Inspector James v Dekorform Pty Ltd & Paul

Inspector James v Dekorform Pty Ltd & Paul - [2010] NSWIRComm 150 - NSWIRComm 2010 case summary — Zoe

[139]

(l) engaged two external consultants to perform a risk assessment of the machine. 7 In addition, there was tendered into evidence on behalf of the prosecutor factual inspection reports prepared by WorkCover New South Wales and photographic evidence. 8 For Dekorform, there was tendered into evidence an affidavit of Lindsay William Brydson and of Donald Ian Page. Both these affidavits became evidence also in the proceedings against Mr Paul. 9 For the defendant Mr Paul, there was tendered into evidence an affidavit, which he had sworn, and affidavits of William Lindsay Brydson, Peter White and Kelly Lovely. 10 The proceedings against both defendants arise out of an incident that occurred at the premises of Dekorform involving a multirip circular saw on 3 July 2006. The agreed statement of facts contains detailed evidence about the saw and the circumstances leading up to and following the incident. Tragically, an employee of Dekorform was killed. 11 The additional affidavit evidence adduced by the defendants supplements the material contained in the agreed statement of facts. 12 Donald Ian Page described himself as "the former owner" of Dekorform with a great deal of experience in the industry in which it operated. He managed the Dekorform business from 1980 to 1989. He sold a substantial portion of his shares in Dekorform to Parbury Building Products Pty Ltd ("Parbury") in 1988 and sold the remainder of his shareholding to Parbury in 1991. It was Mr Page who acquired the multirip circular saw and oversaw its installation. At the time of that installation, he was "very confident" that the internal anti-kickback fingers were installed in it. 13 Mr Page appointed Mr Brydson manager of Dekorform in 1981. 14 Mr Brydson said that he was appointed as sales manager of Dekorform in 1981. Although he was principally involved in the sales administration of the business, he did perform work from time to time in operating machines to assist operators where necessary. Mr Brydson has a qualification in accounting but does not appear to have any other formal qualifications associated with the operation of machinery. 15 Parbury had previously been involved in the manufacture of some products similar to those being manufactured by Dekorform but this ceased in 2004. It operated its business at premises away from and separate to the premises occupied by Dekorform. Alesco Corporation Limited ("Alesco") acquired Parbury in March 2000 and it remains a wholly owned subsidiary. 16 There is a description of the multirip circular saw commencing at [14] of the agreed statement of facts and, commencing at [25], a description of the safety mechanisms designed to deal with kickback and splinters. 17 In amplification of material in [26], Mr Brydson said in his affidavit that prior to the incident

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[44] Some weeks before the Incident: (a) I had been involved with Wayne, Glenn and Mick in identifying a problem with the Machine. The sheets of MDF were running off the fence line, producing the exact same result as occurred on the day of the Incident. A photograph of the fence line of the PAUL Machine is exhibited at "LB2-4". (b) During the inspections we identified that a number of locking nuts which located shims into position on an arm which controlled the movement and pressure of the top rollers were loose. Glenn relocated the shims and tightened the locking nuts. After the locking nuts were tightened and the shims relocated the problem we had been experiencing with the Machine ceased. Photographs of the shims, locking nuts and controlling arm are exhibited at "LB2-17". (c) During the inspection I observed that two of the top rollers located either side of the saw blades were damaged. The rest of the top rollers appeared to be in good condition. I discussed with Wayne, Glenn and Mick whether the damaged top rollers needed to be replaced. We jointly concluded that they were not adversely affecting the operation of the Machine and decided that they could be replaced during the annual closedown. I was under no budgetary constraint in relation to the repair and/or maintenance of the Machine (or any other machine in the business) and the only reason this decision was made was on a belief that it was not affecting the safe operation of the Machine. (d) I have seen a photograph of one of the damaged top rollers after it was removed from the Machine. Photographs of the damaged top rollers are exhibited at "LB2-18 and 19". The photograph behind LB2-19 does not depict how the damaged top rollers looked while they were still in the Machine, LB2-18 being more accurate. If I had known, or it had been suggested by Wayne, Glenn or Mick that the damaged top rollers were affecting the safe operation of the Machine, I would have taken the Machine out of service and arranged for the top rollers to be replaced. 19 In explaining what he knew about the circumstances of the removal of the internal anti-kickback fingers, Mr Brydson said:

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[10] During my visits to the Dekorform Factory I would spend time with Lindsay Brydson, to review the business, walk through the Factory to 'meet and greet' the employees and discuss with them any needs and concerns they may have. 23 Upon becoming General Manager, Mr Paul appointed a Mr Ian Owen to work in the Dekorform business in "a clerical/OHS capacity." He said that Mr Owen "was able to support and develop an increased awareness of OHS within the Dekorform organisation." He described Mr Owen's primary task as involving liaison with Mr Peter White, the National Warehouse and Distribution Manager of Parbury to update and integrate the Parbury and Dekorform OHS manuals into one OHS manual. 24 On the day of the incident, Mr Paul attended Liverpool Hospital and met with Mr Hogden's family members. He also dealt directly with Dekorform's staff and arranged counselling for them. He closed the Dekorform factory after the incident for approximately three days. He also arranged for tangible support to be given to the late Mr Hogden's wife and mother-in-law. 25 After the incident, Mr Paul took active steps to arrange for a complete review of the occupational health and safety procedures and protocols of Dekorform and Parbury and changed the structure of the businesses to accommodate this. 26 After he had resigned from Parbury Mr Paul decided to "move away from manufacturing and back into sales and marketing. I am now extremely critical of a company's focus on OHS." 27 Much of Mr Paul's evidence was corroborated by Mr White. Mr White said that upon his appointment as General Manager, Mr Paul elevated consideration of occupational health and safety matters and that they had become "more important". 28 George Alexander Bejatovic was the National Sales and Marketing Manager of Parbury between January 2006 and December 2007. He reported directly to Mr Paul. He said that occupational health and safety matters were a "priority" for Mr Paul and his management team. 29 Mr Bejatovic described the impact of Mr Hogden's death on Mr Paul personally and on his commitment to occupational health and safety matters. He said that, in effect, Mr Paul demonstrated a renewed commitment to occupational health and safety matters and to this purpose he appointed Ms Kelly Lovely as Health Safety and Environment Manager. New protocols and procedures were introduced, a new manual was produced and Mr Paul conducted regular senior management meetings that specifically focussed on safety. 30 Mr Bejatovic observed that:

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33 Dekorform and, in effect, Mr Paul are each charged with the same breach of s 8(1) of the Act. The starting point for a consideration of the assessment of penalty is a determination of the objective seriousness of the offence. It is clear, as is conceded by all parties, that the multirip circular saw, at the time of the incident, was defective and manifestly unsafe. The internal anti-kickback fingers had been removed, the rollers and sleeves were damaged, employees were not precluded from standing in line with the in-feed of the machine, such steps as were taken to identify any risks involved in the condition of the machine were inadequate, and nobody appears to have been furnished with sufficient or appropriate information, instruction and training concerning the identification of any risk associated with the state of the machine and in some respects its operation, especially prohibiting employees from standing in line. Furthermore, there was a failure to undertake an adequate risk assessment in all the circumstances. 34 This seemingly parlous state of affairs was, however, ameliorated by the fact that Dekorform, through its controlling personnel at Parbury, had had the machine serviced at regular intervals. Indeed, it may be inferred from the evidence, and especially that given by Mr Brydson in his principal affidavit, that the internal anti-kickback fingers had been removed by a person or persons forming part of the Parbury maintenance crew. This throws up for consideration what Dekorform ought properly to have done in circumstances where, on the evidence, the machine was regularly serviced to deal with any problems that arose and undertook a major service during the annual close down. 35 However, the situation is more complex because some weeks before the incident trouble had been encountered with the machine as is outlined in the agreed statement of facts, and there was a failure to have the machine examined by a person who was fully trained and competent to do so. An examination carried out after lifting the top of the machine would have revealed that a bar which was the housing for the internal anti-kickback fingers was missing. Furthermore, it appears that none of Mr Brydson, Mr Hogden or Mr Owen was trained, equipped or competent to carry out an inspection of the equipment. Accordingly, the no doubt well-intentioned regular inspections and safety audits were insufficient and ineffective to reveal the underlying condition of the machine, one that was manifestly unsafe predominantly because of the absence of the internal anti-kickback fingers. 36 This discussion of the evidence leads me to conclude that this is a most serious breach of the Act and should be so characterised for the purpose of the assessment of an appropriate penalty. 37 In assessing penalty, I shall also take into account the need to accommodate the deterrent effect that any penalty will provide both generally within the industrial and manufacturing community and specifically with respect to these defendants. However, I acknowledge that the commitment to the discharge of occupational health and safety obligations demonstrated by each of the defendants after the incident, which is manifested in the steps taken to enhance compliance with occupational health and safety obligations, will ameliorate to some extent the need to accommodate specific deterrence in the fixing of any penalty. Subjective factors

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38 There are a number of subjective factors that the Court is entitled to take into account in favour of each of the defendants and that are common to both of them. As was conceded by the prosecutor, both defendants co-operated fully with the WorkCover Authority in and about its investigation of the incident and have made tangible expressions of contrition and remorse for what occurred. Both defendants sought an available discount on the basis that they had entered a plea of guilty at the earliest appropriate opportunity. These submissions were rejected by the prosecutor. 39 The applications for order were filed in the Court on 30 June 2008. Not guilty pleas were initially entered in February 2009. The proceedings were then set down for hearing over several days in June 2009. Just before that hearing, Mr Paul indicated the entry of a guilty plea on 4 June 2009 and Dekorform seven days later. I should add for completeness that the sentencing hearings were deferred pending the determination by the Court of proceedings brought by the prosecutor against another defendant, Justin Ryan. Those proceedings were protracted, occupied many days of court time and, furthermore, involved the hearing of an appeal. Mr Ryan was acquitted. It was only at that stage that the Court was asked to determine the penalties to be imposed on both defendants. 40 In the case of Dekorform, it is clear that the indication of a plea of guilty was not entered at an appropriately early time. Nevertheless, there has been a saving of court time that would, in my opinion, justify the application of some discount. In the case of the defendant Dekorform, I propose applying a discount of 5 per cent. 41 It was Mr Paul's submission that he was faced with a difficulty in terms of a decision to enter a plea of guilty because his culpability relied in turn on the culpability of Dekorform by reason of the operation of s 26 of the Act. Accordingly, it was said that it would have been inappropriate for Mr Paul to given consideration to the entry of a plea of guilty unless and until he was aware of the course that Dekorform was likely to take. I accept this submission in part and I would propose, in the circumstances of Mr Paul, to apply a discount of 10 per cent for this matter. 42 In each case the prosecutor sought a moiety of the penalty imposed and an order for costs. Neither defendant opposed this course of action. 43 Before proceeding to fix an appropriate penalty in the case of each defendant, I also acknowledge that the Court received, during the course of the proceedings, a victim impact statement of Michele Hogden, the sister of the late Mr Hogden. During the course of the proceedings and whilst Ms Hogden was present, the Court formally acknowledged receipt of the statement and indicated the Court's expression of regret for the loss suffered by her and her family as a result of this tragic incident. Dekorform Pty Ltd

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[39] In assessing the culpability of the second defendant it is, in my view, important to place particular weight upon the role of the defendant in the management of the corporation and the nature of the gravity of the offence as identified in relation to the first defendant, and to make an assessment in that context of the situation of the second defendant. Any matters of doubt should, generally speaking, be resolved in favour of the defendant: R v Olbrich (1999) 73 ALJR 1550 at 24 - 28; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698 - 699. Although the second defendant was an important and crucial part of the management of the first defendant, nevertheless he was a manager in the context of a small company which was a family company which was itself managed and run by a highly experienced manager who had many years of experience in the industry, as did those members of the family who preceded him. He was not the alter ego of the company. It would be appropriate therefore to proceed on the basis that although the second defendant would have had a significant role in decision making as to employment and the like and otherwise in the running the first defendant, it could not be assumed that he could make all crucial decisions, or changes to practices, relating to a change in employment policy as to, for example, the qualifications that would necessarily be required of all employees. Therefore, it may be appropriately assumed, and thus found for the purpose of these proceedings, that the system now in place as exemplified by paragraph 21 of the defendants' submissions was not a matter within the authority of the second defendant. Accordingly, I consider that there is a significant qualitative difference between the culpability attaching to the first and second defendants, although I find that the gravity of all of the offences is serious. 48 In Department of Mineral Resources (Chief Inspector McKensey) v Berrima Coal Pty Ltd & Anor [2001] NSWIRComm 130; (2001) 105 IR 348, Walton J, Vice President, approved of the observations of Wright J set out above. (See [178] and [179]). A Full Bench of the Commission in Court Session (Walton J, Vice President, Boland J and Staff J) set out inter alia [178] and [179] of the judgment of Walton J in Berrima Coal and proceeded to apply them to the circumstances of the proceedings before them in Morrison v Powercoal Pty Ltd (no 3) [2005] NSWIRComm 61. 49 It may be assumed that in applying these observations, the Full Bench intended fully to approve them. 50 In undertaking the sentencing process, the Court is to have regard to the culpability of Mr Paul in the context of his involvement in the management of Dekorform and the part played by him in the particular breach of safety with which the Court is concerned in these proceedings. 51 The effect of the evidence given in the proceedings to which I have previously referred is that Mr Paul had ultimate responsibility for occupational health and safety matters in the Dekorform business. However, he was not involved in the day-to-day management of that business which appears to have been vested in Mr Brydson who was the manager of Dekorform. Assessed objectively, and given the evidence about the obligations, responsibilities and duties both overall and specifically with respect to occupational health and safety matters, I would assess Mr Brydson as being much more culpable than Mr Paul in terms of the matters surrounding the incident that is at the heart of these proceedings. I am unaware whether the prosecutor has instituted proceedings against Mr Brydson under s 26 of the Act, but certainly they are not proceedings with which I have had to deal. 52 The maximum penalty applicable to the charge against Mr Paul is $55,000. Assuming that his culpability is less than that of Dekorform, on the basis of the matters to which I have just referred, an appropriate monetary penalty would be something less than $5,000. 53 It was submitted on behalf of Mr Paul that the Court should apply the provisions of s 10 of the Crimes (Sentencing Procedure) Act 1999. Relevantly, s 10(1) to (3) of that Act is in the following terms:

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[133] In Department of Mineral Resources (Chief Inspector McKensey) v Berrima Coal and Coke Pty Ltd and Anor (2001) 105 IR 348, in which Walton J, Vice President determined to apply s 10, his Honour referred to the judgment of Wright J, President in WorkCover Authority of New South Wales (Inspector Page) v Walco Hoist Rentals Pty Ltd (No. 2) (2000) 99 IR 163 at [38] and [39] where the President considered the construction of s 50 of the Occupational Health and Safety Act : 178 In assessing the culpability of the second defendant, it is also necessary to consider the application of s50 of the Act. Wright J, President, discussed the construction and implications of s50 of the Act in WorkCover Authority of New South Wales (Inspector Page) v Walco Hoist Rentals Pty Ltd (No. 2) (2000) 99 IR 163 at [38]. His Honour's construction of the section, with which I agree, was as follows at [38]: Having reached those conclusions in relation to the culpability of the first defendant it is necessary to consider that of the second defendant. The construction and implications of s50 are relevantly these. First, the level of culpability of a personal defendant who is deemed to have committed the offence by virtue of s50(1) cannot be greater than that of the corporation who has been convicted or otherwise assumed to be guilty for the purposes of the operation of the section. However, most pertinently for the present proceedings, it must be recognised that the culpability of the personal or individual defendant may be less than that of the corporate defendant. It is not, in my view, a question of considering their relative contribution but assuming that the purpose of the provision is to make an individual who is responsible to an extent for the management of the corporation similarly responsible and culpable for the acts or omissions of the corporation. Although the relevant consideration is not whether, or to what extent, there is a level of contribution as between the corporate and individual defendants for the particular breach of safety which arose under the Act, it is nevertheless necessary when dealing with the precise gravity of the offence committed, or deemed to have been committed by the personal defendant, to accept the possibility or, in many cases where the individual is not simply the alter ego of the corporation, the likelihood that the level of gravity of the offence attributable to the personal defendant may be less than that which has been found to have been committed by the corporate defendant - that is, in these proceedings the first defendant.

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In assessing the culpability of the second defendant it is, in my view, important to place particular weight upon the role of the defendant in the management of the corporation and the nature of the gravity of the offence as identified in relation to the first defendant, and to make an assessment in that context of the situation of the second defendant. … 58 The prosecutor submitted that there did not exist the "extraordinary and highly exceptional circumstances" that would justify the grant of discretion under s 10. 59 Whilst I recognise that this Court must be concerned to ensure that s 10 is only applied appropriately, there are in my opinion circumstances that would justify the exercise of discretion in favour of Mr Paul. As I have said, his position was remote from that of the actual business operations of Dekorform. Although he was admittedly a director of that company, he was not an executive employee of it. He was predominantly an employee of Parbury with overall management responsibilities for Dekorform. Mr Paul did take active steps designed to satisfy the obligations of Dekorform under the Act and to enhance its commitment to occupational health and safety matters. Persons were appointed by him to facilitate the involvement of Dekorform in occupational health and safety protocols and procedures, audits were undertaken and there were regular reports made to management, including Mr Paul. Of course, as I have observed, the persons who carried out these activities were not adequately or appropriately qualified to do so and were not given the requisite training or instruction. However, these failures should have been more apparent to the immediate management of Dekorform, albeit that they were themselves unequipped to recognise this. 60 In particular, the failure to ensure that the internal anti-kickback fingers were installed and operational was something that was remote from Mr Paul's day-to-day activities and in particular remote from his involvement in Dekorform. The same comment may be made with respect to the failure to maintain or replace the rollers, the failure to provide information, instruction and training and the failure to undertake an adequate and appropriate risk assessment. All these matters were the responsibility of the more immediate management. There is no explanation for the apparent failure of the prosecutor to institute proceedings against Mr Brydson who is clearly involved in the management of Dekorform and who would have been amenable to prosecution under the provisions of s 26 of the Act. 61 Having regard to these matters, Mr Paul's age, background, previous good record and the personal impact that the incident had upon him, I am persuaded that it is appropriate in all the circumstances to apply the provisions of s 10 of the Crimes (Sentencing Procedure) Act and direct that the charge against him be dismissed. Nevertheless, he should be directed to pay the costs of the prosecutor, because having entered a plea of guilty it is appropriate that he be found guilty of the offence. Orders

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