Deterrence in OH&S Act civil contraventions
62 There is a long line of decisions at first instance in this Court which accept that, as a general proposition, specific and general deterrence are relevant matters in fixing a civil pecuniary penalty under the OH&S Act (see, for example, Trooper Lawrence at [116]-[120]; Cadet Francis at [101]-[104]; Comcare v National Gallery of Australia (2007) 98 ALD 67 at [5]; Comcare v John Holland Rail Pty Ltd (2009) 188 IR 415 ("John Holland") at [135]-[136]; Comcare v Australian Postal Corporation [2011] FCA 530 at [57]; Comcare v Subsee Explorer Pty Ltd (2011) 210 IR 322 at [50] and Comcare v John Holland Pty Ltd [2012] FCA 449 at [45]). We respectfully agree with that approach, particularly having regard to its consistency with several of the express objects set out in s 3 of the OH&S Act, as discussed above in [53].
63 Acknowledgment at a level of general principle of the relevance of general and specific deterrence in determining civil pecuniary penalties under the OH&S Act should, however, be qualified in the following two respects. First, because of the individual nature of specific deterrence, there may be good reason why that concept has no or little relevance in the circumstances of a particular case. For example, at first blush it may be difficult to see any meaningful role for specific deterrence to play in a case where the Commonwealth is the party which has contravened the OH&S Act and any pecuniary penalty must be paid to the Commonwealth, presumably into the Consolidated Revenue Fund (see, for example, Cadet Francis at [102]). However, it may be important to appreciate that the individual officer or officers of the Commonwealth with general or particular responsibility for the conduct will ordinarily be publicly associated with the penalty imposed, he or she will have to allocate scarce public funds that were not appropriated to pay such a penalty, and thus cause a reduction in what the Commonwealth department, authority or agency involved can now provide. That is, the imposition of the penalty will have an impact on the department's, authority's or agency's capacity to perform its role, even if the sum is small in its overall budget. And, most importantly, the department, authority or agency will have to account to the Parliament and the public as to why it had had to pay a penalty and not use the money appropriated to it for the purposes that the Parliament intended. The impact of the penalty may vary depending on whether there is any evidence demonstrating the practical effect on internal budget allocations within the Commonwealth if the particular Commonwealth department, authority or agency is ordered to pay a civil pecuniary penalty.
64 The second qualification relates to the need to ensure that any list of relevant considerations guiding the exercise of a discretion to impose a civil pecuniary penalty not be permitted to fetter the proper exercise of the discretion which is expressed in relatively unconfined terms in the OH&S Act. The importance of this consideration was emphasised in Lapidario where, after referring to the Madgwick factors and the guidance provided by French J in CSR, Flick J stated at [37]-[38]:
These considerations may also be applied to the task of assessing the penalty to be imposed under the current legislation. To some extent the considerations set forth by Madgwick J overlap with those set forth by French J; to some extent they do not.
Care must be taken to ensure that any listing of potentially relevant considerations do not themselves become an impermissible substitute for considering the terms of the legislation in issue or an unnecessary constraint upon a discretion conferred in otherwise unconfined terms. But the attempts that have been made by both Madgwick and French JJ (in particular) provide a useful touchstone of those matters that may be taken into account when assessing the penalty to be imposed. Those considerations set forth by Madgwick J are obviously more directed to the specific statutory context of ensuring the health and safety of workers than the more generally expressed considerations set forth by French J. But both, it is considered, are relevant to the present assessment of penalty.
65 To similar effect, in John Holland at [142], Barker J stated:
However, I also concur with North J, in his emphasis of the overriding caution expressed by Flick J in [Lapidario], where His Honour said that care must be taken to ensure that any listing of potentially relevant considerations do not themselves become an impermissible substitute for considering the terms of the legislation in issue or an unnecessary constraint upon a discretion conferred in otherwise unconfined terms.
66 It is to be noted at this juncture that the primary judge below expressly associated himself with the reservations expressed in those cases regarding the utility of the Madgwick factors. Indeed, his Honour went further than that, stating that his reservations were "even more profound" in respect of the use of sentencing principles in imposing civil penalties under different statutory regimes.
67 For convenience, we set out immediately below the Madgwick factors:
(i) the penalty must be such as to compel attention to occupational health and safety generally, to ensure that workers whilst at work will not be exposed to risks to their health and safety;
(ii) it is a significant aggravating factor that the risk of injury was foreseeable even if the precise cause or circumstances of exposure to the risk were not foreseeable;
(iii) the offence may be further aggravated if the risk of injury is not only foreseeable but actually foreseen and an adequate response to that risk is not taken by the employer;
(iv) the gravity of the consequences of an accident does not of itself dictate the seriousness of the offence or the amount of penalty. However the occurrence of death or serious injury may manifest the degree of the seriousness of the relevant detriment to safety;
(v) a systemic failure by an employer to appropriately address a known or foreseeable risk is likely to be viewed more seriously than a risk to which an employee was exposed because of a combination of inadvertence on the part of an employee and a momentary lapse of supervision;
(vi) general deterrence and specific deterrence are particularly relevant factors in light of the objects and terms of the Act;
(vii) employers are required to take all practicable precautions to ensure safety in the workplace. This implies constant vigilance. Employers must adopt an approach to safety which is proactive and not merely reactive. In view of the scope of those obligations, in most cases it will be necessary to have regard to the need to encourage a sufficient level of diligence by the employer in the future. This is particularly so where the employer conducts a large enterprise which involves inherent risks to safety;
(viii) regard should be had to the levels of maximum penalty set by the legislature as indicative of the seriousness of the breach under consideration;
(xi) the neglect of simple, well-known precautions to deal with an evident and great risk of injury, take a matter towards the worst case category;
(x) the objective seriousness of the offence, without more may call for the imposition of a very substantial penalty to vindicate the social and industrial policies of the legislation and its regime of penalties.
68 We agree with the reservations expressed by Flick and Barker JJ concerning the Madgwick factors. If a court applied the Madgwick factors dogmatically or inflexibly, there is a significant chance an error would be committed in the reasoning process. As Mahoney JA stated in Kable v Director of Public Prosecutions (1995) 36 NSWLR 374 at 394, "If justice is not individual, it is nothing". The various factors for consideration in assessing a penalty for breach of the OH&S Act may have greater or lesser importance in any given case, depending on the various objective and subjective elements of the breach. The penalty assessment process cannot be reduced to an inflexible set of criteria.
69 That being said, we consider that the Madgwick factors provide a useful foundation or starting point for an assessment of a civil pecuniary penalty. They are consistent with the body of authority from this Court and other courts. Furthermore, they are consistent with the theoretical principles concerning the role of deterrence considered above. In our view they properly recognise that deterrence is a relevant matter to be taken into account in assessing a civil pecuniary penalty under the OH&S Act. Although a court is not required to specifically refer to these factors, in most cases it would be prudent to do so. Having regard to the fact that, since 1 January 2012, the OH&S Act has been replaced by the Work Health and Safety Act 2011 (Cth) (subject to the Transitional and Consequential Provisions Act), the Court sees little or no advantage in reformulating either the Madgwick factors or any of the other factors which have been identified in the caselaw as having a potential relevance to the determination of a pecuniary penalty under the OH&S Act. The position may need to be revisited if and when an appropriate occasion arises in respect of the new legislation.
70 A critical issue raised by this appeal is whether the primary judge took into account the concept of deterrence in determining what was an appropriate civil pecuniary penalty in the particular circumstances here. If, on a proper reading of his Honour's reasons for judgment, the concept of deterrence was rejected as an irrelevant matter, the question then arises whether that involves an appellable error. We now turn to address those questions.
71 The essence of the primary judge's reasoning on this matter is to be found in [34] to [36] of his Honour's reasons, which we have set out in [32] above. Those paragraphs contain a detailed discussion by the primary judge of the inappropriateness, as his Honour described it, of drawing too freely on concepts from the criminal law in setting a civil penalty. Despite his Honour's strong reservations about applying concepts and canons of criminal law sentencing in that civil context, it is to be noted that his Honour recognised and accepted that notions of punishment and culpability are to be included among the objectives to be considered in determining an appropriate penalty for the purposes of the OH&S Act. In our view, however, a fair reading of [35] of his Honour's reasons indicates that his Honour regarded the concept of deterrence - both specific and general - as inappropriate and irrelevant in fixing a civil penalty, both under the OH&S Act generally and, more specifically, in the present case.
72 With great respect to the primary judge, we find it difficult to see the distinction drawn in [35] of his Honour's reasons between avoiding a breach of the Act and upholding positive obligations of protection of workplace health and safety. The stated objectives of the OH&S Act include securing the health, safety and welfare of employees and protecting persons at or near workplaces from risks to health and safety arising out of the activities of such employees at work. Another important and relevant stated objective is to provide for effective remedies if obligations are not met, through the use of civil remedies and, in serious cases, criminal sanctions.
73 In our view, general deterrence is an important consideration in fixing an appropriate pecuniary penalty for a contravention of the OH&S Act if that remedy is to be effective and if other relevant statutory objects are to be served. The Act encourages positive steps to be taken to achieve these objectives by, inter alia, providing for civil and criminal penalties to be imposed in cases where these positive obligations are not observed. The OH&S Act reinforces the positive obligations contained in s 16 and elsewhere by emphasising the obligation not to commit the civil wrongs that are stated in the Act. The two concepts are inextricably linked. Moreover, as noted above, we consider that the fixing of an amount of pecuniary penalty serves a valuable purpose in raising awareness on the part of both the particular contravenor and others who are bound by the OH&S Act of the need for compliance with statutory occupational health and safety standards.
74 It appears from the reasoning of the primary judge that no weight was given to deterrence because of his Honour's views that:
(a) no further practical steps could have been taken by the respondent to prevent the incident from occurring. The minor shortcomings that his Honour identified were taken into account in assessing the penalty; and
(b) adopting the concept of deterrence from the criminal law risked introducing a "ritual incantation" which would divert attention from the relevant practical issue of giving effect to the statutory objectives of the OH&S Act, namely how to provide appropriate incentive and encouragement (as well as punishment) to enhance workplace safety.
75 With great respect to his Honour, we consider that that reasoning reflects too narrow a view of the role of deterrence in fixing an appropriate civil pecuniary penalty. A penalty has the consequence of providing a salutary reminder of the importance of observing the obligations specified in the Act to both the contravenor and other potential contravenors (see, for example, Subsee Explorer at [50]). The imposition of a penalty shifts the economic calculus in favour of taking necessary steps to ameliorate the risk of OH&S incidents generally.
76 The views we have expressed above do not mean that we disagree with the primary judge's concerns about the need to avoid using concepts in this area which carry the risk of becoming "a ritual incantation". But acceptance of that proposition does not mean that the concept of deterrence (both specific and general) is irrelevant. We respectfully agree with the following observations of Barker J in Transpacific Industries at [38]:
… I do not disagree with observations recently made by Buchanan J in Comcare v Post Logistics Australasia Pty Limited [2011] FCA 1422 (Post Logistics 2011), where his Honour expressed his concerns about adopting an automatic application of a checklist drawn from criminal law sentencing principles, as suggested in Trooper Lawrence. I agree there is a danger in any ritual incantation of a set of considerations in deciding what penalty is appropriate in a particular case. In the present case, the fundamental need to impose a penalty that highlights the importance of compliance with occupational health and safety law in order to ensure the safety of employees at work must always be kept at the forefront of the penalty assessment process. That is not to say that notions of "deterrence", either specific or general, are irrelevant, for, in my view, they plainly are closely allied to this primary objective of ensuring the objects of the OHS Act are met. It is important that a particular respondent who admits contravention of the OHS Act or is found guilty of contravening the OHS Act should suffer a sufficient penalty, having regard to the seriousness of the contravention, so as to remind them of the significance of their responsibilities under the OHS Act. It is also important to remind employers more generally of the significance of their responsibilities under the OHS Act. No doubt the concept of "deterrence" can be expressed in different ways; but so long as the penalty is assessed with the importance of meeting the occupational health and safety obligations under the OHS Act are steadfastly borne in mind - not mere punishment or retribution against a contravener - then, in my view, the penalty assessment process will be properly undertaken.
77 Furthermore, in our view, to say that deterrence has no relevance because no practical measures could have been taken to prevent this particular incident is too narrow a view. Incidents involving forklifts and pedestrians in a warehouse or other place of employment can manifest themselves in myriad ways. A description of the incident, a declaration that the employer was at fault and an appropriate penalty are all factors that the wider community will take into account in analysing their own procedures regarding forklift-pedestrian interactions. Even though safety mechanisms in a particular place of business may prevent this particular iteration of a forklift accident from being replicated, a penalty has the capacity to provide impetus to persons and to organisations who are the subject of duties under the Act to ensure that all aspects of forklift safety are optimally designed.
78 The discussion above has largely focused on general deterrence but, in our view, it is also evident that the primary judge viewed specific deterrence as an irrelevant concept in setting an appropriate pecuniary penalty. In [33] of his reasons for judgment, his Honour said that he saw no reason for reducing an otherwise appropriate penalty because the respondent had disposed of its warehouse business. This issue arose, as the primary judge pointed out, because a submission had been made to that effect relying on the concept of "specific deterrence". In explaining why he rejected that submission, the primary judge then proceeded to express his reservations concerning the transposition of criminal law concepts into this civil penalty context. In our view, it is evident that the rationale for his Honour's rejection of the submission concerning "specific deterrence" was tied to his Honour's view that the concept of deterrence - whether general or specific - was simply irrelevant.
79 It follows that, in our view, the primary judge erred in taking too narrow a view of the role of deterrence. This amounts to his Honour acting upon a wrong principle and thus the discretion to impose a pecuniary penalty under cl 4 of Schedule 2 of the OH&S Act miscarried.