Inspector Swadling v Empire Talkies Pty Ltd

JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J

Matter Number IRC 7303 of 2002 INSPECTOR STEPHEN SWADLING v EMPIRE TALKIES PTY LTD Prosecution under s 16(1) of the Occupational Health and Safety Act 1983 by operation of Schedule 3 of the Occupational Health and Safety Act 2000

1 The defendant Empire Talkies Pty Ltd has pleaded guilty to a charge brought against it by the prosecutor Inspector Stephen Swadling of the WorkCover Authority of New South Wales alleging a breach of s 16(1) of the Occupational Health and Safety Act 1983 ("the Act"). This judgment is concerned solely with the question of penalty.

2 An agreed statement of facts was tendered into evidence which contains within it details and particulars of the charge brought against the defendant. That document was in the following terms: "1. At all material times the Prosecutor was an Inspector appointed under Division 1 of Part 5 and empowered by Section 106 of the Occupational Health and Safety Act 2000 to institute proceedings in this matter (or, in the alternative, was an Inspector appointed under Division 4 of Part 3 and empowered by section 48 of the Occupational Health and Safety Act 1983 to institute proceedings in this matter).

2. The Prosecutor has conducted investigations into the circumstances surrounding an accident which occurred on 3 January 2001 at Her Majesty's Theatre at 107 Quay Street, Haymarket in the State of New South Wales (premises) and from those investigations he is able to state the following either from his own knowledge or upon information and belief. 3. Empire Talkies Limited (ACN 000 021 965) (Defendant) is a corporation with its registered office situated at Level 5, 285 George street, Sydney in the State of New South Wales. 4. At all material times the Defendant: 4.1 operated a live theatre at the premises incorporating a system of setting and moving theatre props by way of a batten/counterweight flying system (Flying Prop System); and 4.2 employed Peter Anderson as Head Mechanist at the premises. 5. On 3 January 2001 Mr Richards, an employee of The Sydney Festival Limited was carrying out his duties as a casual mechanist at the premises. Mr Richards went to the Fly Gallery level of the stage area of the premises located approximately 9.3m above the main stage to load weights into counterweight cradle 55 for a prop. Mr Richards was heard to call, 'Look out!'. Mr Anderson who was at the stage level holding the ropelines of counterweight cradle 55, moved clear of the stage, letting the ropes go. Counterweight cradle 55 ascended, coming to a stop above the gallery area which was 9.6m above the Fly Gallery. Ropeline 56 also moved, the scene bar descended and the counterweight cradle ascended. There were loud crashing sounds. Mr Richards was found lying on his right side on the Fly Gallery level, bleeding heavily from a head wound which caused his death. 6. A report was prepared on behalf of Unisearch Limited by Dr Alexander Samson concerning Mr Richards' accident on 3 January 2001 (report). 7. On 5 February 2001 the Prosecutor attended the premises and met Mr Jim Crowley, General Manager of the Second Defendant, and Mr Anderson at the premises. Mr Anderson accompanied the Prosecutor to the scene of the accident. He observed as follows: 7.1 A sign on the front of the premises stating 'Her Majesty's Theatre'. 7.2 An auditorium area of the theatre approximately 13.7m deep and 22.8m wide filled with rows of seating. 7.3 At the southwestern end of the auditorium there was a stage approximately 12.9m deep, 28.9m wide and 21 m high raised approximately 1 m above the auditorium. 7.4 In the western wall of the stage was located a flying system consisting of 83 ropelines to control the movement and setting of scenery, curtains and theatre props by way of a batten/counterweight flying system (Flying Prop System). 7.5 The Flying Prop System comprised a metal counterweight cradle with a rectangular metal section at the top and bottom approximately 75mm deep and 50mm wide with 20mm round bars welded into grooves at both ends of the metal sections. The metal bars were spaced at 295mm centres. 7.6 Attached to the top of the counterweight cradle were 3 flexible steel wire cables which run up and over sheaves and down to battens and a sisal rope (also known as a manila rope) running up over sheaves and then down to the stage level, under sheaves and then back up to the bottom of the counterweight cradle. The sisal rope was pulled to move the batten up and down. 7.7 There was a wooden kick rail approximately 200mm high at stage level. There was damage to this kick rail adjacent to line No. 55. 7.8 Approximately 9.3m above the western side of the stage and accessed by a stairway was an area known as the Fly Gallery. The Fly Gallery had a solid wooden floor and was approximately 12.9m deep and 5m wide. On both sides of the Fly Gallery were metal handrails approximately 910mm high. These handrails consisted of a 130mm toe board located above the floor, a midrail located 460mm above the toe board and a top rail located 320mm above the midrail. 7.9 On the Fly Gallery there were a number of steel counterweights of various depths stacked in rows. The larger of the 501b or 561b counterweights were approximately 340mm long, 100mm wide and 100mm deep. The width and length of each counterweight was the same but the depth of the counterweight varied according to the mass of the counterweight. In each end of the counterweight was a groove approximately 22mm wide and 25mm deep. Each counterweight had been designed to sit in the counterweight cradle stacked on top of each other. 7.10 Located approximately 9.6m above the Fly Gallery and accessed by a step-type ladder was an area known as the Loading Gallery. The Loading Gallery had a metal floor and was approximately 12.9m deep and 1m wide. On both sides of the Loading Gallery were metal handrails approximately 910mm high. There was a 130mm toe board located above the floor, a midrail located 460mm above the toe board and a top rail located at 320mm above midrail. 7.11 Located approximately 2.4m above the Loading Gallery and accessed by a step-type ladder was an area known as The Grid. The Grid had a metal channel floor and was approximately 12.9m deep and 28.9m wide. It was protected on all sides by the brick walls of the building. 7.12 There was an area on the Fly Gallery adjacent to ropeline No. 55 which was the ropeline being weighted at the time of the accident. The front sisal rope was located 200mm from the edge of the handrail and the rear sisal rope was located 390mm from the handrail. 7.13 There was a clear walkway of approximately 700mm between the handrail adjacent to the Flying System and the stacked counterweights. There were 2 rows of counterweights stacked 3 high for the length of the Fly Gallery. The handrails, Flying Prop System ropes and counterweight cradles all appeared in good condition. 8. As a result of the Prosecutor's observations and investigations and the findings made by Dr Samson in the report: 8.1 Mr Richards was working as a casual mechanist at the premise at the time of the accident; 8.2 Mr Richards was attempting to load counterweights into a weight cradle on the Fly Gallery at the time; 8.3 Mr Richards was working alone at the time; 8.4 Other persons heard Mr Richards yell, 'Look out!' as a warning to those below him on the stage level; 8.5 Mr Anderson, who was holding the twisted ropes, let go of the ropes and he and other persons working on the stage cleared the stage immediately; 8.6 this left the Flying Prop System controlling ropes unattended; 8.7 2 unbalanced controlling ropelines then started to move; 8.8 a loaded batten on the heavier side descended back to the stage under gravity and its counterweight cradle attached to the other side of the rope ascended to the roof of the theatre as the weight cradle was lighter; 8.9 when the cradle stopped at its sheaves, some counterweights were ejected from the weight cradle; 8.10 Mr Richards was struck on the head by something which was most likely a counterweight failing out of the weight cradle and suffered fatal injuries as a result; 8.11 there was no documented procedure for securing the cradle whilst weights were being added; 8.12 the manner in which the Flying Prop System was operated on the date of the accident involved hazards for a person in Mr Richards' situation; 8.13 the risk of injury to Mr Richards could have been minimised or prevented if the Defendant had taken some or all of the precautions identified by Dr Samson in the report. 9. It is alleged that on 3 January 2001 the Defendant breached section 16(1) of the Occupational Health and Safety Act 1983, in that it failed to ensure that persons not in its employment, in particular, Geoffrey Keith Richards, were not exposed to risks to their health and safety arising from the conduct of its undertaking while they were at its place of work at the premises. 10 Particulars of the Defendant's breach are that it: 10.1 operated a live theatre at the premises incorporating a system for the movement and setting of scenery, curtains and theatre props by way of a batten/counterweight flying system (Flying Prop System) and failed to ensure a safe system of work for the operation of the Flying Prop System; 10.2 failed to ensure that there were adequate safety measures adopted for the movement and setting of the Flying Prop System including, but not limited to: 10.2.1 mechanical rope locks; 10.2.2 counterweight restraining security device attached to cradle; 10.3 failed to ensure the implementation of adequate periodic risk assessments in relation the operation of the Flying Prop System; 10.4 failed to ensure that persons not in its employment performing work involving the operation of the Flying Prop System were wearing appropriate personal protective equipment namely hard hats. 11. The prosecutor also alleges there was a failure to ensure a physical impact barrier to prevent contact of the cradle and its counterweights with the sheaves at the grid level of the premises."

3 During the course of the hearing the prosecutor abandoned the allegation referred to in para 11 of the agreed statement of facts, and it is not necessary to consider this matter.

4 The report of Dr Samson referred to in para 6 of the agreed statement of facts was tendered into evidence and Dr Samson gave evidence. In addition, the prosecution tendered a number of photographs and other material reference to some of which will be made later in these reasons for judgment.

5 For the defendant there was tendered into evidence affidavits sworn by Peter John Anderson, Ian William Byrnes and James Gordon Crowley. Messrs Anderson and Crowley gave evidence.

6 Mr Anderson in his evidence explained in greater detail what was happening at the time that the incident occurred which caused the death of Mr Richards. A piece of scenery had previously been attached to a batten and the appropriate weight of the counter balance had been adjusted. Whilst the production was being set up the director decided to add a curtain which added to the weight of material being held by the batten and required an additional weight to be added to the counter balance. At the time Mr Anderson and Mr Richards were standing on the stage level. Mr Richards went up to the higher fly floor level to add a weight to the counter balance cradle. Whilst Mr Richards was doing this Mr Anderson twisted the hauling ropes together to stop the batten moving. He said "I became aware that he was working on the counterweight cradle because I could feel vibration in the ropes I was holding. I could not see him because he was standing on the fly floor directly above me. I then heard a shout "look out". I let go of the ropes immediately and jumped clear. As I did this I saw, and heard the noise of a counterweight falling to the floor at the foot of the fly control line. There were a number of loud impact noises. The loaded batten was heavier than its counterweight cradle so it dropped to the stage floor." Subsequently Mr Anderson and others climbed to the fly floor and found Mr Richards lying there with head injuries.

7 In essence, the incident occurred because Mr Anderson let go of the ropes in order to escape from what he perceived might be an area of danger.

8 It was the evidence of Dr Samson that there were a number of devices available which would have secured the ropes during the procedure by which the counterweights were adjusted. There is a mechanical rope lock which is affixed to the wall of the stage area. This mechanism was not, however, available at the theatre. There was also a hand rope lock which was described by Mr Anderson as being made of 10mm steel rod bent into a shape that enabled a person to clamp the ascending rope to its descending counterpart. This "created a zigzag in the ropes with sufficient friction between the ropes to secure the counterweight cradle and loaded batten in a fixed position." Mr Anderson conceded that hand rope locks could be used at stage level and there were a number of these available at the theatre. A lock of this kind could have been activated within about ten seconds. If this type of lock had been used then it would have held the two ropes in place whilst the adjustment was being carried out. This would have enabled Mr Anderson to leave the stage area quickly so as to avoid being injured himself and avoid any risk of injury to Mr Richards of the kind which caused his death. This is the essence of the breach of the Act by the defendant which has given rise to these proceedings.

9 Mr Anderson gave evidence that he was in charge of this aspect of the defendant's operations and had been employed as its head mechanist since September 1983 until the theatre closed in 2001. His evidence indicated that he had taken steps to introduce safety features to the operation of mechanical scenery movements at the theatre and that he had ensured that persons employed by the defendant for each of the shows staged at the theatre were competent.

10 Mr Anderson had eschewed the use of mechanical rope locks because he had seen one fail whilst working at the Alexander Theatre at Monash University in 1970 and 1971. This had occurred on one occasion only but had caused him to have no confidence in devices of this kind, and had caused him to refrain from making a recommendation to management for the installation of these devices. I conclude on the basis of the evidence given in the proceedings and concessions made by Mr Anderson in cross-examination that his one experience on that occasion could not justify the failure to have inserted those devices. This is, however, an ancillary issue in that Mr Anderson conceded that the use of the hand rope locks was justifiable, feasible and appropriate.

11 The particulars of the charge also included a failure to implement an adequate periodic risk assessment in relation to the system used by the defendant. There is evidence that Mr Anderson gave some thought to safety matters on a number of occasions and introduced certain safety mechanisms, but there is no evidence that the defendant employed a structured systematic approach to safety matters. It is obvious that the failure to implement such a process may detract from the adoption of the vigilance and foresight necessary to comply with the provisions of the Act.

12 Finally, the particulars of the breach alleged that the defendant had failed to provide hard hats for use by back stage employees engaged in the setting up and operation of the Flying Prop System. It was Mr Anderson's evidence that he had never seen anyone in the theatrical industry engaged in such processes wearing hard hats. However the defendant had provided approximately twelve hard hats for the use of persons working at the theatre but did not require that they be used. Mr Anderson offered the opinion that "if there is a risk of injury sufficient to require that back stage employees wear hard hats, performers are equally at risk and should also be required to wear them." A comment of this kind is, to say the least, facile. It is obvious that actors and entertainers are unable to wear hard hats on stage, and in these circumstances the obligation on the theatre proprietor or occupier is to ensure that safe systems are utilised so as to eliminate any risk to injury to persons performing on stage. The situation is somewhat different to persons who are employed back stage, particularly in setting up and dismantling sets and in organising and operating Flying Prop Systems. The fact that persons in this industry do not habitually wear hard hats does not provide an answer to the allegation of breach made in the proceedings. It is not until comparatively recent times that the use of hard hats has been mandated in the building industry in New South Wales. The answer to the opinion expressed by Mr Anderson is that if the use of hard hats is necessary in order to protect employees from a risk of injury, then they ought to be provided and required to be worn. There is no evidence whether Mr Richards would have survived the accident which gave rise to these proceedings if he had been wearing a hard hat. However, there can be no doubt that the risk of the consequences of the incident would have been lessened if he had been wearing a hard hat at the time.

13 It is now necessary to determine the appropriate penalty. The maximum penalty is $550,000. Viewed objectively there can be no doubt that this breach of the Act by the defendant was a serious one. The defendant did not exercise the vigilance and foresight necessary to ensure compliance with the heavy obligations imposed by the Act, leading to the death of Mr Richards.

14 In fixing penalty there is a need to take into account the general deterrence that an appropriate fine will provide, particularly within the theatrical industry as well as deterrence specific to this defendant. In this regard I note that the defendant no longer operates Her Majesty's Theatre, which has been sold and its business operations appear to centre around the operation of a car park.

15 There are a number of matters which the Court is required to take into account by way of mitigation of penalty. The defendant has no prior convictions for any breach of the Act and, presumably, associated legislation. The company was formed in the 1930's and has owned and operated initially a cinema and subsequently a live theatre on premises in Quay Street Haymarket almost continuously since that time. There is evidence that the company had a commitment to ensure compliance with the requirements of a number of authorities exercising jurisdiction over the theatre including Sydney City Council, fire brigade and licensing police. There is also evidence that the company ensured that all its employees were adequately trained and that they were competent to perform the tasks for which they were employed.

16 In addition, the company has demonstrated that during the period that it operated the theatre it regularly assisted a number of charities and actively facilitated student training and work experience at the theatre. It must be characterised as "a good corporate citizen".

17 The company cooperated fully with the WorkCover Authority in connection with its investigations and in ensuring compliance with certain requirements imposed by that Authority following the accident. It also ensured that other persons engaged in the production at the time were given counselling to assist them in dealing with the tragic consequences of the accident. Finally, the defendant expressed contrition for what had occurred.

18 There was, however, one area of contention. The defendant submitted that firstly by reason of the provisions of s 6 of the Fines Act 1996, the Court was required to have regard to the means of the defendant. Section 6 of that Act is in the following terms: "In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider: (a) such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and (b) such other matters as, in the opinion of the court, are relevant to the fixing of that amount."

19 There was tendered into evidence certain information concerning the financial affairs of the defendant. The most recent described the financial position of the defendant as at 31 March 2003. As at that date the company was owed almost $4.9 million by way of loans which appeared to have been made to an interrelated corporation and to a corporation controlled by two of its shareholders and directors. It was said in evidence that these represented loans made over a long period of time. However the defendant also owned property, plant and equipment valued at approximately $8.7 million and had investments by way of moneys on bank deposit of $1.157,000 million. It had total liabilities of $6.4. million.

20 Given that the defendant has an excess of assets over liabilities of a substantial amount including a substantial amount invested on deposit, I am not prepared to apply s 6 of the Fines Act in a manner which would have the impact of lessening any penalty which would otherwise be properly imposed.

21 The other area of controversy arose as a result of a submission made on behalf of the defendant that the financial burden of any penalty would be borne substantially by Mr Byrnes and, presumably, his wife. In essence the defendant was owned as to two thirds by Mr Byrnes and his wife and as to the remaining one third by a third party. In support of this submission the defendant relied on a number of decided cases.

22 A reference to this matter was made, inter alia, by the Full Court of the Industrial Court of New South Wales in Haynes v C I & D Manufacturing Pty Ltd (1995) 60 IR 455. At 457 the Court (Bauer, Hungerford and Cullen JJ) said: "In a number of cases decided under the OHS Act where the corporate structure of the defendant has been shown to be little more than the means of distribution of earnings arising from personal exertion, or where, as a matter of corporate structure, the burden of any fine levied would fall on one person or one family group ownership, the Court has seen it appropriate to impose a fine substantially less than if the corporation was functioning as a company with assets of a substantial kind. (See Gordon v MIJO (NSW) Pty Ltd; Ford v Warrah Ridge Pastoral Company Pty Ltd (unreported, Bauer J, 23 September 1994, Matter No CT1109 of 1993); Robins v C T Plumbing Pty Ltd (unreported, Fisher P, 16 December 1991, Matter No 522 of 1991) and Mauger v Kremar Engineering Pty Ltd (1993) 47 IR 359). We consider that as precedent has developed there are two strands to the consideration of fines under the OHS Act. The first comes into play when the defendant is an individual and there is no corporate structure. Where the defendant is a company with the structure as above considered, the principles and approach adopted in the cases above cited are to be applied."

23 It will be noted that the emphasis from the material extracted above is directed to the burden of any fine levied. Further insight as to the approach to which the Full Court was referring in Haynes may be gathered from the judgment of Fisher CJ sitting as a single judge in that Court in Mauger v Kremar Engineering Pty Ltd, cited above. At 359 his Honour said: "The Commission has on several occasions held that it was appropriate to look at the nature of the Company to ascertain whether in fact it was truly a corporation within the meaning of that description in the Occupational Health and Safety Act 1983 or whether its true nature, even though there was some incorporation was that of an individually run business incorporated purely for the convenience of book-keeping and perhaps making appropriate tax arrangements. As was discussed in Inspector Robins v C T Plumbing Pty Ltd .….an examination of the circumstances of the Company's operations demonstrates that effectively and as a commonsense matter the penalty will be met by an individual whose 'one-man' business may qualify as a corporation merely because it has been convenient to employ a shelf company for the purposes of business and taxation arrangements. In such cases I consider it appropriate that the penalty should be directed behind what has been called the corporate veil and measured against the reality, namely the scale of liability the Act provides for individuals."

24 This approach was applied more recently by Schmidt J in this Court in WorkCover Authority of New South Wales v Robert Shone Constructions Pty Ltd (2002) 118 IR 267. After referring to s 6 of the Fines Act and the fact that it was "proper to take account of the nature and size of this defendant's operations" and that account be taken of the defendant's means to pay any fine imposed her Honour said: "The defendant is a small family company operated by the directors, Mr Shone and his wife, resulting in fairly modest returns and assets, in an environment which I accept as being detrimentally affected by the current state of the building industry. The problems with the availability of insurance cover has prevented the defendant carrying on building work for some months, a situation which it is anticipated will continue for some further time. I also accept that in the circumstances it is appropriate in this case to have regard to the fact that any fine imposed on the defendant would essentially be borne by the proprietors and that this is a matter which would justify a fine substantially less than would otherwise be imposed. This flows from the judgment of the Full Court in Haynes …. where a number of earlier authorities were followed." (at 272-3). In imposing a fine her Honour said that the amount was "less than that which would be imposed, but for the defendant's circumstances. It is, nevertheless, a substantial fine, reflective of the nature and quality of the offence to which the plea was entered." (at 273).

25 I should add for completeness that in Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 Wright J President of this Court made reference to submissions made by counsel with respect to the size of the defendant company and the fact that it was (presumably) owned by a husband and wife. As I read his Honour's judgment attention is given to the means of the defendant, but not to the fact that the defendant is the manifestation of the trading activities of a husband and wife.

26 It was submitted on behalf of the defendant that the approach exemplified by Haynes, Shone Constructions and the authorities referred to in Haynes should be applied to the circumstances of the defendant in these proceedings. In my opinion this submission should be rejected. The approach exemplified in Haynes is clearly directed to circumstances where a person, or two persons in a close relationship utilise a corporation in connection with a business operated personally by at least one of them, the earnings of which are derived substantially or wholly from the personal exertion of at least one of them. Accordingly this approach would not apply to a corporation where a number of persons were employed or to a corporation which was other than a "small business" operation. Accordingly, I am not prepared to characterise the defendant in these proceedings in a manner which would allow an assessment of penalty to be undertaken as if the defendant was a natural person or in a manner which would result in a fine being imposed of a lesser amount than would otherwise apply. These are considerations which are discrete from any consideration concerning the application of s 6 of the Fines Act which, for reasons that I have earlier advanced, has no application to these proceedings.

27 Having regard to all of the matters to which I have referred I am of the opinion that an appropriate penalty for this offence is $65,000. The defendant is entitled to a discount by reason of the fact that it entered a plea of guilty at the first available opportunity and for the general utilitarian benefit of contrition and remorse. Accordingly that fine should be subject to a discount of thirty percent resulting in a net penalty of $45,500.

28 The parties agreed that a moiety should be ordered in favour of the WorkCover Authority of New South Wales and that the defendant should pay the costs of the prosecutor.

29 I make the following orders: 1. The defendant is found guilty of the charge and is convicted accordingly. 2. The defendant is to pay a penalty of $45,500 with a moiety to the WorkCover Authority of New South Wales. 3. The defendant is to pay the costs of the prosecutor as agreed or in default of agreement as assessed by the Court. __________________________

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