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OSH Tracker

Department of Labour v Tranz Rail Ltd (DC, 27/04/01)

OSH Tracker

Defendant:
Tranz Rail
No action was taken following the discovery on two separate occasions that a section of rail track in the sidings at Woolston shunting yard was wider than the allowable safety margins. Two months after the second discovery, shunter Neil Faithful was fatally crushed when an overloaded wagon derailed on that section of track. In the Christchurch District Court on 27 April, Tranz Rail Ltd was fined $40,000 and $10,000 on two .6 charges that it had failed to check the condition of an "exceedance", and that it had failed to give special attention to a portion of the track with repeated exceedances. The dead man's widow was awarded $25,000. The fact that the wagon was overweight and not well balanced was found not to have contributed to the derailment. Three sleepers at and before the point of derailment were found to be in poor condition, allowing the track to spread to the point where the front wheels on the wagon derailed. The first time the excessive gauge width was noted, it was classified as to be fixed within four weeks. On the second occasion, the excess width was such as to require immediate action. 
Industry:
Transport and Storage
Sub-Industry:
Rail Transport
Risk:
Vehicle - offroad (eg ATV, tractor)
Harm:
Death
Penalty Amount:
$50000.00
Reparation Amount:
$25000.00
Appeared in Safeguard issue 69

Judgment Text

ORAL JUDGMENT ON PENALTY OF JUDGE T M ABBOTT 
Judge T M Abbott
Introduction 
Tranz Rail Ltd has pleaded guilty to two charges under section 6 and section 50 of the Health and Safety in Employment Act 1992 (to which I shall generally refer as “the Act”). 
Both charges result from a fatal accident which occurred during a shunting operation at its Woolston shunting yards in Christchurch on 27 April 2000, which, by an unfortunate coincidence, is a year ago today. 
The charges relate to Tranz Rail's failures to comply with its own approved safety system in two particular respects. 
The first charge relates to a failure to comply with clause P.91(a) of Tranz Rail's Operations Group Track Code 4.03 (“the Code”) in respect of a failure to check the condition of what is known as a “Class 1** exceedance” which had been identified on the portion of track which was involved in the accident, that exceedance not having been corrected as a result of an earlier identification of the fault. 
The second charge relates to a failure to comply with clause P.91(d) of the Code, the allegation in that respect being that, there having been repeated exceedances on the portion of track in question, Tranz Rail failed to give that portion of track the special attention which was required in terms of the Code. 
Although the first charge was laid on the basis that Tranz Rail's failure to comply with the clause in question involved a failure to take all practicable steps to ensure the safety of the employee who was tragically killed in the accident on 27 April 2000, Mr Faithful, that charge was amended on 29 March 2001 to refer to an allegation of a failure to take all practicable steps to ensure the safety of its employees in a general sense. That amendment involved an acceptance by the Department of Labour that it could not necessarily prove that the failure to check the condition of the Class 1** exceedance itself directly resulted in the accident which in turn resulted in Mr Faithful's death. 
As a result, in terms of the penalty provisions in section 50 of the Act, the maximum penalty for that offence, it not being an offence which resulted in serious harm, is a fine of $25,000. 
The other charge, which, as I have said, relates to the failure to comply with clause P.91(d), is acknowledged to involve the higher maximum penalty of a fine of $50,000, it being conceded by Tranz Rail that its failure to give the portion of track in question the required special attention was a direct causative factor in respect of the accident which resulted in Mr Faithful's death. 
Tranz Rail is in a unique position in respect of issues of compliance with the Act relating to its rail operations. That is the direct result of sections 6A to 6H of the Transport Services Licensing Act 1989, which in effect provide that the holder of a rail service licence must have an approved safety system for the rail service in question and that compliance with such an approved safety system shall be deemed to be compliance with the provisions of the Health and Safety in Employment Act. In this context, it is noteworthy that section 6B(2) of the Transport Services Licensing Act provides that every safety system which is proposed by an applicant for a rail service licence shall contain certain specified provisions, including a system or structure for managing the implementation and maintenance of the safety system. 
The Facts 
As I have mentioned, the charges relate to Tranz Rail's failure to comply with two particular provisions of its own safety system, which in turn relate to what are described as exceedances. The term “exceedance” is apparently used in the rail industry and relates to what one might describe as an excessive gauge, that being in the sense that there is a standard gauge, but with an upper limit, beyond which there is again a margin before issues of safety are likely to arise. 
The section of railway track which has come under scrutiny in the context of this prosecution is between two turnouts on Road No 1 in the Woolston shunting yards. A “road” is apparently the term which is used for a particular section of railway track, while a “turnout” might more commonly be known as a points change or an intersection. 
A fault on the section of track in question was identified by a track evaluation car on 20 September 1999 and again on 28 February 2000. As is stated in the summary of facts, a track evaluation car is a mechanical testing vehicle which travels along a section of railway track and tests the condition of the track and compares it to a specified standard, that being not only in relation to gauge but also in respect of other factors. 
On 20 September 1999 the gauge of the section of track in question was measured by the track evaluation car at 1096 millimetres, which exceeded both the standard track gauge of 1068 millimetres and the prescribed upper limit of 1094 millimetres. As a result, the track evaluation car generated a classification which is known as “Priority 1” for that section of track. 
On the second occasion, 28 February 2000, the track gauge was again measured by the track evaluation car, with the result that the gauge of the section of track in question was recorded at 1097 millimetres, which therefore involved a deterioration or widening of one millimetre during the period since the preceding September. As a result, the track evaluation car automatically generated a “Priority 1**” classification in respect of that section of track. 
The first measurement on 20 September 1999 should have resulted in some checking of the state of the track. However, in terms of clause P.91(a) of the Code, a specific obligation to check the condition of the track apparently did not arise until the Priority 1** classification was generated by the track evaluation car on 28 February 2000. The charge relating to the breach of clause P.91(a) therefore involves an allegation, which Tranz Rail has admitted, that it failed to check the condition of that exceedance during the period from 28 February to 27 April 2000. 
The other charge involves an allegation of a more general nature, that being because clause P.91(d) of the Code requires special attention to be given to repeated exceedances. Although I have not been told whether the terms “repeated exceedances” and “special attention” are defined in the Code, Tranz Rail's guilty plea to that charge imports an acknowledgement that it did not comply with that clause. 
In this respect, it is also relevant to note that a Priority 1 classification should result in remedial action being taken within four weeks and that, if the problem is not fixed within that period, a temporary speed restriction should be imposed if that is deemed necessary. However, the Code requires remedial action to be taken immediately in respect of a Priority 1** exceedance, with a temporary speed restriction being imposed “if considered necessary” if the problem is not fixed within 24 hours. 
However, the issue of a possible speed restriction is in many respects irrelevant in the context of the present case, that being because it is apparent that no issue of speed arises in respect of the accident which occurred on 27 April 2000, that in turn being because the shunting operation in question was being conducted at standard walking pace. 
The accident which occurred on 27 April 2000 related to a shunting operation which involved a locomotive and two four-wheeled wagons. The wagons contained scrap metal, which had been loaded the previous day, 26 April 2000, at the Ashburton premises of a recycling company. The second wagon, which carried an identification of LPA 5218, was apparently loaded unevenly, with approximately 56.5% of the weight being on the left side of the wagon and 43.5% being on the right side. The fact that the wagon LPA 5218 was out of balance was recorded when the two wagons travelled over a weighing facility at Weedons while en route from Ashburton to Christchurch on 26 April. 
The shunting operation on 27 April involved the two wagons being shunted into the private siding of the recycling company, which was adjacent to or near the Woolston shunting yards. The shunting operation progressed from Road No 2 through Turnout 12 onto Road No 1 and then along the short section of track to Turnout 11, where the points were set so that the shunting locomotive and the two wagons would proceed straight ahead on Road No 1. 
However, although the locomotive and the first wagon proceeded safely along the short stretch of straight track between the two turnouts, the rear wagon, LPA 5218, derailed. The cause of the derailment was a spreading of the tracks as the train passed over them, which in turn caused the front left wheel of the wagon to fall inside the left track, while the front right wheel continued for a further four metres before riding over onto the outside of the right track. 
The derailed wagon was then pulled along the inside of the left track and the outside of the right track, until the front left wheel of the wagon struck the end of the switch blade at Turnout 11. A switch blade is the leading point of an intersecting track, and the point of contact can be seen in photograph 4 of the photographs which have been put before me by the Department. 
What then happened was that the rear wagon followed the curve of the outward road of the turnout while the locomotive and the front wagon continued along the straight track, Road No 1, as had been intended and in accordance with the setting of the points. 
By this time, conflicting physical forces were of course in play. The derailed wagon, LPA 5218, was following a track which it was not intended to be on and which was inconsistent with the direction in which it was to travel and in which it was being pulled by the locomotive and the front wagon. The net result of those conflicting physical forces was that, at a point about eleven metres beyond the initial derailment point, the rear wagon commenced to roll over, coming to rest on the ground approximately seven metres further on. 
During the shunting operation the locomotive was being controlled by a Tranz Rail employee, a Mr Palmer, that being by remote control from the shunter's refuge which is now on all Tranz Rail shunting locomotives. The other employee who was involved in the shunting operation, Mr Faithful, who had apparently been called back to work on a day off, was riding between the two wagons, which was in accordance with standard practice. 
As the rear wagon began to roll, Mr Faithful jumped off from his position on the handbrake between the two wagons, but unfortunately he did so in the direction in which the rear wagon rolled. The tragic outcome was that Mr Faithful was trapped beneath the wagon as it rolled onto the ground, and he suffered fatal injuries as a consequence. 
In the summary of facts, part of which I have already summarised in what I have already said, the Department refers to the factors which caused or contributed to the accident. Hardly surprisingly, identifying the causes of the accident involved investigations by the Department, which commissioned a report from an independent rail expert, and by Tranz Rail, whose senior design engineer prepared a report. 
In his report Tranz Rail's senior design engineer concluded that the primary cause of the derailment was the gauge spreading under the rear wagon. According to the report, the rear wagon was then pulled over because, once it was derailed, it went down a diverging path to the rest of the train. In this context, the fact that the rear wagon was out of balance was not identified as a significant cause of the accident, although, as a matter of common sense, being out of balance on the left side would certainly have done nothing to halt a roll in that direction when the wagon was pulled that way by the locomotive and the front wagon. 
As is apparent from the section of the summary of facts on pages 4 to 5, the principal cause of the accident related to maintenance deficiencies in respect of the section of railway track between the two turnouts on Road No 1 at the Woolston yards, in particular in respect of the condition of three sleepers. If sleepers are in poor condition, the screwspike holes wear and decay, causing the gauge to widen and the fastening of the rails to become insecure, resulting in turn in a risk of what is known as a “spread gauge derailment”
In such circumstances, when the gauge of a section of track reaches approximately 1,100 millimetres, the contact between the wheel of a wagon and the rail is near the edge of the rail, with a resulting sharply-increased tendency for further outward movement of the rail itself. As a result, although apparently the gauge of a section of track must widen to approximately 1,167 millimetres for a wheel to drop off the rail, the physics-related dynamics of the situation allows that to occur once the gauge reaches approximately 1,100 millimetres. 
Furthermore, in respect of the rolling over of the wagon, as I have already indicated, and as is stated in the summary of facts, the critical factor was that the train was still moving when the derailed wagon reached the points of Turnout 11. As is said in the summary, and as I have mentioned, as the derailed wagon attempted to go to the right, down the turnout track, the force from the drawbar connecting it to the wagon in front would therefore have been to the left, in other words to remain in line on the straight stretch of track on Road No 1. 
As is then said on page 5 of the summary of facts, the consensus in the expert reports was that the cause of the derailment was that the gauge between the rails was wide enough, when taken with the poor condition of the sleepers, to enable the derailment to occur. Once the derailment had occurred, and once there were the conflicting physical forces to which I have already mentioned, the overturning was the almost inevitable result. 
The Relevant Sentencing Factors 
The leading case regarding the relevant factors which should be taken into account when imposing penalty for offences against the Act remains Department of Labour v de Spa & Co Ltd [1994] 1 ERNZ 339Has Cases Citing which are not known to be negative[Green] 
However, although that case remains relevant in respect of issues of principle, it must be borne in mind that, as it was decided during the honeymoon period of the Act, as it is sometimes described, de Spa is certainly no longer good authority in respect of the appropriate levels of financial penalties. 
In de Spa the High Court (Tipping and Fraser JJ) identified nine relevant factors which should be considered by a judge who is required to impose penalty for an offence against the Act. However, the Court emphasised that the factors which it listed in its judgment were in no sense an exhaustive list. 
The nine factors which were specifically mentioned by the Court in de Spa were the following: 
Firstly, the degree of culpability which was involved in the offence in question, which the Court said must be assessed by a careful appraisal of the circumstances in which the breach of the Act occurred. 
Secondly, the degree of harm which resulted from the breach. 
Thirdly, the financial circumstances of the offender. 
Fourthly, the attitude of the offender, with particular regard to factors of remorse, co-operation with the authorities, and the taking of remedial action. 
Fifthly, any plea of guilty. 
Sixthly, the need for deterrence, both particular and general. 
Seventhly, the possible relevance of section 28(1) of the Criminal Justice Act, which provides that, where any act which constitutes an offence has resulted in physical or emotional harm to a victim, part or all of the fine may be awarded to the victim by way of compensation. 
Eighthly, the safety record of the employer, in which respect the Court commented that the absence of previous relevant convictions would be best viewed as the absence of an aggravating factor. 
Finally, any other relevant factors, in which respect the Court again emphasised that its list was not intended to be exhaustive. 
As I have said on previous occasions, and as Mr Withnall noted in his submissions, it is important to bear in mind that the section 28(1) factor relates not to the assessment of the appropriate quantum of any fine but rather to its destination. As Paterson J in effect noted in Fairfax Industries Limited v Department of Labour [1996] 2 ERNZ 551Has Cases Citing which are not known to be negative[Green] , it would therefore be quite wrong to artificially inflate a fine so as to provide some means of compensation to an injured employee or to the dependants of an employee who suffers fatal injuries in a workplace accident. 
From that perspective, it is somewhat unfortunate, with respect, that in de Spa the High Court included the section 28(1) factor in its list of the factors which it said would be relevant in determining the appropriate level of a penalty for a breach of the Act. 
The Present Case 
In their respective submissions Mrs Currie and Mr Withnall referred to the relevant de Spa factors, to which I shall now turn. 
In respect of the degree of culpability factor, Mrs Currie submitted that the degree of culpability in the present case was high, whereas Mr Withnall in effect contended that the degree of culpability was rather less. 
In her submissions Mrs Currie referred to the two separate inspections on 20 September 1999 and 28 February 2000 and to Tranz Rail's failure to take any remedial action as a result of the exceedances which were disclosed by both inspections, in which context the failure to comply with its own standards in respect of Priority 1** exceedances was particularly significant. 
Mrs Currie also referred to what she in effect described as Tranz Rail's privileged position in respect of compliance with the Act, which of course relates to the provisions of the Transport Services Licensing Act to which I have already referred. 
However, whether Tranz Rail's approved safety system represents a lower standard than would be imposed by the Act is in my view really of academic interest only, because the crucial factor is that Tranz Rail had an approved safety system in place but failed to comply with it. Indeed, the fact that the Code required Tranz Rail to fix the exceedance when it was identified for the second time on 28 February 2000 “immediately”, as the Code prescribed, and the fact that Tranz Rail did nothing in that context except to include the section of track in the maintenance plan for the following year, in many respects tell their own story. 
In his submissions on the degree of culpability issue Mr Withnall contended that the accident was in some respects a freak or quirky occurrence. 
In that context, Mr Withnall emphasised that the accident occurred as it did because of a combination of factors, which he listed as the obsolete type of wagon which was being used, the type of load which was being carried on the wagon and the lack of balance in that load, the fact that the shunting operation involved a short train, with the problem wagon being the last vehicle in the train, and finally what one might describe as the self-correcting mechanism which may sometimes come into play when wagons head in diverging directions. In respect of the last point, Mr Withnall noted that, although the connecting equipment is not designed to do so, in such circumstances inconsistent pulling forces may result in a breakage of that equipment. 
However, as I commented to Mr Withnall during his submissions this morning, many workplace accidents involve a combination of circumstances. In my view the combination of circumstances in the present instance was not out of the ordinary and could well have been anticipated or foreseen. Furthermore, there is some incongruity in one of those factors being the non-occurrence of an unintended breakage of equipment. 
In my view, notwithstanding the fact that there had been no previous accidents on this section of track, to use a much overused expression, the accident which occurred on 27 April 2000 was in many respects an accident which was waiting to happen. 
It follows from what I have said that I accept Mrs Currie's contention that Tranz Rail's degree of culpability in respect of the accident was high. 
The second de Spa factor relates to the degree of harm which resulted from the Act in question. 
All that I need to say in respect of this issue is that it is clear that serious harm, namely Mr Faithful's death, resulted from one of the breaches of Tranz Rail's own approved safety system. 
In respect of the third factor, namely Tranz Rail's financial circumstances, Mr Withnall has confirmed that it is in a financial position to pay a fine at the appropriate level. 
The fourth de Spa factor relates to the attitude of Tranz Rail, including in particular issues of remorse, co-operation, and the taking of remedial action. 
In this context, I should refer to issues relating to the victim impact statement which have been raised by both Mrs Currie and Mr Withnall. On the basis of what I have been told today, it would be fair to say that the negative feelings of the Faithful family regarding Tranz Rail's apparent lack of sympathy in respect of the loss of a husband and a father may well have been justified and that those feelings may now have been better recognised by those in authority at Tranz Rail. 
Having said that, it is clear from Mrs Currie's submissions that the Department acknowledges that Tranz Rail co-operated fully in respect of the investigation. In that context, I am also prepared to accept Mr Withnall's submission that extensive remedial action has been taken by Tranz Rail since the accident, in particular in respect of safety issues relating to shunting operations in general. 
However, it is apparent from what I have already said that the taking of remedial action following a fatality should not have been necessary and that appropriate pro-active maintenance procedures should have been in place prior to the accident. As I commented this morning, it is all very well to have a safety system in place, but a safety system is only as good as its implementation. 
Before leaving this issue, I should mention that, although the Faithful family have had reservations regarding Tranz Rail's attitude to the issues which have resulted from Mr Faithful's death, it is nevertheless clear that the company has provided significant financial assistance to Mrs Faithful in an attempt to assist her to adjust to her tragically changed circumstances. 
In particular, a compassionate grant of approximately $15,000 has been paid to her, although it must be said that such a grant is apparently calculated in accordance with a formula which has been agreed between Tranz Rail and the Rail and Maritime Transport Union and which is therefore incorporated in the relevant collective employment contract. However, a further payment of $10,000 has recently been made to Mrs Faithful to assist her in respect of issues relating to the property in which she and Mr Faithful lived, which is of course now her sole responsibility. 
The fifth de Spa factor relates to the guilty pleas. 
As was agreed this morning, I proceed on the basis that Tranz Rail is entitled to the full degree of credit to which a defendant who pleads guilty at the earliest practicable opportunity is entitled. In that context, although there were a number of adjournments of the charges before pleas were entered on 29 March 2001, the case is complex, and two other charges were apparently withdrawn as a result of the agreement which also involved the amendment of one of the charges and the guilty pleas to the two charges which require consideration today. 
The next relevant factor relates to deterrence. Deterrence of course has two facets, the first being general deterrence in respect of the employing community in general and the second being particular deterrence in respect of an individual employer. 
In her submissions Mrs Currie emphasised what the High Court said in de Spa seven years ago. Although the comment in question was made in the context of general deterrence, it is also relevant in the context of particular deterrence relating to an individual employer. The Court said (at page 346): 
“Deterrence for present purposes requires a fine at a sufficient level to encourage other employers to take seriously their obligation actively to seek out hazards and to deal with them. No room must be left in the community for the view that it is easier to wait until an accident happens, pay the fine, and try and do better in the future. ”
In her submissions Mrs Currie then referred to what I said in the second de Spa case, Department of Labour v de Spa & Co Ltd (District Court, Christchurch, CRN 6009032433-34, 20 December 1996), in particular in respect of the importance of individual deterrence in respect of an employer who has previously breached the obligations which are imposed by the Act and the appropriateness of regarding any previous such conviction as an aggravating factor. I shall return to this general issue shortly in the context of Tranz Rail's safety record. 
Turning now to the penultimate de Spa factor, which is in fact Tranz Rail's safety record, in her submissions Mrs Currie referred to a number of previous convictions for offences against the Act and a previous conviction for a similar offence under the Maritime Transport Act 1994. 
Of particular relevance in the present context are a conviction which resulted from a fatal accident during a shunting operation on 24 May 1995, for which a fine of $15,000 was imposed in June 1997, and a conviction following another shunting accident on 23 November 1998, which resulted in a fine of $27,500 on 29 September 1999. While the circumstances of the first accident are not clear, the second accident involved an employee falling into the path of a train because a handgrab on a tank wagon came off due to a corroded nut, which in turn involved a lack of maintenance in breach of Tranz Rail's approved safety system. 
The charge under the Maritime Transport Act related to a well-publicised fatal accident during an exercise on the “Arahura”, which resulted in the death of a seaman and injuries to three other seamen. The outcome of that prosecution was a fine of $37,500. 
Last year, as a result of concerns regarding accidents involving injuries to Tranz Rail employees, the Cabinet authorised a Ministerial Enquiry regarding the circumstances of the accidents in question, which of course included the present incident. Of particular concern in the present context is the fact that a high proportion of rail accidents during the past seven years have involved shunting operations, there apparently having been 15 such accidents in a total of 22 rail accidents which have resulted in fatal or serious injuries to Tranz Rail employees. 
It is hardly surprising that during the Ministerial Enquiry a world-renowned rail safety expert, Mr Rayner, found shortcomings in the implementation of Tranz Rail's safety system. While in his view its organisation of safety management was appropriate, Mr Rayner concluded that Tranz Rail's overall performance in occupational safety management has lagged behind international standards. To an extent at least, that conclusion supports my comment that a safety system is only as good as its implementation. 
While in his submissions Mr Withnall contended that, to a certain extent, Tranz Rail has already been punished in respect of issues relating to its safety record as a result of the findings of the Ministerial Enquiry, in my view I must consider the present prosecution in its own context. The enquiry into Tranz Rail was motivated by legitimate public interest factors, and to some extent it must be seen as the inevitable result of concern about Tranz Rail's safety standards. 
Having said that, as I mentioned to Mrs Currie this morning, the present issues must be kept in perspective. Although Tranz Rail's fatality rate may appear high compared to the New Zealand average, at 39.3 deaths per 100,000 employees, compared to the national average of 4.9 deaths per 100,000 employees, a more meaningful comparison would relate to similar occupational activities, for example the construction industry or the mining industry. 
Furthermore, it must also be borne in mind that, as Mr Withnall emphasised, Tranz Rail is a nation-wide rail operator, and in this context the fact that its operations include inter-island sea transport must also be borne in mind. In other words, put very shortly and bluntly, the fact that there may have been a fatal accident on the “Arahura” should not assume undue importance in the context of imposing penalty for a fatality which occurred during a shunting operation. 
Having said that, it must nevertheless again be emphasised that the incidence of fatal or serious injury shunting accidents involving Tranz Rail employees is of concern and that the company has a particular obligation to ensure that the inherent operational risks in shunting activities are minimised to the absolute extent that is practicable. 
Decision 
Although there are two charges, and although it is accepted that only one of those charges justifies the higher maximum penalty under the Act, and although the two charges relate to breaches of two separate provisions of Tranz Rail's safety system, I must nevertheless bear in mind that both breaches relate to the same overall issue, namely Tranz Rail's failure to ensure that the section of track on which this accident occurred was safe for use in all foreseeable circumstances. 
Against that background, in my view I should approach the imposition of penalty on a totality basis, by fixing the appropriate total financial penalty and then apportioning that total financial penalty between the two charges in a manner which reflects my view of their respective degrees of seriousness. 
In that context, I must also take into account in particular the ex gratia payment which Tranz Rail has recently made to Mrs Faithful and the earlier payment which was made in terms of the arrangements between Tranz Rail and the Rail and Maritime Transport Union. 
Taking all factors into account, in my view the appropriate total financial penalty would be in the sum of $50,000. 
On the charge relating to the breach of clause P.91(d) Tranz Rail is convicted and fined $40,000. 
On the charge relating to the breach of clause P.91(a) Tranz Rail is convicted and fined $10,000. 
On each charge there is an order for court costs in the sum of $130, while on the first charge there is an order for a solicitor's fee in the sum of $1,000, which reflects the additional complexity of the present case. 

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