Inspector Mayell v Invanovski and Global Crown Constructions Pty Limited [2009] NSWIRComm 49 (29 April 2009)

Last Updated: 1 May 2009

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION :
Inspector Mayell v Invanovski and Global Crown Constructions Pty Limited [2009] NSWIRComm 49



FILE NUMBER(S):
IRC 1469
1470

HEARING DATE(S):
17 November 2008, 11 March 2009

DATE OF JUDGMENT:
29 April 2009

PARTIES:
PROSECUTOR
WorkCover Authority of New South Wales

DEFENDANTS
Borce Ivanovski
Global Crown Constructions Pty Limited

CORAM:
Marks J


CATCHWORDS: OHS prosecution - concurrent proceedings - first defendant sole director and sole shareholder of second defendant - guilty pleas - penalty - defendants were conscious of safety problems associated with working on roof - range of measures were taken to minimise risk of injury - some carelessness and inattentiveness on the part of the deceased - totality of work situation - defendants utilised comprehensive safety systems - made available a range of safety equipment - serious offence, although not at highest level - general deterrence and impact on defendants - mitigating factors - guilty plea at earliest opportunity - expression of remorse and contrition - no prior convictions - co-operated with investigation - financial circumstances of defendant - appropriate to apply provisions of the Fines Act - ultimately, the burden of the financial penalty falls on individual defendant - each defendant found guilty - penalty imposed on both defendants

LEGAL REPRESENTATIVES
PROSECUTOR
Ms P McDonald of counsel
Solicitor
Legal Group
WorkCover Authority of New South Wales
Ms E Haigh
DEFENDANTS
Mr I Taylor of counsel
Solicitor
Truman Hoyle Lawyers
Ms F Inverarity

CASES CITED:
Inspector Trotter v BBC Hardware Limited and Bunnings Group Limited [2008] NSWIRComm 232
McColl v John Watson Building Services Pty Ltd and Dowdon Contracting Pty Ltd [2004] NSWIRComm 353

LEGISLATION CITED:
Fines Act 1996 s6
Occupational Health and Safety Act 2000 s10, s26


TEXTS CITED:




JUDGMENT:

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: Marks J

Wednesday 29 April 2009

Matter No IRC 1469 and 1470 of 2008

Inspector Mayell v Borce Invanovski and Global Crown Constructions Pty Limited

Prosecution under ss 26(1) and 8(2) in the alternative ss 26(1) and 10(1) and under s 8(2) in the alternative s 10(1) of the Occupational Health and Safety Act 2000

JUDGMENT

[2009] NSWIRComm 49

1 These proceedings concern a prosecution brought by Inspector Robert Mayell of the WorkCover Authority of New South Wales against two defendants. The first defendant, Borce Ivanovski, is the sole director and sole shareholder of Global Crown Constructions Pty Limited. He is charged with a breach of s 10(1) of the Occupational Health and Safety Act 2000 (“the Act”) by reason of s 26(1) of the Act. The second defendant is Global Crown Constructions Pty Limited (“Crown”) which is charged with a breach of s 10(1) of the Act.

2 Each of the defendants pleaded guilty to the charges and this judgment deals only with the question of penalty. There was tendered into evidence in each prosecution an agreed statement of facts. I set out hereunder the agreed facts as they concern the prosecution against Mr Ivanovski. In all essential terms, each document is identical.

1. At all material times the Prosecutor, Inspector Robert Mayell, was duly appointed under Division 1 of Part 5 of the Occupational Health and Safety Act 2000 (“the Act”) and empowered under Section 106 of the said Act to institute proceedings in this matter.

2. MR BORCE IVANOVSKI (“the defendant”) of 50 Edith Street, St Peters in the State of New South Wales, is and was at all material times the director of a corporation namely, GLOBAL CROWN CONSTRUCTIONS PTY LTD [ACN 109 027 867] whose registered address is located at Mack Partnership, 13 Marion Street, Bankstown in the State of New South Wales.

The Parties

3. At all material times the corporation’s undertaking was roof replacement works.

4. At all material times the corporation was the principal contractor engaged in the removal and replacement of a roof (“roof replacement works”) at an industrial factory situated at 40 Madeline Street Enfield, in the State of New South Wales (“the premises)”.

5. At all material times the corporation had limited control over the roof worksite at the premises.

6. The corporation engaged a sub-contractor, Mark Ingelmo, trading as Mo’s Roofing Services [ABN 28 074 383 223], to supply the labour for the roof replacement works. The sub-contractor in turn engaged additional contractors to assist in the roof replacement works, including Matthew Ingelmo.

7. At all material times the defendant was the sole director of the corporation. The defendant’s role at the premises did not involve undertaking the performance of the roof replacement works. Rather, his responsibilities included supply of the materials for the roof replacement work, supervision and ensuring the premises were safe.

Plea of Guilty.

8. The defendant entered a plea of guilty to the alternative charge under section 10(1) of the Occupational Health & Safety Act 2000, at the first mention of the matter on 12 November 2008.

Background

9. In or about August 2006, the owner of the premises, Kirby’s Furnishing (Dee Why) Pty Ltd [ACN 000 403 976] (“Kirby’s”), entered into a Minor Works Agreement contract (“the contract”) with the corporation in relation to the roof replacement works at the premises.

10. Pursuant to Schedule 2 of the contract, the scope of works was to include the supply of all labour, materials, safety equipment and materials handling equipment and to carry out the following:

i. removal and disposal of approximately 5000 square metres of corrugated iron roof and deteriorated fibreglass skylight sheets;

ii. supply and installation of a corrugated zincalume roofing system including regulation flashings, cappings, standard safety mesh and skylight sheet material.

iii. removal of rusted guttering and supply/installation of new quad zincalume gutters;

iv. removal of rusted and/or damaged downpipes and supply and installation of new PVC down pipes;

v. supply and installation of zincalume box gutter; and

vi. removal of fibro (asbestos) sheets between the two roof sections and replacement with “BMT” corrugated zincalume.

11. By virtue of clause 5.5 of the contract, the corporation was appointed as the principal contractor for the purposes of the Occupational Health and Safety Regulation 2001 (NSW) and was required to ensure compliance with the Regulations.

12. On or about 7 August 2006 the corporation contracted Mark Ingelmo to supply the labour for the roof replacement works. Mark Ingelmo operated as a sole trader, under the name of Mark Ingelmo, trading as Mo’s Roofing Services [ABN 28 074 383 223].

13. The scope of works Mark Ingelmo was engaged to perform at the premises included the removal of existing metal roofing and the installation of corrugated roof sheeting, safety mesh and fibreglass sheeting.

14. To assist in the roof replacement works, Mark Ingelmo directly engaged a number of roofing contractors, namely: Michael Sheather (roof plumber), Adam McManus (labourer), Anthony Read (roof plumber/labourer), Jason Metcalfe (roof labourer) and Matthew Ingelmo (roof labourer). Mark Ingelmo also indirectly engaged Darren Ford (plumber), through Michael Sheather.

The Roof Replacement Works

15. The roof replacement works commenced at the premises on 29 August 2006, with an expected completion time of six weeks.

16. The factory had a raised pitched roof and was 13.7 metres in height at the apex. The roof had a pitch of approximately 30 degrees.

17. The existing factory roof consisted of corrugated iron sheeting, interspersed with old Alsynite fibreglass skylight panels (the skylight panels). Prior to the roof replacement works there were approximately 260 skylight panels, which were placed at 2 metre intervals across the roof.

18. The condition of the existing roof was poor. It included surface rust on many of the corrugated iron panels and the skylight panels were brittle. The skylight panels were also deteriorating and blended with the roof, making it somewhat difficult to differentiate them from the corrugated iron panels.

19. There was no mesh, covering panel or other fall protection provided around or on top of the skylight panels. Further, certain sections of the existing roof did not have any safety mesh installed underneath. In particular a large number of the skylight panels on both the top and lower tiers of the roof did not have safety mesh installed underneath them.

The Incident on 4 September 2006

20. On 4 September 2006 at approximately 6.30am, Ivanovski, and roofing sub-contractors Metcalfe, Read, Sheather and Ford arrived at the premises. All the roofing sub-contractors had been working at the premises since 29 August 2006, with the exception of Ford, who commenced on site that morning.

21. In accordance with their usual morning procedure, the roofing sub-contractors proceeded onto the factory roof and began setting up their equipment for the day, which included preparing their tools, electrical leads and safety harnesses.

22. Just prior to 7.00 am Matthew Ingelmo arrived at the premises and made his way to the roof. He collected his harness and tools from the toolbox, which was located on the southern side of the existing roof, against the safety rail.

23. Matthew Ingelmo then commenced a discussion with Read, who was in the process of undoing the screws on the ridge capping of the roof, so that the roofing sub-contractors could don their harnesses. Prior to wearing a safety harness a section of the ridge capping had to be removed in order to anchor the harness to the roof structure. An alternative anchor point was available by using a ‘T-bar’ connection that was attached to the gutter of the roof.

24. In the course of conversation, Matthew Ingelmo began walking straight towards Read, and whilst he was doing so, inadvertently stepped onto a skylight panel. The panel was not load bearing and broke, causing Matthew Ingelmo to fall approximately 12 metres to the ground below. Read and Metcalfe both told investigators that Matthew Ingelmo was looking directly at Read when he was walking towards Read.

25. Matthew Ingelmo was conveyed by ambulance to Westmead Hospital, where he was treated for head trauma and cardiac arrest post fall. He was however pronounced dead, shortly after his admission.

26. Mark Ingelmo, Matthew Ingelmo’s brother, was not present at the premises on the day of the incident. On or about 1 September 2006 Mark Ingelmo advised his workers, that he would not be present at the premises on the morning of 4 September 2006 as he was attending a celebrating on 3 September 2006. Matthew Ingelmo also attended a father’s day celebration on 3 September 2006.

Investigation of the Incident

27. On 4 September 2006, Inspector Andrew Perry attended the premises and made observations contained in a Factual Inspection Report dated 19 September 2006. Annexed hereto and marked with the letter “A” is a copy of the Factual Inspection Report.

28. During the course of his inspection at the premises on 4 September 2006, Inspector Perry took a number of photographs. Annexed hereto and marked with the letter “B” is a copy of the photographs.

Systems of Work Prior to the Incident

29. The corporation did not provide or ensure that a safe system of work was in place with respect to the roof replacement works.

30. The corporation developed a Safe Work Method Statement (“SWMS”) titled, “Install Metal Gutter” and “Install Metal Roofing” to be utilised for the roof replacement works. Annexed hereto and marked with the letter “C” is a copy of the SWMS.

31. On 29 August 2006, the first day of the roof replacement works, the corporation provided Mark Ingelmo and the roofing sub-contractors with a copy of the SWMS. Each worker on the roof confirmed their agreement in accordance with the SWMS by reading and signing the SWMS. However Ford, who began work at the premises on 4 September 2006, was not provided with a copy of the SWMS prior to commencing work.

32. The corporation’s SWMS did not adequately control or address the risks associated with working on brittle and fragile roofing. The SWMS did not refer to the fragile roof sections per se, however a form entitled “Additional Health and Safety Issues” was attached to the SWMS. It outlined the following:

Date/Address: 25/8/2006 40 Madeline St, Enfield

Risk: Fragile Roof Sections

How the risk will be controlled: taking extra caution while on the roof, walking on screw lines, individual fall arrest systems”.

33. Although the corporation was aware of the presence of the brittle skylight panels, the corporation did not devise or implement adequate control measures to prevent the fall of persons working on the roof, or to reduce the risk of stepping on the brittle skylight panels.

34. Clause 60 of the Occupational Health and Safety Regulation 2001 provides that the risk of falls associated with persons working in, or passing across fragile or brittle roofs are controlled by the use of the following measures:

“(a) permanent walkways;

(b) if this is not practicable, adequately secured temporary walkways or other means to prevent the fall of persons working on or passing across the roof”.

35. Similarly, Section 3.11 of the WorkCover Code of Practice – Safe Work on Roofs, Part 1 – Commercial and Industrial Buildings, also outlines a number of measures to be taken in relation to working on brittle or fragile roofs. Section 3.11 states in part -

“a. If a roof or part of a roof covering comprises fragile or brittle material, the owner or occupier of the building must maintain a warning sign at any place where persons can gain access to the roof.

b. Before carrying out maintenance on a roof containing brittle or fragile materials, the employer or persons in control of the roofing work should:

...

(ii) Provide temporary walkways where any person is required to work on or use as a means of access any part of the roof sheathed with brittle material and where permanent walkways are not provided.

...

(iii) Provide temporary roof ladders of sufficient strength if any person is required to carry out work on or near to any part of a sloping roof sheathed in brittle material”.

(iv) Provide individual fall arrest systems including anchorages for any person working on or near any brittle roof sheathing or from roof ladders, wherever safety mesh, safety nets or similar fall protection has not been provided.

c. If the work involves removal of all or a major part of a roof sheathed with fragile material, safety harnesses should be worn by all personnel engaged in the work if:

(i) the pitch of roof is greater than 15 degrees; or

(ii) the roof is not provided with permanently installed safety mesh or at its perimeter:

· a solid balustrade; or

· scaffolding; or

· a guardrail...”

36. The corporation did not provide any temporary walkways or roof ladders for work upon the roof. Furthermore, the corporation did not install any warning signs alerting the roofing sub-contractors to the presence of the brittle skylight panels; nor did the corporation implement any adequate control measures to identify or isolate the skylight panels, such as erecting physical barriers around or on top of the panels.

37. On or about 1 September 2006, the defendant commenced spray painting yellow crosses on the panels on the lower tier of the roof which had no safety mesh underneath. However the panels in the area in which the roofing sub-contractors were working on the day of the incident were not marked.

38. The defendant asked Tony Read on the morning of the incident if he wanted crosses painted on the panels. Read informed the defendant that he thought this would not be required.

Risk assessment

39. The corporation did not undertake an adequate risk assessment with respect to the roof replacement works it had contracted to perform at the premises.

40. Prior to commencing work at the premises, the corporation did not adequately assess and control the risks associated with the condition of the existing roof, including the absence of safety mesh under certain sections of the roof and the presence of brittle skylight panels.

Access to work area

41. The corporation did not provide or ensure that the means of access to the work area upon the roof was safe and without risk.

42. Part 3.10 of the WorkCover Code of Practice states that:

a. The person who is in control of a workplace is responsible for ensuring that the access from the ground to the work area on the roof is safe and without risk to health.

b. Access requirements should take into account any tools and equipment the roof worker may be required to carry to and from the work site...”

...

d. A ladder access tower is recommended if access to a roof is between 6 and 15 metres above the ground or other access point. Above 15 metres consider suitable alternative access.

e. Arrange means of access to the work site from the ladder or landing platform to eliminate the risk of injury. Pay special attention to openings in the roof, such as smoke ventilation or box gutter sump installation.”

43. In order to access the roof the corporation provided an access scaffold from the ground level to the lower tier of the roof and a ladder located between the lower tier and upper tier of the roof. Both the access scaffold and ladder were located on the north-western side of the factory. The corporation also installed guard rails along the perimeter of the roof.

44. The corporation did not however arrange a safe means of access from the ladders to the work site(s) upon the roof. No roof boards, walkways or other items of plant were provided upon the roof.

45. Similarly, the corporation did not provide or implement any safety measures to prevent the risk of stepping upon the skylight panels (and falling through them) from the point of access to the roof, to the area in which work was being performed.

46. Whilst traversing the roof and setting up their equipment, the roofing sub-contractors were not equipped with a fall restraint device. Accordingly, in order to set up their equipment for the day and attach their harnesses, the roofing subcontractors were required to traverse the roof with no fall protection.

Information and Instruction

47. The corporation did not provide adequate information or instruction to Mark Ingelmo and the roofing subcontractors in relation to the roof replacement works to be performed at the premises.

48. The corporation did not provide or ensure that all the roofing sub-contractors were provided with adequate information and instruction in relation to the condition of the existing roof, including that safety mesh was not installed under all the skylight panels.

49. The corporation did not provide adequate instructions as to the risks associated with working upon fragile and brittle roofing.

System of Work After the Incident

50. On 4 September 2006, Inspector Perry issued a prohibition notice (148879) upon the corporation. The notice required the corporation to:

a) immediately cease work on the roof; and

b) develop, implement and maintain a safe system of work for working at heights.

Annexed hereto and marked with the letter “D” is a copy of the prohibition notice.

51. Following the incident, the corporation did not recommence the roof replacement work at the premises. On 5 October 2006, Kirby’s terminated the contract with the corporation and roofing contractor, Combined Roofing Solutions Pty Ltd [ABN 27 093 334 199], was subsequently engaged to complete the remaining work.

52. Since the incident the corporation has changed the system of work with respect to working at heights, in that the corporation has purchased some portable static lines, which are utilised where possible.

The Defendants Criminal History

53. The defendant has no prior criminal convictions. Annexed hereto and marked with the letter “E” is a copy of the Prior Convictions Search.

3 The prosecutor also tendered into evidence a factual inspection report and photographs taken by an inspector of the WorkCover Authority of New South Wales, a Crown Roofing safe work methods statement and a prohibition notice issued upon Crown on 4 September 2006.

4 In addition, the prosecutor tendered a statement made by one of the persons who was working with the deceased at the time of the incident, Anthony Read and Mr Read gave oral evidence in the proceedings.

5 For the defendants, an affidavit of Borce Ivanovski was tendered into evidence and in addition he gave oral evidence. The defendants also relied upon witness statements given by Jason Metcalfe and Mark Ingelmo to a WorkCover inspector which became evidence in the proceedings.

6 It is clear from the evidence of Mr Read and verified by the other witnesses that the accident occurred after the deceased had picked up his harness from a box which was fixed towards the bottom end of the slanting roof near the gutter. The deceased then started walking in a straight line up the roof slope towards the ridge cap where Mr Read was standing. Mr Read had taken the ridge cap off to allow harnesses for the deceased and himself to be affixed. Mr Read observed that whilst the deceased was walking up towards him, he was talking about Fathers’ Day and other matters. He said that the deceased “was looking straight at me when he stepped on the sheet and fell through. He is normally very safety conscious and wouldn’t walk and talk without knowing where he was going.”

7 It was his clear impression that the deceased was not looking at the ground where he was walking at the time that he fell.

8 The evidence of Mr Read and of Messrs Metcalfe and Ingelmo was that the skylight panels blended in with the remainder of the roof material making it difficult to see them.

9 As is made clear from the agreed statement of facts, the defendants had put in place a process to mark the brittle skylight panels with “illuminance” paint. Mr Ivanovski had contemplated using the same paint again to mark the panels on the day of the incident but had been told by Mr Read that he did not think it was necessary because of the then familiarity by all of the persons working on the roof with its construction.

10 Mr Read expressed some doubt as to whether the deceased would have seen such paint in any event.

11 The totality of the evidence given in the proceedings is to the effect that the defendants were conscious of the safety problems associated with working on a roof which is an inherently dangerous place of work, and had taken a range of measures to minimise the risk of injury to any of the persons carrying out the work. Indeed, apart from the use of the highly visible paint, none of the witnesses, all of whom were experienced in working on rooves, were able to suggest any additional measure that the defendants could reasonably and appropriately have taken. There was evidence that the only appropriate point for fixing the harnesses was at the top of the roof near the ridge cap area to avoid any harness impeding the carrying on of the work.

12 The commencement point for the assessment of penalty is a consideration of the objective seriousness of the offence. There can be no doubt that the carrying out of roofing work is inherently dangerous as was readily conceded by the defendants. This must create a heightened awareness of the need to ensure the safety of the work, including the need to accommodate carelessness and complacency on the part of persons carrying out that work. Again, this was readily conceded by the defendants. Nevertheless, I agree that the incident was contributed to because of some carelessness and inattentiveness on the part of the deceased. The objective seriousness of the offence needs to be considered in the context of the totality of the work situation and in this regard I take into account that the defendants had utilised comprehensive safety systems and had made available a range of safety equipment other than, on the day in question, marking the skylight panels.

13 I conclude that whilst the offence is serious, it is not at the higher level.

14 In assessing penalty, I will take into account the deterrent effect including both generally within industry and in a particular sense as it impacts upon these defendants.

15 The defendants are entitled to a reduction in the penalties to be imposed by reason of a number of mitigating factors. They pleaded guilty at the earliest opportunity, they have expressed remorse and contrition for what has occurred, they have no prior convictions and they co-operated fully with the WorkCover Authority in and about its investigation of the incident.

16 Furthermore, each of the defendants sought to benefit from an application of the provisions of s 6 of the Fines Act 1996, which is in the following terms:

6 Consideration of accused’s means to pay

(cf Crimes Act 1900 sec 440AB and Justices Act 1902 sec 80A)

In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider:

(a) such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and

(b) such other matters as, in the opinion of the court, are relevant to the fixing of that amount.

17 For the purpose of this submission, there was tendered into evidence documentation concerning the financial circumstances of each of the defendants.

18 Crown was registered in May 2004. I infer from the totality of the evidence that it was the vehicle by which Mr Ivanovski carried on business as a roofing contractor. It has no employees other than Mr Ivanovski and his wife. All labour used for the purpose of carrying out roofing work is engaged on a “contract” basis.

19 Financial statements for the years ending 30 June 2006, 2007 and 2008 indicate gross profit from trading before expenses of $45,139, $125,813 and $75,332 respectively. There appears nothing untoward in an examination of the expenditure shown for each of these years. In the 2008 year, wages were shown as $54,080, which is an amount similar to that shown for the 2007 year. These include a salary of about $15,000 per annum paid to the wife of Mr Ivanovski, the remainder being a sum attributed to him for his work. In all of these financial years, the financial statements show a trading loss. For the 2008 year, that loss would have been about $8,000 after making an adjustment for the wages paid to Mr Ivanovski and his wife.

20 It was Mr Ivanovski’s evidence that the trading position of Crown had deteriorated since 30 June 2008 because of the current downturn in building work. It may be assumed therefore that Crown’s current trading position will continue at a loss.

21 Mr Ivanovski furnished some updated information about the assets and liabilities of Crown as at “March” 2009. Assets were shown at $37,610, which I am advised comprises substantially motor vehicles. Whether that amount represents historical figures, depreciated figures or an assessment of current market value is unknown. There are liabilities totalling $249,872 but this includes an amount of $197,000 approximately owing to Mr Ivanovski by way of a director’s loan. I shall ignore this amount for the purpose of considering whether it is appropriate to apply the provisions of s 6 of the Fines Act.

22 There are other amounts owing, including approximately $11,500 to the Australian Taxation Office, $5,000 to a roofing sub-contractor and $26,500 to American Express on a “business credit card” account. Furthermore, there is an amount of approximately $30,000 owing with respect to the defendants’ own legal costs in these proceedings and a further $5,000 due soon to the Australian Taxation Office.

23 The overall position of the company, therefore, is that it is trading at a loss, its liabilities, after discounting the director’s loan, exceed its assets and, given Mr Ivanovski’s assessment of the current trading position, its financial future is uncertain.

24 Mr Ivanovski provided details of his personal financial circumstances verified by supporting documentation. His assets are a home which he valued (without supporting evidence) at $650,000 and motor vehicles valued at $5,000. However, there are loans secured against the home from Westpac totalling $483,000. The loan amounts have increased over the last few years because Mr Ivanovski has drawn down against them for the purpose of funding Crown and this funding accounts in large measure for the amount of the director’s loans shown in Crown’s accounts.

25 In addition, Mr Ivanovski appears to owe a further $70,000 approximately to a number of creditors including the Australian Taxation Office for $6,600, American Express for $21,600, Commonwealth Bank Visa account for $16,000 and three further bank credit cards exceeding $23,000. Some of those accounts are in arrears and Mr Ivanovski has available something of the order of $8,000 left to draw down from the Bank. Mr Ivanovski and his wife have two children aged seven and a half months and three years. His wife derives limited income, as I have said, from Crown. Mr Ivanovski is aged 34.

26 Mr Ivanovski’s assessment is that his net personal and family expenditure of $6,780 per month exceeds his net monthly income after expenses of about $3,000 per month.

27 In endeavouring to assess Mr Ivanovski’s personal circumstances in a realistic fashion, I infer that he has limited or no ability to service his existing financial commitments and, in circumstances where his future income is likely to decrease, there must be a real likelihood that one or other of his creditors will take such action as may require him to sell the family home. In this regard I note also that the American Express “business account” debt owed by Crown is, in reality, in Mr Ivanovski’s personal name and this must represent a further contingent personal liability if Crown is unable to adjust this account.

28 The appropriate approach to the application of s 6 of the Fines Act is now well established. I set out an extract from the judgment of a Full Bench of this Court in McColl v John Watson Building Services Pty Ltd and Dowdon Contracting Pty Ltd [2004] NSWIRComm 353. At [24] and [25], the Full Bench said:

“24 We agree with and adopt the following principles which may be distilled for present purposes from the discussion of the authorities contained within the judgment in Inspector Mansell v Eleven Lighting Pty Ltd:

1. This court is obliged to take into account the means of a defendant to pay any penalty by virtue of s 6 of the Fines Act.

2. The imposition of a fine on a corporation may have different ramifications to the imposition of a fine on an individual where imprisonment or some other penalty may be available as an alternative sanction. That alternative is not available in the case of a corporation.

3. A defendant who wishes to rely on the provisions of s 6 to temper the amount of any monetary penalty bears the onus of putting such evidence in support as is appropriate before the court and bears the onus on the basis of the balance of probabilities of satisfying the court as to the truth of such evidence and its relevance to the fixing of penalty.

4. Whilst it is for a corporate defendant to fully disclose its financial state, it is for the prosecutor to check that information in order to assist the court in determining the propriety of taking that evidence into account in imposing a monetary penalty. It is inappropriate for the court to exercise an inquisitorial role in this regard.

25 In addition, we note the following principles which have been settled for the consideration of the financial situation of the defendant:

1. In the context of determining penalties in prosecutions for a breach of occupational health and safety legislation by a corporation, it may be appropriate, in some limited circumstances, for the Court to have regard to whether the defendant's corporate structure is little more than a means of distributing earnings arising from personal exertion or where the burden imposed by a fine will fall on one person or family, compared with a corporation which is functioning as "a company with assets of a substantial kind": see Haynes v CI&D Manufacturing (1995) 60 IR 455 at 457. However, it is now also clear that the fact that a corporation may represent the alter ego of a person or family and that any penalty imposed on the corporation will consequently have a financial impact on that person or family does not, of itself, warrant a reduction in penalty: WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Ltd trading as Old But New [2004] NSWIRComm 247; Inspector Gregory Maddaford v Graham Gerard Coleman & Anor [2004] NSWIRComm 317.

2. The financial position and the means of a defendant should be taken into account when determining penalty. It is well established that, notwithstanding such considerations, the penalty must ultimately reflect the objective seriousness of the offence: Ferguson v Nelmac Pty Limited (1999) 92 IR 188 at 209; WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284 at 308-309; Manpac Industries Pty Ltd v WorkCover Authority of New South Wales [2001] NSWIRComm 190; (2001) 106 IR 435.”

29 In considering the financial circumstances of the corporate defendant I note that, in reality, it will be unable to pay any fine no matter how little the amount. Furthermore, these circumstances will be exacerbated by a costs order in favour of the prosecutor, which the prosecutor has sought and which was not opposed. I proceed to deal with the matter on the basis that predominantly the penalty that is fixed must reflect the objective seriousness of the offence.

30 The maximum penalty is $550,000. I take into account the objective seriousness of the offence, which I have previously described, and the need to reflect the deterrent effect of the penalty to which I have previously referred. I also take into account in favour of the corporate defendant the mitigating factors, which I have referred to, which would permit of a maximum discount in accordance with the relevant sentencing principles.

31 In all the circumstances, I conclude that an appropriate penalty to be imposed upon the corporate defendant is $75,000.

32 I now turn to a consideration of the appropriate penalty to be imposed on Mr Ivanovski. In doing so, I will take into account the fact that, by virtue of s 26 of the Act, Mr Ivanovski is guilty of the same offence as committed by the corporate defendant. As Mr Ivanovski remains working in the industry, it is appropriate that the same deterrent factors also be taken into account in addition to the objective seriousness of the offence. However, Mr Ivanovski is entitled to the same subjective mitigating factors as applied to the corporate defendant.

33 There is, however, one additional matter to which I need to refer in the circumstances of the imposition of a penalty on Mr Ivanovski. He is, as I have stated, the sole shareholder of the corporate defendant. Accordingly, any financial impact on the corporate defendant that results from the penalty which I will impose upon it will be suffered by Mr Ivanovski as reflected in a lessening of whatever value already attaches to his shareholding in the corporate defendant and a resultant lessening in the availability by way of distribution of any profits (even though this may be unlikely) to him.

34 In Inspector Trotter v BBC Hardware Limited and Bunnings Group Limited [2008] NSWIRComm 232, I considered the circumstances of prosecutions instituted against two closely related corporate defendants arising out of the same incident. Having regard to a line of authority which I referred to in the course of my reasons for judgment, I ameliorated the aggregate penalties imposed on each of the corporate defendants because, essentially, ultimately they were to be borne by the same shareholders, namely the shareholders of the ultimate corporate proprietor of each of the defendants. In my opinion, the same approach is applicable in the circumstances of these proceedings. The corporate defendant and Mr Ivanovski were both prosecuted arising out of the same incident. They are both guilty of the same offence. Mr Ivanovski was only susceptible to prosecution because he was a director of the defendant corporation and, by virtue of s 26(1), is taken to have contravened the same section as the corporation. He is, as I have previously noted, the only shareholder of the corporation. Accordingly, although the prosecutor is clearly entitled, under the provisions of the Act, to have instituted proceedings against Mr Ivanovski as well as the corporate defendant, ultimately the burden of the financial penalty will fall on Mr Ivanovski only. In that I intend imposing a substantial penalty on the corporate defendant, as I have indicated, it is appropriate, in my opinion, having regard to the principles to which I referred in BBC Hardware that the financial penalty to be imposed on Mr Ivanovski be reduced accordingly.

35 Ms McDonald, counsel for the prosecutor, suggested that there may be some tension between this approach and the first sub-paragraph of [25] of McColl, which I have previously extracted. However, the observations made by the Full Bench in McColl are confined to a consideration of the penalty to be imposed on a corporate defendant that, in reality (as is the case in these proceedings), is the means by which a small business person carries on business. That factor may affect the amount of any penalty properly to be imposed upon the corporate defendant. However, those observations do not, in my opinion, impact upon the proper approach to sentencing that should apply in circumstances where concurrent proceedings are instituted against both the corporate defendant and its sole shareholder or shareholders.

36 Having regard to all of the matters to which I have referred, I intend imposing a penalty on Mr Ivanovski of $1,000.

37 The prosecutor sought a moiety of the penalties and costs orders which were not opposed and, in my opinion, should properly be made.

Orders

38 I make the following orders:

1) Each of the defendants is found guilty of the offence as charged and convicted accordingly.

2) I impose a penalty of $75,000 on Global Crown Constructions Pty Limited and $1,000 on Borce Ivanovski with a moiety in each case to the prosecutor.
3) The defendants are to pay the costs of the prosecutor in the proportion in which each of the penalties bears to $76,000, assessed by the Court in default of agreement.



LAST UPDATED:
30 April 2009