Benbow v Converquip Pty Limited

PROSECUTOR: Mr P M Skinner of counsel PricewaterhouseCoopers Legal (Mr Gordon Henderson) LEGAL REPRESENTATIVES: DEFENDANT: Mr T J Golding of counsel Adrian G Byrne & Co (Mr Henry Rodgers)

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

INSPECTOR ELIZABETH BENBOW v CONVERQUIP PTY LIMITED

Prosecution under s 16(1) of the Occupational Health and Safety Act 1983

JUDGMENT (Extempore) [2001] NSWIRComm 85

1 The defendant, Converquip Pty Limited, has pleaded guilty to a charge brought by Elizabeth Benbow, an inspector of the WorkCover Authority of New South Wales under s 16(1) of the Occupational Health and Safety Act 1983. The prosecutor is authorised by s 48 of that statute to institute the proceedings. The defendant is a company which manufactured metal products at premises located, at the relevant time, in Gibson Avenue, Padstow and contracted with a company known as Capro Pty Limited to provide the services of its managing director, Mr Robert Bonniface, as foreman/supervisor at the premises. It also employed David Bain as managing director and general manager and Bradley Crewes as a fitter/machinist. At the relevant time the defendant operated a Schaerer lathe machine at the premises and on the date in question Mr Bonniface was supervising the defendant's work shop at Padstow. 2 Section 16(1) of the Occupational Health and Safety Act provides that: Every employer shall ensure that persons not in the employer's employment are not exposed to risks to their health or safety arising from the conduct of the employer's undertaking while they are at the employer's place of work. 3 The offence with which the defendant is charged was that it: DID FAIL

To ensure the health, safety and welfare at work of persons not in its employment, contrary to section 16(1) of the Occupational Health & Safety Act 1983 in such case made and provided in that:

It is alleged that the defendant, CONVERQUIP PTY LIMITED (ACN 003 512 187), an employer, breached Section 16(1) of the Occupational Health and Safety Act 1983 on 5 November 1998 at premises located at 42 Gibson Avenue, Padstow in the State of New South Wales, in that it failed to ensure that persons not in its employment were not exposed to risks to their health and safety arising from the conduct of its undertaking while they were at its place of work.

and the particulars of the charge are set out in paragraph 10 of the agreed statement of facts referred to subsequently. 4 Mr P M Skinner of counsel appeared for the prosecutor in the proceedings and Mr T J Golding of counsel appeared for the defendant.

Factual background 5 An agreed statement of facts relevantly in the following terms was tendered by the prosecutor: 4. At approximately 2.00pm on 5 November 1998 Crewes reported to Bonniface that he was having trouble changing gears on the lathe. Crewes demonstrated the problem to Bonniface by operating the lathe but told him that he was still able to perform the task he was currently carrying out. 5. Bonniface informed Bain of the problem in changing gears on the lathe at approximately 4.30pm - 4.45pm. Bonniface and Bain walked over to the lathe. Bain tried to move the levers to change the gears on the lathe and then he started the lathe. Bain then tried to change the gears as the machine was slowing down. A metal bar approximately 2.5 metres in length was secured in the chuck of the lathe while this operation was carried out. The metal bar had been left in the chuck of the lathe when Crewes finished work for the day. He had not finished machining the metal bar. 6. Bain ran the lathe at half speed and then stopped it. He then tried turning the gear change wheel again and rotated it to full speed of around 1,400 revolutions per minute. Bain slowly started the lathe and ran it up to approximately half speed. He then stopped the machine and realised that the gear lever was in the disengaged position. He re-engaged the gear lever then slowly started the machine again. The lathe accelerated at a much faster speed than it was running before and the metal bar began to bend. There was a whirling noise and Bain stopped the machine. He noticed Bonniface clutching his side and Bonniface said "I've been hit". Bain then laid Bonniface down and arranged for an ambulance to attend the premises. Bonniface was conveyed by the ambulance to Liverpool Hospital. 7. Bonniface suffered multiple injuries due to being hit by the metal bar including a collapsed lung, a broken shoulder blade, numerous broken ribs, a perforated spleen, muscle damage and he required a tracheotomy. Bonniface was hospitalised from 5 November 1998 until 30 November 1998. He spent approximately 17 days in the Intensive Care Unit. Bonniface returned to light duties in February 1999. 8. The prosecutor attended the premises on 10 November 1998 and observed as follows: (a) A Schaerer lathe identified in writing as "lathe No. 1 C/B 18 Main Bd". A metal plate at the end of the lathe stated "3690". (b) The scene of the accident had been roped off by means of black and yellow tape. (c) The metal bar approximately 33mm in diameter and approximately 2.5 metres long was in the lathe. (d) The metal bar projected approximately 1.4 metres beyond the headstock of the lathe into the passageway. (e) The metal bar was bent at an angle of approximately 45 degrees. (f) Scratch marks extended along the metal bar from the centring screws for a distance of approximately 50mm. (g) The face of the metal bar was recessed back approximately 10mm from the face of the three jaw chuck of the lathe. (h) The face of the chuck was approximately 40mm away from the face of the tool post. No tool was in the tool post. (i) The bed of the lathe measured approximately 3.9 metres. (j) The centre support "steady" was observed on the factory floor near the end of the bed of the lathe. There was no centre support "steady" on the bed of the lathe. (k) An electric light and a Sony digital read out were located near the chuck. (l) An electrical cable that was on a reel was covered with swarf from the lathe. 9 The prosecutor's investigations disclosed that: (a) The metal bar in the lathe became deformed and bent due to the speed of the lathe while Bain was operating the lathe; (b) The lathe should not have been tested by Bain with the metal bar in the lathe; (c) The metal bar protruding from the rear of the headstock of the lathe was inadequately secured for the lathe speed setting used; (d) It was possible to remove the metal bar from the lathe prior to testing the lathe; (e) It was possible to adequately secure the metal bar for the lathe speed used. 10. It is alleged that on 5 November 1998 the defendant, Converquip Pty Limited (ACN 003 512 187), an incorporated company with its registered office located at c/- Vincent J Di Bella & Associates, Level 4, 44 Miller Street, North Sydney in the State of New South Wales, an employer, breached Section 16(1) of the Occupational Health and Safety Act 1983 at premises located at 42 Gibson Avenue, Padstow in the State of New South Wales, in that it failed to ensure that persons not in its employment were not exposed to risks to their health and safety arising from the conduct of its undertaking while they were at its place of work. In particular, the defendant: (a) Allowed a Schaerer lathe machine to be operated in an unsafe manner which caused serious personal injuries to Robert Bonniface; (b) Failed to adequately secure the metal bar protruding from the rear of the headstock of the lathe; (c) Failed to securely fence the area behind the lathe to prevent access to the metal bar when it was being machined.

6 The prosecutor was called to give evidence as to the course of the investigation. During her evidence photographs were tendered of the scene taken some five days after the incident which led to the proceedings. Counsel for the prosecutor also tendered records of interview with Mr Bain and Mr Bonniface and also, having heard preliminary submissions from the defendant as to its present financial situation which foreshadowed its particular reliance on s 10 of the Crimes (Sentencing Procedure) Act 1999, certain financial or company records (including extracts from the WorkCover Data Base as to the wages declared by the defendant for workers compensation purposes for the last complete financial year) and an historical company extract obtained in 10 May 2000. 7 The defendant tendered evidence from David Arthur Bain and Geoffrey Ronald Buckfield. Mr Bain gave evidence by affidavit sworn on 23 March 2001. He indicated that he is currently the engineering manager of a division of the LSW Group Pty Limited and that, on the date of the incident, he was General Manager and a Director of the defendant. He outlined his qualifications which included trade qualifications and the subsequent completion of a TAFE certificate in mechanical engineering. He was clearly well qualified for the work he performed. This is also demonstrated by the lengthy experience he has had in the engineering field and in the manufacture of machines for the printing and packaging industry. 8 Mr Bain referred to the fact that the machine in question, the Schaerer lathe, was purchased in approximately 1992 and also to the circumstances of the incident, including the role of the machinist, Bradley Crewes, and the work he had been carrying out on the day in question. He also described in some greater detail than is otherwise before the Court, the operations of the machine and gave some background to the circumstances of the accident on the day in question. His evidence included the following: 10. Robert Bonniface came to see me and after work had finished we both went down to look at the Schaerer lathe. The job had not been finished and was still in the machine. The rod was sticking out of the headstock approximately 1200 mm. I was operating the lathe with Robert on my left towards the rear of the headstock. The lathe was stuck in low gear approximately 350 rpm. The speed change dial would not rotate until we operated another lever. This took several minutes of operating different levers. The dial then rotated around halfway to approximately 700 rpm. I started the lathe and then stopped and tried to change gear again. 11. The dial again would not move up only down. By turning the dial more the dial turned all the way around to full speed of 1400 rpm. I then started the machine and it appeared to be still running at 700 rpm. I stopped the machine and realised that one of the levers was disengaged. I re-engaged this lever and started the machine. I heard the machine speed up and suddenly the work piece was distorted and rotating so I stopped the machine. 12. I then heard Robert say from behind me, "I'm hurt". I got Robert to the ground and I checked for injuries and I immediately went to the office to arrange for an ambulance to be called which arrived in approximately 15 minutes. 9 He also indicated that the particular job was always carried out at "low revs" so there was no danger of a rod distorting. The bar in the lathe extended 1200 mm into a large four metre cleared space. A coloured rag was tied to the end of the bar to warn people of its presence. He said that this was the practice the company had always employed in jobs of this kind. His evidence continued: My experience was that it was the industry practice in such jobs to set it up in that manner so that where you are machining is closer to the chuck. The other alternative is to have one end of the shaft running in the three jaw and the other end on a fixed steady.

10 He also deposes that there had never been any previous accidents or incidents relating to the particular lathe since its purchase in 1992. It has continued to operate since the accident without incident and experience since that time has led him to conclude that the original problem may have been caused because the operator changed gears while the machine was still running. In that respect he refers to the lack of synchromesh on the gear changes and drew comparison with the situation normally existing in relation to gear changes on manual geared motor vehicles. 11 He also observed that at the time of the accident there were only two personnel in the workshop, that is himself and the injured worker, Mr Bonniface. There are usually six or seven personnel in the workshop, all of whom are experienced people who have been involved in the business in one way or another for at least two years.

12 In respect of the working practices he notes: Only staff were permitted in the workshop floor and the front door of the premises was chained across. Any visitors were required to go into an office. The workshop floor area was of such a size that all the people would have been aware that Bradley Crewes was performing the lathing work.

13 He refers to Mr Bonniface's experience in the industry and with the companies within the group of which the defendant was part. Mr Bonniface has been involved with the defendant since 1997 as a fitter/welder. He had helped out where there was an overload but otherwise had his own business and customers. On the date in question he was still employed through his company but was acting as the workshop foreman for the defendant. He also deposes: At the time the accident occurred Robert Bonniface and I were not carrying out the actual job but were involved in attempting to identify the fault with the machine and rectify the problem. As a fitter/welder I was aware that Robert had experience with the mechanical side of machines. I deeply regret the accident that occurred to Mr Bonniface and realise that it could have been much more serious. In hindsight I am grateful to WorkCover for their assistance in finalising the guarding solution which we have now implemented and which I have referred to in paragraph 15. I was very concerned at the injuries suffered by Mr Bonniface and I visited him on two or three occasions whilst he was in hospital. I then spoke with him several times by telephone whilst he was recuperating. Once he had fully recovered, Mr Bonniface returned and worked for The LSW Group for approximately 12 months. He then reverted to his previous business of operating as a subcontractor under his company and supplying his services to various companies in the engineering field. 14 Mr Bain's affidavit contains a number of other important pieces of evidence as to the nature of the staff employed at the premises of the defendant and their experience, the steps taken by the defendant after the accident to remedy the safety problems manifested and also as to the developments that have occurred in relation to the financial and operational situation of the defendant since the time of the accident. I shall refer to these matters in that order. 15 As to the first of those matters, as to which there was also other evidence before the Court, he observed that all staff were qualified trades persons who received on the job training in the operation of the machinery, including the lathe used in the running of the business. Many of the personnel had previous experience working in the engineering industry with other employers. 16 As to the second matter, Mr Bain refers to the inspections carried out by the WorkCover Authority, including those by the prosecutor, the fact that WorkCover issued Improvement Notices to the defendant which led him to immediately design a "guarding solution" and submit it to the WorkCover Authority. Before the Court is the finished design as submitted and approved by the WorkCover Authority which includes a sketch plan of the relevant guarding device. 17 Mr Bain said of this design: "In hindsight this system is much better and safer than the system we previously employed". This is one of a number of examples where I have been impressed by the candid and balanced approach adopted by the defendant in the evidence given by Mr Bain, who was the key witness for the defendant. I shall return to that aspect subsequently. 18 Returning then to the steps taken by the defendant after the accident, Mr Bain also deposes that the improvements made centred around this newly designed guard. After the guard was constructed provision was made for a 1.2 metre walkway which still provided sufficient room to run a fork lift down the other side of the passageway as its width was four metres. The speed with which the manifested safety problem was rectified and compliance with the Improvement Notice occurred, is shown by the evidence that the Improvement Notice was served on 13 November 1998; the design was submitted to WorkCover on 17 November, the device then constructed and in place within two weeks of the submission of the plan. It is important to note that the particular lathe was not used from the time of the accident until the guard was in place. 19 Before coming to the third area earlier referred to from Mr Bain's evidence, I should refer briefly to some other evidence relied on by the defendant. This is a record of interview between Mr Bain and the prosecutor which occurred on 16 November 1999. Mr Bain described the methods usually adopted in relation to this lathe. He referred to the use of a cloth wrapped around the protruding end of the metal bar in the lathe and the view taken that that was sufficient to identify any potential safety hazard. He also said he had no idea why the metal bar was left in the lathe when the gears were being tested on the date of the accident although he did indicate that it appeared to have occurred because the job which Mr Crewes was carrying out earlier in the day had not been finished. 20 Reference was also made to the records of interview of Mr Crewes and Mr Bonniface which corroborate in relevant respects Mr Bain's evidence. They also confirm the evidence as the significant experience of those personnel who were employed by the defendant and the emphasis in the defendant's business on ensuring ongoing training at the workplace and the defendant's consistent approach in ensuring that new employees received appropriate induction training over periods as long as six months. 21 As to the third area dealt with by Mr Bain, which relates to the changes in the financial position and operating circumstances of the defendant since the incident, as this is of some complexity it is appropriate to set out the two detailed paragraphs in his affidavit which deal with this matter: 5. In 1988 I and a partner established our own business under the name Converquip Pty Limited. We ran that business until 1997 when the business and assets were sold to a company called Lewisham Saw Works Pty Limited. The company operated by myself and my partner and then known as Converquip Pty Limited changed its name and a company was incorporated and took the name Converquip Pty Limited. The new company, Converquip Pty Limited, then operated the business on the basis that it was paid a management fee but did not own the assets of the business. The employees working in the business and the subcontractors were employed by the new company, Converquip Pty Limited. As a result of the sale of the business operated by myself and my partner, I received a net amount of $35,000.00 for my share of the proceeds and my partner and the only other shareholder received a similar amount. The company which had been formerly operated by my partner and by myself under the name, Converquip Pty Limited, was wound up approximately two years after the sale took place. Whilst I am shown as the shareholder in the company which changed its name to and is now known as Converquip Pty Limited, the share was held on trust I believe for either Lewisham Saw Works Pty Limited or an associated company controlled by Geoffrey Buckfield. I was not the beneficial owner of the share in the company, Converquip Pty Limited, at the date of the accident. I was a director of the company at the date of the accident. I have never received any dividends or director's fees from Converquip Pty Limited or any other company associated with Lewisham Saw Works Pty Limited or Mr Buckfield. My salary at the time of the accident was $60,000.00 per annum and, in addition, I received statutory superannuation entitlements and had the use of a company car.

27. On the 23rd March 2000 a company called The LSW Group Pty Limited was incorporated. The new company, The LSW Group Pty Limited, then took over running businesses which had formerly been run by organisations known as Australian Speciality Knife Co Pty Limited, Lewisham Saw Works Pty Limited, Gow's Heat Treatment Pty Limited, Australian Saw & Knife Group, Churchill Precision Grinding, Eversharp Guillotine, National Saw Works and Pearson Sales & Service. I understand that the reason for this reorganisation was the then impending GST legislation. As there were several associated companies operating and there were many intercompany transactions which would have been subject to GST, it simply would have been too difficult and expensive to comply with the operations of the new GST legislation. I understand that it was considered it would be far easier to comply with the GST legislation with one operating company rather than so many different operating companies. The accident, to the best of my knowledge and belief, had absolutely no bearing on this decision. The business formerly operated by Converquip Pty Limited ceased trading on the 30th June 2000, the day before the GST legislation commenced operation. All businesses including that formerly operated by Converquip Pty Limited are now operated by The LSW Group Pty Limited.

22 As earlier indicated, the defendant relied upon the evidence of Geoffrey Ronald Buckfield, whose affidavit sworn on 18 April 2001 was also read in the proceedings. Mr Buckfield is the Director and Sole Shareholder of The LSW Group Pty Limited. He details his lengthy experience in the relevant industry and his previous control of businesses loosely known as "The LSW Group", the members of which are specified. 23 He confirms the evidence of Mr Bain that because of the impending effect of the GST Legislation and associated perceived administrative difficulties arising from that legislation by businesses run by a number of different entities, there was a consolidation of the defendant's operation into The LSW Group Pty Limited on and from 30 June 2000. 24 Mr Buckfield's evidence concludes as follows: 6. As at 30 June 2000 The LSW Group employed approximately 90 people and had a combined turnover of approximately $12 million. The retained profit for the year ending 30 June 2000 was $446,000.00 after payment of tax and allowance for extraordinary items.

7. In all the time that I have been involved with the business Lewisham Saw Works Pty Limited since 19 January 1966 and the other companies and businesses subsequently purchased, there has never been an industrial accident which has led to WorkCover or any of its predecessors prosecuting any of the companies or businesses in The LSW Group.

8. I take a "hands on" approach to running the business and I still regularly work on the factory floor. I have always had a concern for my employees and for their safety in the work place.

9. I was horrified when I heard of the accident and the injuries suffered by Robert Bonniface on 5 November 1998. Robert had been a personal friend for some 15 years and during that period had worked for different companies and businesses operated by me as a sub contractor through his own company.

10. At the time of the accident, the company Converquip Pty Limited and the business operated by it was not a profitable company for the group.

25 The defendant also relied on a number of testimonials specifically as to Messrs Bain and Buckfield but inferentially in relation to companies owned or managed by them. Although there is no significant detail provided as to the persons providing those testimonials, I am prepared to accept that the persons providing them are persons experienced in the industries in which those persons work and that they are persons in a position to have formed a reliable view as to the standing of Messrs Buckfield and Bain. The picture that emerges of those persons is that they are conscientious businessmen in the industry who are safety conscious and concerned for the safety of those who work with them as employees or otherwise. 26 The prosecutor in reply relied on a number of records of interview and the financial and company records that had been tendered. Reference was made, for example, to the practices adopted by the defendant as to the lathing of metal rods and the circumstances on the day in question, which, it is said, show that the accident or incident involving Mr Bonniface was clearly foreseeable. 27 As to the financial and company situation, it was submitted that the evidence showed that the defendant was not a small operation; during the last financial year it had total wages of over $337,000; it was associated with companies of some significance and its overall financial and other circumstances were to be considered in the context that they referred to continuing fixed and floating charges to major banking corporations such as the Westpac Banking Corporation and the National Australia Bank Limited.

Submissions for the prosecution 28 Counsel for the prosecutor referred to the principles laid down by this Court in relation to sentencing under the occupational health and safety legislation and conceded that the circumstances of this matter constituted the entering of an early plea of guilt and that the principles laid down in the guideline judgment of the Court of Criminal Appeal in R v Thomson: R v Houlton (2000) 49 NSWLR 383 were to be applied. It was submitted that the present offence was one of significant gravity and that deterrence was an important consideration in the sentencing approach to be adopted by the Court. 29 In relation to the anticipated submissions of the defendant that it was no longer an employer in the industry and that this was relevant to the issue of deterrence, it was submitted that although that consideration might have some relevance to particular deterrence, nevertheless the Court should proceed on the basis that general deterrence was an important consideration in this and other prosecutions under the legislation, that the particular "sting" for general deterrence related to the other companies in The LSW Group; particularly the company which presently uses the factory formerly operated by the defendant and the lathe involved in the relevant incident. 30 As to the other anticipated submission of the defendant as to s 10 of the Crimes (Sentencing Procedure) Act , it was submitted that the authorities in this Court make plain that s 10 is to be rarely applied in proceedings under the Occupational Health and Safety Act. The circumstances here were not appropriate for the exercise of the relevant discretion and an inappropriate precedent would be set if s 10 was applied in these proceedings. 31 Although it was conceded that the financial circumstances of a defendant were appropriately to be taken into account in assessing the penalty, the Court should act cautiously in relation to the present matter because of the limited material which the defendant had placed before the Court. It was submitted that the Court should be cautious before it accepted that the defendant had no assets at all or that it was otherwise inappropriate to impose a penalty out of keeping with the objective elements of the offence as mitigated by relevant subjective considerations.

Submissions for the defendant 32 Counsel for the defendant submitted that in assessing the objective circumstances of the offence it was important to characterise accurately the unsafe practice or circumstance which had led to the charge being laid and a plea of guilty being entered. In that regard it should be accepted that, although at the time the lathe was being operated in order to fix the machine and enable it to perform its normal functions, it was also to ensure that accidents involving the machine did not occur and were prevented. It was stressed that this was an important consideration to be taken into account in favour of the defendant. 33 It was also submitted that in all of the circumstances before the Court the seriousness or gravity of the offence should be assessed as below the average and certainly towards the lower end of the range of seriousness. 34 As to the subjective considerations which the defendant was entitled to have taken into account, it was emphasised that the plea of guilty was entered at the earliest possible opportunity. That circumstance carried with it a number of other important considerations which the defendant was entitled to have taken into account in its favour. These include not only the utilitarian value of the plea which arose directly from the guideline judgment in R v Thomson; R v Houlton , but also the consequent acknowledgment of culpability by the defendant. Reference in that regard was made to the affidavit of Mr Bain, and particularly to the concerns for the welfare of the injured contractor, Mr Bonniface, which were shown not only in visits to the hospital and inquiries as to his recovery, but ensuring that work was available for him within the group for some time after his return to health and return to work. 35 The other matters which arose from the plea of guilty but to which the defendant was cumulatively entitled, were that the entering of the early plea gave an insight into the conduct of the defendant and particularly of its clear appreciation of its fault and that rehabilitation should be seen to have actually and substantially occurred; the Court could be confident that the recognition arising from the entering of the plea and the circumstances otherwise shown in the evidence would ensure that there would be no repetition of circumstances which led to the relevant incident. The practical confirmation of the contrition of the defendant and its rehabilitation is also demonstrated by the significant steps taken to remedy the hazard in accordance with the approval by the WorkCover Authority. 36 I pause to indicate that I accept the evidence of Mr Bain as to the actual and practical contrition of the defendant in relation to the breach that occurred and the injuries suffered by Mr Bonniface. Another example of the candour earlier referred to is the following extract from paragraph 23 of his affidavit: "I deeply regret the accident that occurred to Mr Bonniface and realise that it could have been much more serious". 37 Returning to the subjective features relied on by the defendant in its counsel's submissions, reference was made to the demonstrated industrial good citizenship of the defendant where its industrial responsibility has been shown not only by the steps taken subsequent to the breach of the Act but also by the evidence demonstrating its conscientiousness as to safety in the workplace and as to the proper training of its staff and contractors. It was submitted that it is clearly industrially a responsible company employing highly and well trained engineering staff. 38 Emphasis was also placed upon the fact that the defendant had no prior convictions under the Occupational Health and Safety Act or related legislation which should be seen in the context of the evidence of both Mr Bain and Mr Buckfield, that they are persons of long experience in the industry and neither of them or their associated companies had had previous involvement in proceedings under the Act and certainly no prior convictions. The fact that there were no prior convictions was a matter of great significance because the Court should act on the basis that the industry in which it operated was an industry of some danger or hazardousness. 39 The final part of the defendant's submissions related to its capacity to pay but more particularly to the submission made as to s 10 of the Crimes (Sentencing Procedure) Act . It was submitted that all the circumstances of this matter including the present financial and operating situation of the defendant, coupled with other relevant considerations such as the lateness of the prosecution, provided a proper basis for the discretion under s 10 to be enlivened. The financial situation of the defendant was relevant to its reliance on s 10 of the Crimes (Sentencing Procedure) Act . There was a real risk, it was submitted, that any order that the Court would make would have no practical effect. It was submitted that such an order had a potential to be "vacuous" and it would be inappropriate in those circumstances for the Court to impose a penalty. 40 The lateness of the prosecution was referred to not only in a general way but also in the context of it being a circumstance which, without suggesting any criticism of the prosecutor or the WorkCover Authority, had led to the present situation as to the defendant's financial and related circumstances. This would not have been the case if the proceedings had not been taken so late in the relevant limitation period. These matters, coupled with the other subjective circumstances which demonstrate the good industrial citizenship of the defendant were, it was submitted, such that the provisions of s 10 should be applied. 41 It was submitted, in the alternative, that if the Court was not prepared to grant the benefit of s 10, the means of the defendant or its capacity to pay were most important considerations and it should be acknowledged that it was a true "small business"; it was certainly not a corporation of significant financial standing. Earlier cases in which the Court has imposed significant fines should be distinguished as relating to companies of a tangibly different nature. Consideration 42 The principles to be applied in sentencing under the Occupational Health and Safety legislation are settled, see for example Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at [53]; WorkCover Authority of New South Wales v Profab Industries Pty Limited (2000) 49 NSWLR 700 at [31]; Lawrenson Dyecasting Pty Limited v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 472 - 476; WorkCover Authority of New South Wales (Inspector Page) v Walco Hoist Rentals Pty Limited No 2 (2000) 99 IR 163 at [21] to [27]. See, for example, the considerations referred to in the following extract from the last mentioned judgment: [22] The primary factor to be considered in determining the appropriate sentence is the objective seriousness of the offence charged. This has been expressed in various ways. For example, by observing that "the true measure of penalty lies in the nature and quality of the offence" ... The proper approach involves initially considering the gravity of the offence viewed objectively with the Court ensuring that the allowance for subjective factors does not produce a sentence which fails to take account of the objective gravity of the offence ...

[23] The proper consideration of subjective matters such as "previous good industrial citizenship and the absence of prior convictions", rank in importance well behind "the two primary aspects of the matter namely the nature and quality of the offence and the clear policy of the Act in relation of the establishment of safe standards and the protection of the workforce" … (references omitted) 43 As to the importance and significance of an early plea of guilty, what was said in Walco Hoist at [25] and [26] is to be considered now in the light of the guideline judgment in R v Thomson generally but particularly at [160] to [162]. See also the judgment of the Court as presently constituted in WorkCover Authority of New South Wales (Inspector Sheppard) v State Rail Authority of New South Wales [2000] NSWIRComm 179 at [37] to [40] and s 22 of the Crimes (Sentencing Procedure) Act 1999, which is referred to in that judgment at [38]. 44 I do not consider it of assistance to seek to characterise the offence in this matter as coming at any particular point on the spectrum of seriousness or gravity of offences under the Occupational Health and Safety Act . It is sufficient to find, and I do so, that the offence is one of significant gravity. 45 The relevance of the consequences of the breach to the gravity of the offence was considered in Capral Aluminium at [94] to [95] and in Walco Hoist at [22]. It is sufficient to refer to the following extract from the case last referred to (omitting authorities cited): 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 …

It is plain that the consequences of the breach of the Act were very serious. 46 The details of the injuries suffered are set out in paragraph 7 of the agreed statement of facts and show that the injured Mr Bonniface spent slightly less than four weeks in hospital, including 17 days in the intensive care unit. As earlier indicated, the defendant through Mr Bain candidly accepted that the injuries could have been even more significant than the significant injuries which occurred. I conclude that the gravity of the offence is exemplified by the acceptance of the potentially grave and significant consequences of the accident which occurred. The defendant's concession is also relevant to its contrition. 47 The other important consideration as to the gravity of the offence is the foreseeability of a breach of the Act and also the foreseeability of the actual injury or accident. The question of foreseeability was also considered in Capral Aluminium at [81] to [82] and I adopt the consideration set out in those paragraphs, which in any event is binding upon me. It is sufficient to note that the Full Bench adopted the consideration by Walton J, Vice-President, as to this issue, in Department of Mineral Resources v Kembla Coal and Coke Pty Limited (1999) 92 IR 8 at 27 and also referred to the judgment in Ferguson v Nelmac Pty Limited (1999) 92 IR 188 at 209 - 210 as to an obligation on employers in industry to take a pro-active role in relation to safety and the detection of potential hazards to safety because of the statutory obligation to ensure health, safety and welfare at work; that it is not sufficient for an employer in industry to rely upon those risks to safety and health which have only become manifest with the benefit of hindsight. Notwithstanding the conclusions which I reach as to the safety consciousness and general good industrial citizenship of the defendant, I consider that the breach of the Act and the real possibility of an accident or injury of some significance was foreseeable. 48 It may be, as discussed with counsel for the defendant during submissions, that this was a situation of a safety conscious employer becoming complacent and the offence may have been largely a manifestation of a systemic problem associated with complacency. The breach of the statute involved a number of elements not limited to what happened at the time of the offence but included the failure to securely fence the area where the metal bar was being machined and relying instead on the practice of tying a coloured rag to the end of the bar. Nevertheless, in terms of assessing the gravity of the offence, it is relevant that the breach of the Act was clearly foreseeable and again illustrative of the conclusion which the Court should reach, that is, the offence was of significant gravity. 49 I conclude that the negligence shown by the circumstances of the breach of the defendant is significant and, as earlier indicated, resulted in very serious injuries which were clearly preventable. 50 As to the defendant's reliance on s 10 of the Crimes (Sentencing Procedure) Act , I do not consider it is appropriate to grant the application by the defendant to apply the beneficial provisions of the section. It is necessary briefly to refer to that section, which is relevantly in these terms: 10 Dismissal of charges and conditional discharge of offender (1) Without proceeding to conviction, a court that finds a person guilty of an offence may make either of the following orders: (a) an order directing that the relevant charge be dismissed, (b) an order discharging the person on condition that the person enter into a good behaviour bond for a term not exceeding 2 years. (2) An order referred to in subsection (1) (b) may be made if the court is satisfied: (a) that it is inexpedient to inflict any punishment (other than nominal punishment) on the person, or (b) that it is expedient to release the person on a good behaviour bond. (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. (4) … (5) …

51 I do not consider that the matters relied upon by the defendant in the circumstances of the occupational health and safety legislation may be seen, for example, as extenuating circumstances as referred to in s 10(3)(c). Nor do I consider that these circumstances can be considered as "any other matter that the Court thinks proper to consider" in terms of s 10(3)(d) of the statute. I do not consider the delay in the proceedings being commenced either of itself, or in conjunction with other considerations, should lead to the grant of the s 10 application. 52 The defendant's financial circumstances must be considered by the Court and I shall return to that aspect later. It is sufficient to state as to the reliance on that matter in the submissions seeking the application of s 10, that I do not consider that such circumstances are relevant in any decisive way to the exercise of the discretion under s 10 in occupational health and safety offences. The reasons for this conclusion I would have thought were obvious. However, by way of example, reference may be made to the fact that the favourable exercise of the discretion would fail to take into account sufficiently the important public interests and public purposes served by the Occupational Health and Safety Act and sentencing under it, particularly insofar as the deterrent effect of sentencing under the legislation is concerned. The importance of that deterrent effect should neither be underestimated nor understated. Further, the inappropriate exercise of the discretion could lead to the misuse of company restructures and the like by less scrupulous corporations and those controlling them. The defendant's plea should, in all the circumstances, result in the defendant being convicted of the offence charged. 53 Section 6 of the Fines Act 1996 makes plain that, in the exercise by this Court of its discretion to fix the amount of any fine, it is required to consider inter alia "such information regarding the means of the accused as is reasonably and practicably available to the Court for consideration". Such matters were considered in Ferguson v Nelmac Pty Limited and also in Walco Hoist . This was said in the second of those cases, (again without setting out the authorities relied upon), at [27]: As to the financial position of the defendants, it is to be accepted in terms of general sentencing policy that the means of a defendant are relevant. This consideration may, in appropriate cases, involve a careful examination of the means of the defendant, and consideration of the means of the defendant in fixing the amount of any penalty or fine: ... This is, in any event, required by s 6 of the Fines Act ... It is to be observed, however, that a consideration of the means of the defendant with the conclusion that a heavy fine may be a burden on the defendant and its financial resources does not necessarily preclude the imposition of a heavy penalty.

54 I accept that the financial situation of the defendant, at least when compared to many cases which come before the Court, is quite unusual. I accept that it has occurred independently of these proceedings or the defendant's culpability under the Act. That is, I accept that the situation of the defendant has arisen from commercial decisions taken bona fide by those controlling it on the basis that the steps were considered to be in the defendant's interests. Nevertheless, to impose a penalty entirely out of step with the objective circumstances of the offence, by having regard as the crucial consideration to the evidence before the Court as to the defendant's financial circumstances, would, I consider, be inconsistent with the role of the Court and would, in particular, represent a failure to impose a sentence with appropriate regard to the importance of deterrence in the sentencing process. In this case general deterrence has particular relevance. 55 It is clear from what has been said that I consider it is inappropriate to provide the benefit of s 10 of the Crimes (Sentencing Procedure) Act and indeed to do in this matter would be contrary to recent authorities which bind me on that issue: see, for example, WorkCover Authority of New South Wales v Profab Industries Pty Limited (2000) 49 NSWLR 700 and the subsequent Full Bench decisions which have applied that judgment: McCarthy v Sell & Parker Pty Limited (2000) 102 IR 355 and Riley v Australian Grader Hire Pty Limited [2001] NSWIRComm 31. An important feature of those judgments was the reference to the important public purposes which sentencing under this statute serves. However, to ensure a just outcome in the proceedings before the Court I have taken into account all of the circumstances as to the current operating situation of the defendant and its financial situation. Notwithstanding the submissions of the prosecution, I accept those of counsel for the defendant that the defendant at present has no assets, which represents a change in its circumstances. Although it had been essentially a service company it would have been able to pay any fine imposed. 56 The Court obviously would hesitate before it would impose a fine which could be described, as counsel for the defendant did, as "vacuous". However what the Court must do is to take all relevant circumstances into account. In that regard, as well as giving weight to the finding earlier made as to the bona fide commercial decisions which led to the present situation, I should also have regard to the acknowledgment by the defendant that the existence of these proceedings was not the only factor which led to the defendant being kept in existence. Other considerations included that it had "a place in the market" and that situation is to be seen as having commercial benefit to its associated companies and those controlling them. 57 Taking all those considerations into account I consider that it is appropriate for the Court to impose a fine of significance to reflect the objective circumstances of the offence as found but with regard to all the objective and subjective circumstances to which I shall now return briefly. 58 Reference should be made to one aspect of the issue of deterrence. I consider that this is one of the exceptional circumstances referred to in Capral Aluminium and Walco Hoist where the Court may conclude that it is unlikely that the defendant will be an employer in the foreseeable future so that the question of deterrence becomes essentially one of general deterrence. However, I also accept the submission of counsel for the prosecutor that in assessing the significance of general deterrence it is relevant to note that the particular "sting" in that respect will be on the associated companies and particularly the company operating the factory and the relevant machinery. I proceed on that basis. 59 It is also relevant to have regard to the maximum penalty for this offence which is $550,000 and also to give effect to the intention of the legislature that the existing sentencing patterns are to move in a sharply upward manner manifested in the most recent significant increases in penalties under the Act. 60 The defendant is clearly entitled to great benefit from the various subjective factors which it has relied upon and, without seeking to limit the matters earlier referred to in seeking to summarise the submissions of counsel for the defendant, these include the fact that the defendant is and was a safety conscious employer; a good industrial citizen; it has shown significant contrition not only by word but also by deed. Also relevant are the steps taken after the offence to remedy the defect in safety manifested, the co-operation with the authorities and the previous good record, which I accept is to be seen in the context that it operates in an industry which by its nature is one of some significance in terms of hazardousness. It is also appropriate, as earlier indicated, to assess the means of the defendant and I have had regard to that evidence and also to have regard to the nature of the defendant, its size both now and at the time of the incident. 61 Of particular importance in terms of contrition is that there has been tangible confirmation of the contrition by the support and assistance rendered to the injured Mr Bonniface by way of rehabilitation and assisting him back to work and recovery. This is a matter which has been referred to in earlier judgments; for example, the judgment in the State Rail Authority case at [48]. It is a matter to be taken into account in favour of the defendant. I consider that the appropriate approach in applying the guideline judgment in R v Thomson; R v Houlton in these proceedings is to adopt the approach referred to in paragraph [160(ii)] of that judgment; that is, where other matters associated with the plea of guilty are regarded as appropriate to be quantified in a particular case, a single combined quantification may be appropriate. 62 I consider that the appropriate quantification should be in the order of one third. Having regard to all the circumstances earlier referred to, the gravity of the offence, the subjective circumstances which I have held that the defendant is entitled to rely upon and the discount for the early plea of guilty and the associated matters, and having due regard to the particular circumstances of the defendant, I consider that the appropriate penalty that should be imposed is $50,000.

Orders 63 The Court accordingly makes the following orders: 1. The defendant is convicted of the offence alleged in Matter No IRC 4614 of 2000 under s 16(1) of the Occupational Health and Safety Act 1983. 2. The defendant is fined the sum of $50,000 with a moiety of that fine to the prosecutor. 3. The defendant shall pay the prosecutor's costs of these proceedings in a sum as agreed or, in default of agreement, as assessed.

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