, the base mounting plate requiring remounting and welding. Those reports in that form were followed by service reports that perhaps in more general language identified the same issues. 7 The industry code of practice was referred to in the Agreed Statement of Facts including the relevant Australian standard and attention was drawn to clause 30.1 that was in these terms: Any part of a crane that becomes so worn or damaged as to constitute a hazard or impairs the operation of the crane or may constitute a hazard before the next routine inspection shall be repaired or replaced. 8 Following this incident involving Mr Coleman, the defendant replaced the crane. It also implemented a system which permitted the regular repair and replacement of faults identified with cranes without the express permission of the defendant based on a hierarchy of levels of seriousness. 9 The remainder of the prosecution case consisted of two factual inspection reports, some 25 photographs of the area and the particular crane that was involved in this incident and a close-up of the slew pin and the brackets where the crane was connected to a column at the site. 10 A statement of prior convictions was tendered showing that there were four previous convictions, some dating from as early as 1985 but relevantly the most recent being in May 2000 where the Chief Industrial Magistrate imposed a fine of $11,000 for a breach of s 15(1) of the Occupational Health & Safety Act 1983. 11 The evidence for the defendant company was provided by a very detailed affidavit with numerous annexures sworn by Mr Stephen Wall who was the company's Manufacturing Manager - New South Wales at the time of swearing the affidavit. At the relevant time of this incident he was known as the Plant Manager. Mr Wall described the company as being established in 1908 and being a wholly owned subsidiary of Brickworks Ltd. The company was one of 25 trading companies within the Brickworks Ltd group. The principle business of the company was the manufacture and sale of clay bricks and pavers and it operated 18 brick factories and two masonry factories across Australia and manufactured approximately 200 million bricks each year in New South Wales. In New South Wales the company operated five brick manufacturing plants across three sites; two located at Horsley Park, one at Punchbowl and the other at Bowral. The kiln operated 24 hours a day, 7 days a week. The group employed 1500 people nationally and the defendant company employed approximately 400 people in New South Wales. Of those, approximately 200 were employed in the company's factory production processes across the three sites at Horsley Park, Punchbowl and Bowral. The nature of the process was set out and that is helpful information but I need not delve into the details of these matters. 12 The company, with its large number of employees, engaged a number of contractors for the purpose of outsourcing maintenance work, mechanical fitting, electrical requirements, general cleaning of the plants and the like. One of those companies was George D Jones - they were refractory brick layers specialising in the maintenance of kiln carts and were engaged to undertake refractory brick maintenance/installation on the kiln carts. They had been engaged for approximately 8 years and they had employed Mr Coleman. There was some 62 kiln carts used in the production process at plant 1. 13 The reason why maintenance and servicing of those carts was necessary was set out and it was stated that crane 4 was used to service approximately 3 kiln carts every week and during the service of each cart, the crane was used for approximately four hours each time, thus crane 4 was used for approximately 12 hours a week. 14 Mr Coleman had worked at plant 1 and plant 3, usually working for approximately 8 hours a day and worked two to three days a week at plant 1 with the remaining days at plant 3. The company had required him to undergo an induction including training in the company's general Occupational Health & Safety practices. He was provided with the company's induction booklet. 15 The circumstances of the incident were set out. They do not add largely to what is contained in the particulars of the offence. The Agreed Statement records that Mr Coleman was kept under observation for two hours at hospital having experienced minor cuts and dizziness. The company maintained regular contact with the hospital while he was in their care. He returned to full duties the next day. It was understood that he did not suffer any permanent injury as a result of the incident. WorkCover was notified by Mr Wall of that incident on the morning of its occurrence. 16 The affidavit then goes into some detail about the existing system of safety. It is sufficient to say that detail demonstrates a very comprehensive and documented system in operation at the company's various outlets. The Occupational Health & Safety Management System had been in operation since 1999 and had been upgraded. There was a need for the procedures to be consolidated into a manual. That occurred in 1999 and the manual contained a number of specific topics that were set out in detail in the affidavit, but they included, as might be expected, means of reporting and recording accidents, identifying hazards including risk assessment and also contractor safety. The policy adopted by the company was said to be encapsulated in a statement that was to be found on two large signs in place at Horsely Park. That statement is: There is no task that we undertake that is so important that we cannot take the time to find the safe way to do it. It is said that statement reflected the fundamental values of the company. 17 Detail was provided of the operation of safety committees. Safety was discussed at board meetings which occurred monthly and at management meetings. There were 10 operating divisions within the group and each division met once a month with the Managing Director. There were general manager's meetings. Safety was a part of those discussions. There were quarterly safety meetings. The purpose of those meetings was clearly specified. There were safety committee meetings, tool box meetings and in addition to those matters there was a safety system review. That was conducted by an external provider and a provider said to be experienced in the task of safety management. Quarterly safety audits were conducted and reports made to the company and all aspects of the management system of Occupational Health & Safety were considered. There was a review of that management system in December 2003 and in addition reference was made to the employee induction manual and the requirement that before any employee or contractor commenced working on the company site there was a requirement to be inducted. That induction was both general and in relation to the specific work being undertaken by the employee or contractor. 18 Mr Wall said prior to this incident managers and supervisors employed by the company were required to undergo additional Occupational Health & Safety training and that was conducted by Mr Jones, the external provider. There was reference in detail to hazard identification, contractor safety and additional components within the Occupational Health & Safety manual. Some attention was drawn in that respect to the concept of "safety contact", a scheme of personal auditing introduced by the company whereby a supervisor would watch the work of an employee under supervision for approximately five minutes and then provide the worker with feedback about their safe working practices. In relation to the maintenance of cranes there were internal and external maintenance programmes. It was emphasised on behalf of the defendant that these were regular programmes rather than being one off or ad hoc, and it was also emphasised that here the defendant had resolved to seek the assistance of qualified external maintenance providers to ensure high safety standards were met. 19 There was a description of Morris Powerlec inspections which were conducted every six months and their categorisation of maintenance under five headings, with 1 being the top category and identified as "safety related" to the bottom category of seriousness being 5, a heading of "serviceable" indicating some attention was needed. The second category was "critical condition". In relation to this method of categorization, Mr Wall said that he had been informed that anything within category 1 was a safety related issue and if it was a maintenance issue it fell between categories 2 to 5. The reports when supplied by Morris Powerlec would be discussed, any expenditure required would then be addressed by Mr Wall. He said he approved every item of expenditure that the maintenance supervisor requested in relation to the maintenance of cranes. Anything that had been categorised as a number 1 category, being safety related, was repaired or replaced immediately. He pointed out that in the reports between 2002 and 2003 provided by Morris Powerlec, the highest category of maintenance was a category 3 level. 20 Following the incident involving Mr Coleman there was an investigation by the company. A safety alert was prepared and read to all employees and contractors during the next tool box meeting. The safety alert was also posted on the company's notice boards for approximately a month. The company then turned its attention to what was needed to prevent a recurrence of the incident. Crane 4 was no longer used in plant 1 and a replacement crane, a new crane, was erected approximately three months later. Crane 4 was a slew crane but was replaced by a new crane which was roof mounted and was able to deal with the servicing of the kiln carts to exclude some manual handling issues and therefore thought to be safer for employees to use. 21 There was also some change in relation to crane maintenance. Mr Wall spoke about being unhappy with the follow-up work associated with inspections performed by Morris Powerlec. In particular there was dissatisfaction with the December 2003 report that had not categorised the issues which caused this incident as safety related in the number 1 category. Morris Powerlec was to immediately rectify the issues with the crane involved in the incident and all outstanding issues and that cost the company in excess of $20,000. The repairs were completed by 26 March 2004 and Morris Powerlec was authorised to spend up to $2000 on maintenance for inspection. From February 2005 a new maintenance provider has been engaged. A similar scale of categorisation has been adopted. The new provider is authorised by the company to fix the issue immediately if it is a safety related issue, or if it cannot be fixed immediately to tag the crane so it cannot be used until it is fixed. Within a week of inspections, the maintenance supervisor and the plant manager meet with representatives of the maintenance provider and they discuss the cranes which have been inspected. All the issues are discussed that have been identified and approval for expenditure on those issues is then dealt with. 22 The company in 2004 appointed an Occupational Health & Safety and Environment Manager. That person is responsible for developing, in consultation with company senior managers, an Occupational Health & Safety Management Plan for New South Wales and it is reviewed quarterly. The policies and procedures in August 2004 were updated and reviewed. There were some 14 additional processes and programmes included. There were references to consultation with employees about safety, additional training for employees and contractors, the making of Occupational Health & Safety a formal criteria of performance management, meaning that managers have to reach certain targets in order to access a bonus incentive scheme. There was also an upgrade of audit tools conducted as a further example of the company's commitment to Occupational Health & Safety. 23 In relation to expenditure on occupational health and safety, the company has spent nearly $1.3 million on non capital safety in New South Wales over the last three financial years and in addition the Board had approved the expenditure of over $6 million involving a significant safety related element to make the company's plant safe. 24 In relation to the company's wider involvement with the community, Mr Wall noted that the company had been involved and supported a number of fund raising initiatives, donating $70,000 to the Childrens Cancer Institute Australia between 2002 - 2004 and would donate a further $100,000 to the same charity for the period 2005 to 2007. 25 In relation to that evidence, the court needs to firstly consider the objective seriousness of this offence. The injury, thankfully, was relatively slight to Mr Coleman. Having regard to the weight and nature of the crane and the falling of the crane, it can be said that this was a potentially very serious risk and could have resulted in much more serious injuries. To this extent it may be said that it was foreseeable. The pin apparently had moved over a number of months or perhaps longer. The company had been told of bends and other defects in and around this equipment and the fact that there needed to be re-welding. Those matters should have clearly put the defendant company on notice that it needed to do more than simply rely upon the documents passed to it by its maintenance provider and in effect, this is acknowledged in the plea. In all of those circumstances, it is an offence that can be properly categorised as a serious offence. 26 There is no debate that both general and specific deterrence should be a factor in setting the penalty. General deterrence is a usual requirement as part of penalty and in this case, as in many cases that come before the court, it is of particular significance that the company, despite having very considerable, one might even say comprehensive safety plans and procedures, nevertheless fell into the position of confronting what was a serious breach of the Act and a very serious incident. 27 In relation to specific deterrence, I am asked to take into account the particular and general steps taken by the company after the accident. I accept that they are relevant but they also reflect how the defect in the system was easily remedied. Nevertheless considered in the overall width and comprehensiveness of the safety system and the steps taken to address safety after this particular accident, I am of the view that specific deterrence is a relevantly low level of concern in relation to this defendant. 28 In relation to subjective factors, the defendant has prior convictions so that the maximum penalty that may be imposed is $825,000. It is to be firstly recognised that the evidence shows this company has been in existence for a very long time, since 1908 in New South Wales. It employs a large number of people and it employs them in a process that has some operational hazards. All of the prior convictions have been dealt with by the Chief Industrial Magistrate. The most recent and the most relevant was a breach of s 15(1) of the 1983 Act resulting in a penalty of $11,000 being imposed. Not a greet deal is known about that particular offence but I am informed on behalf of the company that it did not involve cranes or maintenance. I think in those circumstances that is to be regarded as a good safety record and reflects the company's attention to Occupational Health & Safety. 29 Its activities in relation to the wider community also signal it as a good corporate citizen. I note here that the plea was entered on the third occasion the matter was mentioned before the court. It was first mentioned in late May and by early July a plea of guilty had been entered. I regard that as an early plea and the defendant is thereby entitled to a full measure of discount.. A discount of 25 percent will therefore be granted in relation to the final penalty. The company also co-operated with the WorkCover authority. That is an important consideration as well as the fact that the company by its early plea demonstrated its contrition. Those subjective factors were frankly accepted by the prosecutor. 30 In those circumstances there are very significant subjective factors that operate in the favour of the company in mitigating the penalty. 31 Having regard to all those matters the Court makes the following orders: 1. The defendant is convicted of a breach of s 8(2) of the Occupational Health & Safety Act 2000 as particularised in matter No IRC 1204 of 2006 to which it has pleaded guilty. 2. The defendant is fined a sum of $100,000 with half that sum to be paid to the Prosecutor by way of moiety. 3. The defendant shall 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.