Fernandes Constructions Pty Limited v WorkCover Authority of New South Wales

APPELLANT: Mr A Henskens of Counsel SOLICITORS: Mr A. P Riordan Colin Biggers & Paisley

LEGAL REPRESENTATIVES: RESPONDENT: Mr B G Docking of Counsel SOLICITORS: Mr G. Henderson Phillips Fox

JUDGMENT: - 17 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH CORAM: WALTON J, VICE-PRESIDENT KAVANAGH J STAUNTON J 19 December 2002 Matter No. IRC 2535 of 2002 Fernandes Constructions Pty Limited v WorkCover Authority of New South Wales (Inspector Steven Jones) Appeal against a decision of Justice Boland given on 15 April 2002 in Matter No IRC 2096 of 2000.

JUDGMENT OF THE FULL BENCH [2002] NSWIRComm 364

1 These proceedings involve an appeal pursuant to s 196 of the Industrial Relations Act 1996 and s 5 AA of the Criminal Appeal Act 1912 as amended by the Courts Legislation (Amendment) Act 2000 against the severity of the sentence imposed upon the appellant by Boland J on 15 April 2002. The appeal shall be determined as an appeal stricto sensu: Ridge Consolidated Pty Ltd v WorkCover Authority of NSW (Inspector Mauger) (2002) 115 IR 78 at [15].

2 The proceedings before his Honour involved an offence under s 16 (1) of the Occupational Health and Safety Act 1983, in that the appellant: Failed to ensure that persons not in its employment were not exposed to risks to their health or safety arising from the conduct of its undertaking while they were at its place of work. In particular, the Defendant failed to ensure that an adequate system of work was in place to protect against persons being exposed to a risk of injury from falling while working on the level 2 concrete slab and level 3 formwork deck located at portion 4 of the building under construction at Nepean Hospital known as the Stage 2 Project.

3 As part of the relevant facts of the offence, Mr Melvaine, a steel fixer working on the construction site, fell from level 2 of the building under construction.

4 In the proceedings before Boland J, the appellant entered a plea of guilty to the charge. However, the appellant took issue with certain factual matters expressed within the offence particulars. Specifically, the appellant conceded that there was an inadequate system of work in place on level 3 to prevent persons falling from that level but denied any liability with respect to Mr Melvaine's fall from level 2.

5 On the factual dispute, as identified by the appellant, his Honour heard detailed evidence from a number of witnesses in order to determine that issue before he proceeded to a penalty properly reflecting the appellant's culpability.

6 His Honour ultimately determined that matter against the appellant's interests.

7 In determining penalty, his Honour then took a number of matters into account. In conclusion, he determined a notional penalty of $140,000 and allowed a discount of fifteen percent, embracing both the utilitarian value of the plea entered as well as other subjective features that he identified. In making that discount, the final penalty imposed was $119,000.

8 Pertinent to his Honour's considerations on penalty was the maximum penalty having regard to any prior convictions. On that issue his Honour concluded that a prior conviction of the appellant under the Construction Safety Act 1912 was a prior conviction for the purposes of the Occupational Health and Safety Act 1983 (the Act).

9 Accordingly, his Honour approached the determination of penalty on the basis that, as the appellant had a prior conviction, the maximum penalty was $825,000, as provided by s 51A of the Act.

10 That his Honour was in error on that point was the major ground of the appeal before us.

11 As has now been acknowledged by both parties to this appeal, his Honour's conclusion as to the appellant's prior conviction being a prior conviction for the purposes of the Act was an error (although no assistance was provided to his Honour by the appellant or respondent in this respect). A prior conviction under the Construction Safety Act 1912 is not a conviction such as to enliven s 51A(1) of the Act: WorkCover Authority (Inspector Glass) v Kellogg (Australia) Pty Limited (No 2) (1999) 101 IR 261 at 265, paras [26] - [31].

12 Procedurally it was open to the parties to have the matter re-opened before his Honour in accordance with the provisions of s 43(2) of the Crimes (Sentencing Procedure) Act 1999.

13 In the appeal proceedings before us, this course was proposed to the appellant and rejected - primarily, it was submitted, because the appeal went to other additional grounds considered by his Honour in mitigation of the penalty ultimately determined.

14 In considering the possible future conduct of proceedings, not least of all on the question of costs, we determined to conclude the matter before us.

15 The primary ground of appeal having been conceded, the appellant pressed the other grounds relied upon. As argued by counsel for the appellant they can, we believe, be expressed as his Honour erring in the general exercise of his sentencing discretion in: · failing to take into account or properly take into account the prior good character of the appellant · the discount allowed for the utilitarian value of the plea entered was insufficient · failing to allow for the economic duress occasioned to the appellant in the circumstances of the offence as a factor in mitigation

16 A further ground pressed before us was not specifically pleaded. It arises from the decision of her Honour Glynn J in WorkCover Authority (Inspector Jones) v the State of New South Wales (Department of Public Works and Services) [2002] NSWIRComm 284. The decision of her Honour's was handed down a few days prior to the appeal before us. On any proper consideration, the defendant in those proceedings was a co-offender in the factual circumstances giving rise to the offence under consideration by us. We will return to the issue raised by her Honour's judgment in the matter before us in due course.

17 At this point, it is necessary to recount relevant findings made by his Honour Boland J in the proceedings before him as set out in para [50] of his judgment: (1) The defendant [the appellant before us] was contracted by the Department of Public Works and Services to erect a concrete structure for the new Women and Children's Block at Nepean Hospital, Derby Street, Kingswood. The Department was responsible for the project management of building and construction work at the Nepean Hospital construction site and it was responsible for erecting perimeter scaffolding on the building as a measure to prevent persons and materials falling from the building. (2) The defendant subcontracted steel reinforcing placement work on the building to C&H Reinforcing (NSW) Pty Ltd. (3) Steven Melvaine was a steel fixer employed by C&H. (4) On 12 May 1998 Mr Melvaine fell from level 2 of the building to the ground, sustaining head injuries and abrasions. (5) The Construction Safety Regulations require fall protection measures to be erected on buildings of the type under construction at the Hospital site. The usual form of fall protection is perimeter scaffolding designed to prevent persons and materials falling from heights. (6) No perimeter scaffolding was in place when Mr Melvaine fell on 12 May 1998. The only measure of fall protection on level 2 where Melvaine fell was a 100 mm x 75 mm timber handrail 1.3 metres from the floor of level 2. The timber handrail was an inadequate measure against persons and materials falling from level 2 of the building under construction. (7) No perimeter scaffolding was in place on level 3 on 12 May 1998. (8) The defendant knew that construction work should not have been proceeding on levels 2 and 3 without appropriate fall protection in place. In this respect, given that columns would inevitably be placed near the edge of the concrete slab of each level, it was readily foreseeable that persons working on levels 2 and 3 might be working close to the edge of the slab. (9) The rational inference to be drawn from the evidence is that there was no prohibition against workers being on level 2 on 12 May 1998 and that Mr Melvaine was present on level 2 on 12 May 1998 for the purpose of performing work. I find that the prosecution has established this beyond reasonable doubt. (10) The defendant had failed to ensure that workers did not gain entry to level 2 and failed to erect warning signs prohibiting entry onto level 2 on 12 May 1998 in accordance with its own Safety Manual. Further, a ladder was in place enabling access to level 2 from level 3 on 12 May 1998. (11) Whilst it had responsibility for doing so, the Department of Public Works and Services failed to erect the perimeter scaffolding up to the time of the incident on 12 May 1998, despite repeated requests by the defendant that it do so. (12) Whilst the weather may have been a consideration in the Department's failure to erect the scaffolding, there was no convincing evidence that it could not have been erected, despite the weather. (13) The Department's desire to complete the work according to deadlines had the effect of placing the defendant under pressure and was a factor in the defendant's decision to continue with the construction work in the absence of perimeter scaffolding. The contract to erect the building on the Hospital site constituted about 30 per cent of the defendant's revenue and the defendant did not wish to jeopardise this or jeopardise the prospect of future contracts with the Department. (14) The erection of the timber handrail as a substitute for perimeter scaffolding was the Department's proposal, designed in my opinion, to stem the repeated requests of the defendant to erect the scaffolding.

18 The facts and circumstances as determined by his Honour in sub para [13] above is the substance of the economic duress argued by the appellant in these proceedings.

19 It is appropriate, we believe, to commence consideration of the matters raised on appeal by reference to the judgment of Glynn J in WorkCover v Department of Public Works and Services.

20 As co-offenders in the factual circumstances giving rise to the offences in both matters, any proper consideration of the respective culpability of the two parties is essential if the principle of parity in sentencing is to be observed.

21 His Honour Boland J did not determine the respective culpability of the two co-offenders. He was not asked to. His consideration was predominantly taken up by the appellant's submissions on the particularised matters it sought to place in dispute relevant to its plea of guilty.

22 In the proceedings before him, his Honour made certain relevant findings as to the role of the Department of Public Works and Services in addition to those outlined in para [17] above. The first appears at para [35] of his Honour's judgment as follows: As to whose responsibility it was to erect perimeter scaffolding, I am satisfied the responsibility lay with the Department of Public Works and Services. and further, at para [43]: I do not find the reason given by the Department for not erecting the safety scaffolding, namely the state of the weather, at all convincing. In any event, if the scaffolding could not have been erected because of the wet and muddy conditions, the construction work should not have continued in the absence of proper safety scaffolding.

23 In July of this year the Department of Public Works and Services (DPWS) entered a plea of guilty to an offence under s 16 (1) of the Occupational Health and Safety Act concerning their role in the accident before us. It is relevant to highlight that the offence under s 16 (1) to which the Department entered its plea of guilty, was pleaded by the prosecution in exactly the same terms and with the same particulars as that offence to which the appellant had entered its plea.

24 In determining the matter before her, Glynn J was required to traverse much of the same factual circumstances as had been placed before Boland J. Indeed, parts of the transcript of that matter were placed before her. It is clear that she was aware of Boland J's decision.

25 A number of matters emerge from Glynn J's decision pertinent to the appeal. The first is confirmation in para [17] of that judgment that, having regard to the role of the DPWS in the factual circumstances before the Court, the prosecution contended: The prosecutor does submit that very significantly and seriously the State of New South Wales is more culpable criminally than the co-defendant Fernandes Construction.

26 In the appeal, counsel for the respondent rightly highlighted that paragraph as properly reflecting the prosecution's view in the matter before Glynn J. He did not seek to resile from that primary position in the matter before us.

27 That submission adds some weight to the appellant's claim that, on a proper approach to apportioning culpability having regard to the principle of parity, the appellant has been treated too severely.

28 The findings of her Honour on the issue of the respective culpability of the two co-offenders is however expressed in somewhat more equivocal terms at para [199] of her judgment: I also find that the defendant had no less responsibility for the particular risk to employees that was evidenced by Mr Melvaine's fall than did Fernandes. (our emphasis)

29 In the matter before us, we have had regard to her Honour's finding of the assessment of culpability of the DPWS vis-a-vis the appellant. We consider it appropriate to state at this point that it also accords with our assessment when considering the factual circumstances and the respective roles of the DPWS and the appellant in the matter.

30 Glynn J determined a penalty in respect of the DPWS of $119,000 after making provision for a discount of 15 percent for the plea of guilty and a further five percent for subjective features in mitigation against a maximum penalty backdrop of $825,000.

31 Having regard to the above facts and circumstances, we accept that it is open to us to find that the appellant should succeed in having the penalty imposed reassessed on a proportionate basis relative to a maximum penalty backdrop of $550,000.

32 Before any final consideration of that issue, we propose to consider those matters raised by the appellant under the general umbrella of error in the sentencing discretion of his Honour as identified in para [15] above. Taking that approach we turn in the first instance to the appellant's submission that his Honour erred in the discount allowed for the utilitarian value of the plea.

33 His Honour clearly considered the proper approach he should take, having regard to the decision of R v Thomson; R v Houlton (200) 49 NSWLR 383, particularly at para [160] of that judgment as follows: (ii) Sentencing judges are encouraged to quantify the effect of the plea on the sentence insofar as they believe it appropriate to do so. This effect can encompass any or all of the matters to which the plea may be relevant - contrition, witness vulnerability and utilitarian value - but particular encouragement is given to the quantification of the last mentioned matter. Where other matters are regarded as appropriate to be quantified in a particular case, e.g. assistance to authorities, a single combined quantification will often be appropriate. (our emphasis) (iii) The utilitarian value of a plea to the criminal justice system should generally be assessed in the range of 10-25 percent discount on sentence. The primary consideration determining where in the range a particular case should fall, is the timing of the plea. What is to be regarded as an early plea will vary according to the circumstances of the case and is a matter for determination by the sentencing judge . (our emphasis) (iv) In some cases the plea, in combination with other relevant factors, will change the nature of the sentence imposed. In some cases a plea will not lead to any discount. (our emphasis)

34 Before his Honour, the appellant took issue with certain essential factual particulars of the offence but not, as we perceive it, the legal elements of the offence (which elements would nonetheless bind the appellant by its plea of guilty). Those legal elements arising under s 16 (1) of the Act were that the appellant: · failed to ensure · persons not in its employment · were not exposed to risk to their health or safety · arising from the appellants conduct at its place of work

35 As a general proposition, the legal elements to an offence under s 16 (1) of the Act were affirmed by the decision of a Full Bench of the Commission in Court Session in Mainbrace Constructions Pty Ltd v WorkCover Authority of NSW (Inspector Charles) (2000) 102 IR 84 [at12].

36 The essential factual particulars as pleaded in this matter before his Honour were expressed thus: In particular, the Defendant failed to ensure that an adequate system of work was in place to protect against persons being exposed to a risk of injury from falling while working on the level 2 concrete slab and level 3 formwork deck located at portion 4 of the building under construction at Nepean Hospital known as the Stage 2 Project.

37 It could be said that the particulars as pleaded were defective in that they raised a "failure to ensure an adequate system of work was in place" in relation to "the level 2 concrete slab and level 3 formwork deck" of the building under construction such that a person may be exposed to the risk of falling from either level - on one view a restating of the essential legal elements of the offence somewhat differently expressed.

38 The real particulars that should have been pleaded were, quite simply, that there was a failure by the appellant to ensure that perimeter scaffolding was in place such as to prevent persons falling from level 2 or level 3. If such a particular had been pleaded it would have removed any uncertainty in the mind of the appellant as to the essential factual particulars of the plea of guilty being entered.

39 On any view of his Honour's judgment, the appellant understood that the critical nub of the offence was the presence or otherwise of the perimeter scaffolding and whose responsibility it was to erect it. A significant proportion of the evidence before his Honour was taken up with that issue. As the matter proceeded before him, he was confronted, rightly or wrongly, with a dispute on the part of the appellant as to an essential factual particular of the offence as pleaded to which the plea of guilty had been entered.

40 It was an issue he had to determine. To do that, his Honour was obliged to hear detailed oral evidence from a number of witnesses in order to reach the conclusion that he did.

41 In reaching the conclusions that he was required to do, his Honour found against the appellant. This finding was, in our view, entirely open to his Honour on the evidence before him.

42 As to his approach to the utilitarian value of the plea, his Honour had this to say at para [75]: … there has been some erosion of the utilitarian value of the guilty plea. I consider, therefore, the discount available should be towards the lower, rather than the upper, end of the available range. 43 Whilst his Honour did not dissect the elements of the discount as between utilitarian and other components, on any view, his Honour's approach was entirely within the discretion available to him as part of the sentencing process he was undertaking.

44 On a proper assessment of the role of the appellant in the matter before us, the offence was objectively a very serious one.

45 In considering the factual circumstances of the offence before us, it is clear that the nub of the offence identified a failure to erect perimeter scaffolding around the building under construction that, at the time of the accident, was some three levels high.

46 Hence, the breach here was of a most fundamental kind having regard to the industry in which this work was performed. It is difficult to imagine a more significant breach in the construction industry than a failure to provide what might be described as rudimentary measures to prevent a fall.

47 Before his Honour, the appellant argued it was the responsibility of the Department of Public Works and Services to erect the perimeter scaffolding. That was a conclusion with which Boland J agreed (para [35]). Equally, his Honour was unequivocal in his view that the appellant could not evade its responsibilities in this area by simply pointing to the Department of Public Works and Services and pleading economic duress as a critical factor in persuading them to press on with the work despite the absence of perimeter scaffolding. On this point his Honour said: Although it is clear from the evidence that the responsibility for erecting the scaffolding lay with the Department, it is also clear that the defendant was acutely aware of the need for safety scaffolding. Mr Bullock agreed in his evidence that construction work should not have been proceeding without the perimeter scaffolding in place.

48 This finding of his Honour only confirms earlier decisions of this Court as to the responsibility for common risk on building sites where numerous contractors are engaged in various capacities. On this point, we reiterate what was stated in WorkCover Authority of NSW (Inspector Byer) v Cleary Brothers (Bombo) Pty Limited (2001) 110 IR 182 at [65] and cited with approval in WorkCover Authority of NSW (Inspector Farrell) v David Carl Schrader (2002) 112 IR 284 at para [54]: However, where an operator continues to operate in circumstances that present an obvious and known risk to persons working at the site and which constitutes an offence under the Act, the culpability of the operator will not be removed by the fact that other persons may also have responsibilities in relation to the safety of the site generally, or related responsibilities as to a particular operation at that workplace. And again in WorkCover v Schrader at para [61]: The duty to be proactive falls equally upon each and every employer or self-employed person on a particular site, subject, of course, to a consideration of whether the risk emanated from the relevant 'undertaking' and 'place of work'. However, when determining an appropriate penalty in circumstances where more than one individual or legal entity can be said to have contributed to the relevant risk, it is important to view the nature and seriousness of the defendant's offence by reference to the contribution of the defendant to the relevant risk: Department of Mineral Resources (Chief Inspector McKensey) v Berrima Coal Pty Ltd and Anor (2001) 105 IR 348; WorkCover Authority of New South Wales (Inspector Ankucic) v McDonalds Australia Limited (2000) 95 IR 383 (at 437) and WorkCover Authority of New South Wales (Inspector Victor Page) v Walco Hoist Rentals Pty Limited (No.2) (2001) 99 IR 163 at [31]; Nesmat Pty Ltd v WorkCover Authority of New South Wales (1998) 87 IR 312 and Alcatel Australia Ltd v WorkCover Authority of New South Wales (1996) 70 IR 99.

49 It is clear that his Honour carefully considered the appellant's conduct relevant to its contribution to the offence that occurred. As his Honour stated at paras [60] and [61]: Essentially, the offence involved a failure by the defendant to ensure workers were not exposed to a risk of injury from falling while working on level 2 and 3 of a building under construction. On the face of it the offence is serious. Workers should not be put at risk of injury or death whilst working at heights in circumstances where the protection against falling is absent or grossly inadequate.

The defendant was well aware of the dangers presented by the absence of perimeter scaffolding and was anxious that it be put in place as soon as possible. Nevertheless, the defendant allowed construction work to continue without adequate fall protection having been erected.

50 To the above observations, we would add our view that the appellant's culpability is compounded by the nature and quality of the breach. That is, a failure to enforce a most fundamental and basic safety measure well recognised on any building site - as earlier mentioned, adequate fall protection to the perimeter of the building they were involved in constructing.

51 As to the issue of economic duress as argued by the appellant in these proceedings, we see no merit in the submission. We concur entirely with the view expressed by his Honour at first instance in paras [66] and [68] of his judgment: [66] … it was submitted, I should take into account in mitigation … the fact that the defendant made repeated requests to the body responsible for erecting the scaffolding, namely, the Department of Public Works and Services, but to no avail. However, the defendant could obviously have stopped the construction work until the fall protection had been put in place. Mr Austin submitted that this was an artificial course of action because the defendant was under considerable pressure from the Department to make progress on the job and was concerned that if it did not do so it would put at risk a significant source of revenue and jeopardise future contracts with the Department. [67] … [68] I do not accept there should be any mitigation of the defendant's sentence for reasons relating to a failure by the Department to meet the defendant's repeated requests to erect the scaffolding and because the defendant was under pressure from the Department to progress the work. It was clearly an option for the defendant to refuse to continue with the construction work in the absence of fall protection. Indeed, in my opinion, that is the option the defendant should have pursued. To mitigate the sentence because the Department wanted to press ahead with the construction program without adequate safety measures in place, and because the defendant felt obliged to do so essentially for financial reasons, would be to undermine the clear public policy underpinning s 16 of the Occupational Health and Safety Act that is, ensuring the safety of persons at work. 52 The prior good character of the appellant as an industrial citizen is the final point we turn to in relation to the appellant's submission before us. On that issue the prior good safety record of the appellant was considered by his Honour at para [75] of his judgment where he stated - … the defendant has a good safety record given the inherently dangerous nature of the industry in which it operates.

53 His Honour made that statement within the context of believing that the appellant had one prior conviction. To the extent this fact influenced his Honour's decision on penalty, it did so by enlivening the provisions of s 51A of the Act and raising the maximum penalty to $825,000. There is nothing in his Honour's decision to suggest he did other than consider the appellant's otherwise good industrial record within the context of the maximum penalty he was required to consider.

54 In all of the circumstances, we are of the view that, save as to the issue of the maximum penalty, the exercise of discretion by his Honour in the sentencing process has not miscarried. He has, in our view, correctly applied proper considerations to the matters before him and come to a concluded view clearly open to him as indicated in R v Thomson; R v Houlton and having regard to the evidence before him. We see no error on his Honour's part as to the exercise of that discretion that calls for our intervention in the overall discount determined by his Honour.

55 We have already noted it is open on appeal to reassess the penalty imposed on a proportionate basis relative to a maximum penalty backdrop of $550,000 rather than the $825,000 applied by his Honour. We propose to adopt that course, as we believe his Honour would have properly adjusted his approach to the penalty imposed having regard to that fact.

56 We propose to set aside his Honour's penalty at first instance. In substitution, we impose a notional penalty in this matter of $93,500. To that we apply the fifteen percent discount as determined by his Honour and determine a final penalty of $79,475.

57 Counsel for the appellant sought an order as to costs. Notwithstanding that we have upheld the appeal we have done so on the very limited basis by adjusting the penalty imposed by his Honour against the lower maximum penalty conceded by the respondent at the commencement of these proceedings. That approach was open to the parties before his Honour pursuant to the provisions of s 43 (2) of the Crimes (Sentencing Procedure) Act - a course that was rejected by the appellant because of those matters it wished to further argue that his Honour had erred in the exercise of his general sentencing discretion. We have found against the appellant on those matters. The major appeal point was conceded in written submissions from the respondent filed on 24 October - nearly two weeks before the appeal was heard.

58 Nevertheless, there is some force in the appellant's arguments that it was required to prepare the appeal books "and the like" long before the respondent finally conceded ground (a) in the Notice of Appeal - that is, that the maximum penalty available to his Honour was $550,000 and not $825,000. The appellant resisted our suggestion that the matter be dealt with by an application to his Honour on the basis that, even if his Honour did adjust the penalty imposed having regard to the lower maximum threshold, the appellant could not rule out "the possibility" that it would still wish to press those additional appeal points going directly to his Honour's sentencing discretion.

59 While we have some sympathy for the appellant's position, we are of the view that in the appeal before us, each party should bear their own costs. While the appellant was unfairly put in the position of having to press ahead in preparing Appeal books, to have their major appeal point conceded only weeks before the appeal, there was a course of action open to the parties to pursue this issue directly with Boland J. That course was not considered prior to the appeal and, when drawn to the appellant's attention, rejected because of its wish to press those other matters on appeal - all of which we have rejected. If those issues had been the only issues on which the appeal had been prosecuted, we would have dismissed the appeal and made a costs order in favour of the respondent.

60 As it is, having regard to the rather unusual circumstances of this matter and with a view to doing justice between the parties, we propose to order that each party bear their own costs of this appeal.

61 We accordingly order: i. The appeal is upheld; ii. The penalty at first instance is set aside; iii. The appellant is fined the sum of $79,475 with a moiety to the respondent; iv. Each party shall pay their own costs of the appeal. ----------------------------------------

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