Citation: SafeWork NSW v Auschem (NSW) Pty Limited [2017] NSWDC 338
Court: District Court of New South Wales
Date: 27 November 2017
Judge: Judge D. Russell
Background
The offender was a family-owned chemical distribution business operating from Wetherill Park, New South Wales. It acted as the sole NSW distributor for Shell Chemicals and stored petroleum-based products, including All Purpose Thinners, in underground tanks before transferring them into drums and IBCs (Intermediate Bulk Containers) for sale to customers including paint and glue manufacturers.
On 3 February 2015, two employees aged 63 were decanting Thinners by gravity feed from one 1,000-litre IBC to another, because the source IBC was leaking. Within a second of opening the valve, an explosion and fire occurred. Both workers suffered injuries including burns, a fractured finger, and lacerations requiring stitches. The cause was electrostatic ignition generated by the flow of Thinners between the two containers.
SafeWork NSW prosecuted the offender under the Work Health and Safety Act 2011 for failing to comply with its primary health and safety duty as a person conducting a business or undertaking, thereby exposing the two workers to a risk of death or serious injury. The offender pleaded guilty.
Legal Issues
- What was the appropriate level of objective seriousness of the offence?
- What weight should be given to mitigating factors, including the early guilty plea, cooperation with authorities, remorse, and post-incident remediation?
- What fine was appropriate, having regard to the maximum penalty of $1,500,000, the totality principle, and the need for general and specific deterrence?
- Whether a discount of 25% should be applied to reflect the guilty plea entered at the earliest opportunity.
Decision
Judge Russell identified multiple serious failings in the offender's systems of work before the incident. There was no documented risk assessment for the decanting process, no formal training, no procedure to ensure earthing equipment was in working order, and no controls to manage the rate of liquid flow, which at 3.1 metres per second was more than three times the recommended maximum. Workers were not informed that electrostatic charge could build up even when containers appeared to be properly earthed.
The Safety Data Sheet for Thinners explicitly warned that electrostatic charge could accumulate during handling despite grounding measures, yet that warning was not translated into safe work procedures. The court regarded the offence as being in the mid-range of objective seriousness, noting that the risk was foreseeable and that the failures were systemic rather than isolated.
In mitigation, the court accepted that the offender was a previously unblemished small family business, had cooperated fully with SafeWork NSW, had taken significant corrective steps after the incident (including moving from gravity decanting to pump transfer), had demonstrated genuine remorse, and had also voluntarily assisted investigators in a separate unrelated matter. The guilty plea was entered at the earliest opportunity, warranting a 25% discount.
Applying those findings, the court determined a base fine of $80,000, reduced to $60,000 after the guilty plea discount. The court also ordered 50% of the fine to be paid to SafeWork NSW as the prosecutor, as permitted under the Fines Act 1996, and accepted the parties' agreed costs figure of $31,000.
Orders Made
- The offender was convicted of the offence under s 32 of the Work Health and Safety Act 2011.
- A fine of $60,000 was imposed (reduced from a base of $80,000 by a 25% guilty plea discount).
- Pursuant to s 122(2) of the Fines Act 1996, 50% of the fine was directed to be paid to the prosecutor.
- The offender was ordered to pay the prosecutor's costs in the agreed sum of $31,000.
Key Takeaways
- The District Court treated the absence of a documented risk assessment, inadequate training, and the failure to control electrostatic risks during flammable liquid transfer as serious, systemic failures warranting a mid-range assessment of objective seriousness under the WHS Act.
- A guilty plea entered at the earliest opportunity attracts a discount of up to 25% on the fine, and the court confirmed that cooperation with the regulator and voluntary assistance in a separate investigation are recognised mitigating factors.
- Under s 122(2) of the Fines Act 1996, the court has power to direct that a portion of the fine be paid to the prosecuting authority, and the District Court exercised that power here by directing 50% to SafeWork NSW.
- Safety Data Sheet warnings about residual electrostatic risk, even where earthing and bonding measures are in place, were found to be directly relevant to the assessment of foreseeability and systemic fault where those warnings were not converted into formal procedures.
- Post-incident remediation, including the adoption of pump-based transfer methods and regular auditing of earth straps, was accepted as evidence of genuine rehabilitation and reduced the likelihood of re-offending, factors relevant to both specific deterrence and the overall penalty.
Legislation and Cases Referenced
Legislation
- Work Health and Safety Act 2011 (NSW), ss 19(1), 32
- Crimes (Sentencing Procedure) Act 1999 (NSW), ss 21A, 22(1)
- Fines Act 1996 (NSW), ss 6, 122(2)
- Occupational Health and Safety Act 2000 (NSW)
Cases
- Nash v Silver City Drilling (NSW) Pty Limited; Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96; 93 NSWLR 338
- Bulga Underground Operations Pty Limited v Nash [2016] NSWCCA 37
- Capral Aluminium Limited v WorkCover Authority of New South Wales (2000) 49 NSWLR 610
- SafeWork NSW v Omega International Coatings Pty Limited & Shetty [2016] NSWDC 11
- Jahandideh v R [2014] NSWCCA 178
- R v McNaughton (2006) 66 NSWLR 566
- Veen v R (No. 2) (1998) 164 CLR 465
- Baumer v R (1998) 166 CLR 51
- BW v R [2011] NSWCCA 176
- R v Wilkinson (No. 5) [2009] NSWSC 432