Inspector Spence v Multiplus Group Pty Ltd

The charges 9Both charges characterise the risk to safety as, "a risk of injury to non-employees working on the ground floor level at the premises of falling approximately four metres through an open, unsecured penetration to a concrete basement below". 10The acts and omissions alleged against each defendant are the same. They are particularised in the charge against Multiplus as follows: The defendant failed to ensure that the penetration on the ground floor level adjacent to Unit 22 of the townhouses being constructed at the premises ("the penetration") was securely covered. The defendant failed to conduct an inspection of the penetration to ensure it was securely covered prior to non employees commencing work in the vicinity of the penetration. The defendant failed to warn persons working at the premises of the risk of the inadequately secured penetration. The defendant failed to undertake a risk assessment which identified and considered the risks associated with working near an open, unsecured penetration and implement appropriate control measures to address these risks. The defendant failed to inform non-employees, in particular Mr Markovski, Mr Preston and Mr Djukic, working at the premises of the penetration and/or inform them of the risks of working in the vicinity of the penetration, in particular: the defendant failed to implement site specific inductions to inform persons of the presence and proximity of the penetration; the defendant failed to implement tool box talks to inform persons of the presence and proximity of the penetration. The defendant failed to ensure that a safe work method statement was in place for working near an open, unsecured penetration as required by clause 227 of the Occupational Health and Safety Regulation 2001. The defendant failed to ensure the non-employees working at the premises were supervised to ensure that non-employees did not work in close proximity to the unsecured penetration with a fall height that was in excess of three metres. As a result of the defendant's failures, non-employees present at the premises were placed at risk and, in particular, on 28 August 2009, Victor Markovski sustained severe head injuries which was a manifestation of that risk.

Systems of work prior to incident 11Details of the systems of work in operation at the site at the time of the incident are set out in two of my earlier judgments following the sentence proceedings against Mr Shang and Mr Cai: see Inspector Spence v Shang [2012] NSWIRComm 86 and Inspector Spence v Cai [2013] NSWIRComm 5. The same details form part of the Agreed Facts in the present proceedings. My observations and findings in those two earlier judgments concerning the system of work are of equal application here. Accordingly, I adopt and apply here the following passages extracted from Inspector Spence v Cai at [15]-[19]: Austar was the project manager at the site. It used a Construction Project Safety Plan for occupational health and safety management (the Plan). The Plan identified Mr Shang as the site manager and Mr Cai as the project manager. The Plan, described as "relatively comprehensive" in the Agreed Facts, was defective in a number of respects. It referred, for example, to an "Occupational Health and Safety Co-ordinator", "2-way radios", and, a "site shed", none of which existed at the site. It also referred to the adequate provision of PPE at the site, however, Mr Markovski was not wearing a helmet, gloves or proper boots on the day of the incident. The Agreed Facts record further safety procedures at the site which were either not implemented at all, or only partially implemented. For convenience, these are set out below: Site Induction and Recording The site induction consisted of completion of a form. Not all persons on site completed these forms. Mr Markovski did not complete a site induction. ... No system was in place to record planned or actual events. Mr Shang did not utilise a daily attendance sheet, so no record of who was on site on any particular day can be ascertained. No emergency procedures were established for the site. No hazard reporting procedure was established. Risk Assessment The Project Safety Plan refers to an "Ongoing Risk Analysis". The date that this analysis was conducted by Mr Cai and Mr Shang is shown as "22 February 2004". If the analysis provided was implemented and followed, it would have addressed and controlled the numerous hazards identified after the incident. These hazards include falling from heights, lack of handrails, access and egress to the concrete area, slips, trips and falls, hazardous substances, and falling of personnel and materials through penetrations. The plan identifies Mr Cai as being responsible for the implementation of "an effective Health & Safety System", "Monthly Safety Report" and "Site Registers". There is no record of any such reports or registers being kept in relation to the site prior to the incident. Subcontractors Requirements Subcontractors provided Safe Work Method Statements (SWMS) but they were not followed nor were they used by site management, including Mr Cai and Mr Shang, to monitor the subcontractor's work. Mr Cai claims that he undertook safety walks or inspections of the site approximately once a week. There is no record of consultation or involvement of any subcontractors in safety walks or discussions. Instruction No consultation was established and there appears to be no evidence of regular or comprehensive consultation, even via Toolbox Talks. Toolbox Talk sheets were provided, but those prior to the incident have no subject matter and only one or two names as persons in attendance. There was no Toolbox Talk on the day of the incident. In the related matter of Inspector Spence v Shang [2012] NSWIRComm 86, I found (at [13]): These matters show that to a significant extent the various safety procedures formulated by a number of entities involved in, or engaged at, the site were not implemented. At best, there was some partial implementation of some of those procedures. The Prosecutor's Facts, for example, attaches a number of "safety induction" forms some of which were signed by the inductees. As the Prosecutor's Facts disclose, the risk analysis conducted by Mr Shang was never implemented at the site, but if it had been, it would have addressed and controlled numerous hazards, such as, falling of personnel and materials through penetration. This finding applies with equal force in these proceedings. The Agreed Facts disclose that the risk analysis referred to in the above extract was conducted by both Mr Cai and Mr Shang, but it was never implemented at the site. 12The section in Austar's Plan, headed "Ongoing Risk Analysis", expressly identified the risk of falling through penetrations and set out appropriate control measures to address the risk (extracted below): All penetrations to be covered and permanently secured - where possible mesh & collars to be cast in. When working in or near penetrations (greater than 1.8m) appropriate fall arrest system to be used, area to be barricaded and signed accordingly (esp Air Conditioning risers). At completion of work area to be adequately protected. SWMS to be detailed by Site Manager re: Stair Well Construction & Riser work. Sub-contractor to supply SWMS before removal of any penetration covers. 13Although not expressly stated in the Agreed Facts, it may be readily inferred from the material available that Multiplus, as the developer, manager and controller of the site, had primary responsibility for matters of site safety. It entered into various contractual arrangements with the sub-contractors at the site, including Austar. Under the contractual arrangements with Austar, Austar was to provide a management team to co-ordinate and oversee the conciliation. This, no doubt, included the formulation of the Plan. None of these matters were in contest between the parties. It was also part of the Agreed Facts that Mr Gao regularly attended the site on behalf of Multiplus and discussed safety issues with representatives of Austar, as well as Messrs Cai and Shang. 14It was conceded on behalf of Multiplus and Mr Gao that the risk to safety was reasonably foreseeable. I find, on the material available, that the risk of falling through the open unsecured penetration was reasonably foreseeable. According to Mr Djukic, there had been no cover on the penetration for about one or two weeks prior to the incident. The risk of persons falling through open, unsecured penetrations on building sites is well-known within New South Wales, a fact confirmed in the numerous sentencing judgments in this jurisdiction under the occupational health and safety legislation. 15There was also no contest between the parties that simple and readily available steps, if implemented, could have controlled or eliminated the risk, and, that the consequences of exposure to the risk were serious. In this regard, I adopt my analysis and findings on these issues in Inspector Spence v Cai (at [25] and [26]): Simple and readily available steps could have been put in place to control and eliminate the risk. These include some obvious measures identified by the prosecution in written submissions such as: Not permitting persons working at the site to work in close proximity to the open penetration. Warning persons about the penetration. Conducting a risk assessment in relation to the risks associated with working near it. Implementing site inductions to inform persons of the presence of the penetration. Securing the penetration with a dedicated cover. The consequences of exposure to the risk were also serious. Mr Markovski fell 3.7 metres through the penetration onto a concrete slab. Although the consequences of the accident do not impact on the quantum of penalty, the seriousness of the risk to which Mr Markovski was exposed is a relevant factor to be taken into account by a Court when assessing the objective seriousness of an offence. 16When these objective factors are considered in combination, it must be concluded that the offences are objectively serious. 17General deterrence must also be taken into account in the sentencing process. As earlier noted, falls through unsecured penetrations at construction sites are well-known. Any penalty to be imposed for a breach of an offence involving risks of falling through penetrations must be of a severity sufficient to deter others from failing to detect and act upon such risks. 18The Court was informed that Multiplus has not actively traded since October 2010 and that Mr Gao no longer works in the construction industry. Based on these matters, the prosecution informed the Court that it did not advance a submission that specific deterrence should play "any significant role" in the imposition of penalty. Accordingly, I do not intend to take into account the principle of specific deterrence in these proceedings. 19Neither defendant has prior convictions. Multiplus faces a maximum penalty of $550,000 and Mr Gao faces a maximum penalty of $55,000.

Subjective factors 20Neither defendant has prior convictions. They are therefore entitled to leniency normally extended to first time offenders. 21It was the prosecution's contention that the defendants' pleas of guilty were not entered at the first available opportunity, but occurred only after numerous mentions and directions hearings. It should also be noted that the pleas were entered to the original charges, that is, absent any amendments. In those circumstances, the prosecution submitted that a "lesser discount" that might otherwise have applied was justified. A figure of 22.5 per cent was proposed as an appropriate discount. On behalf of the defendants it was accepted that the pleas were not entered at the first available opportunity. In addition, the defendants agreed that the discount proposed by the prosecution was appropriate. I propose therefore to award a discount of 22.5 per cent reflecting the utilitarian value to be derived from the entering of the pleas of guilty. 22Both defendants fully co-operated with WorkCover during the course of the investigation. They also complied promptly with a number of Improvement Notices issued after the incident. 23The Agreed Facts record a number of remedial steps taken by various parties engaged to work at the site, shortly after the incident. In relation to Multiplus and Mr Gao, the following matters are agreed: Within a few days after the incident, Gordon Gao visited the site to discuss remedial work in response to the Prohibition Notice. He also conducted a meeting at the site with Mr Cai and Mr Shang to discuss safety issues, and he instructed Mr Cai to conduct an investigation into the incident. He also directed Mr Cai to work full-time at the site. 24On behalf of Mr Gao, three testimonials were tendered in order to demonstrate his good character. The testimonials, as well as the other subjective factors referred to above, will be taken into account in Mr Gao's favour in mitigation of penalty. Those subjective factors relied upon by Multiplus will also be taken into account in mitigation of the penalty to be imposed. 25During the sentence proceedings, the defendants were given leave to file any material in support of a submission that Multiplus, at least, lacked the capacity to pay a fine. It was not contended on behalf of Mr Gao that he lacked capacity to pay a fine. The prosecution was also granted leave to make an application in order to test any material provided on behalf of the defendants on the issue. No such application was made, although further written submissions were filed by the prosecution addressing the additional material filed by the defendants after the sentence proceedings concluded. 26The further material includes the following financial information relevant to both defendants: Mr Gao's individual tax returns for financial years 2010/11 and 2011/12 Mr Gao's taxable income for the year ending 30 June 2011 was $43,822 Mr Gao's taxable income for the year ending 30 June 2012 was $59,204 Extract from ASIC database showing that Mr Gao is the sole director and shareholder of Multiplus Multiplus financial report for the year ended 30 June 2010 Multiplus financial report for the year ended 30 June 2010 Statement of financial position from Mr Gao's accountant showing that Mr Gao has net assets worth $281,000 as at 6 December 2012 Multiplus currently has no assets and is not earning any income Mr Gao lives in a house purchased by his wife in about 2003. His wife has a mortgage with the Commonwealth Bank of approximately $500,000 Mr Gao and his wife jointly pay approximately $4,300 per month in mortgage repayments Mr Gao owns a block of 3 shops at 1-5 Harrow Road, Auburn. There is a mortgage of $772,000 with Westpac on these properties. Two of the shops are currently without tenants. Mr Gao pays approximately $3,500 per month in interest only repayments Mr Gao works as a salesperson and earns approximately $60,000 per annum Mr Gao is borrowing money from family and friends to meet his commitments 27It may be concluded from the material that Mr Gao's concession that he has the capacity to pay a fine was properly made. The records disclose that he has personal net assets totalling $281,000, and has been earning an income for the financial years ending 2011 and 2012. 28In relation to Multiplus, the Court agrees with the prosecution's submission that the financial information provided is insufficient to permit a proper consideration as to whether Multiplus has the capacity to pay a fine. In this regard, I adopt my observations with regard to the requirements under s 6 of the Fines Act 1996 in Inspector McGrath v Cooper [2013] NSWIRComm 14 at [58] and [59]: Under s 6 of the Fines Act, the Court is required to consider, in the exercise of its discretion, information on the financial means of a defendant, "as is reasonably and practicably available", as well as other matters which, in the Court's opinion, are relevant to the fixing of the fine. The onus is on the defendant to satisfy the Court on the balance of probabilities as to the truth of such evidence and its relevance to the fixing of penalty: McColl v John Watson Building Services Pty Ltd [2004] NSWIRComm 353; 137 IR 310 at [24]. It is significant when undertaking an assessment as to the financial means of a defendant that the Court should bear in mind that notwithstanding the requirement to take into account a defendant's financial position when determining penalty, the penalty must ultimately reflect the objective seriousness of the offence: McColl at [25]. In Ferguson v Nelmac Pty Ltd (1999) 92 IR 188, Wright J, President, said on this issue (at 209): The financial position and more particularly the means of the defendant should be taken into account in relation to the question of penalty. Otherwise it is inappropriate to consider the fact or amount of legal costs, consulting and other fees. In any event, it was not submitted that I should. I should, as submitted by counsel for the informant, consider not only the financial information included in the correspondence from the accountants, but also the defendant's asset position. Whilst I accept that the imposition of heavy fines would be a burden on the defendant and its financial resources and that consideration should be given appropriate weight on the question of penalty, it does not necessarily result in the Court not imposing a heavy penalty. The penalty imposed will reflect the consideration given to this aspect as discussed above. I have also had regard to the submissions filed by the informant in respect of the additional affidavit and issues arising from it. Further, I have considered and applied the authorities referred to therein, particularly Haynes v C I & D Manufacturing (at 457-458); R v Sgroi (1989) 40 A Crim R 197 and Rahme v The Queen (1989) 43 A Crim R 81 . Finally on this aspect, I indicate that I do not consider that the penalties imposed are beyond the means of the defendant. The approach to be taken, which I intend to adopt, is set out by Walton J, Vice-President, in WorkCover Authority (Insp Ankucic) v Lyndhurst Trading Co Pty Ltd (2000) 95 IR 462 at 476: Where the means of the defendant to pay any fine is raised, the proper course will be to assess the appropriate amount of the fine having regard to the gravity of the offence charged and then reduce the fine to take into account the defendant's means and impecuniosity: see R v Rahme (1989) 43 A Crim R 81 at 86 . 29The material relied upon in support of Multiplus on the issue is deficient in a number of respects. Multiplus did not provide its most recent bank statements or its most recent taxation return. There is no statement of its current financial position. No financial reports after the year ending 30 June 2010 were provided. The statement that Multiplus currently has no assets and is not earning income is unsupported by documentation. Given the paucity of the material, it would be inappropriate to rely on the information provided as a basis for the application of s 6 of the Fines Act 1996. 30In my view, the defendants have expressed remorse in accordance with the requirements in s 21A(3)(i) of the Crimes (Sentencing Procedure) Act 1999 (CSP Act). In his affidavit, Mr Gao stated: ... In relation to the accident suffered by Victor Markovski, I am very upset by what happened. I accept responsibility as Controller of the site for what occurred and this incident has caused me to take great care in future in ensuring that nothing like this ever happens again. I take what happened so seriously, that I undertook the Master Builder's Association courses, referred to above, to have a better understanding of how to prevent such occurrences. I do not wish to rely on any other people or organisations to assist with Control of building sites that I may be associated with as I want to take full control and ensure the safety of everyone that may work on a site with me in future. 31In addition, Mr Gao took immediate steps to address safety matters at the site.

Respective roles 32The prosecution submitted that Multiplus and Mr Gao, at the time of the incident, had "the highest degree of control over the premises in relation to the subject risk". Multiplus and Mr Gao played a more direct role in implementing and maintaining site safety standards than the other co-defendants who have been sentenced. In addition, all the co-defendants took instructions from Multiplus and Mr Gao in relation to the site, including safety matters. Accordingly, the prosecution's contention was that the Court should impose penalties which reflect that the overall culpability of the present defendants is higher than that of Austar and "approximately equal to that of the Aleksic defendants and Mr Shang". 33On behalf of the defendants, it was submitted that it was open for the Court to find that their culpability may be assessed as lower than that of Mr Shang and Mr Cai and far below the culpability of the Aleksic defendants. It was conceded on behalf of the defendants that Multiplus was the developer and financial controller and had "direct responsibility" to ensure safety at the site. It was submitted, however, that Messrs Shang and Cai, on the evidence, also had direct responsibility to ensure safety. Mr Shang, for example, was identified under Austar's Plan as having "primary responsibility" for safety matters on site. On behalf of Mr Gao, it was submitted that he was "woefully ill-equipped" to manage the project given his lack of expertise and experience, but that he should be credited with approaching another construction company (Austar) to provide project management services at the site in an endeavour to ensure that the necessary experience and expertise was available to undertake the construction. I note on this latter point concerning Austar's so called expertise and experience that it was an agreed fact that Austar was a small building company which had undertaken two small constructions at the time it was appointed by Mr Gao and had, "little experience in a major development". 34In Inspector Spence v Cai I reviewed the material available to assess the respective culpabilities of the Aleksic defendants and Mr Cai in the circumstances of the incident. I concluded (at [51]): It is difficult to distinguish between the respective culpabilities of the parties by reference to what each party actually did, or did not do, at the site in discharging their respective obligations and responsibilities. The Court agrees with the prosecution's submissions that the conduct of Aleksic and Mr Aleksic exhibits a high degree of culpability because of their direct supervision of Mr Markovski. Moreover, Aleksic was aware that Mr Markovski was engaged as a vocational rehabilitation person who had been on long-term unemployment benefits and had limited experience on construction sites. What, in the Court's view, elevates Aleksic and Mr Aleksic's role to a higher degree of culpability than that of Mr Cai is that Mr Aleksic knew that the penetration was unsecured and yet failed to take adequate steps to address what was an obvious hazard, apart from placing a sheet of compressed fibro over the penetration with the assistance of Mr Djukic, a few days before the accident. On any view of it, this was a very inadequate attempt to address the problem. 35The sentence proceedings in Inspector Spence v Shang and Inspector Spence v Cai relied on substantially similar, if not, identical material to the material relied upon in the present proceedings. According to the prosecution, when all of that material is taken into consideration, what emerges is that Multiplus and Mr Gao were not passive, but active, controllers of the site, that is, they controlled the payments to contractors and gave relevant instructions. The prosecution's contention was that based on the material the responsibility for safety at the site fell equally on Mr Gao (and Multiplus), Mr Cai and Mr Shang. 36During the course of the sentence proceedings, the following exchange took place between the Bench and the defendants' counsel: HER HONOUR: It is certainly arguable, I would have thought, that if you have very limited or an entity has very limited experience in development work and construction sites then in a sense that imposes upon him a very high duty to ensure that whoever is engaged to address and look after those matters, is appropriately qualified. Not only that, the entity that engaged that person plays a continuing role in terms of ensuring that matters of safety are properly implemented at the site. WILLIAMS: There's no doubt he failed in those respects your Honour and I don't cavil with that. 37Mr Gao accepted that his lack of experience did not excuse the offences. He acknowledged that he had an obligation to ensure the safety of the site, but failed to discharge that obligation. Mr Gao did take some steps to address safety matters in an attempt to ensure that the construction could proceed safely. His belief, without further enquiry, that those persons whom he engaged were appropriately qualified to ensure that proper safety measures were in place at the site does not constitute an adequate or satisfactory response to his acknowledged lack of experience and expertise. Given, however, that Mr Gao (and Multiplus) did take steps to address issues of safety at the site and notwithstanding that Multiplus was the developer and a controller of the site, I am inclined to the view that the culpabilities of Multiplus and Mr Gao may be characterised as similar to that of Mr Shang and Mr Cai. Both those latter co-defendants had, by virtue of their roles at the site, direct responsibility for matters of safety. According to the Agreed Facts, Mr Shang and Mr Cai "held out" to Austar that they had the qualifications and experience to provide the management services required at the site. Mr Shang, as the site manager, had direct responsibility for ensuring that health and safety standards at the site were maintained and he had daily operational involvement in the activities undertaken at the site: Inspector Spence v Shang at [14] and [15]. Under Austar's Plan, Mr Cai's responsibilities included the monitoring and supervision of the construction and the co-ordination of sub-contractors engaged at the site. Mr Shang reported to Mr Cai. Under the Plan, Mr Cai, as the project manager, was expressly required to maintain an understanding of the obligations under the Act and under the Occupational Health and Safety Regulation 2001: Inspector Spence v Cai at [3] and [21]. 38I find that the respective culpabilities of Multiplus and Mr Gao are equal on the basis that Mr Gao was the sole director and sole shareholder of Multiplus at the time of the offences. 39It was submitted on behalf of the defendants that the Court could take into account in their favour when imposing penalty that the penalty to be imposed on Multiplus will be borne by Mr Gao as its sole director and shareholder, which will operate as a "deterrent effect" on Mr Gao. No authorities were placed before the Court in support of the submission. The prosecution submitted that in the absence of sufficient documentary material showing that Multiplus currently has no assets or no income, the Court does not know whether Mr Gao will bear the burden of any penalty imposed on Multiplus. Nor does the Court know, on the evidence and material placed before it, whether the financial situation of Multiplus is such that it has limited capacity to pay a penalty. 40In WorkCover Authority (Inspector Young) v Wilson (t/as Wilson's Tree Service) (2005) 145 IR 187, a Full Bench held that Boland J, President, in the Court below, did not fall into error in ordering the defendant to pay 20 per cent of the prosecution's costs of the proceedings. In expanding upon the finding that Boland J did not fall into error, the Full Bench said (at [133]): His Honour, in our view, did not fall into error on the issue of costs. In accordance with established principle, the court must make its determination in accordance with s 6 of the Fines Act. The court must also set the appropriate penalty for the offence giving proper weight to the objective seriousness of the offence. The court must then determine the appropriate costs order. Such a consideration, in our view, may also take into account the financial situation of the defendant. In so ordering the court must then determine that the total fine and costs order be an "acceptable total" or as otherwise said "just and reasonable". If the total penalty and costs order is viewed by the court to be excessive the court must make an appropriate adjustment to the costs order. The total must not be disproportionate to the offence. Boland J took into consideration this latter step in his determination as to costs when he stated at [51]: The prosecutor sought costs and a moiety of the fine. The defendant accepted that the usual order as to costs was that the defendant be required to pay the prosecutor's costs in an amount as agreed or assessed. However, it was submitted, costs were ultimately in the Court's discretion and the Court must exercise its discretion as to costs in accordance with what is just and reasonable. 41I have found in these reasons for sentence that Mr Gao has the financial capacity to pay a fine. No submissions were forthcoming that Mr Gao otherwise lacks the financial capacity to meet any costs order imposed upon him. In relation to Multiplus, I have found that the material relied upon by it in support of the submission to the effect that it lacked the capacity to pay a fine was insufficient to facilitate any proper assessment of the issue. It follows that the same conclusion must apply to an assessment as to the capacity of Multiplus to meet a costs order. Accordingly, based on the paucity of material, the Court is unable to form a considered view as to whether Mr Gao will bear the burden of any penalty imposed on Multiplus, that is, in the sense advocated on behalf of Mr Gao that any costs order made against Multiplus will operate as a "deterrent effect" on Mr Gao. No other matters in support of the submission were advanced on behalf of the defendants which might have otherwise allowed the Court to consider the application of s 6 of the Fines Act 1996 in the context of an order for costs, in the exercise of its discretion.

Orders 42In IRC 1393 of 2011, the Court makes the following orders: (1) Multiplus Group Pty Ltd (ACN 132 085 824) is convicted of the offence and fined $110,000 with a moiety to the prosecutor. (2) Multiplus is to pay the reasonable costs of the prosecutor as agreed or in the absence of agreement as assessed. 43In IRC 1394 of 2011, the Court makes the following orders: (1) Gao Geng He (Mr Gao) is convicted of the offence and fined $11,000 with a moiety to the prosecutor. (2) Mr Gao 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: 16 August 2013