Inspector Craig Hall v Lloyd A Cooper Pty Ltd

Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Factories Shops and Industries Act 1962 Occupational Health and Safety Act 2000

CASES CITED: WorkCover Authority (NSW) (Inspector Lai) v Rexma Pty Ltd (2008) 172 IR 210 WorkCover Authority (NSW) (Inspector Jones) v Challita (2006) 153 IR 409

PROSECUTOR: Mr C O'Donnell of counsel WorkCover Authority of New South Wales

LEGAL REPRESENTATIVES: DEFENDANT: Mr M Tooma Deacons Lawyers

Prosecution under section 8(1) of the Occupational Health and Safety Act 2000

1 The defendant, Lloyd A Cooper Pty Ltd, has pleaded guilty to an offence under s 8(1) of the Occupational Health and Safety Act 2000 (2000 Act). 2 The defendant was incorporated in 1979. At the time of the offence Lloyd Cooper was the sole director, secretary and two-thirds majority shareholder. It operates as a contract packager primarily for the food industry. At the time of the offence it employed 11 full-time employees and about 4 casual employees. 3 In about November 2005 the defendant acquired a can seamer machine for its can line. This particular operation involved packers on each end of a production line. The packers loaded cans at one end and removed and packed the cans at the other end. The packers were not permitted to touch anything mechanical, although they were allowed to adjust magnets and reset counters. In the event this activity was not successfully performed, a fitter was called in to undertake these tasks. The packers were also required to undertake some cleaning work when the can line was not operating. This work included vacuuming the dust off the production line and took place when the power was isolated. The packers were also trained to use the emergency stop function on the production line. The fitters were responsible for the safe working of the production line. 4 In March 2006, the defendant engaged Fallsdell Machinery Pty Limited to carry out a refurbishment of the can line. Fallsdell completed a test run of the can seamer machine with gravel substituted for product. The machine was returned to the defendant in late April 2006. 5 The machine was installed at the defendant's factory premises about two or three weeks prior to the offence which occurred on 12 May 2006. The commissioning of the machine by the defendant consisted of operating it entirely with no product and thereafter running about 50 cans of While's powdered milk shake through the machine. Following its commissioning the machine experienced a number of problems. It did not run efficiently without intervention and required continual maintenance and servicing. Despite these matters the machine was brought into full production in order to meet a production order for While's powdered milk shake which was due for delivery on 10 May 2006. 6 When the machine was first supplied to the defendant it was fitted with guards, including a can indexing turret guard. On the day of the offence the indexing turret guard was not fitted to the machine while it was in operation. Instead it had been taken to the defendant's workshop for alteration by James Shepherd who was the maintenance fitter with responsibility for the maintenance of the plant. The defendant had no system of work in place for preventing the operation of the machine while it was unguarded. 7 Kim Richmond commenced casual employment with the defendant in January 2006. She became a permanent employee in April 2006 working as a packer and after completing a three month probationary period. Her duties were limited to packing at the end of the production line and cleaning after the line had stopped operating. She had extensive experience in the packaging industry. She was regarded by her employer as an enthusiastic worker with the prospect of becoming a supervisor at the factory. 8 On 12 May 2006, Ms Richmond was, in accordance with her duties, assisting in the operation of the can seamer machine. The production line included a rotary in-feed table, a stainless steel conveyer, a video inkjet printer and a rotary out-feed table. At about 8pm, Ms Richmond's right hand was caught in the machine while it was in operation. All five fingers of her right hand were partially amputated. She was, shortly after, admitted to Westmead Hospital where she remained for 10 days receiving treatment which included diagnostic, therapeutic, operative physiotherapy and hand-therapy procedures. 9 At the time of the accident, Ms Richmond had been attempting to redress the defective operation of the machine by cleaning the unguarded hoppers using a rag. This activity was performed in order to facilitate the cans passing through the machine, dropping, uninhibited by product residue, and being correctly indexed in order to allow the seaming/capping process to occur and to prevent damage to the cans. The activity involved placing her right hand into the moving turntable, which was holding the cans, and wiping the inside of the rims inside the actual can holder. Her hand was caught in the area where the cans and lids were secured or sealed using an aluminium base. 10 Ms Richmond had been instructed by Mr Shepherd to stop the machine prior to wiping it. This instruction was conveyed by the words: "Don't even think about putting your hand in the machine when its running". 11 If the indexing turret guard had been in place on the machine the system of work employed by Ms Richmond, which was clearly unsafe, would have been impossible. 12 An inspection of the factory premises and the can seamer machine by Inspector Derek Pryor from the WorkCover Authority of New South Wales revealed that in addition to the unguarded indexing turret, the drive mechanism of the machine was also unguarded and the red mushroom emergency stop adjacent to the indexing table of the machine was surrounded by a can, cut and stuck with clear adhesive tape. Inspector Pryor was informed by an unnamed informant that the machine was in maintenance and that was why the guards were not in place. Inspector Pryor observed that no danger tag, electrical isolation, permit to work or any other control measures were in place. He concluded that because of those factors the machine while in operation was unguarded with no effective emergency stopping mechanism in place. 13 These matters, in combination, reveal a serious breach of the Act. The defendant was aware that the machine was not operating efficiently and had been experiencing technical problems. Nevertheless the machine continued in operation in order to meet a commercial deadline at the expense of workers' safety. Guards protecting dangerous parts of the machine had been removed yet no directive had been issued to ensure the workers did not operate the machine in its unguarded state. Mr Shepherd's instructions to Ms Richmond to stop the machine prior to wiping it and to refrain from putting her hand in the machine while it was in operation were inadequate. No procedure had been devised to attempt to accommodate the obvious and very serious risk to Ms Richmond's safety while the machine was in operation. 14 The defendant's conduct, in allowing the unguarded machine to continue in operation because of a commercial imperative, exposed Ms Richmond to a very serious, obvious and foreseeable risk to her safety. 15 Breaches of the occupational health and safety legislation which arise because of the risks posed by unguarded machinery are notorious in this jurisdiction. Here, there was a known danger against which appropriate measures were not taken. The necessity to apply general deterrence given the prevalence of breaches of the legislation arising from the presence of unguarded machinery becomes more compelling while those with responsibility for safety in the workforce continue to expose their workers to the very serious dangers posed by machinery which is unguarded, and otherwise defective, but allowed to remain in operation. 16 A relatively recent statement of the importance of applying general deterrence in the context of an offence involving an unguarded machine, which I adopt in these sentencing remarks, appears in the Full Bench judgment of WorkCover Authority (NSW) (Inspector Lai) v Rexma Pty Ltd (2008) 172 IR 210 at [49]:

The need for the application of the principle of deterrence in the sentencing process cannot be underestimated here. The offences reveal yet another serious incident involving unguarded machinery where the risk to safety, although obvious, was ignored. We adopt the observations of Walton J, Vice-President, in WorkCover Authority of New South Wales (Inspector Ankucic) v Crown in the Right of the State of New South Wales (Department of Education and Training) (2001) 112 IR 1 concerning the importance of the principle when considering the objective seriousness of offences involving unguarded machinery: [41] ...It scarcely needs to be said that the presence of unguarded machinery constitutes one of the most pernicious and infamous dangers to the health and safety of persons in the workplace. It is this very type of danger that prompted persistent and ongoing legislative attempts by governments to compel the correction of such obvious and serious faults in the systems and plant employed in the operations of employers: see WorkCover Authority (NSW) v Waugh and Another (1995) 59 IR 89 at 100 and Department of Mineral Resources of NSW (Chief Inspector Terry) v A M Hoipo & Sons Pty Ltd (2000) 99 IR 137 at par 53.

[42] The dangers presented by an unguarded saw are well known and management at all levels should be vigilant to ensure that unguarded machinery is not used... 17 Specific deterrence is also a relevant consideration. Following the accident the defendant implemented a number of measures designed to address and improve matters of safety in its workplace. These will be discussed in more detail shortly. The can seaming machine involved in the accident was also decommissioned. 18 The prosecutor sought to rely on a prior conviction of the defendant under the Factories Shops and Industries Act 1962 as being relevant to the application of the principle. Details of this prior conviction were tendered into evidence. Those details disclosed a number of factual similarities between that offence and the present one. The brief facts with regard to the earlier offence were that a machine being operated at the defendant's premises in Gladesville was unguarded on its discharge side. A worker placed her hand into this unguarded area in order to remove some build-up of material. This was, according to the worker, a common practice. In the process the worker severed her right middle finger. Despite the factual similarities between both incidents, the conviction was recorded on 19 October 1984, that is about 25 years ago. In my view, this lengthy period of time between the two breaches of the safety legislation substantially diminishes the weight that might otherwise be given to specific deterrence by reason of the earlier conviction. Because of this I decline to take the previous conviction into account in my consideration of whether the principle of specific deterrence should be applied. 19 The prosecutor also relied on the contents of an email sent by Mr Cooper to a member of the parliament of New South Wales following the 2009 incident as relevant to the principle of specific deterrence. The defendant asked the Court to dismiss the contents of the email on the basis that at the time it was sent Mr Cooper was under a significant amount of pressure brought about by his belief that the defendant would receive the maximum penalty and be forced out of business. The email contains some disparaging comments about the impact of occupational health and safety legislation in New South Wales. It also seeks to depict the circumstances of the incident as an "irresponsible and impulsive act". It also acknowledges, however, the heavy impact of an accident on the life of the victim and the devastating effect of the incident on the defendant. 20 Having read the contents of the email I do not see the necessity, or indeed the relevance, of taking the email into account in assessing the application of specific deterrence, and I decline to do so. I would simply note that labelling the incident as an "irresponsible and impulsive act" does not discharge the defendant from its obligations under the legislation to ensure that an appropriate regime is implemented within its workplace to ensure the safety of all workers, including those who may be careless or inattentive. None of the comments, I take it, were directed to Ms Richmond, the injured worker, who Mr Cooper described in his affidavit as an enthusiastic worker with prospects of becoming a supervisor at some future stage. 21 The principle nevertheless falls for application because the defendant remains in business in the packaging industry. It employs a number of workers most of whom have been on the defendant's staff for several years. The nature of the work performed at the defendant's premises involves the operation of machinery. It cannot be said in these circumstances that the risk of re-offending is low or non-existent: see generally for discussion of the principle WorkCover Authority (NSW) (Inspector Jones) v Challita (2006) 153 IR 409 at [32] to [35]. 22 Ms Richmond's accident also illustrates the degree of seriousness of the risk to the safety of persons operating unguarded machinery. There can be little doubt that the likely or probable consequences of the defendant's breach of the 2000 Act would be a serious injury, although given the particular circumstances of the accident, I accept that the nature of the breach was such that it would not have resulted in a fatality. 23 These matters attest to the objective seriousness of the offence. Nevertheless it must be acknowledged that the defendant had taken a number of steps prior to the incident in an attempt to impose appropriate measures in the workplace. 24 The defendant had an occupational health and safety policy prior to the offence. It was annexed to Mr Cooper's affidavit and consists of one page containing only generic statements on the importance of providing safety in the workplace, and the responsibilities of employees with regard to safety matters, but it otherwise provides no details as to what if any measures had been actually imposed in the workplace to ensure safety. Other information set out in the affidavit, however, reveals that a number of safety measures had been implemented prior to the offence. These include the installation of 10 air-conditioning units in the factory as well as the installation of air-conditioning filters to remove airborne dust. Six industrial vacuum cleaners were also installed as dust extractors for the purpose of eliminating risks to safety arising from exposure to dust within the confines of the premises. 25 In addition, the defendant had taken steps to deal with the risk of fatigue to staff. Work breaks every 2.5 hours were instituted for the benefit of staff as well as a 4-day week. Staff were also rotated to avoid exposure to repetitive work. Anti-fatigue matting was also available to those workers required to stand as part of their job. The defendant also had a job sheet produced for each job which set out details of the jobs and the tasks required to be carried out. Personal protective equipment was also required to be worn. Some training was provided to the workers which consisted of "on the job" training. New employees were inducted to the workplace during which they were provided with a Staff Handbook. A copy of a Staff Handbook dated 14 January 2004 was annexed to Mr Cooper's affidavit. 26 These matters will be taken into account in mitigation of the objective seriousness of the offence. 27 The agreed statement of facts nevertheless highlights serious defects and deficiencies in the defendant's systems of work with regard to the operation of the can seamer machine involved in the accident. Ms Richmond was given only minimal training on the operation of the machine. No documented safe operating procedure had been developed for the machine. Ms Richmond's supervisor, Joel Killorn, was unaware of the unsafe system of work which had been adopted while the machine was operating. Mr Killorn had only been a supervisor for about three weeks at the time of the offence. No formal risk assessment had been conducted to identify and control the risks associated with the operation of the machine. A simple but effective measure to avoid the risk would have been to undertake a proper risk assessment. This would have undoubtedly identified the risk of hands being caught in the machine and appropriate measures could have been taken to ensure the machine was properly refurbished and operating correctly. An obvious and available measure would have been to ensure the indexing turret guard was in place on the machine. 28 A number of remedial steps were in fact taken after the accident to address the risk of injury posed by the machine. These steps have been set out in the agreed statement of facts. They consisted of two notices, issued by Mr Cooper to the defendant's staff on 15 and 25 May 2006 respectively. Those notices stated: a. All packing staff must be clear of machines being set up. b. Fitter setting up machine is responsible for permission for staff to approach machine whilst being set up. c. Fitter will replace all machine guards before machine is set to run. d. Line clearance form is important and must be filled out and complied with.

and; a. All packing staff must stay clear of machines while they are being set up. b. Fitter setting up machines will erect safety barrier cones and ribbon barrier to warn unauthorised staff to stay clear. c. Fitter will be responsible for authorising any staff to approach the machine while being set up. d. Fitter will replace all machine guards before machine is set for production. e. Line clearance to be signed off by fitter. 29 Other remedial steps taken by the defendant after the offence include a documented occupational health and safety management system, the core components of which are risk assessment programmes which identify the date of assessment of a particular risk, its location and the measures taken to eliminate it. Special instructions have been formulated to ensure office staff, operators and packers, managers, supervisors, and cleaners are aware of their responsibilities with regard to safety in the workplace. Special instructions have also been issued to fitters with regard to their responsibility for the safe operation of the defendant's machinery. 30 The defendant also took the following additional steps: (1) painted all safety railings and floor markings high visibility yellow; (2) required all staff at the factory to wear high visibility yellow; (3) required all staff to use the notice board to communicate safety issues and other issues to all staff; (4) installed larger chains on pallet access gates to mezzanine floor; (5) put castors on all hoppers on the mezzanine floor so they can be easily transported to the wash bays; (6) reinforced safety on all job sheets and revised the job sheets to include the Work Instruction (7) reviewed all policies and procedures including the Handbook (8) reinforced with fitters that they must ensure guarding is in place at all times; and (9) purchased two high volume dual motor ultra filtration vacuum cleaners to supplement the existing four machines to use for localised dust extraction. 31 Mr Cooper also purchased and erected ribbons and barriers around the can line to prevent workers from entering the area when the machinery required modification. Staff meetings were also held where employees were consulted on their views as to safety. The defendant undertook a self-assessment of all employees' skills and levels of competence with regard to the operation of the machinery at the factory. Its training programmes have been revised and retraining undertaken to ensure that the work is performed in a safe manner. As earlier mentioned the can seamer machine was also decommissioned. It was tagged "not for use" in November 2007 and disassembled in early 2008. 32 The post-offence measures are both comprehensive and impressive and will be taken into account in mitigation of the penalty to be imposed. 33 A number of other personal factors will also be taken into account in the defendant's favour when imposing penalty. These include the defendant's cooperation with WorkCover during it investigations as well as the assistance provided to Ms Richmond following her accident. This assistance included visiting Ms Richmond several times while she was undergoing treatment in hospital as well as financial assistance. Ms Richmond was also informed that she was welcome to return to work when she was fit to do so. 34 The defendant has also demonstrated good community and industrial citizenship through its involvement in community initiatives and local churches. Mr Cooper and his wife are also involved in bush care regeneration with Ku-ring-gai Council. The defendant provides work opportunities to people with disabilities and day release prisoners from Silverwater Gaol in the form of administrative work. 35 The defendant also entered a plea of guilty at an early stage. I therefore assess an appropriate discount of penalty at 25 per cent. As a separate consideration from the utilitarian value of the plea, the defendant is also entitled to leniency in recognition of the remorse shown by the plea. 36 The prior conviction, although recorded some 25 years ago, nevertheless disentitles the defendant to leniency which might otherwise be extended to an offender not otherwise adversely recorded. 37 The defendant also expressed its sincere regret for the injuries suffered by Ms Richmond. It has also accepted responsibility for its actions, as evidenced by the post-incident safety measures, which it has instituted, as well as the assistance it provided to Ms Richmond, including financial assistance. 38 The defendant, in oral submissions, asked the Court to take into account on penalty its capacity to pay a fine, contending that it had limited means with which to pay a fine of any substance. The prosecutor contended to the contrary submitting that the evidence disclosed that Mr Cooper, the defendant's sole director, had personal assets in the order of $850,000, and that the defendant's financial records were such that it could not be concluded that it was unable to pay a fine. 39 Mr Cooper gave oral evidence on the issue. He conceded that the defendant's financial records showed it had net assets and that he and his wife had personal assets in an amount of about $850,000. In re-examination Mr Cooper said that he made unsecured loans to the defendant in the financial year ending 30 June 2008 in order to keep the company running. He identified entries in the defendant's balance sheet as confirming the loans. He said that he had personally borrowed the money in order to lend it to the defendant. He also said that for the financial years ending 30 June 2007 and 2008 he had not received any wages from the defendant. 40 Mr Cooper's income tax return 2008 was tendered into evidence. It records a total income of $12,771 for that year. None of that income appears to have been derived from salary or wages. 41 In his affidavit, Mr Cooper said that the defendant generated a small profit of $20,370 in the year ending 30 June 2007 but it suffered an accumulated loss of $227,588.60 and an operating loss of $247,957.74 the following financial year. He described the defendant's financial position as steadily declining over the past four years as a result of changes in the manufacturing industry and other, unspecified, factors. He expressed a view that it would be difficult "to turn (the defendant) around" in the future. 42 The defendant's financial records for the financial year ending 30 June 2008 confirm Mr Cooper's evidence with regard to the accumulated and operating losses for that financial year. The balance sheet however shows total assets owned by the defendant in the amount of $917,877.14 and current liabilities in the amount of $663,245.28. Of this latter figure a substantial amount includes unsecured loans in the sum of $202.858.04 which appear to have been made by Mr Cooper and his wife. 43 These records indicate that the defendant has substantial assets and therefore has the capacity to pay any fine that may be imposed against it. I should add, by way of clarification, and because the prosecutor appeared to place some reliance on the personal finances of Mr Lloyd and his wife, that I have not taken into account the personal financial position of Mr Cooper or his wife in concluding that the defendant has the capacity to pay a fine. Penalty

44 In determining the penalty against the defendant I have taken into account the objective seriousness of the offence, the maximum penalty which is $550,000, the subjective factors in mitigation and the prior conviction. These factors have been considered by reference to the Crimes (Sentencing Procedure) Act 1999 in particular s 21A. Orders

45 In Matter No IRC 614 of 2008 I make the following orders: (i) The defendant Lloyd A Cooper Pty Ltd is convicted of the offence. (ii) The defendant is fined $82,500 with a moiety to the prosecutor. (iii) The defendant is to pay the costs of the prosecutor as agreed or, in the absence of agreement, as assessed.

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