Worksafe New Zealand v The Tasman Tanning Company Limited [2017] NZDC 24398 (27 October 2017)

Last Updated: 23 June 2018

EDITORIAL NOTE: CHANGES MADE TO THIS JUDGMENT APPEAR IN [SQUARE BRACKETS].

IN THE DISTRICT COURT AT WHANGANUI

CRI-2017-083-000120

[2017] NZDC 24398

WORKSAFE NEW ZEALAND Prosecutor

v

THE TASMAN TANNING COMPANY LIMITED Defendant

Hearing:	27 October 2017
Appearances:	S Petricevic for the Prosecutor G Gallaway for the Defendant
Judgment:	27 October 2017

ORAL JUDGMENT OF JUDGE C M RYAN

Introduction.

[1] On the afternoon of 29 April 2016, a forklift driver employed by the Tasman Tanning Company Limited (“Tasman”) was loading bins of animal skins into one of 10 large mixing vessels or “mixers” at Tasman’s Heads Road site. He noticed a strong smell of rotten eggs, but did not recognise what it was so kept working.

[2] Soon he began coughing. He tried to move away from the mixers, but fainted, striking the back of his head on the concrete floor. He eventually regained consciousness, but was disorientated and tried to climb back into his forklift.

WORKSAFE NEW ZEALAND v THE TASMAN TANNING COMPANY LIMITED [2017] NZDC 24398 [27

October 2017]

[3] He then lost consciousness again, this time falling forward and striking his face on the ground. A fellow worker noticed the forklift driver lying on the ground and raised the alarm.

[4] The forklift driver had been exposed to hydrogen sulphide gas. He was also diagnosed with concussion as a result of striking his head twice. He was absent from work for five weeks with symptoms including a sore throat and more significantly memory loss, fatigue, dizziness and headaches. Those last four symptoms have not fully abated and are the long-term consequences of exposure to the toxic gas.

[5] As a result, Tasman was charged with failing to ensure the safety of employees when they were at work, the failure exposing them to a risk of death or serious injury or illness arising from exposure to hydrogen sulphide gas. The penalty is a fine of up to $1.5 million.

[6] Tasman pleaded guilty promptly. Sentencing took place on 27 October 2017. I received extensive and helpful written submissions from both counsel in addition to equally helpful oral submissions.

[7] After I had commenced delivering my oral decision, the FTR failed and the first five minutes of the decision were not recorded. By the time the FTR was restored, counsel needed to catch planes out of Whanganui. Accordingly, I provided an oral summary of the outcome with full reasons to follow. These are the reasons for the decision.

Facts.

(a) Background.

[8] Tasman is a leather tanning company which commenced as a family business in or about 1953 and now employs about 280 people at its Heads Road and Tod Street sites in Whanganui, including the victim Mr G who at the time of the incident had been employed for about 9-10 months. It produces leather for leading manufacturers

and boutique designers around the world from a variety of animal skins, primarily sheep and cattle.

[9] The process of tanning skins to produce leather includes painting fresh skins with a solution containing sodium sulphide which penetrates the skin and loosens the wool roots enabling the wool to be mechanically removed. The skins, now without the wool, are placed in large containers called “mixers’” which at the Heads Road facility stand in a row of 10 on a large concrete floor.

[10] Diluted sulphuric acid and salt, contained in preparation tanks attached to each mixer, are then placed into the mixers to pickle and preserve the skin. The solution is acidic and known as “pickle liquor”.

[11] The combination of the pickle liquor and the sulphide-painted skins produces hydrogen sulphide, a colourless but toxic gas with the characteristic odour of rotten eggs. To neutralise the production of hydrogen sulphide, an oxidising agent is added to the pickle liquor.

[12] Each of the Heads Road mixers is inclined and elevated at the front. Skins are loaded and unloaded through a chute at the front of each mixer. Because of the height of each mixer, a forklift is required to lift bins of skins approximately 2.5 metres to reach the opening of each chute.

[13] Employees known as “process operators” are responsible for the operation of the mixers, the number of chemicals, salt and water and other solutions to each mixer and the point at which the solutions are added. They are required to perform regular checks and make alterations or additions to the solutions. They work on a mezzanine floor above and to the front of the mixers. Forklift operators, including the victim, Mr G, operate on the ground level of the mixing room.

[14] A written process sheet called a “recipe” is created to control and record all standard processing of hides and skins. It is generated at the start of the tanning process. It records the weight of the hides or the skins and identifies the type and volume of chemicals to be added at each step of the mixing process.

[15] The recipe is fixed on the mezzanine floor next to the relevant mixer and Tasman requires that it remains in place during the mixing process. Each step in the mixing process, including any chemical additions, is signed off on the recipe with the time and date recorded.

(b) Risk to employees.

[16] The relevant risk as a result of the mixing process is the exposure by employees to hydrogen sulphide, a poisonous, corrosive and flammable gas. It was acknowledged in oral submissions that hydrogen sulphide is heavier than air, which is, as is well known, a mixture of oxygen and nitrogen. As a result, hydrogen sulphide tends to accumulate in the lower levels of buildings.

[17] Even though the floor on which the forklift drivers operated was not poorly ventilated but was a large factory floor with open doors, proximity by those on the floor to any escape of hydrogen sulphide was an ongoing risk.

[18] Although the smell of rotten eggs may be obvious at first, hydrogen sulphide quickly deadens the sense of smell so that people exposed to it may be unaware of its presence until they are overcome by it. It can poison several different systems in the body, the nervous system being the most affected.

[19] Exposure to lower concentrations can result in eye irritation, sore throats, coughing, nausea, shortness of breath and pulmonary oedema or fluid in the lungs. Long-term exposure even if at a low level may result in fatigue, loss of appetite, headaches, irritability, memory loss and dizziness. Short-term high exposure can cause unconsciousness, loss of breath and death.

(c) The incident.

[20] On 29 April 2016, there were three “intermediate bulk containers” (“IBCs”) of partially diluted pickle liquor solution which Tasman decided to reuse for processing. To do so, the solution needed to be diluted to match the pH of the pickle liquor in the preparation tanks.

[21] At around midday, the shift supervisor, area manager and operations manager discussed the way this could be done, aware that the partially diluted solution could not be put through the concentrated dispensing system as usual. They decided to pump the pickle liquor into mixer 10, add water until the solution attained the right pH, then pump it out into the IBCs again to store for later use (“The procedure’).

[22] The procedure had not been undertaken by Tasman before. Accordingly, there was no specific protocol for carrying it out.

[23] The shift supervisor communicated the plan to two of the process operators on shift at the time, A and B, who began the procedure.

[24] At about 1 pm, another processing operator, C, began his shift. It does not appear that details of the procedure were communicated to C.

[25] By approximately 2.50 pm, the pickle liquor had been diluted, and process operator A filled the first IBC with the solution from mixer 10. Further unloading of the pickle liquor from mixer 10 was paused for a work break and because there were no other empty IBCs immediately available.

[26] At approximately 3.00 pm A and B finished their shift and were replaced by process operators D and E. A handover meeting between the shift supervisor A, B and D, but not with C or E, took place. When interviewed, A and B told a WorkSafe Investigator that they had advised D that there was pickle liquor in mixer 10 which needed to be emptied. D said to WorkSafe that he was not told that.

[27] The conflict in those statements was not resolved. No disputed facts hearing took place. It was agreed that it would not make a material difference to the end sentence so sentencing proceeded. The important point was that no written recipe was placed near the mixer and IBCs which could have resolved any doubt about what was said and what was happening.

[28] At approximately 3.50 pm, forklift operator F drove a bin of skins to mixer 10 and asked C if mixer 10 was ready to be loaded. This was in accordance with the

normal procedure that the forklift operator checks with the process operator prior to loading the skins in a mixer. Neither C nor E was aware of the departure from the usual process agreed upon earlier in the day.

[29] C went to the mezzanine level and carried out his pre-loading checks as usual including a visual inspection. He could see liquid in mixer 10, but assumed it was just water.

[30] According to standard protocol, the mixer should have been completely empty prior to the adding of skins. Nonetheless, C started the mixer and advised the other employees that skins would be coming into mixer 10.

[31] F moved the IBC which was now filled with pickle liquor from mixer 10 to the side of the mixer. He did not know what was in it and also assumed it was water.

[32] Shortly thereafter the victim, G relieved F who left to visit his wife in hospital. G confirmed with C that mixer 10 was ready to load. He then began to load bins of skins into the chute. He was part way through loading a fifth bin into the mixer when he noticed a strong rotten egg smell.

[33] What then happened to him I have already recorded. Mr E noticed Mr G’s prone body and raised the alarm. Mr G was assisted from the tannery floor and transported to Whanganui hospital by ambulance. How long he was unconscious is not known, but I accept that it was a matter of minutes as opposed to hours.

[34] In addition to being exposed to hydrogen sulphide, Mr G sustained lacerations when he fainted and fell, requiring five stitches.

(d) Relevant standards and guidelines.

[35] There was no dispute between the parties that there are no formal industry standards or best practice guidelines for the tannery industry in New Zealand. However, there is a great deal of information in the public arena about hydrogen sulphide gas and its risks.

[36] The Meat Industry Association of New Zealand publishes health and safety guidelines, section 11 of which deals with fellmongery and tanning and notes that hydrogen sulphide is a primary hazard in the tanning industry.

[37] The Occupational Safety and Health Administration in the United States of America, the UN Industrial Development Organisation and the Agency for Toxic Substances and Disease Registry have all produced publications outlining the risks associated with hydrogen sulphide gas, particularly as a by-product in the tanning process.

[38] New Zealand tanneries at Tomoana, Waitoa and Wiri use mechanical conveyers to deposit skins into mixers largely removing the need for human forklift drivers.

[39] New Zealand process operators are trained as approved handlers pursuant to the Hazardous Substances and New Organisms Act 1996.

(e) The relevant Act and Tasman’s breach of that Act.

[40] Pursuant to the Health and Safety at Work Act 2015 (“HSWA”), Tasman is a “person conducting a business or undertaking” (“PCBU”).1 It is obliged to ensure as far as reasonably practicable the health and safety of its workers while they are at work pursuant to s 36(1)(a) of the HSWA.

[41] It is not disputed that in this case, Tasman:

• (a) Failed to have appropriate policies and/or procedures in place to ensure that no substances or chemicals were applied other than in accordance with an established safe operating procedure or “recipe”:
  
  • (i) Tasman did not have an adequate system in place to ensure that employees commencing their shift were made aware of novel, onus or one-off processes commenced during the previous shift.
    

1 Section 5 of the Health and Safety at Work Act 2015.

(ii) While Tasman utilised a recipe for standard processes, no recipe or written record was used for the procedure in this case

(iii) Instead, Tasman simply relied upon the verbal exchange of information between employees who then went about different tasks in different areas of the facility. This meant that the crucial message – that mixer 10 contained acid solution – was not passed on to all employees on the next shift.

(b) Failed to have appropriate policies and/or procedures in place to ensure effective communication between workers:

• (i) Shift changeover is a known risk or hazard in most industries because verbal information or communication can be misconstrued, unheard, misheard or misunderstood. This can lead to serious workplace incidents.
  
• (ii) Each shift should have had a written process in place so that critical issues can be communicated between the departing shift and the new shift, for example, a written register including points to note.
  

(c) Failed to ensure that appropriate training or warnings were provided to all workers at its Heads Road facility, including forklift drivers, regarding the risks of hydrogen sulphide gas:

• (i) Neither of the forklift drivers working on 29 April 2016, namely F and G, were given any training by Tasman regarding hydrogen sulphide gas, the risks linked to it or how to identify and respond to it. Accordingly, when Mr G encountered the strong smell of rotten eggs, he did not know what it was.
  
• (ii) Process operators however, had received training about hydrogen sulphide gas. Nonetheless, only the shift supervisor

and Mr A were approved handlers under HSWA.

(iii) Tasman produced an internal investigation report following the incident, explaining that it did not train forklift drivers about hydrogen sulphide gas because they were not involved in the chemical handling or processing and therefore not trained in hydrogen sulphide hazard risks.

(iv) Tasman had previously identified that the physical loading of skins meant that there was a risk of exposure to the toxic gas. Under Tasman’s normal procedure, skins would not come into contact with pickle liquor at the point of loading so that hydrogen sulphide gas would not be generated.

(v) However, forklift drivers work in close proximity to the mixers. There are 10 mixers joined in a row in the mixing room. Because they are not operated in perfect unison, forklift drivers may end up loading skins into an empty mixer next to another mixer half way through the mixing process.

(vi) Forklift drivers are therefore consistently at risk of exposure to hydrogen sulphide if it is inadvertently produced in the mixing room.

(vii) This is exacerbated by the fact that first, hydrogen sulphide is a well-known byproduct of the process and secondly, it is heavier than air so if it is produced it is likely to flow down to the ground level where the forklift drivers are operating.

(d) Failed to provide workers at its Heads Road facility including forklift drivers with appropriate personal protection equipment including personal gas monitors:

• (i) Tasman provided personal gas monitors to process operators but

not to forklift drivers for the same reason that its forklift drivers had not been trained or warned about the toxic gas; namely that process operators working on the mezzanine floors near the mixers and involved in chemical mixing were at risk of exposure to hydrogen sulphide.

(ii) However, forklift drivers were just as much at risk of exposure to hydrogen sulphide as those on the mezzanine floor, if not more so for the reasons outlined above in paragraph (c)(vi) - (vii).

[42] Both parties agreed that it is impossible to completely eliminate the risk of hydrogen sulphide. It is therefore necessary to implement process controls regarding when and how chemicals are combined to ensure the risk of hydrogen sulphide production or, more importantly, the exposure to it by workers is minimised.

[43] Tasman acknowledged the need for such controls in its internal investigation report, admitting that hydrogen sulphide was a hazard it well understood and was “normally well controlled through a combination of mechanical controls in a strictly regulated formula that includes agents to oxidise the H2S”.

[44] Tasman did not have adequate controls or processes in place to ensure that a novel process was not undertaken without an established procedure, recipe or at least something in writing.

[45] If Tasman wished to dilute the leftover acid solution for storage and use it later, then a safe operating procedure and recipe sheet should have been prepared prior to commencing the process to ensure that it was carried out safely. Failing that, the process should not have been undertaken.

[46] Tasman’s failure to take such steps exposed its employees at its Heads Road facility to the risk of serious injury, serious illness or death as a result of exposure to hydrogen sulphide. Such failure led directly to Mr F suffering serious harm.

(f) Knowledge of risk -Previous Incident.

[47] Tasman had previously experienced first-hand the toxicity of hydrogen sulphide at its Tod Street facility in 2013. An acid solution was inadvertently added to the wrong mixer which already contained sulphide components as it was partway through processing. As a result, what the sentencing Judge described as “an immediate and overwhelming emission of hydrogen sulphide gas was generated.”2

[48] None of the workers was equipped with a personal gas monitor. The process operator closest to the gas emission immediately lost consciousness. Another worker going to his aid also lost consciousness. While most of the other workers were evacuated, several re-entered the building to attempt to assist the two unconscious men, resulting in two further workers losing consciousness.

[49] The two most seriously affected workers were placed in medically induced comas. They sustained serious eye and lung damage. Fifteen employees were exposed to hydrogen sulphide. Six required medical treatment. The long-term prognosis for those most seriously affected was unknown.

[50] Tasman subsequently pleaded guilty to a charge of failing to take all practical steps to ensure the safety of its employees while at work pursuant to s 6 Health and Safety in Employment Act 1992 which has subsequently been repealed and replaced by HSWA.

[51] Reparation awards of $35,000, $25,000, $15,000, $7500, $4500 and $3000 were made in respect of the six employees who required medical treatment.

[52] For the fine, a starting point of $130,000 was adopted with a deduction of 25% for mitigating features including co-operation with the investigation, adopting significant changes including personal gas alarms and breathing apparatus, care for Tasman’s employees by covering financial losses and making interim payments of

2 Ministry of Business, Innovation and Employment v Tasman Tanning Company Wanganui DC, CRI- 2013-083-000629, 26 March 2014 at [6]

reparation, significant remorse, and a previously excellent safety record in a dangerous and potentially hazardous industry. That led to $97,500.

[53] A further discount for Tasman’s prompt guilty plea led to a fine of $73,000.

[54] It is important to note that after the 2012 incident, Tasman not only supplied personal alarms and mandatory gas monitors for staff assessed as being at potential risk of exposure to hydrogen sulphide, it also increased training to key staff identified as being at risk of such exposure.

[55] However, as I have noted, the availability of protective devices and training was not extended to forklift drivers. Tasman did not seek any specialist or external advice in relation to its risk assessment of exposure to hydrogen sulphide.

Victim Impact Statements.

[56] Mr G’s victim impact statement was read aloud by his wife. I acknowledge her presence and that of Mr G and his parents. His mother is also employed by Tasman and was on-site when the incident happened, which understandably caused her great distress.

[57] Mr G is a 35-year-old immigrant, married with four children between the age of 10 months and eight years. His wife was three months’ pregnant at the time of the incident. His initial injuries were a laceration above the left eyebrow requiring five stitches, a lump on the back of his head and grazes and lacerations to the right eyebrow and cheek. He had to be decontaminated prior to admission to hospital.

[58] Four days after the incident he still suffered significant headaches, a sore throat, difficulty and persistent coughing. He felt dizzy and nauseous. He needed medication for headaches and to sleep.

[59] He took five weeks off work but felt compelled to return because ACC only paid 80% of his usual wage and even though Taman topped this up, he was missing out on overtime which was crucial to his family’s financial survival.

[60] He was also a casual worker so was worried about his long-term employment prospects. He appears to have returned to work too early because he still felt dizzy and tired. He had to sit down on more than a few occasions during his work day.

[61] Today, he still suffers a degree of short-term memory loss, irritability, mood swings and misophonia or an extreme intolerance of noise. These appear to be classic symptoms of short-term, high-level exposure to hydrogen sulphide.

[62] He suffered lost wages and loss of overtime although grateful for the top up of five weeks’ wages and the reparation payment by Tasman of $5000. His wife, a self- employed hairdresser, had to take time off work to care for him causing further financial strain.

[63] Tasman has now made his position permanent and he is an assistant supervisor. He still feels the after-effects of hydrogen sulphide poisoning and describes himself as grumpy, moody and argumentative about small things, so much so that he and his wife separated briefly.

[64] As an example, he decided to take his family for a nice meal after receiving the payment of $5000. His children “played up” at the restaurant and he shouted “We are leaving” before storming out, creating more of a public scene than his children had. While leaving a restaurant may be punishment, sometimes effective, for misbehaving children, he and his family were shocked at this sudden and extreme explosion of anger.

[65] Another example is his anger during subsequent training that he had not been given information about hydrogen sulphide prior to the incident.

[66] He was also angry that during the five weeks following the incident, only one person from Tasman, namely the HR manager, rang him. He felt that the company only began to ask him what they could do to help when the Court case approached.

[67] He expressed frustration that he was interviewed by Tasman without his wife who can interpret or help him understand what they were saying. He often does not

remember things they have told him. He worries about his future health and whether he will improve.

Restorative justice conference.

[68] Mr G’s Victim Impact Statement was prepared prior to the RJ conference on 4 October 2017.

[69] At that conference, Mr Thiel made a genuine and remorseful apology to Mr G who accepted it. He acknowledged that company policy needed to improve including communication to Mr G. He assured Mr G and his family that health and safety is a priority and expressed concerns about Mr G’s ongoing health problems. Importantly, he said Mr G had done nothing wrong and was not to blame.

[70] That conference has made a significant, positive and much needed difference to Mr G. A great deal of healing has taken place. Mr G now says there is no bitterness, he is grateful to be alive and acknowledges the positive changes Tasman has made including the personal monitors.

[71] I acknowledge Mr Thiel’s presence in Court today and the presence of Tasman company director Mr Meyers.

Issue arising in relation to Court appearance.

[72] I was told that Tasman required Mr G and his mother to work on the day of sentencing, at least up until the time for this Court appearance. Tasman must have known this was an important day for Mr G and his family. This approach in my view threatened to undo some of the repairs in the relationship so successfully achieved by Mr Thiel.

[73] Mr Galloway is instructed that this arose out of a “communication breakdown” although I am not sure what that means.

[74] It would have been helpful if Mr G and his mother were given time off today, at least until after this proceeding was over. That should not have been difficult to communicate to them, as Mr Thiel and the company readily acknowledge.

Submissions.

(a) HSWA and Hanham.

[75] As submitted by Mr Gallaway in his written submissions and as both counsel accepted, the HSWA significantly increases the penalties to be imposed yet at the same time:

• (a) The Court’s approach to the increases must not be purely mathematical;
  
• (b) The upper levels of the penalty ranges, as with other sentencing bands, must be reserved for the most serious cases;
  
• (c) Such an increase in the maximum penalties shows Parliament’s view

that the penalties imposed under the former Act were inadequate.

[76] Counsel also accepted that the leading case or offences under the now-repealed Health and Safety in Employment Act 1992 Department of Labour v Hanham & Philp Contractors Limited3 (“Hanham”) is still helpful when sentencing for offences under HSWA.

[77] First, its seven factors for assessing culpability are still applicable, while bearing in mind ss 151 and 22 HSWA. The seven factors in Hanham at [54] are:

• (a) Identification of the operative acts or omissions at issue;
  
• (b) Assessment of the nature and seriousness of the risk of harm occurring as well as the realised risk;
  

3 Department of Labour v Hanham & Philp Contractors Limited HC Christchurch CRI-2008-409-2, 18 December 2008.

(c) The degree of departure from standards prevailing in the relevant industry;

(d) The obviousness of the hazard;

(e) The availability, cost and effectiveness of the means necessary to avoid the hazard;

(f) The current state of knowledge of the risks and the nature and the severity of the harm which could result;

(g) The current state of knowledge of the means available to avoid the hazard or mitigate its occurrence.

[78] Section 151 provides as follows:

151 Sentencing criteria

(1) This section applies when a court is determining how to sentence or otherwise deal with an offender convicted of an offence under section 47, 48, or 49.
(2) The court must apply the Sentencing Act 2002 and must have particular regard to—

• (a) sections 7 to 10 of that Act; and
  • (b) the purpose of this Act; and

(c) the risk of, and the potential for, illness, injury, or death that could have occurred; and
(d) whether death, serious injury, or serious illness occurred or could reasonably have been expected to have occurred; and
(e) the safety record of the person (including, without limitation, any warning, infringement notice, or improvement notice issued to the person or enforceable undertaking agreed to by the person) to the extent that it shows whether any aggravating factor is present; and
(f) the degree of departure from prevailing standards in the

person’s sector or industry as an aggravating factor; and

(g) the person’s financial capacity or ability to pay any fine to the extent that it has the effect of increasing the amount of the fine.

[79] Ms Petricevic submitted that s 151(2)(c) (d) and (f) HSWA were important in this case while Mr Gallaway submitted that the assessment must consider the fact that s 48 requires a risk of serious harm. One can see the similarity in both submissions.

[80] Section 22 provides as follows:

22 Meaning of reasonably practicable

In this Act, unless the context otherwise requires, reasonably practicable, in relation to a duty of a PCBU set out in subpart 2 of Part 2, means that which is, or was, at a particular time, reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters, including—

(a) the likelihood of the hazard or the risk concerned occurring; and

(b) the degree of harm that might result from the hazard or risk; and

(c) what the person concerned knows, or ought reasonably to know, about—

• (i) the hazard or risk; and
  

(ii) ways of eliminating or minimising the risk; and

(d) the availability and suitability of ways to eliminate or minimise the risk; and

(e) after assessing the extent of the risk and the available ways of eliminating or minimising the risk, the cost associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk.

[81] It can be seen that the application of factors in ss 151 and 22 aligns with those stipulated in Hanham.

[82] Secondly, the three steps proposed for fixing reparation and penalty are still applicable, with Ms Petricevic proposing the addition of a fourth step as follows:

• (a) Assessing the amount of reparation;
  
• (b) Fixing the amount of the fine;
  
• (c) Making any other orders under HSWA;

• (d) Overall assessment of the proportionality and appropriateness of the total imposition of reparation, other orders and fine.
  

[83] These steps seem to be a sensible amalgamation of Hanham and the HSWA and are the steps I take in sentencing Tasman today.

(b) Post-Hanham sentencing bands.

[84] Hanham specified bands of penalty based on low culpability (up to $50,000), medium culpability ($50,000 to $100,000) and high culpability (between $100,000 and $175,000) with an almost invisible because rarely used fourth band for extremely high culpability from $175,000 to the maximum penalty.

[85] Ms Petricevic for the prosecutor proposed four bands under s 48 HSWA:

• (a) Low culpability: A fine of up to $400,000;
  
• (b) Medium culpability: A fine between $400,000 and $800,000;
  
• (c) High culpability: A fine between $800,000 and $1.2 million;
  
• (d) Extremely high culpability: A fine between $1.2 million and

$1.5 million.

[86] As with Hanham’s fourth band, she submitted that the fourth band would rarely be used.

[87] She argued that this four-band approach was consistent with the decision in WorkSafe NZ v Budget Plastics4 in which Judge Large observed that it was not for the District Court to posit sentencing guidelines. He assessed the culpability as “moderate” although obviously imposing a greater penalty than that which fell within the “moderate” band of Hanham because of the increase in penalty. He adopted a starting point of $400,000 to $600,000.

4 WorkSafe NZ v Budget Plastics [2017] NZDC 17395

[88] She also submitted that this approach was consistent with the broad bands adopted by appellate Courts in serious criminal cases.

[89] Mr Gallaway on the other hand preferred the approach adopted in WorkSafe New Zealand v Rangiora Carpets5 in which His Honour Judge Gilbert increased the sentencing bands to six as follows:

(a) Low: $0 to $150,000;

(b) Low/Medium: $150,000 to $350,000;

(c) Medium: $350,000 -$600,000;

(d) Medium/High: $600,000-$850,000;

(e) High: $850,000- $1.1 million;

(f) Extremely high: $1,1 million +

[90] Mr Gallaway argued that this approach is more consistent with penalties being imposed in Australia, takes greater account of the increased breadth of sentencing and produces more consistency.

[91] Ms Petricevic countered that Australia does not have the equivalent of s 151 HSWA, there is no guideline or tariff decision, and starting points are not usually specified. Accordingly, caution should be exercised when looking to Australia for guidance, a point made by Judge Large in Budget Plastics.6

Submissions as to reparation.

[92] Ms Petricevic emphasised that reparation must be given primacy in sentences under HSWA and pointed to the reparation of $35,000 ordered by Judge Gittos in MBIE v Tasman Tanning Company Ltd.7 She argued that both Mr R in the previous case and Mr G in this case lost consciousness and suffered long-term effects.

5 WorkSafe New Zealand v Rangiora Carpets [2017] NZDC 22587.

6 Supra, n.4.

7 Supra, n.2.

[93] Mr Gallaway argued in his written submissions that Mr G had been able to return to work and in his oral submissions, that the damage to Mr R in the previous case was more serious; he remained unconscious and in an induced coma for some time, suffering burning damage to his lungs and a permanent adverse impact on his eyesight because of his exposure to hydrogen sulphide.

[94] Mr Gallaway also cited authorities in which reparation was lower; ($27,000-$17,000 with a voluntary payment of $10,000) in WorkSafe NZ v Boyds Asparagus Industries Ltd8 for carbon monoxide poisoning leading to 6 weeks off work, memory loss and significant psychological damage; $2500 in WorkSafe NZ v Gunac Hawkes Bay (1994) Ltd9 for hospitalisation after exposure to toxic fumes and between $3000 and $15,000 for those adversely affected by hydrogen sulphide in MBIE v Tasman Tanning Company Ltd10 but less so than Mr R and Mr B in that case.

[95] During oral submissions, Ms Petricevic conceded that reparation in this case should be lower than that specified in her written submissions and accepted that a starting point of $15,000 would be appropriate.

Submissions as to fine.

[96] Ms Petricevic argued that because Tasman was well aware of the ongoing risk of exposure to hydrogen sulphide and failed both to implement recipe procedures especially when there was a deviation from standard practice and to train forklift drivers about the dangers of the toxic gas and provide them with safety equipment its offending fell into the high range.

[97] She submitted that a starting point of between $800,000 to $1 million was appropriate.

[98] She further submitted that a 10% uplift for the previous offending was warranted. She pointed to the similarities between the current offence and the previous

8 WorkSafe NZ v Boyds Asparagus Industries Ltd DC Hamilton CRI-2015-019-5925, 19 February 2016 9 WorkSafe NZ v Gunac Hawkes Bay (1994) Ltd DC Hastings CRN 4020500867, 16 February 2015 Supra, n.2

10 Supra, n.2.

offence by referring to portions of the decision in extracts from MBIE v Tasman Tanning Company Ltd.11 For example, at [7] His Honour noted that Tasman relied on strict adherence by its employees to:

...a recipe as it was described, and adherence to the process outlined in that way is ensured by having a copy of the recipe for a given batch of skins mounted on a clipboard beside the vessel in which the skins are treated so that the staff in charge can, much in the manner of a nurse managing a patient, have reference to the record and tick off what has been done and observe what has to be done next.

[99] Ms Petricevic submitted that this was not done in this case and questioned what Tasman learned from the previous incident.

[100] She also referred to [8]:

...the chemicals that need to be added to these large vessels at various times need to be sequenced in a manner which does not bring about a reaction such as happened on this occasion and which would generate poisonous gas.

[101] I accept that since that time Tasman has ensured that its standard procedures are properly sequenced, a point to which I will return.

[102] Ms Petricevic referred to [10]:

What has occurred on this occasion is that through an error, and it must be acknowledged a human error on the part of Mr R., the person who was in charge of the particular process at the time, a dose, as it were, of acid was put into the wrong vessel and followed some 20 minutes later by a dose of sodium hydrosulphide. The adverse reaction occurred, generating gas and with devastating results...

[103] She submitted that again there is a human error, this time that skins were put into a vessel which should have been empty but was not, again with devastating results.

[104] She referred to [18]:

The consequences of the accident in terms of injury to staff were worrying. [name deleted] was almost immediately, it seems, overwhelmed by the gas. He was seen to be unconscious by [name deleted] who went to his rescue and was overwhelmed himself...

11 Ibid.

[105] She submitted that the same thing happened to Mr G, also overwhelmed by the gas.

[106] At [35] His Honour added:

Hence the provision of a warning device such as a personal gas detector assumes, in my mind, a considerable prominence as a step that could have been taken and should have been taken, as the company now acknowledges, to protect its employees. Had that been done then it seems that there would have been a better prospect of employees and particularly [name deleted] seeking protection for himself against inhalation of gas...

[107] Ms Petricevic argued that had Mr G and others been equipped with personal gas detectors then they would have been alerted in the same way that the employees on the earlier occasion could have been.

[108] She referred to [38]:

The other practicable steps have to do with training workers in evacuation and safe operating procedures. That is the focus that the prosecution has taken but I think that inseparable from that is the issue of whether there were in fact adequate breathing devices or masks available to the staff and as to whether they were in a position where they were going to be able to be used if they were needed....

[109] Judge Gittos held the risk of harm was high, the realised harm fortunately considerably less than it might have been because nobody lost his or her life but that it could very easily have happened. He added at [38]:

There was, in my view, a clear risk which appears not to have been appreciated of a sudden and overwhelming issue of gas if an accidental combination of these substances, both of which were used in the process on a routine basis, came about, and that seems possibly because of a long, uneventful industrial history, not to have been fully recognised.

[110] Ms Petricevic estimated that a discount of 20% for co-operation with WorkSafe, the payment of reparation, remorse and remedial action was appropriate before a discount of 25% for the guilty plea was applied. The end sentence would be a fine of between $680,000 and $850,000.

[111] Mr Gallaway submitted that Tasman’s culpability fell into the low end of the medium band proposed by Judge Gilbert or on the cusp of the low and medium bands proposed by the prosecutor in this case.

[112] He emphasised that hydrogen sulphide cannot be eliminated completely from the process of tanning so that what is required is to reduce the risk of exposure to it. Tasman had already taken considerable steps to do so prior to the previous incident as shown by its impeccable safety record to that point and since then as noted by Judge Gittos and accepted by the prosecutor.

[113] He argued that standard procedures were implemented to protect those workers most at risk, which Tasman deemed to be the process operators because they mix the chemicals whereas forklift drivers do not. The process operators do have safety equipment and personal monitors; that was how E became aware of the presence of the gas when Mr G was seen on the ground and promptly closed access to the area.

[114] He noted that Mr G was the only one affected, clearly by a lesser amount of hydrogen sulphide than that arising in 2012 from the pouring of a large number of chemicals into a mixer.

[115] He also argued that in the previous offending there had been a fault in standard procedure because an employee had mistakenly tipped chemicals into the mixer at the wrong time. More employees were affected. There were more injuries. Those affected were process operators, employees foreseeably at risk of exposure to toxic gas. In other words, the culpability was higher.

[116] Here there was no issue with standard procedure but instead, what Mr Gallaway described as a communication breakdown, together with people moving out of their designated areas to assist in the implementation of something new and the breakdown or ignoring of protocols and processes because this was new. It was not anticipated by those who had designed and implemented the new process that skins would be added to a mixer which was not empty. The risk of the production of hydrogen sulphide from the new process was not obvious.

[117] Mr Gallaway advocated a starting point of about $350,000. At most, there should be an uplift of 5% for the previous offence because it was different.

[118] The mitigating factors he argued should attract a discount of 30 % not 20% before a 25% discount for the guilty plea.

[119] The end sentence would be a fine just over $192,000.

Submissions as to costs.

[120] As Ms Petricevic submitted, a costs order is mandated by HSWA, so that Parliament intended a Court sentencing under the Act to consider it. Costs under HSWA she submitted are different from those sought pursuant to the Costs in Criminal Cases Act 1967.

[121] Authorities she cited show that amounts close to those sought by the prosecutor or in one case a third of the costs sought, taking into account the financial hardship of the defendant,12 have been awarded on the basis that a defendant should pay a just and reasonable sum towards the costs of the prosecution.

[122] The prosecutor in this case sought 50% of WorkSafe’s legal costs, excluding the costs of the investigation. Those costs amounted to $8981.10 so that 50% is

$4490.55.

[123] Mr Gallaway did not oppose the imposition of costs provide that they were reasonable.

Analysis.

(a) Reparation.

12 WorkSafe NZ v Country Nails & Beauty Ltd Auckland DC, CRI-2017-004-3330, 21 September 2017; WorkSafe NZ v Budget Plastics supra, n4

[124] I acknowledge the pragmatic and realistic approach by the prosecutor in departing from the originally submitted $35,000 and instead submitting that $15,000 is an appropriate starting point. I agree.

[125] Without minimising the physical and emotional suffering of Mr G and the emotional trauma to his family, I agree with Mr Gallaway that the physical harm sustained by Mr G is less than that sustained by Mr R in the previous incident.

[126] However, there should be an increase of at least 15% for the psychological harm arising from the persistence of symptoms and the adverse impact on Mr G’s family. I round that up to $3000 and therefore make an award of reparation of $18,000. The defendant has already paid $5000. While I said in Court that the payment of reparation would therefore be $12,000 it clearly should be $13,000.

(b) Fine.

(i) Sentencing bands.

[127] In considering whether I should adopt a four or six-band approach, or another approach entirely, I note that Judge Gilbert observed in WorkSafe v Rangiora Carpets13 at [35] that “at some point, appellate guidance will need to be provided on these matters”. He considered that he was doing the best he could in the absence of such guidance and that he accepted that the bands and sentencing levels he proposed were “somewhat instinctive.”

[128] Counsel in WorkSafe v Rangiora do not appear to have referred His Honour to appellate authority emerging after Hanham, albeit for offences under the Crimes Act 1961, which eschewed the provision of multiple bands for sentencing.

[129] In R v Taueki14, for example, four bands were stipulated with the maximum penalty being 14 years, in R v Fatu15 four bands, in Nuku v R 16 three bands while in

13 Supra, n.5.

14 R v Taueki [2005] NZCA 174; [2005] 3 NZLR 372

15 R v Fatu [2005] NZCA 278; [2006] 2 NZLR 72

16 Nuku v R [2012] NZCA 584

R v AM17 there were four bands for sexual violation by rape or similar offending with the maximum penalty being 20 years and three bands for unlawful sexual connection.

[130] More recently in Samson v Police18 Whata J suggested a four-band range of starting points for recidivist drink-driving.

[131] In addition, the Court of Appeal in R v Clifford19 has confirmed the sentencing methodology in this country which involves fixing a starting point taking into account aggravating and mitigating circumstances relating to the offending, before adjustments for personal aggravating and mitigating circumstances are made. This process does not appear to be adopted in Australia.

[132] Of course, the bands set by appellate authority in New Zealand are for imprisonment or in some cases, sentences short of imprisonment for lower-band offending. However, they still encompass a breadth of offences and offenders and a wide range of penalties. There is wisdom, in my view, in the iteration of about four bands, striking a balance between consistency and flexibility.

[133] That is particularly so given the wide range of offences and offenders pursuant to HSWA and for which a more rigid categorisation of sentencing bands may not be able to be imposed.

[134] Sentencing Judges will, just as they have done when applying the bands or starting points stipulated in tariff cases, consider whether an offence falls into the lower, middle or upper range within the band they find is applicable.

[135] Accordingly, bearing in mind Parliament’s concern that previously imposed penalties were too low, and aware that there is no post-Hanham appellate guideline judgment, I propose to follow the four-band approach in Hanham with appropriate modifications to consider the increase in penalty. I adopt the four bands suggested by Ms Petricevic and set out in paragraph 85 above.

17 R v AM [2010] NZCA 114; [2010] 2 NZLR 750

18 Samson v Police [2015] NZHC 748.

19 R v Clifford [2011] NZCA 360.

(ii) Section 22 – what was reasonably practicable.

[136] Pursuant to s 22 HSWA, I find that the failures set out in paragraphs 41-46 above were reasonably practicable for Tasman to avoid. In other words, it was reasonably practicable for Tasman to ensure that there was always a recipe and/or other written documentation not only for standard procedures, but also for novel ones, especially as its employees work shifts.

[137] It was reasonably practicable to ensure that mixers are not operated unless they are empty. It then will not matter if it is wrongly assumed that any liquid inside is only water.

[138] It was reasonably practicable to recognise that forklift drivers too are at risk of exposure to hydrogen sulphide which is a heavy gas so will descend to the very floor where they are working.

[139] In addition, it was reasonably practicable to recognise that the use of mixers at different times means that forklift drivers may be loading skins into an empty mixer right next to one undergoing the pickling process, thus also at high risk of exposure to toxic gas from the adjoining or nearby working mixer in the event of a fault or error.

[140] It was reasonably practicable to ensure the training of and provision of safety equipment including gas masks and personal monitors to forklift drivers.

(iii) Section 151 – sentencing criteria.

[141] I turn to s 151 (2)(c), the risk of and potential for illness, injury or death that could have occurred. The risk of and potential for serious injury or death I find was known, foreseeable and high. This is so whether there was a significant emission in 2012 or an apparently less significant emission in the present case.

[142] Hydrogen sulphide is a toxic gas. Other than an initial smell of rotten eggs, it is difficult to detect without a personal monitor or alarm. It is particularly hazardous because the immediate effect of exposure to it is a loss of consciousness and the real

risk of death if a person continues to absorb it, especially through a short-term, high concentration while the person is unconscious.

[143] In short, hydrogen sulphide is difficult to detect apart from a rotten egg smell, by which time it is almost too late to escape it unscathed. It can overwhelm a person rapidly, it can cause permanent or long-lasting injury or damage to the human body and it can kill.

[144] The science available in the public domain and which was or ought to have been readily available to Tasman indicated that this is a heavy gas. Not only therefore was there a risk to the process operators above the mixers but to the forklift drivers below the mixers. The failure to identify that risk after 2012 was significant.

[145] I next turn to s 151(2)(d) and consider whether death, serious injury or serious illness occurred or could reasonably have been expected to occur. Long-term effects could reasonably have been expected to occur, as was shown in 2012 and indeed, Mr G does suffer from long term physical and psychological problems. He was not as seriously harmed as Mr R and Mr B in the previous case. He was not in a coma and is now back at work in a full-time position with a promotion. He is still worried about his health and still exhibits classic signs of hydrogen sulphide poisoning as I have mentioned.

[146] However, that only one person was adversely affected and that injuries were not as severe as last time was, I accept, because the process operators did have monitors and protective equipment so could detect the escape of gas, knew that Mr G was on the ground because he was affected by it and not for some other reason and therefore did not rush to help him in an unprotected state as employees did in 2012. A rescue was achieved with little harm to others.

[147] In the circumstances of this case, death did not occur but long-term and serious illness did. This could reasonably have been expected to occur, despite the prompt actions of Mr G’s work colleagues which are likely to have prevented more serious injury or death.

[148] Mr Gallaway reminds me that the risk of death or injury is inherent in the charge and I must be very careful not to double count and elevate the fine because of foreseeable injury or death or actual injury or death when these are the reasons why Tasman has been charged. I agree.

[149] Next I turn to Tasman’s safety record under s 151(2)(e). There is no doubt that Tasman’s safety record was good for over sixty years prior to 2012. There is equally no doubt that significant improvements were made subsequently. There is no doubt that the possession of a gas monitor by at least one of the process operators when Mr G collapsed prevented more serious injury or death for Mr G or other employees.

[150] However, the safety record is blighted by the previous offending and the lessons which should have been learned from it. It is concerning that two offences involving the inadvertent escape of hydrogen sulphide, a hazard known to Tasman, have occurred within 5 years.

[151] While there are factual differences between the two offences, the underlying problem is the same, namely the inadvertent escape of hydrogen sulphide because of human error, such an escape of the toxic gas being a foreseeable and known risk, and because of inadequate training and procedures in place, exposing an employee to the risk of serious injury, illness or death.

[152] This leads me to the final sentencing criterion, the degree of departure from prevailing standards in the tanning industry pursuant to s 151(2)(f). Here there was the strongest clash between the defendant and the prosecutor.

[153] I accept that the current offence is factually different and that afterwards the hazard was acknowledged and generally the company took careful steps to ensure compliance with standard procedure.

[154] While I accept that there are no formal industry standards or best practice guidelines for New Zealand’s fellmongery and tannery industry, there are guidelines available in the public domain as outlined in paragraphs 35-39 above and training

available under the HSNO Act 1996. Ms Petricevic submitted that too few employees were trained in those processes.

[155] In addition, ensuring that a recipe was available for every process, novel or standard, was an elementary step in the reduction of risk. While Mr Gallaway emphasised that the procedure on 29 April 2016 was unusual and that it was never intended that skins were to be placed in mixer 10, I accept Ms Petricevic’s submission that this is precisely when written procedures should have been adopted so that everyone who came on shift knew not to touch the mixer until access to it was signed off on the recipe.

[156] Because of the known hazard, care should have been taken at every step and not left to oral instructions which of course can lead to “communication breakdowns” especially when shifts change, another risk when trying to reduce hazards. Such “communication breakdowns” can lead to serious injury or death.

[157] The increasing of risk because of an absence of written documentation, human nature and human errors being what they are, was foreseeable and fundamental.

[158] It was also elementary to protect and train forklift drivers. Insisting that they were at less risk because they did not mix chemicals betrayed a fundamental error about the nature of the gas and the risk to those employees on the factory floor.

[159] I consider that these failures constituted a significant departure from prevailing standards of record-keeping, training, support and remaining conscious of the risk. At the same time, there were procedures in place which had they been followed by Tasman’s employees could have reduced the risk.

[160] Notwithstanding Mr Gallaway’s spirited submissions about the rare departure from standard procedure and communication breakdowns, by individuals not by company procedure, I find that had there been a written recipe, had there been a requirement for one especially when there was a novel process being implemented, had those responsible for the process stayed on site, and had Mr G been trained and

equipped with a gas monitor and protective equipment, the risk of his exposure to a toxic and potentially life-threatening disease would have been significantly reduced.

(iv) Starting point.

[161] Taking all of these matters into account, I am not satisfied that Tasman’s culpability is as high as the prosecutor submits. There were safety procedures in place, including a requirement that a mixer containing any liquid should not be filled with skins. That was ignored by well-meaning employees who thought the liquid was water. A recipe would have of course removed all doubt.

[162] There were personal monitors carried by process operators after 2012 which prevented more serious harm. Tasman’s culpability was less than the previous case although the offending was still serious. I should not double-count given the factors inherent in s 48.

[163] Accordingly, Tasman’s culpability is lower than that suggested by Ms Petricevic but much higher than the low level suggested by Mr Gallaway. I find that Tasman’s culpability brings it into the upper level of the medium range, namely a fine between $400,000 and $800,000. I fix the starting point as $700,000. It is also consistent with the medium-high band proposed by His Honour Judge Gilbert namely between $600,000 and $850,000. A fine less than that could not be imposed given the failures I have identified.

(v) Uplift.

[164] I accept Mr Gallaway’s submissions that the previous conviction warrants only a 5% uplift. I acknowledge Ms Petricevic’s concern that a low uplift may be insufficient to mark the Court’s concern about previous offending and that there is a risk that the requisite deterrence and denouncement of repeat offending will be lost.

[165] However, I must balance the one prior although serious offence against Tasman’s otherwise long and unblemished history of being safety conscious in a hazardous industry and, to a very limited extent, the differences in that past offence. I

also consider that the fine itself is a deterrent. I therefore add $35,000 which leads to

$735,000.

(vi) Mitigating features.

[166] I turn to the mitigating features:

• (a) Full co-operation with WorkSafe which I assess as warranting a 5% discount;
  
• (b) Remorse and full participation in the restorative justice conference, in particular the apology by Mr Thiel on behalf of Tasman which contributed a great deal to Mr G’s ability to move forward and start to heal – 5%;
  
• (c) An interim payment of $5000, a topping up of wages to at least partially relieve the financial strain on Mr G and his family; welcoming back of Mr G into the company, retraining him, making his job permanent and promoting him – 10%;
  
• (d) Remedial action involving training and safety equipment which has at last been extended to forklift drivers. I acknowledge that Mr G wishes this had been done sooner. I share that wish. I doubt that anyone in this room would disagree. What happened to Mr G could and should have been avoided. However, there have been strong and resolute steps to fill that gap and a promise by Mr Thiel that they will train again and again. Accordingly, this warrants a discount of 10%.
  

[167] I do not consider that today’s “communication breakdown” should detract from the steps Tasman has already taken or reduce the discount for mitigating features, although I am recording that it happened.

[168] The discount for mitigating features reaches 30%. I therefore deduct 30% or

$220,500 from $735,000 leading to $514,500.

(vii) Discount for guilty plea.

[169] I give Tasman the maximum discount permitted at law for its early guilty plea which is 25% or $128, 625. The leads to a fine of $385,875.

[170] No issue as to Tasman’s financial capacity is raised so no further discount is granted.

(c) Costs.

[171] I turn to the issue of costs. Given that this is one of the first sentences under s 36 HSWA, involves a defendant who has previously offended and has involved extensive and careful submissions about sentencing bands, I consider that an order for costs is just and reasonable so I make that order.

[172] I direct that Tasman pay 50% of the prosecutor’s costs.

(d) Proportionality and appropriateness of total.

[173] Stepping back and looking at the proportionality and appropriateness of the total imposition of reparation, fine and costs, I do as Judge Gittos did in the previous case involving Tasman and round down the fine. I therefore impose a fine of $380,000.

[174] I also round down the costs to $4000.

C M Ryan

District Court Judge