Botany Bay City Council v Inspector Derek Pryor

CORAM: Walton J Vice-President; Staff J; Backman J

Appeal - Dangerous Goods Act 1975 (now repealed) - s 197 of the Industrial Relations Act 1996 - appeals against conviction and sentence - whether evidence before Chief Industrial Magistrate was sufficient to sustain a finding beyond reasonable doubt that there was on premises a quantity in excess of 1,000 litres of liquid chlorine - held: finding by Chief Industrial Magistrate that offence established an error - appeal upheld.

CATCHWORDS: Appeal - occupational health and safety - Occupational Health and Safety Act 2000 - s 197 of the Industrial Relations Act 1996 - appeal against conviction - whether error in finding that appellant failed to provide or maintain a safe system of work for the manual handling or conveying of liquid chlorine - held: no error identified - appeal dismissed.

Appeal - occupational health and safety - Occupational Health and Safety Act 2000 - s 197 of the Industrial Relations Act 1996 - appeal against sentence - whether sentence manifestly excessive - whether appellant should be treated as an individual or a corporation for the purposes of s 12 of the Occupational Health and Safety Act 2000 - held: appellant a corporation for the purposes of s 12 of the Act - sentence not manifestly excessive - appeal dismissed.

Corporations Act 2001 (Cth) Dangerous Goods Act 1975 Industrial Relations Act 1996 LEGISLATION CITED: Interpretation Act 1987 Local Government Act 1993 Local Government Amendment (Legal Status) Act 2008 Occupational Health and Safety Act 2000

Beacham v Interface Manufacturing Pty Ltd (2005) 141 IR 416 Inspector Prasad De Silva v Spicer Axle Australia Pty Ltd [2005] NSWIRComm 278 CASES CITED: Lapa v Regina [2008] NSWCCA 331 R v Doan (2000) 50 NSWLR 115 WorkCover Authority of New South Wales (Inspector Glass) v Flexible Packaging (Australia) Pty Ltd (2005) 144 IR 385 WorkCover Authority of New South Wales v Stephensons Cranes Pty Ltd (2005) 139 IR 324

APPELLANT: Mr R A Bonnici of counsel Solicitors: Houston Dearn O'Connor (Mr M Perry) LEGAL REPRESENTATIVES:

RESPONDENT: Mr P M Skinner of counsel Solicitors: Carroll & O'Dea (Mr J Rodney)

CORAM: WALTON J, Vice-President STAFF J BACKMAN J

Botany Bay City Council v Inspector Derek Pryor (workcover new south wales)

Application by Botany Bay City Council for leave to appeal and appeal against a judgment of Chief Industrial Magistrate Hart given on 5 December 2006 in Matter No. CIM20117951/06

Botany Bay City Council v Inspector Derek Pryor (workcover new south wales)

Application by Botany Bay City Council for leave to appeal and appeal against a judgment of Chief Industrial Magistrate Hart given on 28 May 2008 in Matter No. CIM20117951/06

1 Before the Full Bench are two applications for leave to appeal and appeal brought by the appellant, the defendant at first instance, under s 197 of the Industrial Relations Act 1996 against two decisions of Chief Industrial Magistrate Hart of 5 December 2006 and 10 March 2008, respectively. 2 The first application concerns an appeal against conviction and sentence under s 9(1) of the Dangerous Goods Act 1975 (now repealed). The second application concerns an appeal against conviction and sentence under s 8(1) of the Occupational Health and Safety Act 2000 (2000 Act).

The Dangerous Goods Act Appeal 3 Both appeals arose out of events on 18 May 2004, at the Big Splash Aquatic Centre in Botany. Ian Huntley at the time was employed by the appellant at the Aquatic Centre as a casual pool supervisor. At the premises, the appellant kept liquid chlorine in two main tanks each with a capacity of some 2,000 litres. Liquid chlorine was also kept in a smaller tank with a capacity of 500 litres located elsewhere on the premises. At some stage during 18 May 2004 Mr Huntley utilised plastic tubing to siphon an amount of liquid chlorine (known as sodium hypochlorite) from one of the main tanks into a container, for the purpose of transporting it to the smaller tank. During the course of the procedure Mr Huntley sustained injuries to his respiratory system when a quantity of the liquid chlorine went into his mouth. 4 There was no issue between the parties at first instance that liquid chlorine was at the relevant time recognised as a dangerous good under the Dangerous Goods Act and the regulations, for which a licence was required where a quantity in excess of 1,000 litres was kept on the premises. What was in issue between the parties at first instance, and on this appeal, was whether the evidence before the learned Chief Industrial Magistrate was sufficient to sustain a finding beyond reasonable doubt that on the day of the alleged offence there was on the premises a quantity in excess of 1,000 litres of liquid chlorine. 5 Following the written and oral submissions of both parties we have been able to reach a firm conclusion that this appeal should be upheld. Our reasons follow. 6 At first instance the prosecutor tendered a record of interview of Mr Huntley in which he was asked questions about the quantity of liquid chlorine on the premises. He said that on 18 May 2004 the capacity of the main tanks in the main plant room was, "almost 100 per cent". However, the immediately preceding answer given by Mr Huntley showed a significant misunderstanding about the capacity of the tanks. The only other evidence that was adduced at first instance in relation to this issue came from a factual inspection report compiled by the investigating inspector on 21 May 2004, three days after the alleged offence. That evidence was to the effect that the two main tanks, each having a capacity of 2,000 litres, were at the time of his inspection on the 21 May 2004 "partly full" of liquid chlorine. No evidence was led by the prosecutor as to the volume of chlorine held in the tanks at the time the workplace was inspected after the incident. This evidence in our view is not sufficient to sustain a finding beyond reasonable doubt that on the day of the alleged offence there was a quantity in excess of 1,000 litres of liquid chlorine kept on the premises as would make out the offence. It follows that the learned Chief Industrial Magistrate was in error in finding that the offence under the Dangerous Goods Act had been established. We would therefore grant leave to appeal and uphold the appeal.

The Occupational Health and Safety Act Appeal 7 We turn now to the second application for leave to appeal and appeal lodged by the appellant against the learned Chief Industrial Magistrate's finding that a breach under s 8(1) of the 2000 Act had been proved and the sentencing of the appellant to a fine of $37,000. 8 The main issue agitated on the second appeal was whether there was a proven risk to safety occasioned by a failure of the appellant to provide a system to manually handle chlorine. The appellant contended that the former practice of manually handling chlorine was unnecessary at the time of the incident because an automatic system had been installed and, in any event, the former practice had been discontinued. However, we are satisfied that the evidence disclosed that some form of manual handling had been undertaken, albeit rarely, and that the practice of using manual handling had not been entirely discontinued - it being available at least for emergency situations. The appellant did not establish a safe system of work by either removing entirely such practices or establishing a safe system for manual handling where that practice was occasionally adopted. 9 The fact that Mr Huntley may have adopted a technique to siphon the chlorine which was not normally used and which was ill-advised did not excuse the appellant. If manual handling of chlorine remained in some use, as it did, then the appellant was required under the 2000 Act to establish a safe system for the same and not to allow the establishment and/or maintenance of an informal system which permitted improvisation by employees in such matters. We note, in this respect, that the appellant had left the means for decanting and siphoning near the tanks, and that that equipment had been used by other of its employees from time to time. The appellant's obligation was to be proactive in identifying and avoiding risks, and the systems it erected must have been adequate to ensure a safe workplace, even with respect to employees who were careless, There was an absence of a "managerial mind" being applied to the tasks in order to remove risks to safety occasioned by any normal handling of chlorine. It was open to the learned Chief Industrial Magistrate to find beyond reasonable doubt that the appellant had failed to provide or to maintain a system of work which was safe for the manual handling or conveying of liquid chlorine at the premises. Accordingly his Honour did not misdirect himself as to the evidence in support of the circumstances prevailing at the time of the offence.

10 A further issue ventilated during oral hearing concerned whether Mr Huntley at the time he siphoned the liquid chlorine from the main tanks, was disobedient in that he failed to follow an instruction that had been issued to him not to manually handle the liquid chlorine. We are satisfied, having been taken to the available evidence on the issue at first instance, that that evidence was not sufficient to sustain a finding that Mr Huntley had been disobedient in failing to follow any specific instruction. On the day of the offence Ms Sandy Davies, Mr Huntley's supervisor, was approached by Mr Huntley who inquired whether he should manually transfer liquid chlorine from the plant room to the waterslide. According to Mr Huntley Ms Davies responded, "if you want to". Ms Davies' evidence on the issue was that Mr Huntley approached her and asked her if she wanted him to fill some drums. She asked him, "do you know how to do it". She said she was not sure how Mr Huntley responded to her question but she recalled adding, "don't worry, I will do it". Shortly after that exchange Ms Davies said she said to Mr Huntley, "no I will get a chlorine delivery". Later in her evidence Ms Davies said that she could not recall whether she said to Mr Huntley the words attributed to her namely, "[i]f you want to". She conceded, "[I] could have said it right at the beginning, I'm not sure". We conclude from the state of this evidence that at no stage did Ms Davies issue a clear or direct instruction to Mr Huntley not to proceed with the manual conveyance or transfer of liquid chlorine. This evidence also discloses that the practice of manual handling persisted, that Mr Huntley and Mr Davies were aware of it and that it was in contemplation that Mr Huntley may handle the chlorine manually. 11 The appellant also appealed against the sentence imposed by the learned Chief Industrial Magistrate in an amount of $37,000 for the offence under s 8(1) of the 2000 Act. According to the appellant, the learned Chief Industrial Magistrate erred in two respects, first by overstating the objective factors, and secondly by failing to adequately reflect what were said to be strong subjective factors. As a separate ground, it was alleged that the penalty was manifestly excessive. 12 In oral submissions the appellant confined the ground alleging errors in the approach taken by his Honour to the factor of general deterrence. It was contended that his Honour, "relied too heavily on the aspect of general deterrence in a serious act purely because of the nature of the injury, not having said that all the signs and everything was there." With regard to the ground that the sentence was manifestly excessive, the appellant advanced the following submission: bearing in mind the maximum penalty of $55,000 and the appellant's great and proud record in safety issues a fine of $37,000 is manifestly excessive. 13 On the issue of general deterrence the his Honour found: There is a need for a general deterrence factor in any penalty imposed by the court. The use of dangerous chemicals in industry carries with it an obligation to ensure the safe handling of such substances. The consequences of a gap in the employer's system can be so serious that there clearly must not be gaps. Every aspect of the handling of such chemicals must be the subject of risk assessment and the development of safe handling procedures that are then enforced. 14 With regard to the appellant's safety record his Honour said:

Before the incident, the defendant already had in place substantial occupational health and safety procedures and policies. The incident has exposed a gap in that system but the defendant must be given credit for its approach generally before the incident. Following the incident, the defendant responded quickly and thoroughly and that should also be recognised. Once the gap was detected the defendant took very thorough steps to overhaul its occupational health and safety systems to not only remove the gap but to reinforce its procedures generally. 15 His Honour also made other findings going to the objective seriousness of the offence which included findings that the risk to safety was reasonable foreseeable, that simple remedial measures were available prior to the offence, and, that the risk to safety resulted to injuries to Mr Huntley of "a most serious type" and could have been much more serious. His Honour also found that the appellant had a good industrial record and had displayed a diligent approach to its occupational health and safety obligations. These matters his Honour expressly took into consideration in mitigation of penalty. 16 These findings in our view when taken together do not disclose error in the sentencing reasons in that it is clear that the learned Chief Industrial Magistrate's application of the factor of general deterrence was one of several factors taken into account by his Honour in his assessment of the objective seriousness of the offence. A similar conclusion is available with regard to his Honour's assessment of the subjective factors. The appellant's good industrial record, its diligent approach to its occupational health and safety obligations, its cooperation with the investigating authority and its plea of guilty were all factors found to be of relevance by his Honour in mitigation of the penalty imposed. When these findings are considered by reference to the statutory maximum penalty the actual penalty imposed by his Honour was not in our view manifestly excessive.

17 Toward the end of oral submissions the appellant raised an issue with regard to the maximum penalty applicable under s 12 of the 2000 Act. That section sets out the maximum penalties that the Industrial Court may impose on a corporation or an individual. In the Local Court, the jurisdictional limit is $55,000 regardless of the status of an offender or whether or not the offender has a prior conviction: see s 105(2) of the 2000 Act. It is important to bear in mind when imposing a penalty in the Local Court for a breach of an offence under Division 1 of Part 2 of the Act (which includes s 8(1)) that where the jurisdictional maximum is lower than the statutory maximum, a sentencing court must be guided by the statutory maximum. Where the maximum penalty is subject to a jurisdictional limit, a court should consider the objective and subjective factors applicable to the offence including the maximum penalty taking care not to impose a penalty that exceeds the jurisdictional limit: R v Doan (2000) 50 NSWLR 115; WorkCover Authority of New South Wales v Stephensons Cranes Pty Ltd (2005) 139 IR 324; WorkCover Authority of New South Wales (Inspector Glass) v Flexible Packaging (Australia) Pty Ltd (2005) 144 IR 385; Beacham v Interface Manufacturing Pty Ltd (2005) 141 IR 416; Inspector Prasad De Silva v Spicer Axle Australia Pty Ltd [2005] NSWIRComm 278; Lapa v Regina [2008] NSWCCA 331 at [16] [17]. 18 In the present case the appellant had prior convictions. The applicable statutory maximum therefore was a fine of $825,000. 19 The appellant in oral submissions in reply disputed the applicable statutory maximum, contending that for the purposes of imposing penalty for an offence under the 2000 Act, the appellant should be treated as an individual, not a corporation. The appellant relied on the definition of a corporation in s 57A of the Corporations Act 2001(Cth) to support a proposition that it was not a corporation but an exempt public authority. In support of the contention that the appellant was an "individual" for the purpose of sentencing under the 2000 Act, the appellant asserted that it was, and is, a council, and that Local Court registries have treated councils as individuals with regard to filing fees. The Full Bench was also asked to take judicial notice of the fact that a council is a public authority because it is financed by the taxpayer. 20 Following the hearing of the appeal, both parties were given leave to file written submissions on the issue. The respondent's written submissions reviewed the relevant legislation. It was contended that s 12 of the 2000 Act contains a clear dichotomy between, "human beings, individuals and corporations", the latter term said to include the appellant, being a body corporate under the Local Government Act 1993. It was also contended in written submissions that there was no inconsistency between the definition under the Local Government Act and the definition of a corporation under s 57A of the Corporation Act 2001 (Cth). The appellant filed its written submissions in reply on the issue on 15 December 2008. It repeated in large measure its submissions on the issue which it made during the hearing of the appeal, namely, that the relevant definition of a corporation applicable to the offence is that contained in s 57A of the Corporations Act and, that in accordance with that definition the appellant was an exempt public authority which is not a corporation under s 57A(2)(a) of that Act. 21 It is convenient at this point to visit the relevant legislation which provides assistance on the issue. 22 Section 57A(2) of the Corporations Act provides: 57A Meaning of corporation (1) Subject to this section, in this Act, corporation includes: (a) a company; and

(b) any body corporate (whether incorporated in this jurisdiction or elsewhere); and

(c) an unincorporated body that under the law of its place of origin, may sue or be sued, or may hold property in the name of its secretary or of an office holder of the body duly appointed for that purpose. (2) Neither of the following is a corporation : (a) an exempt public authority;

. . . 23 According to the appellant, the Corporations Act contains no definition of a public authority. An exempt public authority, is defined in s 9 of that Act:

exempt public authority means a body corporate that is incorporated within Australia or an external Territory and is:

(b) an instrumentality or agency of the Crown in right of the Commonwealth, in right of a State or in right of a Territory. 24 At the time of the offence the legal status of the appellant was governed by the Local Government Act 1993. Section 219 of that Act provided: "a council is constituted by the Act for each area" Section 220 provided: "a council is a body corporate." 25 Although not strictly necessary to the disposition of this issue we would observe that recent amendments to the Local Government Act which came into force on 20 November 2008 did not alter the appellant's status as a corporation under Division 1 of Part 2 of the 2000 Act. 26 On 20 November 2008, s 220 of the Local Government Act 1993 was repealed by the Local Government (Legal Status) Act 2008, and replaced by a new s 220 in the following terms: 220 Legal status of a council

(1) A council is a body politic of the State with perpetual succession and the legal capacity and powers of an individual, both in and outside the State.

(2) A council is not a body corporate (including a corporation).

(3) A council does not have the status, privileges and immunities of the Crown (including the State and the Government of the State).

(4) A law of the State applies to and in respect of a council in the same way as it applies to and in respect of a body corporate (including a corporation). 27 When introducing the Local Government Amendment (Legal Status) Bill 2008 to State parliament on 22 October 2008, the Minister for Local Government, the Honourable Mrs Barbara Perry explained the purpose of the amendment: This bill will minimise the risk of New South Wales councils being caught up in the Federal system by changing their corporate status. Instead of being a body corporate, a council will be constituted as a body politic of the State and will have the legal capacity and powers of an individual. This change in legal status is not intended to affect the day-to-day operations of a council. It will not expose councillors to greater risk of personal liability. It will not affect the existing legal rights and obligations of councils or third parties who do business with them. Its only impact is to remove the possibility that a council might be characterised as a constitutional corporation and therefore as an employer for the purposes of the Commonwealth's Workplace Relations Act. It will ensure that a council cannot be subject to the Federal industrial relations legislation. However, New South Wales laws that apply to corporations will continue to apply to councils as if they were bodies corporate. This means, for example, that section 50 of the Interpretation Act will continue to apply to a council. As a result, a council will continue to have a seal for the execution of documents and may sue and be sued in its council name. Councils also will continue to be subject to any statutory penalties or fees - such as filing fees - that may be imposed on bodies corporate, rather than being treated as natural persons. Earlier this year the Queensland Parliament enacted similar legislation to protect council employees in that State from WorkChoices. That legislation ensured that council workforces are covered by the State industrial relations system. Due to the different legislative schemes for local government in each jurisdiction the reforms are not identical. The bill will nonetheless achieve similar certainty for New South Wales council and county council employees. 28 The Local Government (Legal Status) Act 2008 also inserted into Schedule 8 of the principal Act the following provision: 92 New legal status of existing councils (1) The following provisions apply to a council constituted as a body corporate immediately before the commencement of the 2008 Act: (a) the council ceases to be a body corporate on that commencement and becomes instead a body politic of the State as provided by section 220 or 388 (as substituted by the 2008 Act), (b) the council is taken for all purposes (including the rules of private international law) to be a continuation of, and the same legal entity as, the council as it existed before the commencement of the 2008 Act (except that the council is no longer a body corporate and is instead a body politic of the State). (2) The 2008 Act (this clause in particular) does not: (a) affect existing property, rights or obligations of a council, or (b) render defective any legal proceedings by or against a council, or (c) negate any decision made by a council, or (d) place a council in breach of contract or otherwise make it guilty of a civil wrong, or (e) make a council in breach of any instrument, including, for example, an instrument prohibiting, restricting or regulating the assignment or transfer of any right or liability, or

(f) fulfill a condition allowing a person to terminate an instrument or liability or modify the operation or effect of an instrument or liability, or requiring any amount to be paid before its stated maturity, or

(g) release a surety or other obligee, in whole or part, from an obligation. (3) In this clause: council includes county council.

2008 Act means the Local Government Amendment (Legal Status) Act 2008 . 29 Section 50 of the Interpretation Act 1987, cited by the Minister for Local Government when introducing the Local Government (Legal Status) Amendment Bill provides: 50 Statutory corporations

(1) A statutory corporation: (a) has perpetual succession,

(c) may take proceedings and be proceeded against in its corporate name,

(d) may, for the purpose of enabling it to exercise its functions, purchase, exchange, take on lease, hold, dispose of and otherwise deal with property, and

(e) may do and suffer all other things that bodies corporate may, by law, do and suffer and that are necessary for, or incidental to, the exercise of its functions. (2) The seal of a statutory corporation (being a corporation that has 2 or more members) shall be kept by the president, chairperson or other principal officer of the corporation and shall be affixed to a document only: (a) in the presence of at least 2 members of the corporation, and

(b) with an attestation by the signatures of those members of the fact of the affixing of the seal. (3) Every document requiring authentication by a statutory corporation may be sufficiently authenticated without the seal of the corporation: (a) in the case of a corporation that has 2 or more members - if it is signed by the president, chairperson or other principal officer of the corporation or by any member of the staff of the corporation authorised to do so by the president, chairperson or other principal officer,

(b) in the case of a corporation sole - if it is signed by the person by whom the corporation is constituted or by any member of the staff of the corporation authorised to do so by that person, or

(c) in the case of a corporation that has no members - if it is signed by the person for the time being managing the affairs of the corporation or by any member of the staff of the corporation authorised to do so by that person. (4) This section applies to a statutory corporation in addition to, and without limiting the effect of, any provision of the Act by or under which the corporation is constituted.

30 The effect of the above legislation on the legal status of the appellant may be shortly stated. First, at the time of the offence the appellant was a body corporate under the Local Government Act, as it was then in force. For the purposes of s 12 of the 2000 Act therefore the appellant was a corporation and subject to the statutory maximum penalties applicable to a corporation under that section. Secondly, the introduction of the amendment Act on 20 November 2008, which inserted the new s 220 into the Local Government Act and came into force on 20 November 2008, re-constituted the appellant as a body politic, but in doing so its existing rights and obligations were expressly preserved and the application of New South Wales laws continued to apply to it as a body corporate by virtue of the insertion into Schedule 8 of s 92. We would add before leaving the issue that the introductory words to s 57A of the Corporations Act ("in this Act") serve to confine the exclusions set out in s 57A(2), to that Act. It is the statutory provisions contained in the NSW legislation which determine the legal status of the appellant for the purposes of s 12 of the 2000 Act, not the Corporations Act. 31 Returning to the appellant's ground of appeal that the sentence imposed was manifestly excessive, we are of the view that when regard is had to the statutory maximum penalty, the penalty of $37,000 was not excessive. This is especially so in the absence of any identifiable factual or legal errors in the sentencing remarks. Orders 32 We make the following orders:

1. In Matter No IRC 236 of 2007 (i) to the extent leave to appeal is required, leave is granted

(ii) the appeal is upheld (iii) the decisions as to conviction and sentence are quashed

(i) to the extent leave to appeal is required, leave is granted (ii) the appeal is dismissed

3. Within 28 days of the date of this judgment the appellant shall file and serve submissions in relation to the costs of both appeals. The respondent has a further 14 days in which to file and serve a response. Unless one or both parties make a request to be heard orally, the Full Bench will deal with the question of costs on the papers.

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