Inspector Nicholson v Seovic Engineering Pty Limited

Objective factors 11The risk to safety is particularised in each charge as, "the risk of an employee having their head or other part of their body crushed or hit in the course of carrying out the task of refitting the conveyor chain to a shuttle car, whilst working underneath the shuttle car". 12According to the prosecution, the work was known to be dangerous and the risk was both obvious and reasonably foreseeable. According to the defendants, the risk was not obvious when regard is had to the fact that very experienced employees were undertaking the work in the same way it had been undertaken for many years without incident. It was contended that great weight should be given to the considerable experience of the workers in the performance of the task. Further, the corporate defendant was entitled to rely upon the experience of the workers. The defendants' submission that the risk was not obvious was sought to be developed by reference to statements made by Mr Jenkins during his interview to the effect that Mr Cooper had, "put his head up" while he was underneath the shuttle car when he should not have. 13In my view, the evidence clearly establishes that the risk was obvious, reasonably foreseeable and, very serious. Working in the vicinity of moving parts of heavy machinery gives rise to an obvious, well-known risk within any industry which involves work with heavy machinery. This is particularly apparent in the present circumstances where no procedures have been formulated and where there has been no assessment of the risks involved for undertaking the work that was being performed at the time of the accident. In addition, Mr Cooper was not visible to the other workers while he was directly underneath the moving parts of the shuttle car. The moving parts included the heavy metal chains which were being tensioned and then slackened, or loosened, by the movement of the forklift truck. While this process was taking place, Mr Cooper was exposed to a very serious and obvious risk to his safety. It is irrelevant whether or not he was lying on the creeper or had his head up, or was sitting up at the time of the accident. It is not known what Mr Cooper was doing at the precise time in any event, and Mr Jenkins' statements extracted above (that Mr Cooper "put his head up") amounts to no more than speculation. It is also irrelevant that the workers were experienced in the particular task being performed. Employees, no matter how experienced, without the benefit of proper procedures to ensure safety may take part in unsafe work practices over a long period of time without incident. It does not follow that because experienced workers perform work in a particular way or engage in a particular work practice over many years without incident that the work is safe. The present circumstances provide one such example. 14It is also my view that the defendants were not entitled to rely upon experienced workers as an assurance that any work practices undertaken by them were safe. According to Mr Patrick, the particular work in which Mr Cooper was engaged, and had performed on numerous occasion, was dangerous and "high risk". It is incumbent upon an employer to take active steps to ensure that any work undertaken in an industry, particularly an industry engaged in the maintenance of heavy machinery with moving parts. Here no procedures were formulated and no assessment of the risks was undertaken. In the absence of any procedures in place or any assessment of the risks involved in performing the work, the risk to safety was also reasonably foreseeable. 15Simple remedial measures were also available to obviate the risk. An instruction not to be under the shuttle car while the chains and flights were moving constitutes one such step, which, if it had been implemented, would have ensured Mr Cooper's safety. Such a step was in fact implemented by the corporate defendant after the accident. Safe Work Method Statements were compiled for the task which prohibited employees from being under the shuttle car while the conveyor chain was under tension. Undertaking a risk assessment was another available measure that I have no doubt would have identified the risk and facilitated appropriate control measures for minimising or eliminating the risk. 16The gravity of the consequences of an accident does not dictate the seriousness of the offence under the Act but the seriousness of the risk may do so: see, Lawlenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 476. Here, the gravity of the risk was such that it was likely to result in serious injuries to Mr Cooper. This was starkly and tragically realised when Mr Cooper suffered fatal injuries. 17These factors taken together compel the finding that the offence was objectively serious. Mr Cooper, at the time of the accident, was exposed to a very serious and obvious risk to his safety in circumstances where no safety procedures were in place and no assessment of the risk had been undertaken.

Maximum penalty 18None of the defendants have prior convictions. The corporate defendant faces a maximum penalty of $550,000 and Mr Seovic and Mr Miskell each face a maximum penalty of $55,000.

Deterrence 19There is a need for the application of the principle of general deterrence in these proceedings primarily because the facts disclose that a serious risk to safety arose from the performance of work in the vicinity of moving parts of a heavy machine where no safety procedures and no assessment of the risks were undertaken to avoid exposure to the risk. It must be emphasised that industries engaged in the repair and maintenance of heavy machinery involving moving parts need to have appropriate procedures in place to ensure that the work can be performed safely and without incident, and that the failure to attend to this may well result in harsh penalties. 20Specific deterrence also falls for application. The corporate defendant continues to undertake the same work and employs approximately 25 people to conduct its business. Mr Seovic resigned as a director of the corporate defendant on 26 March 2010, but nevertheless continues to work for the Seovic group of companies. Mr Miskell no longer works for the Seovic group of companies, but took up an appointment in July 2011 as Strata Manager of Astron Plastics Pty Limited.

Whether one penalty should be imposed on three defendants 21It was submitted on behalf of the defendants that because only one offence has been committed under s 8(1) of the Act that only one penalty should be imposed. To take the example proffered on behalf of the defendants, if the Court imposed a penalty of $50,000 on the corporate defendant this penalty should be divided between the three defendants with the result that the corporate defendant would be fined $40,000 and each individual defendant fined $5,000. 22The defendants were not aware of any similar submission having been made or considered before by the Court. Reliance was placed on a number of authorities to support the submission. In particular, the defendants relied upon Environment Protection Authority v New Generation Beverages Pty Limited & Anor [2000] NSWLEC 130. The case concerned a prosecution of two defendants in partnership charged with offences under the Clear Waters Act 1979 arising from the same incident. At [40] of the judgment, the sentencing judge, Lloyd J, said: The prosecutor submits that since there are two separate charges against two separate defendants then the penalty that would be otherwise imposed should be imposed on both of them in equal amounts. As I understand the submission, that would result in a total fine greater than would be the case if the offence had been committed by a single defendant. This is a novel approach to me. I am unaware of any case in the past where that has been done. The prosecutor has been unable to identify any authority where such an approach has been adopted in this Court, or for that matter, in any other court. The fact is that the activities being conducted on the land are being conducted by a partnership of Pepsi Seven-Up Bottlers Australia Pty Limited and by New Generation Beverages Pty Limited. It is the partnership that is carrying on a single business. The defendants are not carrying on separate businesses or engaged in separate enterprises. I am not persuaded that the submission of the prosecutor should be accepted. 23The submission being considered by his Honour is quite different from the submission made on behalf of the defendants before this Court, but in any event it is clear from reading the judgment that the reason his Honour was not persuaded to impose separate penalties on each defendant in equal amounts was because the defendants were engaged in a partnership. Other authorities relied upon by the defendants in support of the submission also involve partnerships carrying on a single business and are therefore distinguishable on that basis: see Environment Protection Authority v Eljo Pty Ltd [2005] NSWLEC 341 at [6] [25] [26] [29] [33]; JT & LC Tippett Pty Limited and RD & LF Tippett Pty Limited v WorkCover Authority of New South Wales [2008] NSWIRComm 177; (2008) 184 IR 1 at [99] [114]. 24The defendants also relied upon Environment Protection Authority v Hochtief [2005] NSWLEC 506; 143 LGERA 118 in support of the submission. The case is also distinguishable in my view. It concerns two defendants each charged in relation to the same incident. Bignold J determined the appropriate penalty and then apportioned it equally between the two defendants, but his Honour proceeded in that way because the incident was caused by the Joint Venture between the two defendants and the admitted liability of the defendants only arose because of the absence of legal personality of the Joint Venture which precluded it from being charged over the incident: at [34]. 25Here, in contrast, the Court is concerned with the admitted liability of three separate legal entities charged in relation to the same incident. The Court is aware that s 26 of the Act does not, of itself, create an offence. Rather, it is the mechanism by which a director, or person concerned in the management of the corporation, is taken to have committed the same offence that the corporation has committed: see, Morrison v Chevalley [2010] NSWIRComm 116; (2010) 198 IR 30 at [222]. The defendants submitted that because they have been charged with a contravention of s 8(1) of the Act (the corporate defendant's contravention) by virtue of s 26(1) that, only one offence has been committed, and therefore only one penalty should be imposed. 26The defendants also sought to derive support for the submission from the proposition that the offences presently under consideration are regulatory offences, as opposed to "true" criminal offences (which import concepts of moral blameworthiness). It was said to follow from that proposition that because the offence under s 8(1) is one of failing to observe a statutory standard, in relation to which the two individual defendants are complicit, that only one penalty should be imposed. 27For my own part, I have difficulty accepting the defendants' submission on this particular issue. I do not see how the mere fact that an offence in which persons are complicit is regulatory, can justify the imposition of a single penalty to be divided between the offenders. In Morrison v Chevalley, the Full Bench recognised that the Act is concerned with regulatory or "quasi-criminal" offences: at [213]. During the course of consideration of the issue, the Full Bench referred to R v Travel Wholesale Group Inc. [1991] 3 SCR 154. In that case, Cory J, in distinguishing between true criminal offences and regulatory offences, said (at 219 to 220): It follows that regulatory offences and crimes embody different concepts of fault. Since regulatory offences are directed primarily not to conduct itself but to the consequences of conduct, conviction of a regulatory offence may be thought to import a significantly lesser degree of culpability than conviction of a true crime. The concept of fault in regulatory offences is based upon a reasonable care standard and, as such, does not imply moral blameworthiness in the same manner as criminal fault. Conviction for breach of a regulatory offence suggests nothing more than that the defendant has failed to meet a prescribed standard of care. That is the theory but, like all theories, its application is difficult. For example, is the single mother who steals a loaf of bread to sustain her family more blameworthy than the employer who, through negligence, breaches regulations and thereby exposes his employees to dangerous working conditions, or the manufacturer who, as a result of negligence, sells dangerous products or pollutes the air and waters by its plant? At this stage it is sufficient to bear in mind that those who breach regulations may inflict serious harm on large segments of society. Therefore, the characterization of an offence as regulatory should not be thought to make light of either the potential harm to the vulnerable or the responsibility of those subject to regulation to ensure that the proscribed harm does not occur. It should also be remembered that, as social values change, the degree of moral blameworthiness attaching to certain conduct may change as well. 28This Court agrees with and adopts the observations of Cory J in the passages extracted above. Here, the Court has found that the breach of the Act was objectively serious based on an analysis of the factors considered earlier. The fact that the offence is regulatory, therefore, provides no support for the submission that one penalty should be imposed and divided between three separate legal entities. 29The Act sets different maximum penalties in respect of corporate defendants and individual defendants found to be complicit by virtue of s 26(1) of the same offence. This is a strong indication of the approach the Court should take in the present matter, that is, impose separate penalties on each defendant (taking into account their respective roles and culpabilities in relation to the offence). Notably, s 26(1) is silent on matters of contribution or joint liability. What the defendants appeared to be submitting on the issue was that the Court should apply the principle of totality when sentencing defendants, who are separate legal entities. Such an approach is impermissible and would lead to error: see the discussion on this issue in Inspector Green v Big River Timbers Pty Limited; Inspector Green v Big River Timbers (Veneer) Pty Limited [2006] NSWIRComm 279; (2006) 156 IR 341 at [11]-[16]. In Big River Timbers, the Full Bench emphasised the correct approach to be taken in this jurisdiction where two defendants (both corporate defendants) faced similar charges arising out of the same incident. An example of this correct approach, which this Court intends to follow, is found in Inspector Sharpin v A Team Concrete (Aust) Pty Ltd [2004] NSWIRComm 182. The case was referred to with approval by the Full Bench in Big River Timbers at [14] [15]. In A Team Concrete, Staff J said (at [110]): I prefer the approach adopted by Walton J Vice-President in McDonald's Australia Limited. In my view, the principle of totality does not require the three defendants to be treated as effectively one entity facing offences under ss 8(1), 8(2), 10(2) and 26(1) of the Act for the purposes of the assessment of penalty and therefore the principle of totality should not be applied in this matter. 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.

Respective roles and culpabilities of persons at the site 30In conducting an assessment of the respective culpabilities of each defendant, I also rely upon the observations of Wright J in Page v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39 (2000) 99 IR 163 at [38] wherein his Honour said: 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 s 50 are relevantly these. First, the level of culpability of a personal defendant who is deemed to have committed the offence by virtue of s 50(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. 31According to the prosecution, Mr Seovic, although in New Zealand attending to another business, was the sole director of the corporate defendant at the time of the offence, and, as such, was the ultimate controlling mind of the corporation. It was further submitted that the culpability of Mr Seovic must be assessed not only against the fact that he was the director, but also against the fact that he pleaded guilty which imports a concession that he had influence over the affairs of the corporate defendant. 32In relation to Mr Miskell, it was submitted by the prosecution that as general manager he had ultimate responsibility and was in a position to direct that a risk assessment be carried out for the work being performed by Mr Cooper at the time of the accident. 33It was submitted on behalf of Mr Seovic that he was a director in name only and that his father, John Seovic, was the controlling mind of the Seovic group of companies which conducted the corporate defendant. Moreover, Mr Seovic was not involved in the business at the time of the offence, he was in New Zealand conducting another business. It was also submitted that Mr Seovic believed that the business of the corporate defendant was being conducted by competent people, a matter relevant to the exercise of due diligence. Mr Seovic's belief was based upon the fact that no previous accident had occurred in relation to the work being performed (and, by inference, the workers were competent). In addition, Mr Seovic's belief was said to be based on the fact that Mr Miskell did not report to him, but to John Seovic, the real controller and person ultimately responsible. Mr Seovic's involvement in the business and therefore in the circumstances of the offence, it was submitted, was "slight". 34On behalf of Mr Miskell it was submitted that the repair and maintenance of the mining equipment, which included the coal shuttle car, was operated as a separate business by Kevin Gander, an employee of the corporate defendant. (According to Mr Seovic, Mr Gander was the Workshop Foreman from about 9 February 2000 to 25 July 2008.) It was also submitted that Mr Miskell had no involvement in the "day-to-day" operation of the corporate defendant. Instead, his role was confined to matters of financial viability. Again, it was submitted that John Seovic was ultimately responsible and Mr Miskell's involvement was "slight". 35The evidence on this issue consists of a number of written statements which were not challenged by the prosecution. The Court has no basis, therefore, barring any internal inconsistencies or contradictions, for not accepting what is said by each statement maker. 36In his statement, Mr Seovic said that he had no involvement in the corporate defendant's business after it purchased and moved to new premises in 2000 and commenced conducting its business of repairing and maintaining mining equipment such as the coal shuttle car involved in the accident. According to Mr Seovic, the corporate defendant purchased the premises from another business and effectively took over and commenced to run the business operations there, including the retention of some 15 employees of the former business. Those retained employees included Howard Domsalla, Mr Gander, Mr Cunningham and Mr Patrick. 37Mr Seovic explained that Mr Domsalla was the general manager of the newly acquired business. He looked after and was responsible for the repair and maintenance of the mining equipment. Mr Seovic looked after the servicing, repair and maintenance of plant and equipment operated by Seovic Civil Engineering (SCE) at a different workshop on the premises. SCE is a corporate entity within the Seovic group of companies. Mr Seovic said that Mr Domsalla did not report to him, but answered to his father, John Seovic. After Mr Domsalla left in 2001, Mr Gander took over most of his functions. Mr Seovic said that, based on his observations, Mr Gander and other employees were, "very experienced in the work that they did". Mr Seovic said he had a role in the formulation of work methods or other arrangements that he believed needed correction. In those instances, he brought the matters to the attention of Mr Gander. He also said that John Seovic kept him informed about the corporate defendant's banking and finances. He also signed company documents. Although he moved to New Zealand in mid-2000 to operate another business and had no involvement in Mr Miskell's appointment, it cannot be said, based on Mr Seovic's evidence, that he had no active role at all in the day-to-day operations of the corporate defendant. 38In December 2009, Quentin Jascha Seovic replaced his brother, Mr Seovic, as director of the corporate defendant. In a statement he confirmed what Mr Seovic said in relation to his involvement in the day-to-day operation of the corporate defendant. In relation to Mr Seovic's involvement, Quentin Seovic said: Even though my brother Jason Seovic was the director of Seovic Engineering until December 2009, he had no day to day involvement in its business or its activities during the time that I was working for it from 2005. In early 2001, Jason had established a business in New Zealand that carried out similar work to that of Seovic Civil Engineering namely concrete slip forming, until it was sold, to the best of my recollection in late 2008. Jason then returned to Australia and resumed his previous position as Plant Manager for Seovic Civil Engineering. In early 2009 he concentrated on the establishment of the diamond grinding aspect of that company. 39In relation to the involvement of John Seovic in the business, Quentin Seovic said: My father's involvement in the business of Seovic Engineering has at all material times been limited to that of financial funding and setting its budget. He has always relied upon others to handle its day to day operations. From my observations, he has no knowledge or involvement in the work carried out by the company. He has told me that the primary reason for taking on additional work for that company in April 2000 was to allow Seovic Civil Engineering to operate out of the Graham Hill Road property. He has also told me that from the time of the acquisition of that property Howard Domsalla and Kevin Gander reported to him when necessary and usually regarding general business or financial matters until Paul Miskell was appointed as General Manager. The appointment of Paul Miskell, Kevin Gander's subsequent departure and my increased involvement resulted in my father's involvement in Seovic Engineering decreasing until he had no involvement at the time of Mr Cooper's death on 26 September 2008 apart from that stated at the beginning of this paragraph. No advice or instructions were received by or taken from him by me or other persons working for Seovic Engineering in relation to the day to day management and operations of that company. 40Mr Gander's role in the business was explained by Quentin Seovic in the following way: From 2005, I also became involved in the repair and maintenance business of mining equipment conducted by Seovic Engineering and was responsible to its Manager, Kevin Gander. I virtually became his offsider or assistant and under his supervision became involved in the management and operation of that business. He was responsible for the management and operation of the business of that company. 41Quentin Seovic also explained his own involvement in the business: In assisting Mr Gander, I participated in the generation of new work and also in the management of the repair and maintenance projects for which Seovic Engineering was responsible. I was involved to a limited extent in the interaction with clients and quality assurance work. After Kevin Gander left Seovic Engineering on 25 July 2008, I performed many of his duties in conjunction with Neale Cunningham, Workshop Manager while a replacement was sought. I reported from that time to Paul Miskell, in the way described above and also in relation to the matters about which I had formerly reported to Kevin Gander. Neale Cunningham reported to Paul Miskell about the matters which he had formerly reported to Kevin Gander. Paul Miskell continued to have no involvement in the day to day management and operations of the company. 42Based on the foregoing material, I make the following observations: i) Mr Seovic was the sole director and on his own evidence played some active role in the day-to-day operations of the business, for example, he formulated work methods and consulted with Mr Gander about those work methods. In addition, John Seovic kept him informed about the corporate defendant's banking and finances; ii) John Seovic had no involvement in the day-to-day operations of the corporate defendant. His role was confined to matters of banking and finances; iii) the managers of the repair and maintenance of the mining equipment side of the business, principally, Mr Gander, are said to have had a "hands on" role in the business. However, the evidence in relation to what those managers actually did and what were their responsibilities, in particular in relation to matters of safety, is scant on detail and consists of only general information, which the Court feels constrained to say provides little assistance to its consideration of the issue. 43The fact that Mr Seovic may have had little involvement in the business because of his business commitments in New Zealand does not exempt him, as sole director, from discharging his obligations under the Act. Mr Seovic accepts that he was complicit in the offence by his plea of guilty. The offence, I have found, was a serious one. Moreover, a belief in the competency of others to safely run the business hardly constitutes a sufficient response to the failure to have in place any safety procedures for the work and the failure to undertake on assessment of the risks. There is nothing in the evidence from which it may be concluded that Mr Seovic was not in a position to make suitable enquiries of the managers, for example, to ensure that they were attending to safety matters, at the premises. In my view, given these matters, Mr Seovic's role in the circumstances of the offence could not be said to be minor, although given that the "on-site" managers, in particular, Mr Gander, and perhaps Mr Cunningham (as well as Quentin Seovic) also had responsibilities at the premises by virtue of their roles as managers, Mr Seovic's culpability may be assessed to be less than the corporate defendant's culpability. The corporate defendant's business operations, on the evidence, appear to have been conducted very informally with no one person identified as responsible for directing its daily operations, in particular, with regard to matters of safety. It appears to the Court that the employees working in the corporate defendant's workshops were left to their own devices on matters of safety simply because they were considered to be experienced and competent. 44A similar conclusion is available based on the evidence in relation to Mr Miskell. According to Quentin Seovic, neither John Seovic, Jason Seovic nor Mr Miskell had any involvement in the day-to-day management and operations of the corporate defendant. Quentin Seovic makes this statement about Mr Miskell despite the fact that Mr Miskell was the general manager and it is by no means clear on the evidence who, if anyone, had involvement, or the extent of that involvement, in the day-to-day operations of the corporate defendant, regarding matters of safety. 45In his statement, Mr Miskell recalled a conversation with Mr Gander shortly after he assumed the position of general manager during which Mr Miskell said that Mr Gander told him that he "believed" Mr Miskell's role was confined to SCE and Mr Gander's role was to continue to run the corporate defendant's operations. The statement sheds little light on what Mr Gander actually did, although it may be inferred that he had a more "hands on" role in the daily operations of the business than did Mr Miskell. In relation to Mr Cunningham, Mr Miskell said that from the time he took over as general manager, Mr Cunningham "had overall control of the work" in the workshop. Apart from a general reference to the provision of training by Mr Cunningham to employees in the workshop, Mr Miskell provided no further information as to what responsibilities Mr Cunningham had with regard to matters of safety. Mr Miskell says he did not become involved in the day-to-day conduct of the business. He reported to John Seovic not Mr Seovic in relation to financial matters. He promoted and dismissed employees. He had a practice of having discussions with the corporate defendant's "on-site" managers. This category of employee presumably includes Mr Gander and Mr Cunningham, although Mr Miskell provides no details of the contents of those discussions. He said that after Mr Gander left, Mr Cunningham and Quentin Seovic took over Mr Gander's functions. He said that they reported to him on matters concerning the conduct of the business. According to Quentin Seovic, the content of his reporting to Mr Miskell was confined to administration and financial matters. Mr Miskell said that both Mr Cunningham and Quentin Seovic, like Mr Gander, were responsible for the conduct of the business. 46Like the evidence of Mr Seovic, Mr Miskell's evidence is scant on detail in relation to what constituted "the conduct of the business" in particular in regards to matters of safety, about which there is no detail. Again, what emerges from his evidence is that no-one appeared to have the conduct of the corporate defendant's operation with regard to matters of safety. Mr Miskell, like Mr Seovic, also accepted responsibility for the corporate defendant's omissions by reason of his plea of guilty. Mr Miskell was complicit in what can only be described as a serious offence. Nor can his role, like the role of Mr Seovic, be said to be a minor one in the conduct of the corporate defendant's daily operations in the workshop. He was the General Manager. On his own evidence, he promoted and dismissed employees of the corporate defendant and he had a practice of holding discussions with the "on site" managers, although there was no evidence as to the content of those discussions. It was also incumbent upon Mr Miskell, by virtue of his senior position within the corporate defendant's structure, to at least make enquiries about safety in circumstances where no safety procedures, formal or informal, were in place in the workshop. 47Neither John Seovic, nor the on-site manager, nor Quentin Seovic, have been prosecuted in relation to the offence, a matter which, according to the defendant, gives rise to a justifiable sense of grievance. The significance of a failure to prosecute other persons who may have contributed to the creation of the risk to safety was explained by Wright J in Walco Hoist at [34]: The significance of the failure to prosecute, or to continue the prosecution of the other potential defendants, is not that fact but rather the fact that any assessment of the role of the present defendants must be considered in the light of the consideration that the criminality for the breach of occupational health and safety was one which did not fall solely on the shoulders of these defendants. That fact, of itself, involves consideration of matters which may mitigate the conclusion as to the objective seriousness of the offences committed and thus the penalty which should be imposed in relation to them. 48The evidence does not establish that John Seovic had a primary role in the operations of the corporate defendant. Whatever role he may have had appears to have been confined largely to matters of banking and finance. He held no formal position at the time of the offence within the corporate defendant's structure. With regard to the "on site" managers, Messrs Domsalla, Gander and Cunningham, and also Quentin Seovic, the evidence sheds no light on what was their involvement in matters of safety at the premises of the corporate defendant. The only detail that may be gleaned from the evidence is that the "on site" managers had a "hands on" role in the workshop, but the evidence is silent as to what were their duties and responsibilities in the discharge of that role. Given the state of the evidence in relation to those persons not prosecuted for the offence, the Court is unable to make any findings that John Seovic, Quentin Seovic or any of the "on site" managers contributed to the creation of the risk to safety.

Application under s 10 of the Crimes (Sentencing Procedure) Act 1999 49An application was made on behalf of Mr Seovic and Mr Miskell that the Court should exercise its discretion in their favour under s 10 of the Crimes (Sentencing Procedure) Act 1999 (CSP Act). 50The following factors were relied upon by Mr Seovic: (i) the corporate defendant was run by John Seovic; (ii) Mr Seovic ceased to be a director after the incident; (iii) Mr Seovic has a "justifiable sense of grievance" because there were other persons culpably involved in the offence who were not prosecuted; (iv) Mr Seovic was not in the country at the time of the offence. 51Mr Miskell relied upon the following factors: (i) he is no longer employed by the Seovic group of companies; (ii) he relied upon others for the day-to-day operation of the corporate defendant whom he believed had conducted the business of the corporate defendant for many years and were competent; (iii) he acted promptly in replacing Mr Gander as on-site manager. 52The defendants, in support of their applications, relied upon the majority judgment of the Full Bench in Newcastle Wallsend Coal Company Pty Limited & Ors v Stephen Finlay McMartin [2006] NSWIRComm 339; (2006) 159 IR 121. In the majority judgment, Walton J, Vice-President and Boland J, said at [618]: Although we are mindful of the Full Bench's decisions to the effect that the discretion available under s 10 would be rarely available in significant offences against the legislation (see WorkCover Authority (NSW) v Profab (2000) 49 NSWLR 700; 100 IR 64 and WorkCover Authority of New South Wales v Waugh (1995) 59 IR 89 at 101), it is important to bear in mind that each matter requiring consideration under s 10 needs to be assessed in the light of its own particular circumstances: WorkCover (NSW) v Ecolab Pty Ltd (1999) 90 IR 413 at 430 and Department of Mineral Resources (Chief Inspector McKensey) v Berrima Coal Pty Ltd and Another (2001) 105 IR 348 at [174]. 53I have already considered in some detail the matters relied upon by both defendants in support of their applications. I have found, based on the material available, that neither individual defendant has a "justifiable sense of grievance" arising from the non-prosecution of other persons. My finding was based largely on the absence of evidence which might otherwise have showed that the persons nominated by the defendants had made a contribution to the creation of the risk to safety. I have also found, based on the evidence, that John Seovic had no primary or active role in the day-to-day operations of the corporate defendant. Reliance on others, in the absence of enquiry or further enquiry, to attend to matters of safety does not, and cannot, operate in favour of either Mr Miskell or Mr Seovic. A simple enquiry from either defendant would have revealed that no safety procedures were in place and no risk assessment had been undertaken in relation to the work being performed by Mr Cooper at the time of his accident. The work, as I have already found, was patently unsafe and exposed Mr Cooper to a serious risk to his safety. The fact that Mr Seovic is no longer the director of the corporate defendant, and that Mr Miskell no longer works for the Seovic group of companies, are not matters to which the Court can afford much weight, in the absence of other factors that might otherwise be favourable. Moreover, the Court has found that the offence in which both defendants were complicit was objectively serious. Given these matters, the Court declines to exercise its discretion in favour of the defendants under the section, and both applications are refused.

Subjective factors 54It was submitted on behalf of the corporate defendant that it has been experiencing financial difficulties with its cashflow as a result of the downturn in the mining industry. It was explained that the submission was not being advanced in order to ground an application that it lacked the financial capacity under s 6 of the Fines Act 1996 to pay a fine. Rather, the financial position of the corporate defendant was sought to be emphasised in support of a submission that its difficulties in maintaining its cashflow should be taken into account when fixing penalty because any fine imposed may affect the future conduct of its business. 55Evidence in support of the submission appears in Quentin Seovic's statement. According to Quentin Seovic, the corporate defendant has an overdraft limit of $500,000 repayable monthly over a period of 15 years, with the loan secured by a fixed and floating charge from the corporation's assets, as well as being the subject of guarantees given by SCE and his parents. Quentin Seovic explained that the bank has advised it is not prepared to lend any further money without security. The corporate defendant, however, does not have any further assets that it can offer as security. Quentin Seovic also relied upon the fact that the corporate defendant needed to retain a minimum of 25 employees in order to conduct its business, as well as an ongoing dispute between the "Office of State Revenue" (OSR) and the Seovic group of companies in relation to liabilities incurred under the payroll tax legislation. The Seovic group has challenged the OSR's assessment, but in the meantime, the group is required to pay instalments of payroll tax in respect of the assessments. Quentin Seovic also relied upon the downturn in the mining industry which he said has resulted in a significant reduction in work since 2012. The downturn was also said to be impacting on the corporate defendant's ability to general profits. Quentin Seovic annexed to his statement a cashflow summary prepared by him, as well as a cashflow forecast for 2013. The documents show a reduction of the value of the stock on hand from about $1,050,000 to $760,000, which Quentin Seovic described as a saving of about $300,000, which will be used to assist the corporate defendant's cashflow. 56Quentin Seovic explained that he was concerned about the impact that a penalty will have upon the financial circumstances of the corporate defendant outlined by him, "particularly if it is not allowed time to pay". 57The prosecution opposed any application directed to the reduction of any fine to be imposed by reason of difficulties encountered by the corporate defendant maintaining its cashflow. The prosecution stressed that no application was being made on behalf of the corporate defendant based on an incapacity to pay a fine and that in any event the evidence was not sufficient to enable the Court to properly consider and make findings in relation to the corporate defendant's financial position: see McColl v John Watson Building Services Pty Ltd and Dowdon Contracting Pty Ltd [2004] NSWIRComm 353; (2004) 137 IR 310 at [24] to [27]. 58The Court agrees with the prosecution that insufficient material has been placed before it to facilitate a proper assessment of the corporate defendant's financial affairs. The Court does not know, for example, in the absence of financial records, what is the corporate defendant's asset position. No taxation, banking records or company statements, such as balance sheets, profit and loss statements have been made available to the Court. Any cashflow difficulties that may be experienced by the corporate defendant may be accommodated by an application made to the Registrar that it be allowed time to pay under s 10 of the Fines Act 1996. That provision permits persons liable to pay a fine to make application to the Registrar for further time to pay. S 10(2) vests the Registrar with a discretion to allow further time to pay the fine, "if it appears expedient to do so". Otherwise, the Court is not prepared, given the paucity of financial records, to take into account the corporate defendant's cashflow difficulties when imposing penalty. 59All defendants pleaded guilty at an early stage. Accordingly, I award a discount of 25 per cent in recognition of the utilitarian benefit to be derived from the early pleas of guilty. 60The defendants also co-operated with the investigations during the course of the investigation. The defendants also expressed contrition and remorse for the circumstances of the offence. Quentin Seovic said he was shocked and extremely distressed when he was advised of Mr Cooper's death. He apologised to Mr Cooper's family on behalf of the corporate defendant. According to him, the corporate defendant offered to pay funeral expenses, but the offer was refused. Instead, the family accepted a contribution for the "wake" following the service. He said that the corporate defendant's business was closed on the day of the funeral as a mark of respect and to allow its employees to attend the service. He also said that John Seovic maintained contact with Mr Cooper's father and offered to help the family on many occasions. The corporate defendant also arranged for professional counselling for 15 employees and reimbursed them for any time lost as a result of absences from work following Mr Cooper's death. 61Mr Seovic was in New Zealand at the time of the fatal accident. He said he was "stunned" when told the news by his father and he felt a "great sense of loss". He asked his father whether he should return home and was told that everything was being taken care of and it was unnecessary for him to return home. Mr Seovic said his feelings of devastation and loss, "continued and affected my attitude to work for a long time". 62Mr Miskell attended the site of the accident. He said he was "devastated". He telephoned Lifeline and arranged for counsellors to be sent to the workshop in order to help those employees who were exposed to the accident. Two counsellors attended the workshop and spent several hours with the employees. Mr Miskell, together with Mr Cunningham, visited Mr Cooper's father in order to advise, "about the tragedy". Mr Miskell also arranged for a trauma counsellor to attend the corporate defendant's premises over the next few weeks in order to provide assistance to the employees. He attended Mr Cooper's funeral with Quentin Seovic and John Seovic. 63These matters will be taken into account by the Court in mitigation of the penalties to be imposed on all defendants. 64None of the defendants have prior convictions which entitles them to leniency. 65It was submitted on behalf of the defendants that the corporate defendant complied with Improvement Notices issued by the WorkCover Authority which operates in mitigation of the penalties to be imposed. According to the Agreed Facts, the corporate defendant complied with these Notices and took the following actions:

• A winch was purchased and placed on a winch carrier to replace the forklift operations during the process of fitting conveyor flight chains to shuttle cars. Engineering calculations were sought for the winch pulling the conveyor flight chain. The winch was to be used in place of the forklift.
• Risk assessments were to be conducted and reviewed for the safe removal and installation of conveyor flight chains on the shuttle cars.
• Safe Work Method Statements were compiled for the removal of a conveyor flight chain and installation of a new conveyor flight chain on the shuttle cars and were to be subject to review. The new system of work that was put in place proscribed employees from being under the shuttle car whilst the conveyor chain was under tension. 66Although s 92 of the Act requires compliance with Improvement Notices, the Notices were not placed before the Court and I am not in a position to assess whether the safety measures attended to by the corporate defendant, set out above and attached to the Agreed Facts, constitute compliance with the Notices or represent measures taken by the corporate defendant over and above the stipulated requirements in the Notices. Giving the defendants the benefit of the doubt and in the absence of submissions on the issue by the prosecution, the Court is prepared to take the post-accident safety measures implemented by the corporate defendant into account in favour of the defendants when imposing penalties.

Victim Impact Statement 67At the conclusion of the sentence proceedings, a victim impact statement prepared and signed by Mr Cooper's parents, Mr and Mrs Cooper, was read onto the record by the prosecutor. The statement attests to the incalculable sense of loss suffered by Mr and Mrs Cooper as a result of this needless tragedy. After the statement was read onto the record the Court expressed its deepest sympathy to the family of Mr Cooper for their "dreadful and unfortunate loss". It was the agreed position between the parties, however, that the accepted law on the admission of a victim impact statement permits the Court to acknowledge the statement (and make appropriate comment), but not to take it into account as part of the material in respect of the penalties to be imposed: see for discussion of this issue, Rodney Morrison v Hunter Quarries Pty Limited and Another [2009] NSWIRComm 179 at [304] to [322].

Costs 68Mr Miskell sought his costs for the additional expenses said to have been incurred as a result of the prosecution's tender of the Further Agreed Facts at a late stage in the sentence proceedings. It was submitted on behalf of Mr Miskell that the material in the document could have been incorporated into the Agreed Facts document. The prosecution opposed the submission relying on correspondence between the parties which it was said revealed that the prosecution had considerable difficulty in getting confirmation that the facts were agreed during the course of the negotiations on the Agreed Facts document. The prosecutor advised the Court that he did not seek an order for costs associated with the preparation of the Further Agreed Facts tendered against Mr Miskell. 69In the Court's view, it is unnecessary to resolve the dispute. The additional material in the Further Agreed Facts tendered against Mr Miskell is confined to two very short extracts from the interview of Mr Patrick and Mr Briggs, the sole relevance of which was that some verbal instructions were issued for the work being undertaken by Mr Cooper at the time of his fatal accident. Given the limited scope and content of this additional material and the fact that Mr Miskell could not have been taken by surprise by the material (the brief of evidence having been served on him on an earlier occasion) the Court does not propose to take it into account in any costs order made in relation to Mr Miskell.

Orders 70In IRC No 1067 of 2010, the Court makes the following orders: (1) The corporate defendant, Seovic Engineering Pty Limited [ACN 003 791 973], is convicted of the offence and fined $100,000 with a moiety to the prosecutor. (2) The corporate defendant is to pay the reasonable costs of the prosecutor as agreed or in the absence of agreement, as assessed. 71In IRC No 1068 of 2010, the Court makes the following orders: (1) John Jason Seovic is convicted of the offence and fined $8,000 with a moiety to the prosecutor. (2) John Jason Seovic is to pay the reasonable costs of the prosecutor as agreed or in the absence of agreement, as assessed. 72In IRC No 1069 of 2010, the Court makes the following orders: (1) Paul Garry Miskell is convicted of the offence and fined $8,000 with a moiety to the prosecutor. (2) Paul Garry Miskell is to pay the reasonable costs of the prosecutor as agreed or in the absence of agreement, as assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 June 2013