Workcover Authority of New South Wales (Inspector Mansell) v Daly Smith Corporation (Aust) Pty Limited and Thomas Edwin Curtis Smith [2005] NSWIRComm 101 (7 April 2005)

Last Updated: 7 April 2005

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : WorkCover Authority of New South Wales (Inspector Mansell) v Daly Smith Corporation (Aust) Pty Limited and Thomas Edwin Curtis Smith [2005] NSWIRComm 101

FILE NUMBER(S): IRC 3374 and 3376

HEARING DATE(S): 16/03/2005

DECISION DATE: 07/04/2005

PARTIES:

PROSECUTION:

WorkCover Authority of New South Wales (Inspector Mansell)

DEFENDANTS:

Daly Smith Corporation (Aust) Pty Limited

Thomas Edwin Curtis Smith

JUDGMENT OF: Staunton J

LEGAL REPRESENTATIVES

PROSECUTION:

Mr R Reitano of counsel

SOLICITORS:

Phillips Fox

DEFENDANTS:

Mr J Phillips SC

SOLICITORS:

Deacons

CASES CITED: Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610

Drake Personnel Ltd t/a Drake Industrial v WorkCover Authority of NSW (Inspector Ch'ng) (1999) 90 IR 432

Fisher v Samaras Industries Pty Ltd (1996) 82 IR 384

Haynes v C I & D Manufacturing (1995) 60 IR 445

Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464

Page v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39

Postiglione v The Queen (1997) 189 CLR 295

R v Dean NSWCCA, unreported, 27 September 1996

R v O'Brien NSWCCA, unreported, 17 April 1997

R v Way [2004] NSWCCA 131

WorkCover Authority of NSW v Profab Industries Pty Limited (2000) 49 NSWLR 700

WorkCover Authority of New South Wales (Inspector Mansell) v Daly Smith Corporation (Aust) Pty Limited and Thomas Edwin Curtis Smith [2004] NSWIRComm 349

Workcover Authority of New South Wales (Inspector Mansell) v Hayman Industries Pty Ltd [2003] NSWIRComm 154

LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999

Occupational Health and Safety Act 1983

JUDGMENT:

- 1 -

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

IN COURT SESSION

CORAM: Staunton J

DATE: 7/4/2005

Matter No IRC 3374 of 2002

WorkCover Authority of New South Wales (Inspector Mansell) v Daly Smith Corporation (Aust) Pty Limited

Prosecution arising under s 15(1) of the Occupational Health and Safety Act 1983

Matter No IRC 3376 of 2002

WorkCover Authority of New South Wales (Inspector Mansell) v Thomas Edwin Curtis Smith

Prosecution arising under s 15(1) and s 50(1) of the Occupational Health and Safety Act 1983

JUDGMENT RE PENALTY AND COSTS

[2005] NSWIRComm 101

1 This judgment deals with the issue of penalty and costs arising from my earlier decision in WorkCover Authority of New South Wales (Inspector Mansell) v Daly Smith Corporation (Aust) Pty Limited and Thomas Edwin Curtis Smith [2004] NSWIRComm 349 delivered on 10 December last. In that matter the prosecutor brought charges against Daly Smith Corporation (DSC) (the corporate defendant) and Mr Thomas Smith (the personal defendant) for offences arising under s 15(1) of the Occupational Health and Safety Act 1983 (the Act) and, specifically in relation to the second defendant, within the deeming provisions of s 50(1) of the Act.

2 Those charges arose out of an incident involving Mr Steven Rowe at the premises of Hayman Industries Pty Limited at Padstow on 30 June 2000. The particular factual matrix of the incident is set out in my substantive judgment at [9] to [39] and I do not propose to recount it for the purposes of this decision.

3 Also arising out of that incident, a prosecution was laid against Hayman Industries Pty Ltd (Hayman Industries) for an offence arising under s 16(1) of the Act. Hayman Industries entered a plea of guilty to the offence charged. That matter was dealt with by me in Workcover Authority of New South Wales (Inspector Mansell) v Hayman Industries Pty Ltd [2003] NSWIRComm 154 given on 19 May 2003.

4 In the offences now before me, the breach with respect to both DSC and Mr Smith was in similar terms. Each failed to ensure the health, safety and welfare at work of its employees, in particular Steven Rowe, and each failed to ensure a system of work for the operation of the John Heine 208AG Series 10 Power Press (the Press) that was safe and without risks to health. Specifically, the prosecutor particularised six failures of the defendants as follows:

(a) It failed to make adequate enquiries as to Rowe's qualifications to operate the Press;

(b) It failed to provide adequate warnings and/or information to its employees about the risks involved and the safety precautions to be utilised while operating the press;

(c) It failed to provide adequate instruction and training to its employees in relation to the operation of the Press;

(d) It failed to provide adequate supervision to its employees operating the Press;

(e) It failed to carry out an adequate risk assessment of the hazards of operating of the Press;

(f) It failed to ensure adequate guarding of the die area of the Press.

5 Of those six failures particularised, I found that the prosecutor established (c), (d) and (e) to the requisite degree for an offence to be established under s 15(1) of the Act in relation to the corporate defendant and, in the case of Mr Smith, pursuant to the deeming provisions of s 50.

6 Neither defendant has any prior convictions. Accordingly, the maximum penalty for the offence involving DSC is $550,000 and for the personal defendant it is $55,000.

7 The defendants relied upon an affidavit sworn by Mr Smith on 7 March last in his capacity both as Managing Director of the corporate defendant and the personal defendant. Mr Smith was required for cross examination.

Relevant principles

8 The overall approach to be followed in relation to the determination of penalty is to be found in the first instance within the statutory provisions of the Crimes (Sentencing Procedure) Act 1999 (CSPA) and in particular in relation to these matters, ss 3A Purposes of Sentencing, 21A Aggravating, mitigating and other factors in sentencing.

9 In R v Way [2004] NSWCCA 131 it was emphasised that the provisions of the CSPA referred to above are not to be construed as representing 'a departure from settled principles of sentencing practice, or an abandonment of the discretion that is essential to any system calling for individualised justice'. As was said at [59]:

....it is clear that the legislative policy.......so far as that can be discerned from the legislation itself, was not to create a straight jacket for judges...but rather were intended to provide 'further guidance and structure to judicial discretion.'

10 The starting point for considerations as to penalty is the objective seriousness of the offence charged. That is a well established sentencing principle and was conclusively affirmed in the Full Bench decision of Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 474 as follows:

... it is important to reiterate that the primary factor to be considered when a judicial officer is determining the appropriate sentence to impose is the objective seriousness of the offence charged. In case of prosecutions under the OH&S Act, this proposition has often been expressed by saying that the 'true measure of penalty lies in the nature and quality of the offence'...

11 To that extent, the principle of foreseeability as a factor in determining the objective seriousness of an offence as part of the sentencing process was considered and affirmed in the Full Bench decision of Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at 646 as follows:

The question of foreseeability is relevant to the assessment of the seriousness of the offence. We consider that the appropriate approach is that of Walton J, Vice President, in Department of Mineral Resources of NSW (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 at 27:

Whilst the reasonable foreseeability of an accident may not be relevant to the question of liability under the Act (see Drake Personnel Ltd t/a Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432), the degree of foreseeability is a significant factor to be taken into account when assessing the level of culpability of the defendant. The existence of a reasonably foreseeable risk to safety which is likely to result in serious injury or death is a factor which will be relevant to the assessment of the gravity of the offence.

12 On the issue of foreseeability, the Full Bench in Capral also stated:

The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However, the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J, President, in Ferguson v Nelmac Pty Ltd (at 209-210) in these terms:

... reliance on 'hindsight' must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s 15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy. So much is clear from the structure and language of the section which is premised on the requirement to 'ensure ... health, safety and welfare at work' and the decided cases which make plain the nature of the obligation.

13 It is also necessary not only to consider the damage and injury suffered but to do so 'in light of the principles which have been laid down in relation to the relationship between the seriousness of injuries which have been suffered, or which may have been suffered, and the gravity of the offence.' (Capral at 650). On that point the Full Bench in Capral stated:

We consider that the relevant principle can be stated in this way. The gravity of the consequences of an accident, such as the damage or injury, does not, of itself, dictate the seriousness of the offence or the amount of penalty. However, a breach where there was every prospect of serious consequences might be assessed on a different basis to a breach unlikely to have such consequences. The occurrence of death or serious injury may manifest the degree of seriousness of the relevant detriment to safety: Tyler v Sydney Electricity (1993) 47 IR 1 at 5, Inspector Hannah v Wonar Pty Ltd (1992) 34 AILR 377at 378, Watson v Southern Asphalters Pty Ltd (1996) 83 IR 446 at 456, Wong v Melinda Group Pty Ltd (1998) 82 IR 118 at 131, WorkCover Authority of New South Wales (Inspector Hannah) v Albury City Council (1999) 90 IR 397 at 408-409, Lawrenson Diecasting Pty Ltd (at 476), WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd (at 428) and Page v Walco Hoist Rentals Pty Ltd (No 2) (at 22).

14 The principles of general and specific deterrence are also relevant in sentencing considerations. The approach to be taken on that issue has also been dealt with in some detail in Capral at 643-645. Without detailing all that the Full Bench had to say on those issues I believe the approach to deterrence in the sentencing process is encapsulated in the following passage from the Full Bench in Capral at 644 as follows:

... both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Page v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39 at [40]-[43] we would expect such cases to be very rare, and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted.

15 In the context of the above well established sentencing principles it will also be necessary to have regard to those general matters going to aggravation, mitigation and other factors identified in s 21A (1) of the CSPA relevant to the defendants. As was said in R v Way at [56]:

... it is not to be overlooked that there is a well established body of principles that have been developed by the courts over a long period of time. By providing guidance in the form of a list of aggravating and mitigating factors in s 21A, the Parliament did not intend to overrule or disturb those principles or restrict their application. In so far as those principles refer to factors, whether objective or subjective, that affect the 'relative seriousness' of the offence, they are expressly preserved by s 21A(1)(c).

16 In addition to the above general principles, the principle of parity in the sentencing process is relevant to my considerations, specifically in relation to Hayman Industries and DSC. That principle and its application will be considered by me later in this judgment.

Relevant considerations

17 I turn first to consider the culpability of DSC. In assessing the objective seriousness of the offence, it is necessary to consider the extent to which the risk to health and safety was foreseeable. The starting point for the determination of foreseeability within the context of the objective seriousness of an offence is whether there was 'an obvious or foreseeable risk to safety against which appropriate measures were not taken'. (Lawrenson Diecasting at 476).

18 In addressing the relative foreseeability of risk, the inherently dangerous nature of the Press is particularly relevant. On that point, commencing at [57] of my substantive judgment and following, I said:

There is no doubt in my mind that the safe operation of the Press demanded a rigorous approach to the provision of adequate training and instruction. The Press was, and is, an inherently dangerous piece of machinery. Evidence of that is found in the Bulletin issued by the manufacturers of the Press ...

19 As well, by way of introduction in the manufacturers Bulletin, the following statement appears:

The Power Press has been recognised for many years as being one of the most dangerous machines used in industry. Records clearly indicate that many serious accidents are still occurring due to persons' hands being trapped between the tool and die, resulting in severe mutilation of the fingers or hand. It is essential for the safe operation of Power Presses that both the employer and employee should recognise the hazards connected with their use.

20 Against that background, DSC had an absolute obligation to ensure that the operation of the Press was undertaken safely and without risk to the health and safety of employees required to operate it. Implicit in that obligation was the need to ensure that the operation of the Press had been risk assessed as to its safe operation and that employees had been instructed, trained and supervised as to its use. Counsel for the defendants submitted that these obligations were keenly recognised and addressed by the defendant in its occupational health and safety policy in force at the time of the incident. A large part of that policy was set out in my substantive judgment and bears repeating for current purposes. That policy relevantly provides:

DSC POLICY

1. Upon taking an order from clients we must:-

(a) Establish exactly what duties the worker is required to perform. Where duties are to be performed and under what circumstances.

(b) Establish exactly who from the client company will supervise and direct the worker.

(c) Establish exactly what plant/machinery/equipment the worker will be required to operate and to what extent will the supervisor train the worker in operation of equipment and a safe system of work to perform duties with the equipment.

2. When a client orders a worker to operate plant/machinery/equipment that has the potential to cause injury (even if injury can only occur through operator carelessness or neglect) branch managers must:-

(a) Visit the site where the work is to be performed. Inspect the particular plant/machinery/equipment to be operated and satisfy themselves that the machinery is adequately guarded etc to prevent accidental injury and satisfy themselves that the client/supervisor has in place a 'safe system of work' and that the supervisor will instruct and supervise the worker in that 'safe system of work'.

3. When assigning a worker to a client to operate equipment DSC must advise the client of the workers skills, qualifications and experience. DSC must also advise the client of what training the worker will require in order to safely operate equipment. In most circumstances DSC will have to advise the client that the worker needs full training in operational features and hazards of a particular piece of equipment and also full training in a 'safe system of work' to operate the equipment along with on-going supervision of the task being performed.

4. When assigning a worker to a job/client requiring operation of potentially dangerous plant/machinery/equipment DSC must:-

(a) Advise the worker of the exact requirements of duties to be performed and equipment to be operated.

(b) Advise the worker of potential hazards if equipment is incorrectly or carelessly operated.

(c) Advise the worker what training will be provided to them the client supervisor in features and hazards of equipment and most importantly the 'safe system of work' in which to operate the equipment.

(d) Advise the worker not to operate any equipment where they have not received adequate training in features and hazards and a 'safe system of work'.

(e) Advise the worker not to operate any equipment that is defective or not safely guarded in their judgment.

5. When a worker has been assigned to a job using potentially dangerous equipment DSC must:-

(a) Follow up with the worker that they have received adequate training from the client in a 'safe system of work' and that equipment being operated is not defective.

(b) Follow up with the client that adequate training has been given to the worker in equipment features and hazards and a 'safe system of work' and that the worker is adhering to the 'safe system of work'.

...

7. If upon a Branch Manager conducting a site/equipment inspection and not being able to satisfy him/herself that the equipment is safe and that the system of work is safe, the Branch Manager is authorised to offer the client one (1) hour (for free and at DSC expense) of an occupational health and safety consultants time to do a specific inspection and recommendation.

21 Counsel for the defendant submitted that when assessing the nature and quality of the offence it should be borne in mind that the above policy represented a system of work directed to ensuring the health and safety of employees. That is not a submission that accords with my findings. As I found in my judgment going to liability, the provisions of DSC's policy were not translated into practice in satisfaction of the obligations created by s 15(1) of the Act. In other words, although there was a policy that dealt with occupational health and safety issues, particularly with ensuring that employees were adequately trained, instructed and supervised, in reality, there was no systemic application of that policy sufficient to comply with the obligations imposed by the Act. On that point I held at [69] as follows:

The role of DSC in the provision of instruction and training to Mr Rowe was cursory, to say the least. Certainly it in no way accorded with the requirement of their own policy to 'establish exactly' what plant and equipment Mr Rowe would be required to operate and, given the Press had the significant 'potential to cause injury', the absolute requirement of DSC's own policy was that the Branch Manager must not only visit the site where the work was to be performed but inspect the particular equipment and to satisfy themselves not only as to the adequacy of guarding of that machinery but that there was in place a safe system of work both as to instruction, training and supervision of their employee. The evidence of those employees of DSC best placed to ensure that the company's own policy was adhered to and that the company's obligation to ensure the health, safety and welfare of its employees at work was not merely a piece of paper, but one that was carried through in practice, was unconvincing to say the least. On the evidence before me as to instruction and training in relation to Mr Rowe, I am of the view that the following through of the DSC policy fell far short of what would be required of an employer in discharging it's obligations to ensure a workplace free of risk to safety.

22 I subsequently held at [74]:

...In any event, the real position seems to be that notwithstanding a written policy by DSC that has certain mandatory requirements as to what its Branch Managers must do in relation to occupational health and safety issues, there was no commitment by management in a real sense to ensure that that was done in a way that resulted in a comprehensive approach to those matters in order to ensure a workplace free from risks to safety. That is, adequate and proper training, instruction and supervision.

23 As I concluded, 'the training and instruction given to Mr Rowe, purportedly to ensure the safe operation of the Press, was woefully inadequate'. Without doubt, the serious injuries suffered by Mr Rowe evidenced the need for adequate training and instruction in the operation of the Press, particularly directed to ensuring that the operator did not place any part of their body under or around the die area. That 'should have been the primary piece of information, warning, instruction and training about the press’. A failure to so train and instruct Mr Rowe gave rise to 'every prospect of serious consequences’ (Capral). As such, the objective seriousness of the offence charged must be assessed with respect to the potentially hazardous nature of the machinery together with the fundamental flaw in the training, instruction and supervision of Mr Rowe that permitted him to operate the Press in a manner that clearly facilitated the creation of the risk to health and safety.

24 At the substantive hearing, evidence was given by Ms Carydias who had occupied the role of Branch Manager at the defendant’s Liverpool office for a number of years. It was from that office that Mr Rowe was assigned to Hayman Industries. At that time however, Ms Carydias was on maternity leave. In her evidence, Ms Carydias addressed the practical application of the DSC policy and how the duties of Branch Manager would be discharged pursuant to it. Counsel for the defendants relied upon the fact that Ms Carydias would have carried out an inspection of the premises of Hayman Industries as indicating that DSC was an employer that endeavoured to fulfil its obligations under the Act. By way of written submissions, counsel for the defendants contended as follows:

An employee of the first defendant, Ms Carydias, went to Hayman's premises before Mr Rowe commenced work. Ms Carydias undertook a visual risk assessment of the job Mr Rowe was to undertake and was satisfied, after some enquiries regarding the guarding on the press, that it was a safe workplace for Mr Rowe.

25 In assessing the evidence of Ms Carydias, I concluded at [72] as follows:

To the extent that she gives evidence as to what would have been the system that she says would have been followed, I am satisfied it is evidence of adherence to a system of work that, in discharging its obligations under the Occupational Health and Safety Act to ensure the health, safety and welfare of employees at work, was inadequate in every respect. In other words, the overwhelming impression is that there was a scant and superficial assessment as to matters such as training, supervision and risk analysis but nothing in any way commensurate both with the obligations arising under s15 of the Act nor with the written policy of DSC.

26 The consequence of this ‘scant and superficial’ assessment was that ‘part of the instruction and training given to Mr Rowe as to the operation of the Press did permit him to put his hands in and/or near the die area in order to assist in the removal of the pressed pole cap’. It is clear that a proper risk assessment followed by adequate instruction or training would have ensured that Mr Rowe did not operate the Press in such an overtly unsafe manner. Counsel for the defendants relied upon the fact that Mr Rowe, in the evidence he gave during the course of the hearing, suggested that he knew not to place his hands underneath or around the die area. That evidence of Mr Rowe has to be received in light of the central tenet of the instruction Mr Rowe did receive. That was that the Press would not stroke while the guard was open. In short, as I made clear, Mr Rowe believed that if the guard was open, the Press would not stroke and it was therefore safe to put his hands into the die area of the Press, which he did, and subsequently lost four fingers when the Press stroked. The instruction received was obviously incorrect. Had Mr Rowe been instructed not to place his hands in or near the die area under any circumstances then any catastrophic failure of the Press would not have resulted in any injury to Mr Rowe. That should have been the key instruction provided to Mr Rowe, and it was DSC's responsibility, as his employer, to ensure that it was. As a result of its failures DSC was directly responsible for the creation of risk to the health and safety of Mr Rowe that was significant, readily foreseeable and easily preventible.

27 In addressing the relative culpability of DSC, counsel for the defendant contended that mitigating in its favour was the fact that DSC did not exercise control of the premises at which Mr Rowe sustained his injury. That proposition is not consistent with the authorities of this Commission. It is well established that labour hire companies attract considerable duties under s 15(1) of the act to ensure the health and safety of employees hired out to third parties: See Drake Personnel Ltd t/a Drake Industrial v WorkCover Authority of NSW (Inspector Ch’ng) (1999) 90 IR 432. In that decision, the Full Bench held that the duties imposed by s15(1) on a labour hire company were not diminished by the fact that the company was not in control of the premises that its employees were sent to work at. On that point, the Full Bench held at 455 as follows:

A labour hire agency does not employ people to work for itself but to work for a client, it does not directly on a day to day basis supervise the tasks carried out by the employee and it is usually not in control of the workplace where the work is done. However, these circumstances do not obviate, or diminish, the obligation of the employer under s 15(1) of the OH&S Act to ‘ensure the health, safety and welfare at work of all the employer’s employees’. Indeed, in our view, an employer who sends its employees into another workplace over which they exercise limited control is, for that reason, under a particular positive obligation to ensure that those premises, or the work done, do not present a threat to the health, safety or welfare of those employees. Certainly, there is no basis to consider that such an employer has a lesser liability or obligation under s 15(1).

28 It is clear that DSC was under a ‘positive obligation’ to proactively ensure the health and safety of all its employees. On behalf of DSC, it was submitted that, by having an arrangement with Hayman Industries that it (Hayman) would train Mr Rowe, and provide supervision in the form of supervisors who worked on the floor during a shift, DSC acted in a manner designed to ensure the health and safety of its employees, particularly Mr Rowe. That was not a conclusion that I came to. The policy of DSC, supplemented by any arrangement with Hayman Industries, did not translate, in any substantial way, to a system of work that complied with its obligations as an employer. As I said at [81] of my judgment going to liability:

I am satisfied that, as the employer of Mr Rowe, DSC failed to provide adequate instruction and training to him in relation to the safe operation of the Press in that they failed to ensure that the instruction and training that was made available to Mr Rowe by Hayman Industries was adequate in that he was properly instructed and trained as to that task. That instruction and training should have encompassed both the risks involved and the safety precautions that he should have undertaken while operating that Press including, particularly, not putting his hand or hands anywhere in or near the die area of the Press at any time, whether the guard was closed or open. It seems to me that that was an absolutely fundamental prerequisite to any instruction and training that Mr Rowe should have received in relation to the safe operation of the Press. I am more than satisfied that that was not done and that the only safeguard that Mr Rowe was offered was an absolute assurance that the machine would not stroke while the guard was open. That assurance was not only wrong but inadequate in ensuring Mr Rowe's safety.

29 It was submitted by counsel for the defendants that the objective seriousness of the offence should be assessed in light of the fact that had an adequate risk assessment been conducted by DSC it would not have identified the potential for the catastrophic failure of the Press that occurred on 30 June 2000. That may well be right. However, even the most elementary of risk assessments would have identified what, in my opinion, was the most important instruction for Press operators to abide by. That being, during its operation, do not, under any circumstances, place any part of your body underneath, or in direct proximity to, the die area of the Press. Had such an instruction been given to Mr Rowe then it is clear that any catastrophic failure on the part of the Press would not have posed the risk to safety that it did. At [121] of my substantive judgment I said:

...In short, in my view, the real failures of the defendants here are the failures that I have already identified, going to instruction, training, supervision and risk assessment. In short, the inadequacy of the guarding to the extent that it failed to operate as it should have on the day in question, would have had no impact on the ultimate outcome as far as the injuries to Mr Rowe are concerned in that if Mr Rowe had been properly and adequately instructed, trained and supervised, which he would have been if a proper risk assessment had taken place, then he would not have had his hands anywhere near the die area when the guard failed in the unexpected circumstances that it did on the day in question.

30 As such, it was the failure to ensure the adequacy of training, instruction and supervision that represented the most significant breach of DSC’s obligations under s 15(1). Those failures go directly to the 'nature and quality' of the defendants' failures and the culpability attributable to them.

31 It is also relevant when assessing the objective seriousness of an offence to consider if there were readily and easily available remediation steps that could have been undertaken by the defendants before the accident to prevent injury occurring. A simple risk assessment would have identified the extreme risk associated with a Press operator placing any part of his body under or around the die area. Given that, had DSC exercised its own policy in the manner in which counsel for the defendants contended it did, it is almost certain that the subsequent risk of injury to Mr Rowe would not have arisen in the way that it did. The DSC policy clearly appreciated the need to ensure that training, instruction and supervision were adequate. To facilitate that, provision was made for a risk assessment to be conducted, at DSC’s expense, if required. At [95] to [97] in my substantive judgment I found:

[95] There is no doubt, in my view, if a proper and adequate risk assessment had been undertaken in relation to the safe operation of the Press, it would have highlighted the hazard that was self evident to all who observed the operation of the Press let alone somebody skilled in the issue of risk assessment. That is, if the risk assessor had asked himself or herself whether any action was required to ensure the safety of persons using the Press, the answer would inevitably have been yes. Inevitably, in my view, included as part of that assessment, there would have been an absolute requirement that the operator of the Press should not place his or her hands or any other body part into or near the die area of the Press at any time. As Mr Buckland advised in his expert report by way of preventability in relation to this accident:

Furthermore, allowing for the fact that an unwanted stroke of such a Power Press could possibly be caused by a mechanical failure, the plaintiff could have also been provided with the tool e.g. long handled tongs, to remove the pole caps from the die, rather than doing so by hand. The plaintiff would not have then had to place his hand into the danger area between the dies and his said injury should not have occurred.

[96] Having identified that hazard, steps would have been devised to deal with it. Those steps would have included those steps that were put in place after the accident. That is, the long handled magnetic tongs as well as the signs on and near the Press instructing employees not to insert their hands into the die area. All of those steps, once devised, would then be integrated into the instruction, training and ongoing supervision of any employee operating the Press.

[97] In my view, it is abundantly self evident that a proper risk assessment carried out in relation to the safe operation of the Press would have highlighted the hazard arising if any part of the operator's hands or any other part of the operator's body was allowed to enter the area in or near the die. That risk assessment was never undertaken in any proper way by employees of Hayman Industries and further, employees of DSC did not, in my view, discharge their obligation to undertake such an assessment in relation to the safe operation of the Press either by requesting it be done by Hayman Industries or relying on their own policy if there was any uncertainty in their own minds as to the hazards that the operation of that Press encompassed.

32 The simple remediation steps identified above indicate the extent to which this incident was readily preventible and is a relevant consideration when considering the objective seriousness of the offences.

33 Overall, in considering the matters to which I have referred, I consider the offence as an objectively serious one and I propose to approach the determination of penalty on that basis. In doing so, the respective culpability of DSC and Hayman Industries is a relevant consideration.

34 In Postiglione v The Queen (1997) 189 CLR 295 the High Court considered the relationship between the principles of parity and totality in the sentencing process. Essentially, parity is a matter to be determined by having regard to the circumstances of the co-offenders and their respective degrees of culpability. That principle becomes particularly relevant in assessing the culpability of the corporate defendant DSC vis-à-vis that of Hayman Industries.

35 It has been emphasised on more than one occasion that the principle that co-offenders should receive the same sentence should not be taken too far and applies if all other things are equal: See R v Dean NSWCCA, unreported, 27 September 1996 and R v O'Brien NSWCCA, unreported, 17 April 1997.

36 While the particularised failures of the respective corporate defendants were not identical in all respects, I consider their respective culpability to be equal. I come to that view having assessed that the true nature and quality of the offence of DSC lay in it's failure to undertake a proper risk assessment, and to provide proper instruction, training and supervision. They were also failures pertinent to Hayman Industries and to which it pleaded guilty. As I said in relation to DSC:

...In short, in my view, the real failures of the defendants here are the failures that I have already identified, going to instruction, training, supervision and risk assessment. In short, the inadequacy of the guarding to the extent that it failed to operate as it should have on the day in question, would have had no impact on the ultimate outcome as far as the injuries to Mr Rowe are concerned in that if Mr Rowe had been properly and adequately instructed, trained and supervised, which he would have been if a proper risk assessment had taken place, then he would not have had his hands anywhere near the die area when the guard failed in the unexpected circumstances that it did on the day in question.

37 The same applies with equal force in relation to Hayman Industries. The fact that they also failed to maintain and adequately guard the Press would not have necessarily given rise to the clear and foreseeable risk to safety that the absence of risk assessment, training, instruction and supervision represented to the overall health and safety of Mr Rowe in the circumstances of the accident. In short, those additional failures to which Hayman Industries pleaded guilty do not materially add to Hayman's culpability such as to render it's (Hayman's) culpability greater than that of DSC.

38 That is so particularly, in my view, given the decision of the Full Bench in Drake regarding the duty of labour hire companies under the Act.

39 In coming to that conclusion, I do against the differing penalty provisions relevant to DSC and Hayman Industries. Hayman Industries had prior convictions that enlivened s 51A of the Act such that the maximum penalty was $850,000. In the case of DSC, it has no prior convictions and the maximum penalty is $550,000.

40 Turning now to consider the principles of general and specific deterrence. The Full Bench in Capral held that it was necessary to give effect to such considerations in all but exceptional circumstances.

41 The decision of the Full Bench in Capral cited, with approval, the judgment delivered by Hungerford J in Fisher v Samaras Industries Pty Ltd (1996) 82 IR 384 where his Honour held at 388:

I...would only echo what I see to be the fundamental duty of the Court in this important area of public concern, that is, to ensure a level of penalty for a breach as will compel attention to occupational health and safety issues so that persons are not exposed to risks to their health and safety at the workplace.

42 That duty, however, is fettered by an equally applicable responsibility ‘not to impose such a penalty as would be oppressively high’. Given the nature of the obligations imposed upon labour hire companies by s 15(1) of the Act, as discussed in Drake, it is clear that there is a need to factor general deterrence into any penalty I determine against the corporate defendant. The 'positive obligation' attracted by labour hire companies poses a significant duty to ensure that their employees are not subjected to risk to health and safety, which is effected, in part, by ensuring the work to be undertaken is properly risk assessed and that those employees are adequately trained, instructed and supervised as to that work.

43 Specific deterrence is particularly relevant in this matter given the 'scant and superficial' manner in which DSC went about implementing a safe system of work, purporting to incorporate its own policy as well as its obligations imposed by the Act. In Capral, the Full Bench held at [77]:

In sentencing, a court may disregard the element of specific deterrence if satisfied that the risk of re-offending is low or non-existent. The court may form such a view as a result of the rehabilitation of the offender ... or because the offender will not have the opportunity to commit a similar offence in the future ... However, we think it unlikely that the weight to be attached to specific deterrence could be reduced to zero in case of offences under the Act. At least where the offender continues to be an employer, risks to the safety of its employees or contractors may exist or be possible. Breaches of the duties imposed by the Act may occur both by commission and omission. Employers are required to maintain constant vigilance and take all practicable precautions to ensure safety in the workplace. They must adopt an approach to safety which is pro-active and not merely re-active... In view of the scope of these obligations, in most cases it will be necessary to have regard to the need to encourage a sufficient level of diligence by the offender in the future. This is particularly so where the offender conducts a large enterprise which involves inherent risks to safety. ...

44 On the evidence of Mr Smith in the sentencing proceedings, minimal steps have been taken since the incident to ensure that the policy of DSC translates into a safe system of work. In fact, Mr Smith, in his evidence, expressed the opinion that to comply with its obligations under the Act, DSC needed only to adopt further 'paperwork' and not concern itself with ensuring that that 'paperwork' translated into practical application. On that point, Mr Smith was cross-examined as follows:

Q. Can I just take you to paragraph 21 of the affidavit. You see there in paragraph 21 you say that since the accident you have called for a review of the first defendant's OHSMS. What is the 'OHSMS'?

A. The occupational health and safety policy of the company. I do not know what MS means.

Q. That is why I asked the question. When you refer to that you mean the document which I think was tendered in the proceedings, but can I show you this copy of it. Is that the document that you have called to have reviewed?

A. No, we are reviewing the total policy and everything. This was our policy at that particular stage. Now, because we have been found guilty by her Honour, we have discovered that it appears to me that the paperwork is a bit more important than action so as a result of that we have got some people in to do some paperwork. It won't affect, your Honour, what we do as far as occ health and safety is concerned but if it means we are found innocent instead of guilty, that is what we will do.

Q. So the review is not being conducted to in any way affect what the company does in respect of occupational health and safety?

A. We already, as I have given evidence, do everything that is possible for our company as far as occ health and safety of our employees.

Q. Can you deal with my question which was, the review, is that intended to change anything in respect of the steps the company takes in respect of occupational health and safety matters?

A. No.

45 It was the evidence of Mr Smith that any reviews being conducted in relation to occupational health and safety at DSC were directed to enlarging the paper policy of the defendant rather than resulting in any systemic change to the overall system of work within the corporate defendant's business. At [22] of his affidavit, Mr Smith stated that DSC has engaged the National Safety Council of Australia (NSCA) to undertake a 'gap audit' of the defendant's occupational health and safety policy. In re-examination Mr Smith did state that any recommendations made by the NSCA as to the practical application of DSC's policy would be implemented. Notwithstanding that, it is not, in my opinion, significant enough to obviate the need for specific deterrence.

46 Mr Smith also stated in evidence that no further occupational health and safety training has been provided to members of DSC staff since the incident despite my observations at [73] in my substantive judgment as follows:

It has to be said that DSC did little to assist its management staff at branch level to comprehensively undertake the occupational health and safety obligations that its own policy demanded. In other words, Ms Carydias, like Ms Parkyns, both Branch Managers at Liverpool, had no formal occupational health and safety training during the period when they acted in the position of Branch Manager and certainly evidenced no ability to undertake any worthwhile assessment even based on first principles, as to the identifiable risks and hazards in relation to the safe operation of the Press as well as the other machinery being operated at Hayman Industries.

47 Given that, I am of the opinion that the conduct of DSC post the incident indicates that specific deterrence looms as a significant element to consider when determining a final penalty in relation to this offence.

48 DSC has no prior convictions. The evidence is that DSC has been operating in the labour hire industry since 1980, and presently has three branches, fifteen permanent employees and hires out approximately 2000 workers per annum with a turn over of $8,000,000. In making submissions on how much weight I should attach to those considerations, counsel for the defendants relied upon the decision of the Full Court in Haynes v CI &D Manufacturing (1995) 60 IR 445 where at 456-457 it was held:

We consider that the extent of the operations of the defendant enterprises is to be taken into consideration when coming to conclusions having regard to the past record. Human experience indicates that the larger the number of industrial transactions a company is involved in, the larger the number of industrial accidents which occur as a matter of statistical expectation. The safety record of a very large company with some prior convictions may, on analysis, be better than that of a smaller company with fewer such convictions...

49 I accept, given that DSC provides labour hire for the relatively hazardous manufacturing and production industries, the fact that neither defendant has prior convictions is a factor that weighs considerably in their favours.

50 That DSC provided assistance to Mr Rowe after his accident was relied upon as a relevant subjective factor operating in favour of both defendants. The extent of that assistance is set out in the affidavit of Mr Smith as follows:

16. On or about 30 June 2000, upon learning of the injury to Mr Steven Rowe I directed Mr Teahan to visit Mr Rowe in hospital and attend to him, provide him with any assistance he required.

17. I am aware that pursuant to my direction, Mr Teahan has assisted Mr Rowe in his rehabilitation and has provided Mr Rowe with assistance in relation to a number of personal and financial matters.

18. The First Defendant has also provided Mr Rowe with counselling to help him through this difficult time.

19. The First Defendant provided financial support to Mr Rowe while his workers compensation claim was being processed.

20. The First Defendant assisted the employee to be rehabilitated back to work.

51 The evidence of Mr Smith on that issue was not challenged. I accept it as a positive factor on behalf of the defendants.

52 In relation to DSC, taking into account all of the principles and considerations referred to generally, including those specific to DSC, I determine a penalty of $40,000.

53 I turn now to consider the personal defendant. In relation to the assessment of Mr Smith's culpability relative to that of the corporate defendant, it is relevant to note the statement of Wright J, President in Walco Hoist. His Honour said at 29:

I consider that, notwithstanding the deeming nature of s 50(1) of the Act in relation to a person such as the second defendant, it does not follow from the fact that an individual is, in the circumstances such as those here present, deemed to be guilty of the offences resulting from the guilt of the corporate defendant, that his degree of culpability is to be assessed necessarily at the same level as the culpability of the corporation.

54 The starting point in assessing Mr Smith's overall culpability must be by assessing the degree of culpability that can be attributed to him relevant to acts or omissions on his part and on the part of the corporation and the extent to which the corporation's acts or omissions can be properly attributed to him. (see Walco Hoist at 187)

55 In approaching any assessment of culpability from that starting point, it is relevant that Mr Smith was a person directly involved in the management of DSC. At [129] of my substantive judgment I held:

In relation to Mr Smith, I am abundantly satisfied that he was very much in a position to influence the conduct of the corporation in relation to the contraventions that I have established. Mr Smith was not an arms length managing director in the sense in that he paid no attention or affected no concern about the overall conduct of the business, particularly matters going to safety. As he indicated in his evidence before me, the corporate defendant and he, on its behalf, have been involved for many years in addressing their responsibilities in relation to occupational health and safety and it was he who was instrumental in putting in place the policy to underpin the corporate defendants approach to occupational health and safety...

56 On that basis, Mr Smith had an obligation to ensure that the system of work adopted by the corporate defendant, over which he had significant control, was consistent with it's (DSC’s) obligations arising under s 15(1) of the Act. Relevant to Mr Smith's culpability are my findings at [131] and [132] as follows:

...To start with, it was submitted that as Managing Director, Mr Smith had a system in place to manage occupational health and safety risks and that he adequately supervised compliance with that system. Mr Smith did not have such a system in place. He (or rather DSC) had a policy in place. Mr Smith had been directly responsible for that policy being developed. But what he did not do was exercise all due diligence to ensure that that policy became the basis for an entrenched systemic process within DSC designed to ensure the worksites to which the company's employees were sent were safe and free of risks to safety. The management staff at DSC, particularly at branch level, were ill-equipped to do the task that the company's occupational health and safety obligations demanded let alone the company's own policy.

On the evidence before me, Mr Smith took no proactive steps to 'adequately supervise compliance' with the company's policy let alone any system contingent on it. He certainly viewed Mr Teahan as having that responsibility but beyond asserting that belief, there is no evidence that Mr Smith took any steps that could be characterised as all due diligence in that he adequately supervised compliance with any system designed to ensure that the company's policy was being carried out in furtherance of its occupational health and safety obligations. As Mr Smith said in relation to Mr Teahan's role in relation to occupational health and safety:

It is something I leave to him to supervise, the training of the occupational health side of our divisions, he reports to me on that basis.

57 On the evidence, Mr Smith was and is a person intimately involved in the management of DSC. His control extended to introducing the corporate defendant's policy in relation to occupational health and safety and taking steps to ensure the policy was adequately translated into a safe system of work. In that sense, Mr Smith had the role and ability to influence the manner in which DSC's policy was applied by his General Manager, Mr Teahan. Beyond delegating that function to Mr Teahan, Mr Smith took no proactive steps to 'adequately supervise compliance' with the company's policy let alone any system contingent on it. Mr Smith clearly formed, and still holds, the opinion that his obligations arising under s 15(1) and s 50 of the Act were and are properly satisfied by the delegation of his authority to Mr Teahan. The evidence given by Mr Smith at the substantive hearing, directly relevant to that issue, was as follows:

Q. Yes, and you are able to control the conduct of the company and you are able to give great attention to such directions as you consider appropriate for the defendant corporation?

A. That is correct.

Q. You did not make any enquiries of Mr Teahan as to the detail of the training that he delivered to branch managers in respect of risk assessment?

A. No, I left that to him.

Q. Similarly, I don't want to go through each heading, but you did not make any enquiries of Mr Teahan in respect of what training, if any, he delivered to branch managers in respect of assessing whether guarding of equipment was adequate?

A. No.

Q. Similarly, in assessing whether supervision was adequate?

A. No.

58 Mr Teahan had day to day control as to how the company's policy was being implemented. Such an approach is understandable given Mr Teahan's position of General Manager of DSC. The involvement of Mr Smith was confined to circumstances when Mr Teahan believed it necessary to seek advice or report on matters relevant to the proper implementation of the company's occupational health and safety systems. This process does not diminish the responsibility Mr Smith had under the Act, but it does, in my opinion, serve to marginally reduce his culpability relative to that of the corporate defendant.

59 The element of general deterrence has limited application in relation to Mr Smith when one has regard to the principle underpinning it earlier referred to. As to specific deterrence, I am of the opinion that there is a need for this to be given weight in any penalty I impose. In addressing the principle of specific deterrence in relation to DSC, I drew attention to the lack of remedial steps taken since the incident as indicated in the evidence of Mr Smith. That evidence suggested a complete misapprehension of the obligations imposed by s 15(1) of the Act in order to ensure a safe system of work, not merely a comprehensive policy structure. The failure of Mr Smith, on his evidence, to acknowledge his obligation to compel a systemic adoption of DSC's policy into overall safe systems of work renders specific deterrence particularly relevant in my considerations.

60 It is relevant that Mr Smith has no prior convictions under the Act. Counsel for the defendants also submitted that Mr Smith was an occupational health and safety conscious individual who had engineered the adoption of the corporate defendant's policy. That may be so but it has not moved beyond being a policy to a hands-on way of going about the company's business that encompasses practical and safe standards in the day to day discharge of that business. As Managing Director of his company, Mr Smith is in the prime and responsible position to drive such a process forward. Since the incident involving Mr Rowe, I see no relevant evidence that such an approach has occurred as far as Mr Smith's view as to his responsibilities on that issue.

61 Counsel for Mr Smith submitted that the circumstances of the offence warranted the exercise of my discretion to apply the provisions of s 10 of the Crimes (Sentencing Procedure) Act 1999. That section relevantly provides:

(1) Without proceeding to conviction, a court that finds a person guilty of an offence may make any one of the following orders:

(a) an order directing that the relevant charge be dismissed;

...

(3) In deciding whether to make an order referred to in subsection (1), the court is to have regard to the following factors:

(a) the person’s character, antecedents, age, health and mental condition,

(b) the trivial nature of the offence,

(c) the extenuating circumstances in which the offence was committed,

(d) any other matter that the court thinks proper to consider.

62 There is clear and long standing authority that for offences arising under the Act, the exercise of discretion under s10 should be available in only very limited circumstances: See WorkCover Authority of NSW v Profab Industries Pty Limited (2000) 49 NSWLR 700 at [19], [21] and [26]. Particularly at [26] the Court held:

Nevertheless, in occupational health and safety offences before this Court the exercise of the discretion under s 556A (cf s 10 of the Crimes (Sentencing Procedure) Act 1999 (NSW)) must be considered as extraordinary and highly exceptional. When a defendant seeks its exercise cogent reasons must, in our view, be provided by the defendant for such exercise and also by the judge acceding to that submission...

63 On behalf of Mr Smith, a number of factors were identified that went to justifying the 'exceptional' circumstances that must exist for such an application to be successful. The first was said to be the conduct of Inspector Mansell acting as prosecutor in these proceedings. At [123] and [124] of my judgment I addressed the nature of the 'significant animosity' that had arisen between the prosecutor and Mr Smith very early in these proceedings. That animosity had as its genesis certain assurances given by Inspector Mansell that, in seeking to interview Mr Smith after the incident involving Mr Rowe, he was doing so with a view to prosecuting the corporate defendant only. Despite those assurances, Inspector Mansell ultimately proceeded to issue a summons against Mr Smith without any further advice or formal warning.

64 In addressing that issue in my substantive judgment I noted that, while a prosecutor has a wide discretion to commence proceedings, the manner in which Inspector Mansell exercised his authority to prosecute was, in the circumstances, unacceptable. Counsel for Mr Smith relied on the view expressed as supporting the submission that the prosecution brought against Mr Smith was engendered by the personal feelings of Inspector Mansell and not the public interest concerns that should dictate the suitability of instituting a prosecution.

65 The interview between Inspector Mansell and Mr Smith did not produce any material that was subsequently used to the detriment of Mr Smith or the corporate defendant. Regardless of that fact, I am satisfied, having heard all the evidence, that the decision taken to commence proceedings against Mr Smith was justified. Mr Smith clearly had, and still has, a hands-on involvement in the running of his company. He was actively engaged in implementing the corporate defendant's occupational health and safety policy. He had the ability and obligation to direct Mr Teahan as to his delegated responsibilities and expect and request reports as to safety issues relevant to the corporate defendant's business activities. For the reasons I have expressed, I have found Mr Smith failed to do that. In all the circumstances and notwithstanding the actions of Inspector Mansell, I am not persuaded that the circumstances warrant the exercise of my discretion under s 10 of the Crimes (Sentencing Procedure) Act 1999 (CSPA).

66 The possible appropriateness of a s 10 discretion order in relation to Mr Smith was a matter that was commented upon by me in my ruling going to the no case to answer submission at the conclusion of the prosecutor's substantive case. In that ex tempore ruling I addressed that issue as follows:

...I have noted the comments made by counsel for the prosecutor as to the possible application of s10 of the Crimes (Sentencing Procedure) Act in relation to Mr Smith should that arise for consideration. I see merit in such an approach subject to further evidence and submissions. (emphasis added)

67 The comments made by counsel for the prosecutor to which I refer in that passage was that the conduct of Inspector Mansell might constitute exceptional circumstances, should I ultimately consider them in that light 'subject to further evidence'. I have now heard and considered that evidence. Having done so, I am not persuaded that the exercise of my discretion under s 10 of the CSPA is warranted in relation to Mr Smith.

68 As an adjunct to the submission made in relation to the conduct of Inspector Mansell, counsel for Mr Smith identified that no director of Hayman Industries was prosecuted for an offence under the Act. Ultimately, the decision to prosecute is a matter for the prosecutor. The fact that Mr Graham Bagley, as a director of Hayman Industries, was not prosecuted is not a matter relevant to my considerations under s 10 of the CPSA relating to Mr Smith.

69 In relation to Mr Smith, taking into account all of the considerations and matters to which I have referred generally, including those matters specific to him, I determine a penalty of $5,000.

70 On the issue of costs, counsel for the defendants submitted that given only three of the six particularised failures pleaded by the prosecutor were successful, then it should follow that any order as to costs should reflect that result by some proportionate discounting. I do not agree.

71 In coming to that conclusion, I see no basis for discounting the prosecutor's costs because some of the particularised failures were found by me not to be made out. Ultimately at issue in the proceedings was the respective defendants' guilt for the offences charged being established beyond reasonable doubt. That has been determined. There is no basis, in my view, for discounting costs on some pro rata basis relevant to how many of the particularised failures pleaded by the prosecutor as evidence of a defendant's breach are not established.

72 In the circumstances, I believe it is appropriate to make an order for costs in favour of the prosecutor. In these proceedings I believe it is just and fair to make an order exclusively against the corporate defendant.

73 Accordingly, I make the following orders:

(i) Matter No IRC 3374 of 2002: offence arising under s 15(1) of the Act re Daly Smith Corporation:

· The defendant is guilty of the offence charged.

· A penalty of $40,000 is imposed.

(ii) Matter No IRC 3376 of 2002: offence arising under ss 15(1) and 50(1) of the Act re Thomas Edwin Curtis Smith:

· The defendant is guilty of the offence charged.

· A penalty of $5,000 is imposed.

(iii) I allocate a moiety to the prosecutor on the usual terms with respect to each penalty imposed.

(iv) I order the corporate defendant DSC to pay the costs of the prosecutor as agreed. Failing agreement within 28 days, the matter may be referred to the Registrar for assessment.

(v) If agreement is reached as to costs, the parties are to prepare and file draft orders to reflect the decisions I have made in order to record convictions and specific costs.

LAST UPDATED: 07/04/2005