District Court New South Wales Medium Neutral Citation: SafeWork v Omega International and Shetty [2016] NSWDC 11 Hearing dates: 01 February 2016 Date of orders: 01 February 2016 Decision date: 01 February 2016 Jurisdiction: Criminal Before: Curtis J Decision: Omega International Coatings Pty Ltd: The defendant is convicted and fined The prosecutor is to have a moiety of the fine Kananjar Shetty: Pursuant to section 10 of the Crimes (Sentencing Procedure) Act, I dismiss the charge and record no conviction Catchwords: CRIMINAL LAW – prosecution – work health and safety – static electricity fire – failures of the defendant were not of a systemic nature SENTENCE – mitigating factors – fine – capacity to pay – circumstances – appropriate penalty Legislation Cited: Occupational Health and Safety Act 2000 Fines Act 1996 Crimes (Sentencing Procedure) Act 1999 Category: Sentence Parties: SafeWork New South Wales (Prosecutor) Omega International Coatings Pty Ltd (Defendant) Kananjar Shetty (Defendant) Representation: Counsel: P McDonald SC with S Walsh appeared for the Prosecutor Y Shariff appeared for the Defendants Solicitor: SafeWorkNSW Legal Services Carroll & O'Dea Lawyers File Number(s): 2012/387526; 2012/387961 Publication restriction: None 1. The defendant, Omega International Coatings Pty Ltd, repairs industrial coatings at its premises at two places in Kurrajong Avenue, Mount Druitt. In the course of the preparation of those coatings, inflammable liquids are combined. 2. On 28 January 2011, when an employee, Mr Konchok Lama, was decanting toluene from a 1,000 litre container into another container for the purpose of manufacturing paint thinner, the toluene ignited, causing an extensive fire. 3. The defendant is charged pursuant to s 8(1) of the Occupational Health and Safety Act 2000 (the Act) that it failed to ensure that the defendant's employees including Mr Lama and two other persons were not exposed to risk to their health and safety contrary to s 8(1) of the Act. 4. The particulars of the charge are in summary that: First the defendant failed to adequately assess the risks that could arise from operations at the site including the risks of the decanting system and the risk of failing to dissipate static electricity. Second that the defendant should have ensured that the container being used for decanting was of a suitable type with antistatic wires that prevented the possibility of ignition and, Third, that the defendant failed to provide adequate information, instruction and training to Mr Lama in relation to his work. 1. The cause of the ignition was the discharge of static electricity. In the course of agitating toluene there is a risk that static electricity may build up and that its discharge may cause a spark. 2. In order to obviate that risk the appropriate practice is that each container be fitted with a static wire leading from the contents to an earthing cable on the steel cage of the container. Through those connections any accumulation of positive electrons within either drum may safely pass to earth. 3. It is common ground that Mr Lama properly connected the earthing cables of the donor drum and the recipient drum to earth. He failed however to notice that there was no static wire in the recipient drum leading from its contents to the steel cage and earthing cable. 4. Mr Lama gave evidence and I accept him as a witness of truth. 5. He was by training and experience well qualified to conduct the decanting operation. He was employed by the defendant in 2002 but before that worked for Caltex in New Zealand. He was well aware of all safety procedures concerning safe delivery and unloading of flammable substances. 6. After joining the employment of the defendant he received intensive training from Mr Wilkinson, an experienced industrial chemist. He was trained in the importance of precautions to eliminate potential dangers from ignition sources such as static electricity. 7. In the course of his employment with the company he was provided with copies of various safety manuals which he read and considered. 8. I will come to those manuals in due course, but it is apparent from his training he was warned, specifically by Mr Harry Fuimaono of the dangers of static electricity and the importance of using the antistatic and earthing straps while decanting flammable substances, and the need to avoid any ignition sources such as mobile phones. 9. Before the incident Mr Lama was aware that the antistatic wires were essential to provide a means for static electricity inside the plastic containers to dissipate. 10. The company purchased bulk containers from two main manufacturers, Univar and AusChem. Mr Lama said that he had used thousands of these containers since at least 2007 and had not in all of that time come across any container which lacked the static electricity wire which was lacking in this particular container.s 11. After the fire hundreds of bulk containers in the possession of the defendant were examined and four only were found to lack the necessary static wire. 12. Mr Lama says that he was aware before the decanting process of the need to ensure that such a wire was in place but on this occasion he failed to check. Had he checked, consistent with his training and his instructions, he would not have decanted the liquid and the risk would not have arisen. 13. There is no causal relationship between the existence of the risk and any failure by the defendant to provide adequate information, instruction or training to Mr Lama. 14. Further, although the defendant is charged with failing to assess the risk that could arise in the operations at the site, the evidence is overwhelmingly to the contrary. 15. Omega acquired the business in February 2000. It was then manufacturing water solvent based paints. 16. When Omega acquired the business it engaged as an employee, Mr Wilkinson, who had 30 years' experience in the paint manufacturing industry. It further engaged a consultant, Mr Barry Bone of Petrolink Pty Limited, to prepare preliminary hazard analyses in relation to the premises adjoining the premises in which this accident occurred. Mr Bone had previously prepared safety documentation for the storage and handling of dangerous goods at the request of the former owner of the business. 17. In September of 2002 Omega commissioned the production of a Dangerous Goods and Handling Manual from an accredited dangerous goods consultant referred by Petrolink. 18. In mid-2005 Omega again retained Mr Bone to provide advice and guidance and prepare documentation in relation to Omega's proposed construction of a purpose-built manufacturing facility. 19. Between July and November 2005 Mr Bone prepared a Qualitative Analysis Safety Management System, a Safety Manual and a Fire Safety Study. He also prepared documents relative to a development application by Omega that addressed similar issues. 20. The Safety Management System, the SMS Manual, which was prepared by Petrolink, prescribed operating procedures for liquid transfers, included the mandatory attachment of static leads between the host and the receiver vessels. The manual provided that: The host containers must be earthed and the receptacle must be monitored to dissipate static electricity… 1. The SMS manual under the heading "Control of Static Electricity" provided that "Earthing and bonding conductors for dissipating static receivers need to be sufficiently robust to withstand mechanical corrosive influences". 2. In 2008 Omega employed Mr Nourhan Demirdjian as a paid chemist. Mr Demirdjian developed a risk assessment process, for a number of work procedures, including a decanting work procedure. 3. The Decanting Work Procedure produced by Mr Demirdjian required employees to ensure the minimisation of static electricity, and for decanting not to take place unless the containers were suitably bonded to dissipate static electricity using static straps. 4. The dangers which came to pass were well recognised by the defendant and the defendant took all reasonable steps to inform itself and to put in place procedures to obviate that risk. 5. The risk arose because of the discrete and signal failure by Mr Lama, notwithstanding his training and the systems devised and implemented by the defendant. 6. The failure of Mr Lama is in human terms perhaps understandable because the static wire in thousands of containers was ultimately found to be lacking on only five containers including the one which caused the incident. 7. I am not persuaded that the defendant failed to adequately assess the risks or take steps to obviate them by a systemic method, nevertheless the defendant is vicariously liable for the failures of Mr Lama to follow instructions. It was Mr Lama who should have ensured that the container used for decanting or receiving the decanted liquid was fitted with an antistatic wire. 8. The failures of the defendant, then, were not of a systemic nature. They consisted of the defendant's vicarious liability for the casual act of negligence by Mr Lama. 9. The gravity of the offence is a synthesis of the potential harm, which was substantial, and the degree of culpability which led to the risk of that harm eventuating. In the present case I find the culpability to be extremely low and the gravity of the offence, because of the nature of the forces involved, to be, because of that fact, only moderate. MITIGATING FACTORS 1. The defendant, notwithstanding its trade in a high risk industry, does not have any significant record. It has two prior convictions in relation to failure to label drums. In one case a drum filled with a different material was fitted with a label to indicate the nature of a second material which additional label failed to entirely obscure the label which pre-existed. In that case, certain information for consumers had been left off the label. 2. I regard the offender as being of good character and without any significant record of prior convictions. The offender is unlikely to reoffend and has shown remorse and contrition for the offence. A plea of guilty was entered and, while not perhaps entered at the first available opportunity, I take into account that the prosecution wished to allege other causal acts which had no basis in substance and it was reasonable for the defendant to resist. 3. Nevertheless, in recognition of the need for general deterrence, this is a matter in which a fine which is not insignificant should be imposed. 4. The defendant calls in aid s 6 of the Fines Act 1996 in which the court is to consider the accused's means to pay. The corporate defendant has, since 2011, traded at a loss. It continues to operate because it obtains a tax benefit due to research and developments offset tax. 5. Mr Shetty, a director of the time, says that if a substantial fine were imposed it is likely Omega will be unable to pay the fine and the outcome will be insolvency. Such a consequence would result in the redundancy of the company's employees, which in view of the safe operation of this enterprise for 15 years, would be most regrettable. 6. The maximum penalty is $825,000. I find an appropriate penalty in all the circumstances to be $50,000. I discount that sum by 20% in recognition of the plea of guilty and cooperation with authorities. The defendant is convicted and fined $40,000. 7. The prosecutor is to have a moiety of the fine. 8. I reserve the costs orders pending written submissions. 9. It would be appropriate if such submissions were to be accompanied by affidavits setting out the factual matters on which my decision may be based. 10. Mr Shetty is charged pursuant to s 26 of the Act in that he, being in a position to influence the conduct of the corporation, failed to use all due diligence to prevent the contravention. It is difficult to see what more Mr Shetty could have done, given my conclusion that this was caused by a casual act of negligence which was not condoned by any of the systems which Mr Shetty had set in place. 11. Section 3A of the Crimes (Sentencing Procedure) Act 1999 provides that the purposes of sentencing include the need to ensure the offender is adequately punished, to prevent crime by deterring the offender, to protect the community, to provide for the rehabilitation of the offender, to make the offender accountable for his actions, to denounce the conduct of the offender and to recognise the harm done to the victim of the crime in the community. 12. In this circumstance there was no harm caused to anyone, and it is not necessary to denounce the conduct of Mr Shetty; rather his conduct in seeking to ensure the safety of his operations is to be commended. 13. Section 10 of the Crimes (Sentencing Procedure) Act provides that I may dismiss the charge without recording a conviction. 14. In applying this provision I am to consider Mr Shetty's personal characteristics, which I find to be honourable, and the extenuating circumstances in which the offence was committed. 15. Pursuant to section 10 I dismiss the charge and record no conviction. I make no order for costs. ********** 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. Decision last updated: 24 February 2016