District Court New South Wales Medium Neutral Citation: SafeWork NSW v Hiltour Pty Ltd [2018] NSWDC 376 Hearing dates: 6 November 2018 Date of orders: 03 December 2018 Decision date: 03 December 2018 Jurisdiction: Criminal Before: Scotting DCJ Decision: 1 The offender is convicted of both offences. 2 The appropriate fine for the section 32 offence is $60,000. The appropriate fine for the section 38 offence is $5,000. Both will be reduced by 25% to reflect the plea of guilty. 3 I impose a fine of $45,000 for the section 32 offence. 4 I impose a fine of $3,750 for the section 38 offence. 5 I order that pursuant to section 122(2) Fines Act 1996, 50% of the fine is to be paid to the prosecutor. 6 The offender is to pay the prosecutors costs agreed in the sum of $38,000. Catchwords: CRIME – prosecution – work health and safety – duty of persons undertaking business – duty of employers – risk of serious injury – worker injured – safety incident reporting SENTENCING – aggravating factors – mitigating factors – objective seriousness – general deterrence – specific deterrence – substantial harm, injury, loss or damage – no record of previous convictions – good prospects of rehabilitation – plea of guilty – assistance to law enforcement authorities – remorse WORK HEALTH AND SAFETY – lack of employee training – no documented safe work procedure – risk control measures available at no cost COSTS – prosecution costs OTHER – batching chemical compounds – contact with chemical induced allergic reaction causing severe burns – worker not trained in safe handling of chemicals – worker not instructed to wash skin thoroughly following exposure – failure to report incident Legislation Cited: Crimes (Sentencing Procedure) Act 1999 Fines Act 1996 Work Health and Safety Act 2011 Cases Cited: Bulga Underground Operations Pty Ltd v Nash [2016] NSWCCA 37 R v Borkowski (2009) 195 A Crim R 1 at [32] R v Thomson & Houlton (2000) 49 NSWLR 383 R v Youkhana [2004] NSWCCA 412 at [26] Category: Sentence Parties: SafeWork NSW (Prosecution) Hiltour Pty Ltd (Defendant) Representation: Counsel: Mr M Moir (SafeWork NSW) Mr C Magee (Hiltour Pty Ltd) Solicitors: SafeWork NSW (Prosecution) Hicksons Lawyers (Defendants) File Number(s): 2017/214966 and 2017/214949 Publication restriction: None Judgment 1. Hiltour Pty Ltd (the offender) has pleaded guilty to an offence that being a person who a health and safety duty pursuant to section 19(1) Work Health and Safety Act 2011 (the Act), it failed to comply with that duty and thereby exposed Ryan McLenaghan to a risk of death or serious injury contrary to section 32 of the Act. The maximum penalty for the offence is a fine of $1.5 million. 2. The offender has also pleaded guilty to an offence of failing to notify SafeWork NSW of an incident offence, namely the injury to Mr McLenaghan contrary to section 38 of the Act. The maximum penalty for the offence is a fine of $50,000. 3. The offender, conducts a business producing protective coatings for concrete, composites and adhesives, at premises located at 19 Dell Road, West Gosford NSW (the premises). At the time of the incident, the offender had been in business for approximately 30 years. The offender's business involves the production of epoxy resin based compounds. The premises consists of an office, a factory and a laboratory. 4. Neil Darlington, who had 40 years of experience as an industrial chemist at the time of the incident, was and remains the sole director of the offender. Mr Darlington is highly involved in the production process at all levels, and was present at the premises on the day of the incident. 5. Sabrina Darlington was employed by the offender as a business manager, and had held this position since 2006. 6. As at 19 January 2016, the offender employed four production staff, including Ryan McLenaghan. Mr McLenaghan had been employed for nine and a half years, initially as a production worker, before being promoted to the position of leading hand in November 2014. Mr McLenaghan's main duty was chemical compounding (mixing batches of compounds to specification in accordance with printed batch cards). Mr McLenaghan reported to Mr Darlington on a daily basis. 7. At approximately 8:00am on 19 January 2016, Mr McLenaghan was mixing an epoxy adhesive batch, known as 'C221 Gel Batch'. He was working by himself, and was wearing boots, tracksuit pants and gloves. Mr McLenaghan used a forklift to move the raw materials required for batching, which included 'Compset DER 731 Epoxy Diluent' (DER 731). DER 731 is a clear liquid that was stored in a 1000l intermediate bulk container (IBC) made of frosted plastic. 8. Mr McLenaghan positioned the IBC containing DER 731 on the tines of the forklift, and raised it to waist height in order to decant the liquid into a mixing tank. The IBC had a recessed outlet valve, with a tap type lever to open and close the valve. When opened, the liquid flowed from the body of the IBC through the valve and out of the outlet hole. The outlet hole was fitted with a cap, which had to be replaced with a decanting tap in order for the liquid to be decanted. Mr McLenaghan removed the cap from the outlet valve in order to fit the decanting tap. The IBC was not positioned above the mixing tank, but above a 20l pail. Mr McLenaghan was standing in front of the IBC. When he unscrewed the cap, approximately 2-3l of liquid came through the valve onto his left leg and the ground. 9. Mr McLenaghan closed the valve and replaced the cap, before using some rags and methylated spirits to clean up the spill on the ground while wearing his gloves. He lowered the IBC to ground level and reversed the forklift back into the position from which it had come. 10. Mr McLenaghan proceeded to the change room and toilet area, where he took off his pants, boots and socks. He used some soapy rags to wash off his leg, as he was unable to fit his leg into the hand basin in the toilet. He did not use the emergency safety shower situated in the change room area of the premises adjacent to the manufacturing area where he was working. 11. After washing down and drying his leg, Mr McLenaghan applied burn aid cream to the affected area and changed his socks and pants. He did not change his boots. Mr McLenaghan recorded the incident in a register of injury book kept in the lunch room and returned to his normal duties. 12. Mr McLenaghan washed his leg and changed his clothes within 30 minutes of the incident. Immediately after doing so, the skin on his leg appeared to be unaffected. 13. At approximately 2:30pm, the skin around Mr McLenaghan's ankle tightened without any redness or irritation. 14. After leaving work at around 3:00pm and arriving home, Mr McLenaghan observed that his lower leg had become red. He left a voicemail message informing Ms Darlington of the incident, and that his leg had become red. Ms Darlington relayed Mr McLenaghan's message to Mr Darlington, and Mr Darlington said that Mr McLenaghan should wash the affected area with soap and water several times. Ms Darlington relayed this to Mr McLenaghan, who said he would follow the suggested course of action. 15. By the early morning of 20 January 2016, Mr McLenaghan's leg had become very red, swollen and painful. The affected area now extended from his knee to the top of his foot. Mr McLenaghan saw a doctor in relation to his injury that day and on subsequent days. He was advised to attend the Burns Unit of Royal North Shore Hospital, and did so on 26 January 2016. 16. Mr McLenaghan sustained serious injuries to his left leg from contact with the chemicals in DER 731. He suffered first and second degree skin burns from his knee to his foot, which required admission to hospital to undergo skin grafts. He underwent skin graft surgery on 29 January 2016. Mr McLenaghan did not return to work with the offender following the incident. 17. Mr Darlington was made aware of the incident on 19 January 2016, through a voicemail message that was left for Ms Darlington by Mr McLenaghan and relayed to Mr Darlington. Mr McLenaghan and Ms Darlington kept in regular contact from 19-25 January 2016 as Mr McLenaghan's condition worsened. 18. SafeWork NSW became aware of the incident on 4 February 2016, when Mr McLenaghan contacted Inspector Michael Tilden to inquire whether it had been reported. 19. The offender was in possession of a Material Safety Data Sheet (MSDS) for DER 731, issued by the manufacturer. The MSDS was stored in the production room at the premises where Mr McLenaghan worked and took his breaks each day, and was available electronically on the offender's computer system. Mr McLenaghan had never read the MSDS for DER 731 before the incident. 20. The MSDS identified DER 731 as a hazardous substance that is 'harmful... in contact with skin' and 'irritating to... skin'. It suggested that chemically resistant clothing should be worn, such as a face shield, boots, apron or a full body suit. Section 7 of the MSDS stated: 'avoid contact with skin and clothing' and 'avoid prolonged or repeated contact with skin'. In the event of contact with skin, section 4 advised: 'immediately flush skin with water while removing contaminated clothing and shoes', 'suitable emergency safety shower facilities should be immediately available', and 'destroy contaminated leather items such as shoes, belts and watchbands'. 21. IBCs were used by the offender for the storage and handling of hazardous chemicals at the premises. The IBC involved in the incident bore two white labels which had been affixed to it by the offender. One label contained the batch number and product name. The other included the name and logo of the offender's trading name, Vee-Tek Innovation, along with some of the safety information present in section 9 of the DER 731 MSDS. 22. The offender's system of work for decanting DER 731 from an IBC into a mixing tank involved the worker using a forklift to position the IBC so that the outlet valve was above the mixing tank. The worker was to stand to the side while they affixed the decanting tap to the outlet valve. The work procedure for batching did not include procedures for managing spills or responding to emergencies. There was no documented safe work procedure for batching. 23. Prior to the incident, Mr McLenaghan had not received training or instruction regarding the first aid requirements for skin contact with DER 731 as set out in the MSDS. Mr McLenaghan knew to wear safety glasses and gloves as this was standard practice in the offender's business, and he knew to record any spillage resulting in skin contact in the register of injury book. He had been told by other employees to wash off chemicals with soapy water, but had not been given any more specific first aid information relating to chemicals coming into contact with skin. 24. Since the incident, the offender has revised its procedures associated with batching chemicals. Workers are now required to wear gloves, sleeve covers and aprons while batching. When printing off batch sheets, workers are provided with the MSDS relating to the specific chemicals the worker is batching, and must sign each batch sheet and acknowledge that they have read and understood the requirements of the MSDS. The offender's case on sentence 1. The offender read an affidavit of Sabrina Henry affirmed 9 October 2018. Ms Henry was present in court but not required for cross-examination. The content of her affidavit can be summarised as follows. 2. At the time of the incident, Ms Henry (formerly Ms Darlington) was business manager of the offender. Her duties included accounts, marketing, sales, human resources, insurance, and assisting with the production schedule. 3. Ms Henry became aware of the incident at approximately 4:15pm on 19 January 2016, when Mr McLenaghan left a voicemail message on her mobile phone stating that his leg had come into contact with one of the epoxy diluents that day and it was a bit red and irritated. 4. On 20 January 2016, Mr McLenaghan texted Ms Henry, informing her that he would not be coming in to work, as the burn now extended from his knee to the top of his foot and was very red, swollen and painful. At approximately midday, Ms Henry received a call from a person at East Gosford Medical Centre, who requested the offender's details because the incident had occurred at work and the offender would have to lodge workers' compensation documents. 5. Mr McLenaghan called Ms Henry and told her that Dr Kenny had informed him he had had an allergic reaction to the epoxy diluent, and would need a couple of days off. Ms Henry informed Mr Darlington of this conversation. She later received a doctor's certificate from Dr Kenny of East Gosford Medical Centre, which declared Mr McLenaghan unfit for work until 22 January 2016. 6. Ms Henry lodged a workers' compensation claim with the offender's insurer, GIO Workers Compensation. As Mr McLenaghan had said he'd suffered an allergic reaction and was only expected to be off work for a couple of days, she considered the incident insufficiently serious to report to SafeWork NSW. Additionally, she believed that GIO would have informed her had there been a need to report the incident. 7. On 25 January 2016, Ms Henry checked in with Mr McLenaghan, who sent her a photo of his leg and told her he was "potentially off to the burns unit, either today or tomorrow". Ms Henry received two further medical certificates from Dr Kenny and Dr Shing, declaring Mr McLenaghan unfit for work until 2 February 2016. 8. Ms Henry spoke to Mr McLenaghan on 29 January 2016. She did not recall the exact substance of the conversation, but she did recall that Mr McLenaghan made no mention of needing a skin graft or of his condition being severe enough to warrant such treatment. 9. On 1 February 2016, Ms Henry was made aware by way of a medical certificate that Mr McLenaghan had undergone skin graft surgery on 29 January. 10. The offender read two affidavits of Neil Darlington affirmed 9 October 2018 and 30 October 2018. Mr Darlington was present in court but not required for cross-examination. The content of his affidavits can be summarised as follows. 11. The offender is a small family-owned business based in West Gosford, and Mr Darlington has acted as the sole director since its incorporation in 1984. 12. The offender designs and produces specialised adhesives, composites and protective coatings. From time to time, the offender also trains the staff of overseas-based manufacturers in safe production methods and quality control. 13. The offender typically employs four to seven local staff members on a full-time basis, including production and office staff. Among its employees are two of Mr Darlington's daughters, Sabrina Henry and Ingrid Darlington. 14. At the time of the incident, the facilities at the offender's premises included a production factory, a warehousing area where the finished products were packaged, a room used for staff meetings, breaks and delivery of batch cards and MSDS, bathrooms and emergency showers, a research laboratory, and an office. In June 2016, a third shower and eye wash station were installed in the production area. 15. Mr Darlington is a trade qualified industrial chemist with over 38 years' experience. He supplements his training with up-to-date information published by several regulatory bodies, including the European Chemicals Agency, the Australian Department of Health's National Industrial Chemicals Notification and Assessment Scheme (NICNAS), and SafeWork Australia and New South Wales. The offender holds a membership with NICNAS, which is required in order for it to import chemicals and manufacture locally. 16. Though not an employee of the offender, Mr Darlington carries out duties for the business including supervision and training of workers, issuing batch cards, quality control testing, investigating safety issues and updating the MSDS library. 17. The offender has a documented work health and safety policy, and adopts an approach to production which views safety of workers and quality of output as linked drivers. When a new product is designed or a new process is implemented, the offender holds meetings with production and warehousing workers to discuss the product and the processes involved with manufacturing and packing. In around March 2014, workers were consulted in relation to implementing the new procedure for decanting DER 731 from IBCs. Mr McLenaghan was involved in the consultation process, and Mr Darlington observed him carrying out the decanting procedure using the correct method on multiple occasions. The procedure was not documented prior to the incident, but Mr Darlington believed it was well known by staff and followed safely without incident. 18. As of 19 January 2016, in the event of a spill the offender's staff were instructed to remove and discard any contaminated items of clothing, wash the affected area using one of the emergency showers located at the premises, and if necessary return home to further wash the area. This information was communicated and reinforced to staff during inductions and production meetings. 19. Mr McLenaghan commenced working with the offender as a warehousing employee, before progressing to production tasks and being promoted to the position of leading hand in 2014. As of 19 January 2016, Mr McLenaghan was the most experienced chemical compounder employed by the offender. In the course of his work he regularly completed liquid transfers using taps, and Mr Darlington regarded him as a safe worker. Mr Darlington believed that during the incident, Mr McLenaghan failed to follow the procedure for using the IBCs and did not respond appropriately to the spill. Had he done so, his injuries would not have proved so extensive. 20. Based on his specialised knowledge in relation to chemical compositions, classifications and handling of chemicals, Mr Darlington was of the opinion that DER 731 is classified as an irritant and not a corrosive, and as such should not have been capable of causing the type or degree of injury suffered by Mr McLenaghan. The MSDS for DER 731 did not identify it as a corrosive substance, or contain warnings applicable to corrosive substances. 21. Had Mr Darlington become aware of the incident at the time it occurred, he would have instructed Mr McLenaghan to wash the affected area continuously for at least 15 minutes and to discard all contaminated clothing, including his boots. In addition, had Mr McLenaghan informed either Mr Darlington or Ms Henry that he had spilt a corrosive substance on his leg and it was having an effect 8 hours later, they would have advised him to go straight to hospital. 22. Mr Darlington stated that the decision to use DER 731 in the compound Mr McLenaghan was batching at the time of the incident was based on his belief, formed by reference to the MSDS and other information available at that time, that it was an irritant and not a corrosive. Had DER 731 been classified as a corrosive, it would not have been used in that formulation. 23. On 20 January 2016, Ms Henry informed Mr Darlington that Mr McLenaghan had been advised he had suffered an allergic reaction on his skin due to the epoxy diluent, and would be off work for a couple of days. This information was consistent with Mr Darlington's understanding of the likely reaction to exposure to an irritant. As this was not considered likely to be a significant injury, Mr Darlington did not think it necessary to report the matter to SafeWork NSW. 24. Mr Darlington expressed remorse, personally and on behalf of the offender, for the harm suffered by Mr McLenaghan. He acknowledged that SafeWork NSW should have been notified of the incident as soon as the offender became aware of it. The offender fully cooperated with SafeWork's investigation after the incident was reported, and complied with all improvement notices issued to it. 25. The offender holds meetings to discuss and collectively determine the safest and most effective way to perform upcoming work. Prior to the incident these meetings would generally occur a few times each month. Following the incident, the meetings were formalised as fortnightly toolbox talks. 26. The offender's work health and safety policy is supplemented by documentation including manufacturing instruction sheets, MSDSs for the raw materials used in production, safe operating procedures for equipment including the ICBs, a personal spill accident procedure, and checklists for maintenance inspections and toolbox talks. Prior to the incident, these systems were in place but were not as well documented. 27. The offender's systems of work include regular task analyses, weekly workplace inspections, outsourced inspections and maintenance of plant, and hazard and injury reporting. All workers undergo induction training which covers safety facilities and equipment, products and associated hazards, work procedures, and clothing requirements. Production staff undergo additional training relating to identification of and safety information for raw materials, understanding MSDSs, interpreting batch cards, and chemical handling procedures. Since the incident, the offender has introduced an external training component for new staff. A new production worker shadows an existing production staff member for several months before being permitted to perform some aspects of production tasks, and compliance is monitored through observation and the quality control process. 28. The offender adjusts its production schedule and processes to maximise the safety of its workers by, for example, minimising the handling of raw products where possible, and ensuring oversight by experienced staff members. 29. The offender has a very low incidence of workplace injury, and as not lodged a workers' compensation claim since January 2016. 30. Since 2016, the offender has spent $65,000 on safety improvements at the factory, including regular outlays for external plant inspections and personal protective equipment, and one-off expenditures such as engaging a safety consultant and arranging health and safety training for its staff. Consideration 1. I have had regard to the objects of the Act set out in section 3 and the purposes of sentencing set out in section 3A Crimes (Sentencing Procedure) Act 1999. Objective Seriousness 1. The section 32 offence is objectively serious. 2. The risk of injury to Mr McLenaghan by prolonged contact with DER 731 was set out in the MSDS for that chemical. The MSDS was in the possession of the offender and its content known. Mr McLenaghan had not been trained on the content of the MSDS, which in the context of the offender's operation was a significant failure. Mr McLehaghan did not know how to immediately treat the spill that came in contact with his leg. The continued exposure to the chemical led to a very serious burn injury to the whole of his lower leg. 3. There were simple measures available at no cost to the offender that could have eliminated or at least minimised the risk. The appropriate training was delivered to the workers shortly after the incident. The verbal system was documented by reference to the MSDS, which in my view was a minimum requirement. The workers are now required to also wear additional PPE. 4. Whilst it is apparent that Mr McLenaghan adopted an unapproved method of decanting the DER 731 that fact is not particularly mitigating. The offender was required to anticipate such actions. The risk could have been avoided by giving Mr McLenaghan proper training to reduce the opportunity for the chemical to harm him. 5. The risk did not include a risk of death. 6. The extent of Mr McLenaghan's injury was serious. 7. The section 38 offence is of reduced objective gravity. The offender was required to notify SafeWork of the injury to Mr McLenaghan because he was required to seek medical assistance within 48 hours of exposure to a substance. I accept the offender's evidence that Ms Henry and Mr Darlington did not appreciate the gravity of Mr McLenaghan's injury and that their omission was negligent of the requirement. 8. I have had regard to the maximum penalties for both offences. Deterrence 1. The penalty imposed in relation to the offences must provide for general deterrence. PCBUs must take the obligations imposed by the Act very seriously. The community is entitled to expect that both small and large businesses will comply with safety requirements. General deterrence is a significant factor when safety obligations are breached: Bulga Underground Operations Pty Ltd v Nash [2016] NSWCCA 37 at [180]. 2. There is also a need for specific deterrence although it is reduced to some extent. The offender had a pre-existing commitment to safety but it has been prompted by the incident to make improvements to that system. However, it continues to operate a business that exposes workers to hazardous chemicals. Aggravating factors 1. The injury, harm and loss caused by the offence was substantial: section 21A(2)(g) Crimes (Sentencing Procedure) Act 1999. In order for the aggravating factor to be established, I must be satisfied beyond reasonable doubt that the harm was greater or more deleterious than may ordinarily be expected for the offence in question: R v Youkhana [2004] NSWCCA 412 at [26]. The offence does not require an injury to be sustained but only the creation of a risk. The injuries sustained by Mr McLenaghan were serious. I am satisfied beyond reasonable doubt that the injury, harm and loss caused by the offence was substantial. Mitigating factors 1. The offender does not have any previous convictions: section 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. The offender was incorporated in 1984 and operated without incident despite working daily with dangerous chemicals. 2. The offender has good prospects of rehabilitation: section 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offender has taken steps to improve its safety systems, including providing training on the contents of the MSDS for the chemicals used at its premises. 3. The offender has demonstrated remorse: section 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. The offender expressed remorse through the affidavits of Mr Darlington, as well as through its actions in implementing changes. The offender has attempted to support Mr McLenaghan in his rehabilitation, but he chose not to return to work with the offender. I am satisfied on the balance of probabilities that the offender has accepted responsibility for its actions and has demonstrated genuine remorse and contrition. 4. The offender entered a plea of guilty: section 21A(3)(k) and section 22 Crimes (Sentencing Procedure) Act 1999. It is entitled to a discount on penalty that reflects the utilitarian value of that plea: R v Thomson & Houlton (2000) 49 NSWLR 383 and R v Borkowski (2009) 195 A Crim R 1 at [32]. The plea also indicates remorse: Borkowski at [32]. The appropriate discount is 25%. 5. The offender co-operated with the Safe Work investigation: section 21A(3)(m) Crimes (Sentencing Procedure) Act 1999. Penalty 1. The offender is convicted of both offences. 2. The appropriate fine for the section 32 offence is $60,000. The appropriate fine for the section 38 offence is $5,000. Both will be reduced by 25% to reflect the plea of guilty. 3. I impose a fine of $45,000 for the section 32 offence. 4. I impose a fine of $3,750 for the section 38 offence. 5. I order that pursuant to section 122(2) Fines Act 1996, 50% of the fine is to be paid to the prosecutor. 6. The offender is to pay the prosecutors costs agreed in the sum of $38,000. ********** 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: 07 December 2018