Inspector Green (WorkCover) v Metropolitan Administrative Services Pty Ltd; Inspector Green

THIRD DEFENDANT Paul Giannikouris

CATCHWORDS: Occupational Health and Safety Act prosecution - plea of guilty - two corporate defendants charged with different offences arising out of one incident - factual matters common to each breach - same shareholders - differing maximum penalties and subjective factors going to penalty - principles in applying approach to penalty - held penalties otherwise appropriate to be reduced because of common facts, same incident and close relationship of each corporate defendant.

LEGISLATION CITED: Occupational Health and Safety Act 1983 ss 15(1) 16(1) 50(1)

CI & D Manufacturing Pty Ltd v Registrar Industrial Court of NSW (1996) 67 IR 440 Haynes & Callaghen v CI & D Manufacturing Pty Ltd (No.2) (1995) 60 IR 455 Inspector Sharpin v A-Team Concrete (Aust) Pty Ltd and A-Team Concrete Pty (2004) NSWIRComm 182 CASES CITED: WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Limited (1999) 95 IR 383 WorkCover Authority of NSW (Inspector Dell) v Baradine Sawmilling Co Pty Ltd and Gunnedah Timbers Pty Ltd [2002] NSWIRComm 304 WorkCover Authority (NSW) (Inspector Page) v Walco Hoist Rentals Pty Ltd (No.2) (2000) 99 IR 163 WorkCover Authority of New South Wales (Inspector Robinson) v Bosnjak Holdings Pty Ltd and Westbus Pty Ltd [2002] NSWIRComm 295

PROSECUTOR Mr Agius SC with Ms L M McMannus Solicitor: Abha Devasia WorkCover Authority of New South Wales LEGAL REPRESENTATIVES:

DEFENDANTS Mr J Phillips SC Solicitor: Theresa Sukkar Bowen & Gerathy

• 20 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Tuesday 1 February 2005

Matter No IRC 4234 of 2003 INSPECTOR RITCHE JOHN GREEN v METROPOLITAN ADMINISTRATION SERVICES PTY LTD Prosecution pursuant to s 15(1) of the Occupational Health and Safety Act 1983

Matter No IRC 4235 of 2003 INSPECTOR RITCHE JOHN GREEN v METROPOLITAN DEMOLITIONS AND RECYCLING PTY LTD Prosecution pursuant to s 16(1) of the Occupational Health and Safety Act 1983

Matter No IRC 4237 of 2003 INSPECTOR RITCHE JOHN GREEN v PAUL GIANNIKOURIS Prosecution pursuant to s 50(1) of the Occupational Health and Safety Act 1983

1 The Court has heard concurrently three proceedings constituted by prosecutions brought by Inspector Ritchie John Green of the WorkCover Authority of New South Wales against three defendants, all of which arise out of the same incident. All of the defendants pleaded guilty although the third defendant, Paul Giannikouris, reserved the right to withdraw the guilty plea depending upon the outcome of proceedings before a Full Bench of this Court which will arguably deal with the question of the proper and appropriate means of charging a person with an offence created by reason of the provisions of s 50 of the Occupational Health and Safety Act 1983 ("the Act"). By agreement between the parties I will not convict the third defendant nor seek to impose a monetary penalty upon him until advised by the parties. Those proceedings are therefore stood over with liberty to apply.

2 The nature of the proceedings and the factual background was the subject of an agreed statement of facts which became evidence in the proceedings and which was in the following terms: 1. At all material times Inspector Ritchie John Green of the WorkCover Authority of New South Wales was an inspector duly appointed under Division 4 of Part 3 of the Occupational Health and Safety Act 1983 and is taken to be appointed as an inspector under the Occupational Health and Safety Act 2000 by virtue of Clause 11 of Schedule 3 to the 2000 Act, and empowered under section 106 of the 2000 Act as extended by Clause 13 of Schedule 3 to the 2000 Act, to institute these proceedings. 2. At all material times, METROPOLITAN ADMINISTRATION SERVICES PTY LTD [ACN 061 050 315] ( the First Defendant ) was a corporation with its registered office at 368 Forest Road, Hurstville, in the State of New South Wales. 3. At all material times Metropolitan DemolitionS and Recycling Pty Limited [ACN 003 107 980] ( the Second Defendant ) was a corporation with its registered office at 368 Forest Road, Hurstville, in the State of New South Wales. 4. At all material times PAUL GIANNIKOURIS ( the Third Defendant ) was a Director of the First Defendant. He was also Managing Director and company secretary. 5. The Second Defendant leased premises at 396 Princes Highway, St Peters ( the Site ) and carried out the business of recycling depot at the Site receiving concrete and brick rubble and reprocessing it into quarry equivalent products ( the crushing operation ). 6. The First Defendant provided labour to the Second Defendant. 7. At all material times the First Defendant was an employer. The First Defendant employed Mr Hayden Birkett as leading hand/foreman. Mr Birkett was responsible for the crushing operation. The First Defendant also employed Haralambos (known as Harry) Sagiotis as a Demolition Worker Class 4 machine operator and Haralambos (known as Harry) Peros as a trainee. 8. At all material times the Second Defendant was an employer. The Second Defendant employed David McInnes as General Manager and the Third Defendant. 9. At all material times the Third Defendant had the role of overseeing the construction of the fixed crushing plant and the overall demolition techniques of the operation business of the First and Second Defendant. Equipment 10. The crushing operation involved a Lokotrack crusher SN 465 1991 ( Lokotrack ) which was a mobile rock crushing machine. The Lokotrack was operated by an operator standing on a platform ( the service platform ) (see photograph 2 of 15B taken by Daryl Wong on 18 August 2001). Mr Sagiotis (now deceased) usually operated the Lokotrack. 11. An excavator, which was situated at the rear of the Lokotrack, loaded material onto a vibrating conveyor section of the Lokotrack (see photograph 3 of 15B taken by Daryl Wong on 18 August 2001 and photograph 2 of 10 taken by Ritchie Green on 18 August 2001). The excavator was operated by a person seated in the cabin of the excavator (see photographs 3 of 8 and 5 of 8 taken by Ritchie Green dated 23 August 2001). 12. The purpose of the Lokotrack was to crush/pulverise the material. The material to be crushed/pulverised by the Lokotrack on 18 August 2001 was sandstone. 13. The material was then conveyed towards crushing jaws of the Lokotrack by the in-feed conveyor. The crushing jaws crushed the material and the crushed material was then released onto a horizontal and inclined conveyor belt located beneath the crushing jaws. The conveyor belt then transported the material from beneath the crushing jaws and discharged the material onto a stockpile beneath the discharge end of the conveyor. 14. A loader operator then cleared the crushed material away from the Lokotrack by front end loader and stockpiled it. 15. There was a steel grate cover ( the rock grill ) to prevent stone chips from coming out of the crushing jaws. Depending upon the type of material to be crushed the rock grill over the crushing jaws remained open when the Lokotrack was being operated (see photograph 11 of 15B taken by Daryl Wong on 18 August 2001). The rock grill was open during the whole of the crushing operation on the day of the incident. 16. The Lokotrack operator would stand on the service platform of the Lokotrack and watch the material going along the conveyor and into the crushing jaws. The operator would lean over and pick rubbish from the material placed on the conveyor and in the crushing jaws (see photograph 6 of 6B taken by Ritchie Green on 21 August 2001 - with the rock grill down). The operator would use a pinch bar or hook. 17. The Lokotrack was manufactured in Finland by Nordberg (Locomo) OY. It was purchased in January 1993 from Nordberg (Australia) now known as Metso Minerals (Australia) Pty Limited. 18. The Second Defendant leased the Lokotrack from The Kouris & Peros Unit Trust. Incident on 18 August 2001 19. On Saturday, 18 August 2001, Harry Peros and Harry Sagiotis commenced working at the Site at approximately 7.00 am. At about 9.00 am Mr Birkett directed Mr Sagiotis and Mr Peros to begin the crushing operation. 20. Mr Sagiotis operated the Lokotrack. Mr Peros operated the Excavator. Mr Danny Batt, loader operator, operated the front end loader. 21. The material being loaded onto the Lokotrack on 18 August 2004 consisted of sandstone material and reinforced concrete which contained pieces of reinforcement or steel. 22. During the morning there was a blockage on the Lokotrack when a bit of small reinforced concrete block was amongst the sandstone and bridged the crushing jaws. It was unable to be removed using the picking process. 23. Mr Sagiotis moved the Lokotrack around to face the excavator. Mr Peros removed the bucket from the quickhitch of the excavator. Mr Peros attached a chain to the excavator and the chain was lowered in. Mr Sagiotis leaned over the crushing jaws and attached the chain to the steel protruding from the footing. The crushing jaws were still operating. The rock grill was open on 18 August 2001. The footing was then lifted out by the excavator. 24. Mr Sagiotis and Mr Peros communicated by hand signals. 25. At about 10.20am Mr Peros placed a load of material on the Lokotrack. 26. Mr Sagiotis was last seen by Mr Peros standing on the service platform. The rock grill was in the open position and the crushing jaws were operating. 27. Mr Peros turned the excavator around to his right to pick up the next load and was facing away from Mr Sagiotis. 28. Mr Peros thought he heard a noise like someone yelling. 29. When Mr Peros again faced the Lokotrack he could no longer see Mr Sagiotis. 30. Mr Peros alighted from the excavator and checked to see where Mr Sagiotis was. In the area of the crushing jaws Mr Peros saw sandstone and the bottom of Mr Sagiotis' boot. There was approximately one and a half tonne of material compacted in the crushing jaws. 31. At the time the Lokotrack was still being operated. Mr Peros turned off the Lokotrack. 32. Mr Sagiotis' body was trapped between the crushing jaws. He suffered extensive crush injuries. When Mr Sagiotis was recovered from the crushing jaws he was deceased. The direct cause of death was upper airway obstruction and mechanical asphyxia. 33. Located in the crushing jaws was a pinch bar and a box section of steel, approximately 150mm square by 150mm in length, wedged between the crushing jaws. Observations made following the incident 34. At about 10.30am on 18 August 2001 Inspector Ritchie Green attended the site with Senior Inspector Daryl Wong. Inspector Green and Inspector Wong took a number of photographs and Inspector Green prepared a Factual Inspection Report 35. Inspector Green issued three Notices to the Second Defendant. 36. On 28 August 2001 Mark Nugent, service representative for Metso Minerals Pty Limited, carried out a visual mechanical inspection of the Lokotrack whilst it was non operational. Amongst other things he observed the following: (a) the service platform had been changed since the date of supply in that on top of the kick rail, which was fixed around the platform, a steel grate floor had been positioned. This had the effect of raising the working floor about 110 to 120mm from the original specifications; (b) the standard hopper wall on both the right hand side and left hand side had been modified. Sections each side measuring around 600mm x 200mm had been torch cut out and then repositioned back on to the hopper walls at a different angle. This had lowered the hopper walls by about 100mm. 37. The height of the hopper wall was 700mm from the floor of the service platform to the lower edge of the hopper wall (splayed steel barrier) and 900mm from the floor of the service platform to the top of the splayed steel barrier. 38. From Inspector Green's observations he estimated that the modification to the wall referred to by Mr Nugent above produced an angle of 45 degrees. 39. The combined effect of the modifications to the steel barrier and platform decreased the vertical height of the steel barrier by approximately 254mm to the top edge, and 454mm to the lower edge of the splayed steel barrier. This facilitated a person leaning across to access the crushing jaws and increased the probability of falling over the barrier. 40. Operators were required to wear a safety belt and lanyard whilst operating the Lokotrack. The lanyard was attached to the rear guardrail of the service platform. This was to be used when the operator had to lean substantially over the wall and the feeder to remove material on the far side of the feeder. The operator used extension hooks and bars to remove material generally from the far side of the feeder. For blockages in the crushing jaws a bar would be used to move the obstruction or an excavator would be used for lifting. 41. Mr Sagiotis was not wearing a safety belt on 18 August 2001. Safety belts were on site. 42. The Third Defendant had on other occasions seen Mr Sagiotis working on the Lokotrack. If he was not wearing his safety harness the Third Defendant told Mr Sagiotis to immediately do so. Steps Taken After the Incident 43. In response to the Improvement Notices the Second Defendant conducted a full risk assessment review of the operational procedures. Personnel involved in the operation of the Lokotrack were re-inducted on the risk assessments developed for safe operation and on new procedures to use mechanical means to clear blockages of the crushing jaws. Harness requirements were reinforced for working over the hopper. Offence 44. The First Defendant contravened section 15(1) of the Occupational Health and Safety Act, 1983 in that on 18 August 2001, at premises situated at 396 Princes Highway, St Peters, NSW, the Defendant, being an employer, failed to ensure the health, safety and welfare at work of all its employees, in particular, Haralambos (Harry) Sagiotis, in that the Defendant: (a) Failed to maintain systems of work that were safe and without risks to health in the operation of the Lokotrack crusher (Lokotrack) to prevent employees being exposed to a risk of injury from falling into the crushing jaws while working on the service platform of the Lokotrack; (b) Failed to provide adequate supervision to employees operating the Lokotrack to ensure that employees were wearing a safety line whilst on the service platform. 45. As a result of the First Defendant's failures Mr Haralambos (Harry) Sagiotis was placed at risk of injury. 46. The Second Defendant contravened section 16(1) of the Occupational Health and Safety Act, 1983 in that on 18 August 2001, at premises situated at 396 Princes Highway, St Peters, NSW, the Defendant, being an employer, failed to ensure that persons not in its employment, in particular Haralambos (Harry) Sagiotis, 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 that the Defendant: (a) failed to maintain plant, namely the Lokotrack, that was safe and without risks to health or safety in that the service platform had been raised in combination with the fact that the barrier separating the service platform and the hopper had been lowered and the rolled steel section at the top of the barrier had been repositioned onto the hopper wall at a different angle; (b) failed to maintain systems of work that were safe and without risks to health in the operation of the Lokotrack to prevent persons not in its employment being exposed to a risk of injury from falling into the crushing jaws while working on the service platform of the Lokotrack; failed to provide adequate supervision to persons not in its employment operating the Lokotrack to ensure that persons not in its employment were wearing a safety line whilst on the service platform. 47. As a result of the Second Defendant's failures Mr Haralambos (Harry) Sagiotis was placed at risk of injury. 48. The Third Defendant being a Director of the First Defendant on 18 August 2001 at 396 Princes Highway, St Peters, NSW, contravened section 50(1) of the Occupational Health and Safety Act, 1983 in that the First Defendant, breached section 15(1) of the Occupational Health and Safety Act, 1983 in that on 18 August 2001 at premises situated at 396 Princes Highway, St Peters, NSW, being an employer, failed to ensure the health, safety and welfare at work of all its employees, in particular, Haralambos (Harry) Sagiotis, in that the First Defendant: (a) failed to maintain systems of work that were safe and without risks to health in the operation of the Lokotrack crusher (Lokotrack) to prevent employees being exposed to a risk of injury from falling into the crushing jaws while working on the service platform of the Lokotrack; (b) failed to provide adequate supervision to employees operating the Lokotrack to ensure that employees were wearing a safety line whilst on the service platform. 49. As a result of the First Defendant's failures Mr Haralambos (Harry) Sagiotis was placed at risk of injury.

3 It was common ground between the parties that the first defendant had entered a plea of guilty at an early stage. The maximum applicable penalty is $550,000. The second defendant entered a plea of guilty at the commencement of the trial. By reason of a prior conviction the maximum applicable penalty is $825,000.

4 In addition to the agreed statement of facts there was tendered into evidence two factual inspection reports, a number of photographs and, on behalf of the defendants, a statement of the third defendant, a statement of Terry Bekiaris, accountant, a Unisearch report of Mr Colin Mohr, a machine safety consultant, and an affidavit of Mr David McInnes, a former manager of the first defendant. Oral evidence was led on behalf of the prosecution by the Prosecutor and Mr Carl Harris, an employee of the first defendant. Oral evidence was led on behalf of the defendants by Mr Giannikouris and Mr McInnes.

5 There are a number of observations which should be made with respect to this additional evidence. Firstly, it is quite clear that the operation of the machinery created an inherently unsafe situation. The operator was required to stand on the service platform and watch the material travelling along the conveyor and into the crushing jaws. The operator was required to lean over the skirting so as to pick rubbish up from the material before it entered the crushing jaws. The evidence was, as indicated in the agreed statement of facts, that the height of the skirting had been lowered by about 100 millimetres and this had been undertaken by the second defendant as the operator of the machinery. The floor level at that area had been raised by the deceased worker, Mr Sagiotis, presumably to allow him to lean over the skirting in a more comfortable manner. In doing this, whatever risk of overbalancing as already existed was thereby exacerbated, particularly when looked at in conjunction with the lowering of the skirting. There was, however, no evidence which would lead me to be able to assess with any degree of accuracy any likely point at which the deceased might have overbalanced in terms of the work that he was required to carry out. Obviously it would be necessary to take into account his own physical size and the dimensions of the part of the conveyor to which he required access in order to retrieve material which was not intended to be crushed. Nevertheless, I infer that because of the necessity to lean over, as shown clearly on the photographs tendered into evidence, whilst the crushing jaws were continuing to operate there was an inherent risk of danger which was unfortunately borne out by the tragic circumstances which led to the death of Mr Sagiotis. Therefore, the use of a safety harness was the only and essential means by which the risk of injury could be eliminated.

6 It is clear from the evidence that the defendants had identified the use of a safety harness as an essential means of ensuring the safe operation of the equipment and they had made these harnesses available for the use of operators. There was in place a system of work requiring the use of harnesses and warnings had been given from time to time to employees including and especially Mr Sagiotis who had been observed from time to time not using a harness.

7 According to Mr McInnes, Mr Sagiotis had effectively become the permanent operator of that piece of machinery from 1993 until his death in 2001. He had worked on a variety of projects both within and outside Sydney and was regarded as an expert in the operation of the equipment as well as its maintenance. He had been properly trained in the use of the equipment and was regarded as a most valuable employee. In addition, Mr Sagiotis was involved in the training and instruction of other employees on the operation of the equipment.

8 The evidence also indicates that all defendants expressed contrition for what had occurred and went to extraordinary lengths to offer support to the family of Mr Sagiotis, both tangible and intangible. Furthermore, arrangements were made for the accident site to be blessed in accordance with the tradition of the Greek Orthodox Church and for other ceremonies to be conducted. The recycling yard was closed by the defendants immediately after the accident and on the first anniversary of the accident. A memorial plaque for the late Mr Sagiotis has been erected in the gardens of the site.

9 It is also clear that the defendants cooperated fully with the WorkCover Authority of New South Wales in connection with the carrying out of investigations into the accident, and they complied promptly with improvement and other notices issued by that authority. After the accident the defendants introduced measures aimed at preventing a recurrence in the future. In doing so the defendants sought the cooperation of the relevant union, the CFMEU.

10 In simplistic terms, the breaches by the defendants of the relevant provisions of the Occupational Health and Safety Act were manifested substantially by the failure to ensure that Mr Sagiotis was wearing a safety harness at the time that he sustained his fatal injuries. Obviously this involves matters of training and supervision.

11 In determining the appropriate penalty in each case it is necessary first to have regard to the objective seriousness of the offences. In that the work was inherently unsafe and in that there had been previous occasions on which Mr Sagiotis had failed to wear a safety harness, I regard each of the offences as a serious one. Obviously, they do not fall for consideration in terms of a 'worst possible case' scenario because systems of work were in place, the risk had been identified, the safety equipment had been supplied and attempts had been made in the past to ensure that the safety equipment was used.

12 It is also necessary to assess the culpability of each of the defendants. Each employer has a continuing obligation to ensure that safety measures are utilised by employees, even experienced employees. This is because the obligation extends to circumstances where employees are inattentive, careless or indifferent to the risks for their safety. A similar obligation applies to the second defendant. It was the second defendant which owned the equipment and which was liable under s 16 of the Act to ensure that persons not in its employment were not exposed to risk of injury in the course of the operation of its business. In failing to ensure that it was operated at all times by a person wearing a safety harness whilst on the service platform the second defendant breached this obligation. By its plea, the second defendant conceded that it also breached s 16 of the Act in allowing for the distance between the top of the skirting and the bottom of the services platform to effectively be lowered so as to increase the risk of overbalancing. Whether and to what extent it was known or ought to have been known by the second defendant that the platform had been raised by Mr Sagiotis is not in evidence. Nevertheless, operators of equipment utilised by persons other than employees are required to ensure the safety of the equipment by inspection from time to time. Overall, however, I would characterise this aspect of the breach as being less serious than the failure to ensure that a safety harness was used. This is because firstly no matter what the height of the skirting, ultimately it was the safety harness which would preclude the operator from overbalancing, and secondly, as I have already indicated, there was inadequate evidence about that height which would ultimately tip the balance from the ability of the operator to carry out his functions, and the intrusion of an obviously unsafe situation.

13 For reasons which I shall advance later, it will be necessary to assess the relative culpability of each of these corporate defendants. The first defendant is, in reality, a labour hire company. In normal circumstances where a labour hire company supplies labour for utilisation by a third party in connection with the business operations of a third party client, an assessment of relative culpability will depend upon a number of features such as steps taken by the labour hire company to assess the risk and to ensure that persons placed with clients were adequately trained, qualified, competent and supervised. Important also would be a consideration of any mechanism put in place by arrangement between the labour hire company and the client designed to ensure that there was a safe system of work and appropriate supervision and instruction. These matters are not as relevant in the circumstances of these proceedings. This is because, as I understand the evidence, both of the first and second defendants are owned by the same shareholders and share common directors. As such, the workforce appears to have regarded itself as being part of 'the Metropolitan Group' without necessarily differentiating whether they were employed by either the first or the second defendant. In these circumstances it seems appropriate in the absence of any alternative scientifically based mechanism to assess the relative culpability of each of the defendants as being approximately equal. This, it seems to me, accommodates the fact that the first defendant's employees were required to carry out work on equipment operated by the second defendant in connection with its business activities in circumstances where the directing minds and management of both defendants were concentrated, at least in the circumstances of these proceedings, in the same place and with respect to the same ultimate operation. Most importantly this approach reflects the fact that it was the failure to ensure that Mr Sagiotis wore a safety harness that is the integral causal factor of the incident giving rise to both charges.

14 In fixing penalty I shall have regard to the necessity for both general deterrence and deterrence specific to these defendants. In this latter regard I am satisfied that both defendants have expressed regrets about what occurred and have put in place measures designed to avoid a recurrence. To this extent it might be said that their 'rehabilitation' as exhibited should reduce the risk of re-offending. Nevertheless, the defendants continue to operate their respective businesses, and there remains a requirement to take the specific deterrent of penalty into account.

15 In the case of each defendant I take into account the expression of contrition to which I have already referred, the remedial measures put in place to prevent a reoccurrence, and the cooperation of their personnel with the WorkCover Authority of New South Wales, including prompt compliance with notices issued by that authority. In addition, I am satisfied that on the evidence that both defendants have a positive commitment to occupational health and safety matters and that that commitment is of a continuing nature.

16 As I have previously indicated, the maximum penalty applying to the first defendant is $550,000. Having pleaded guilty at an early stage it is entitled to a discount of 25% and a further discount with respect to the other mitigating factors to which I have referred, which I assess at 10%. Having regard to all of the matters to which I have referred I would assess a penalty in the sum of $120,000 to which the 35% discount should be applied, leaving a net penalty of $78,000. This is, however, subject to one additional factor to which I shall shortly refer.

17 As I have previously noted, the maximum penalty applicable to the second defendant is $825,000. It pleaded guilty at the start of a 10 day trial and as such is not entitled to the full 25% discount which would otherwise apply. I would propose allowing a discount of 10%. It would also be entitled to a further discount of 10% for the subjective factors to which I have referred. I would assess an appropriate penalty for this defendant in the sum of $180,000 to which the 20% discount should apply, leaving a net penalty of $144,000. This is subject to the additional matter to which I now turn.

18 During the course of the proceedings I had the benefit of submissions from counsel concerning the appropriate approach to the quantification of penalty having regard to the fact that both defendants shared common ownership and common directors. This raised the question of whether both defendants should be dealt with in a global fashion because they were in essence the manifestation of a group of companies. Mr John Agius SC, who, with Ms L M McMannus of counsel appeared for the prosecutor, submitted that the proper approach to the fixing of a monetary penalty in these proceedings was to determine separately the culpability of each defendant and to determine an appropriate penalty accordingly. This was required because there were differences in the features of each of the offence, and it was necessary to accommodate the differential discount for an early plea and the different maximum penalties which applied. Mr Agius then submitted that the Court should take into account "that there is some other overlapping in the facts, to take into account the extent to which the Court may be persuaded that the two corporations are part of the one entity and then to make an adjustment on the basis of avoiding any double-jeopardy…in the sense that you are not punishing each corporation for, in effect, the same breach in exactly the same way if you conclude that these two corporations are significantly linked".

19 The inter-relationship between concurrent defendants in circumstances where prosecutions have arisen out of the same incident has been the subject of observations made by members of this court and its predecessor. The first is a decision of the Full Court of the Industrial Court of New South Wales in Haynes v CI & D Manufacturing Pty Ltd (No.2) (1995) 60 IR 455. The Full Court said, relevantly: "Should the prosecution of the closely related companies attract one penalty or two penalties assessed as against both companies? The evidence available showed that Manufacturing at the time of the accident employed at the Somersby plant about 9 workers and that for purposes related to company structure was a company wholly owned by Industries. The personnel on whom the ultimate responsibility for ensuring the supervision of the employees rested at the time of the accident were the same. We have come to the view on the evidence that the connection between the two companies was so intimate that it is permissible to view the offence in a global way. We are of the view that an appropriate penalty in all the circumstances would be a total fine of $30,000" (at 458).

20 That judgment was quashed by the New South Wales Court of Appeal in CI & D Manufacturing Pty Ltd v Registrar Industrial Court of NSW (1996) 67 IR 440, because it was held that the prosecutor had no right of appeal to the Industrial Court on acquittal. Whilst, on one view of it, the reasons for judgment of the Full Court have been quashed, I have set out the reasoning as an example of one possible approach to the question of penalty in the circumstances of these proceedings.

21 The matter was also considered by Walton J, Vice President, in WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Limited (1999) 95 IR 383. Proceedings for breach of the Occupational Health and Safety Act 1983 were brought against two companies arising out of the one incident. The first company coordinated McDonald's Family Restaurants throughout Australia by means of franchise arrangements and had a licence agreement with a company which operated a McDonald's Family Restaurant at premises where an employee sustained fatal injuries. The second defendant was a wholly owned subsidiary of the first defendant and the owner of the land at which the premises on which the incident took place occurred. It was the lessor of those premises. The defendants had submitted that they should be treated as though they were a single entity and that the one penalty should be assessed for one offence. This was supported on the basis of the application of the principle of totality designed to avoid the undue inflation of a penalty. However, as Walton J pointed out, the principle of totality in a conventional sense applied to circumstances where the one defendant was being sentenced for more than one offence. The purpose of the principle of totality was to ensure that the aggregation of the sentences did not create circumstances where the totality of the punishment was disproportionate to the totality of a defendant's criminality.

22 In discussing the decision of the Full Court in CI & D, Walton J observed that the factual circumstances were "relatively unique in that directly related companies were both responsible in various capacities for the management and control of the subject employees". His Honour contrasted those circumstances with the factual background which applied in the McDonald's litigation where the nature of the control differed with respect to each of the companies, one as lessor and one as licensor. Walton J distinguished circumstances where both defendants exercise a degree of control over the employees, either directly or indirectly, and where the breach as particularised has covered essentially different circumstances.

23 WorkCover Authority of New South Wales (Inspector Robinson) v Bosnjak Holdings Pty Ltd and Westbus Pty Ltd [2002] NSWIRComm 295 is a judgment of Staunton J. A bus driver employed by Bosnjak Holdings was killed whilst refuelling a bus operated by Westbus. The accident was caused by another bus driver, an employee of Bosnjak. Westbus operated the premises at which the refuelling activities were being undertaken. Westbus was a wholly owned subsidiary of Bosnjak Holdings.

24 Notwithstanding the fact that the principle of totality did not strictly apply, Staunton J was prepared to apply 'a totality approach' for a number of reasons. The particulars pleaded against each of the defendants emphasised the same failure to conduct itself in respect of persons who were respectively employees and not employees. Secondly, the two defendants were "for all practical purposes, one entity". Her Honour was told that the buses were registered in the name of Westbus to enable that brand name to be used for ease of identification. Her Honour was assisted by submissions of the Prosecutor to the effect that it was appropriate to apply the principle of totality and thereby fix one penalty for both defendants. Her Honour did so, adopting what she described as "the 'common sense' approach". On this basis her Honour fixed the one appropriate penalty which she then applied equally to each defendant.

25 WorkCover Authority of NSW (Inspector Dell) v Baradine Sawmilling Co Pty Ltd and Gunnedah Timbers Pty Ltd [2002] NSWIRComm 304 is a judgment of Haylen J. Again, there were two defendants and proceedings for a different breach of the Occupational Health and Safety Act 1983 were instituted against each of them arising out of the same incident. His Honour, having noted the "close family links which exist in the operation of these two corporate entities" and "that the practical realities of the corporate structures have to be considered" applied the approach in CI and D and the approach of Staunton J in Bosnjak Holdings Pty Ltd in fixing one penalty which was apportioned equally between each defendant.

26 Finally, I refer to the judgment of Staff J in Inspector Sharpin v A-Team Concrete (Aust) Pty Ltd and A-Team Concrete Pty (2004) NSWIRComm 182. Again, there were proceedings against two related corporate defendants arising out the same incident. In those proceedings, Staff J held that the factual circumstances differed from those which applied in CI and D. This was because "the first defendant carried out the contracting pumping services and was the employer of a number of persons including Mr Gowan. The second defendant was the owner of premises, plant, equipment and machinery". Furthermore, each of the defendants faced a higher maximum penalty. His Honour concluded: "In my view, the company had separate roles and functions and despite having similar directors and shareholders…are separate corporate entities…".

27 His Honour, following the approach of Walton J in McDonald's (Australia) Limited, declined to apply the principle of totality. His Honour said: "Rather, there should be a proper weighing of the respective culpabilities of the defendants and, in this regard, attention should be paid in properly measuring the actual culpability of each defendant in relation to the detriment to safety involved in the accident. Where there are overlapping responsibilities, then the Court will ensure that there occurs a proper apportioning of responsibility by the respective defendants" (at paragraph [110]).

28 I do not perceive that his Honour applied any aggregate approach or otherwise discounted the penalties which would otherwise have been imposed applying the approach of Staunton J in Bosnjak Holdings and Haylen J in Baradine Sawmilling.

29 The approach which I have thus far taken in connection with the quantification of penalty has been consistent with that propounded by Staff J in A-Team Concrete. That is, I have endeavoured to weigh the respective culpabilities of the defendants and I have endeavoured to measure their actual culpability in relation to the detriment to safety which brought about this incident. There are obviously overlapping responsibilities, as I have indicated. However, this begs the question as to whether some ameliorating approach should be adopted. The cases to which I have referred reveal starkly the opposing principles. On the one hand it may be asserted that the shareholders and guiding minds of the corporate entities have chosen to conduct the totality of the business operations by using two corporate structures, for whatever reason. Having done so, they have created two entities, both of which are amenable to prosecution in the circumstances of these proceedings. Having chosen to operate the aggregate of the business activities through these structures, they cannot be heard to complain that penalties should be imposed as if they were two distinct corporate entities operating at arms length. The other extreme is to regard both corporations as, in the aggregate, representing the means of carrying on the one business operation and, accordingly, there would be an element of double counting in imposing two separate and distinct penalties appropriate to each of them where the same common failings have created the breach of different but related provisions of the legislation.

30 It is a trite observation that the duty of the court is to impose such penalty which is appropriate in all the circumstances so as to reflect the intention of the legislature. There can be no doubt that if the shareholders, who are identical in both companies, had resolved to utilise the one corporate entity to operate the business of both defendants there would only be one prosecution before the Court, alleging a breach of s 15(1) of the Act and that there would be no prosecution brought under s 16. Whilst I acknowledge that the different approaches, which are to be found in the authorities to which I have referred, are available and can both be justified, it seems to me on balance that it is preferable to adopt an approach which ameliorates the aggregation of penalties which would otherwise have been imposed on two corporate entities which are closely related by way of identical shareholders and which share common overall management, especially where only one incident gives rise to the proceedings and there is a large degree of overlap in the factual circumstances which have created the breaches. Ultimately, it was the failure to ensure that Mr Sagiotis was adequately supervised so as to ensure that he wore the safety harness when operating the equipment that brought about his untimely death. For these reasons I propose to test the resultant aggregate penalties against what might otherwise be ordered to be paid by way of penalty in the event of one defendant, making due allowance, of course, for the differential maximum penalties and for the differential subjective features.

31 As previously indicated the first defendant would otherwise be fined the sum of $78,000 and the second defendant the sum of $144,000. I propose to reduce these penalties so as to reflect in the aggregate what I perceive to be a more appropriate overall penalty and to apportion the reduction accordingly.

32 Having regard to this approach I propose to reduce each of the penalties by 40%, leaving a final penalty to be imposed on the first defendant of $46,800 and the second defendant of $86,400. The 40% reduction is intended to accommodate the overlapping areas of factual breach.

33 The Prosecutor sought an order for costs and a moiety which was not opposed by the defendants.

34 I make the following orders: 1. Each of the defendants is found guilty of the charge brought against them and convicted accordingly. 2. The first defendant, Metropolitan Administrative Services Pty Ltd, is fined the sum of $46,800 and the second defendant, Metropolitan Demolitions and Recycling Pty Ltd, is fined the sum of $86,400. 3. A moiety of the penalties is to be paid to the Prosecutor. 4. The defendants are to pay the costs of the Prosecutor as assessed by the Court in default of agreement, such costs to be borne proportionately to the amount of the penalty imposed. 5. Liberty to apply with respect to the proceedings brought against the third defendant.

AMENDMENTS HISTORY: 02/02/2005 - Correcting date of delivery from Tuesday 1 February 2004 to Tuesday 1 February 2005. - Paragraph(s) Headnote 16/02/2005 - Correcting date of delivery from Tuesday 1 February 2004 to Tuesday 1 February 2005. - Paragraph(s) Headnote

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