Inspector Trotter v BBC Hardware Limited and Bunnings Group Limited

Industrial Relations Commission (NSW)|2008-06-25|Before: Marks J

CITATION: Inspector Trotter v BBC Hardware Limited and Bunnings Group Limited [2008] NSWIRComm 232

PROSECUTOR WorkCover Authority of New South Wales PARTIES: DEFENDANTS BBC Hardware Limited Bunnings Group Limited

CATCHWORDS: Employee severely injured at work - Occupational Health and Safety prosecution - two companies prosecuted - both companies pleaded guilty to charges - penalty - failure to ensure health, safety and welfare of employees - failure to provide information, instruction and training - failure to properly supervise - serious offences - deterrent effect of penalty on the employing community - deterrent effect on particular defendant - one defendant company no longer trading in NSW - factors that will reduce the amount of penalty - guilty plea at earliest appropriate opportunity - expression of remorse and contrition - actively assisted injured employee in rehabilitation and recovery - proactive steps taken to remedy deficiencies in OH&S systems - defendants are recognised as good corporate citizens - each defendant has acceptable safety record - integration of two defendant companies - one ultimate owner of both companies - commonality in circumstances of culpability - impact of monetary penalties will be borne by same persons - each defendant found guilty - penalties reduced to reflect burden on common shareholders.

LEGISLATION CITED: Occupational Health and Safety Act 2000 s8

Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [1999] FCA 1175 Inspector Bestre v Jontari Pty Ltd [2007] NSWIRComm 190 Inspector Green v Big River Timbers Pty Ltd and anor [2006] NSWIRComm 279 Inspector Green v Metropolitan Administrative Services and anor [2005] NSWIRComm 12 Inspector Sharpin v A Team Concrete (Aust) Pty Ltd [2004] NSWIRComm 182 CASES CITED: JT and LC Tippett Pty Ltd and RD and LF Tippett Pty Ltd v WorkCover Authority of New South Wales [2008] NSWIRComm 177 Morrison v Clarence Coal Pty Ltd and Centennial Coal Company [2007] NSWIRComm 270 Pearce v The Queen (1998) 194 CLR 610 Trade Practices Commission v Cue Design Pty Ltd (1996) 85 Crim R 500 WorkCover Authority of NSW v CI & D Manufacturing Pty Ltd [1995] NSWIRComm 288 WorkCover Authority of New South Wales (Inspector Ankucic) v McDonalds Australia Ltd (2000) 95 IR 383

HEARING DATES: 24 & 25 June 2008, 18 November 2008 (written submissions), 20 November 2008 (further oral submissions)

PROSECUTOR Mr D O'Neil of counsel Solicitor Ms F Miller WorkCover Authority of New South Wales LEGAL REPRESENTATIVES: DEFENDANTS Mr M Cahill of counsel Solicitor Mr A Saunders Lander & Rogers

Inspector Trotter v BBC Hardware Limited and Bunnings Group Limited

Prosecution pursuant to s 8(1) and (2) of the Occupational Health and Safety Act 2000

1 On 10 December 2005, Mr Bruce Henry Miller was working at the Bunnings Hardware shop at Tuggerah and was dealing with a faulty and leaking 9 kilogram LP gas cylinder. He started to release the gas from the cylinder into the atmosphere so that it could be emptied. While he was doing this, there was an explosion and he was caught in the middle of a fireball and badly burned. 2 Obviously, the fire and explosion was caused when the LP gas ignited. No-one knows the source of the ignition but ignition sources can include hot surfaces, friction, exhaust gases from motor vehicles or plant powered by internal combustion engines, high power radio frequency transmitters, smoking, static electricity and electrical sparks or high temperature from the use of electrical equipment. As the LP gas is released from the container, it falls to ground level because it is heavier than air and moves because it is an expanding cloud of flammable vapour. Tragically, the accident could have been avoided if instead of releasing the LP gas into the atmosphere Mr Miller had stored the defective cylinder in a secure, well-ventilated area away from sources of ignition and arranged for it to be picked up by the supplier. Alternatively, if he had to release the gas he should have made sure that he did so in a large open space to allow the vapour to mix and disperse and away from any possible source of ignition. 3 Two companies within the Bunnings group of companies have been prosecuted by the WorkCover Authority of New South Wales for breaches of the Occupational Health and Safety Act 2000 ("the Act"). They each face a maximum penalty of $825,000. Each has pleaded guilty to the offence charged and this judgment deals only with penalty. The charges

4 The charges are constituted by amended applications for order filed in Court on 24 June 2008. The defendant, BBC Hardware Limited ("BBC Hardware"), is charged with a breach of s 8(1) of the Act in that it failed to ensure the health, safety and welfare at work of its employees, and in particular Bruce Henry Miller, on the date and at the store to which I have earlier referred. There are three particulars alleged being: "a) failed to provide and maintain a safe system of work for handling a LP gas leak from a consumer LP gas cylinder; b) failed to provide workers with appropriate information, instruction and training for handling a LP gas leak from a consumer LP gas cylinder; c) failed to properly supervise employees in relation to the task of handling a LP gas leak from a consumer LP gas cylinder." 5 The defendant, Bunnings Group Limited ("Bunnings"), is charged with, being an employer, that it failed to ensure that people other than its employees and in particular Bruce Henry Miller were not exposed to risks to health or safety from the conduct of its undertaking whilst they were at the defendant's place of work in breach of s 8(2) of the Act. The same three particulars are levelled as against that defendant. 6 In summary, the particulars of each of the charges go to the provision and maintenance of a safe system of work for handling an LP gas leak from a consumer LP gas cylinder, the failure to provide information, instruction and training and a failure to properly supervise. 7 Each of the defendants having pleaded guilty to the charges, each is taken to have admitted each of the three failures particularised. The evidence in the proceedings.

8 There was tendered into evidence an agreed statement of facts with a large number of annexures, some of which I shall refer to. In addition, affidavit and oral evidence was given on behalf of each of the defendants by Benjamin Charles Taylor, Christopher Wilks and an affidavit of Domenico Antenucci tendered. 9 The statement of agreed facts was as follows: "1. At all material times the Prosecutor was an Inspector duly appointed under Division 1 of Part 5 of the Occupational Health and Safety Act 2000 and empowered under Section 106 of the said Act to institute proceedings in the within matter. 2. At all material times BBC Hardware Ltd [ACN 000 003 378] was a corporation whose registered office is situated at Wesfarmers House, Level 11, 40 The Esplanade, Perth, in the State of Western Australia. 3. At all material times Bunnings Group Ltd [ACN 008 672 179] was a corporation whose registered office is situated at Wesfarmers House, Level 11, 40 The Esplanade, Perth, in the State of Western Australia. 4. At all material times BBC Hardware Limited ("BBC") and Bunnings Group Limited ("Bunnings") operated a Bunnings hardware shop located at The Homemakers Supa Centa, Shop 7148, Corner of Bryant Drive and Wyong Road, Tuggerah, in the State of New South Wales ("the premises"). 5. At all material times BBC was an employer at the premises and employed Bruce Miller as a gate keeper. Mr Miller had been an employee of BBC, working at two locations that trade under the brand 'Bunnings', since October 2003. 6. At all material times Bunnings was an employer at the premises. Bunnings employed the management staff at the premises. 7. Wesfarmers Limited (ABN: 28 008 984 049) is the Ultimate Holding Company for both BBC and Bunnings. The entity that is now Bunnings Group Limited commenced as a public company in June 1948. The name BBC Hardware Limited commenced in June 1994, and the ASIC records disclose that the company was incorporated on 27 November 1906. Wesfarmers Limited acquired what is now Bunnings Group Limited in 1994, and then acquired BBC Hardware Limited during 2001. 8. The assets, roles, responsibilities and employees at the Tuggerah premises have been divided between BBC and Bunnings since 2001 and the two defendants operated the premises jointly at the time of the incident. 9. On 10 December 2005 Mr Miller commenced work at 8am. He was undertaking his usual employment as a gate keeper. This role involved checking that dockets match goods, checking vehicles for goods that customers have not paid for, filling LP Gas cylinders by decanting and other duties as required. Mr Miller had undertaken these duties at the premises 5 days per week, for approximately 10 months prior to the incident. 10. Several hours after starting work, Mr Miller, in the course of his normal duties, dealt with an LP Gas cylinder that had been given to him the previous day by a co worker, Michael Ferguson. Mr Ferguson had been instructed by Ms Pescud, the store's Claims Administrator, to remove the 9kg LP cylinder from the dock area of the store to the yard area because the 9kg LP gas cylinder was faulty and leaking. The procedure in place at the Tuggerah premises was for leaking or faulty gas bottles to be given to the gatekeeper. On this occasion and on two previous occasions Mr Miller dealt with the faulty bottles given to him by venting the gas from the bottle into the atmosphere without utilising a water spray to disperse the gas. 11. Mr Miller commenced to release the gas from the cylinder into the atmosphere, with the intention of emptying it's contents. Mr Miller undertook this task in an area in the vicinity of the gate keepers wooden shed. There was a concrete wall enclosing three sides of the area. The concrete walls were approximately 7 metres, 6 metres and 8 metres long. The lowest of the three concrete walls was approximately 2.4 metres high and the other two sides were approximately 6 to 8 metres high. There were numerous items in and about the area. The biggest item in the area was the gate keepers wooden shed that was approximately 4m x 3m. In addition there was a portable workbench, 15 LP Gas cylinders ranging in size from 9 kg to 144 kg, eight x 1.5 metre diameter rolls of black flexible tube, two shopping trolleys, and a 4 burner barbeque in and about the area. 12. At approximately 11.20am on 10 December 2005 the LP Gas Mr Miller was venting into the atmosphere ignited explosively and Mr Miller was caught in the middle of a fireball that was estimated by a customer to be at least 10 metres high and 6 metres across. 13. Mr Miller's injuries were the result of a flash fire caused by the ignition of a dense cloud of propane vapour in which he was standing. The origin of the propane was from the cylinder which was venting. The precise source of the ignition is unknown. Given that Mr Miller was venting gas from the 9kg LPG cylinder, there were a number of possible ignition sources in the area in which Mr Miller was venting the gas including vehicles, electrostatic discharge and electrical equipment. 14. The venting process undertaken by Mr Miller was unsafe for a number of reasons, including that the particular area in which it was undertaken was unsuitable as it had enclosed walls and a number of items in the close vicinity. 15. A customer who was standing in the yard area when the gas ignited heard "a percussion boom and caught an orange fireball out of the corner of his eye. It was a self-engulfing ball of orange with black edges". As the customer ran to the area, he met with Mr Miller running out from behind the shed and screaming. 16. The Fire Brigade, Ambulance and Police attended the incident scene. Mr Miller was taken from the scene by ambulance to Gosford Hospital, prepped and then air lifted to Concord Repatriation Hospital Burns Unit. There he was diagnosed with 38% burns to his body, consisting of face, ears, both lower arms and lower legs. He remained in hospital for just under 4 weeks. 17. As of March 2006 Mr Miller was still required to wear pressure dressings on both arms. Mr Miller was also taking anti-depressants to stop flashbacks and help him sleep. In additional, Mr Miller was still regularly attending appointments with his doctor, specialist and physiotherapist with respect to ongoing monitoring and treatment of his burns. Mr Miller was certified fit for suitable duties consisting of mainly sedentary office work for 2 hours per day, 3 days per week from 20 March 2006. 18. Mr Miller had vented gas from leaking or faulty gas cylinders on two other occasions prior to the incident in the ten month period he had worked at the Tuggerah store. There is no suggestion that there was any similar incident on these occasions however the defendant did not adequately promulgate or enforce its systems for identifying and/or reporting incidents, near misses or hazards involving leaking LP Gas cylinders at the Tuggerah store. 19. The Code of Practice for Storage and Handling of Dangerous Goods 2005 and Australian Standards AS 4332:2004 "The Storage and Handling of gases in Cylinders" and AS 1596:2002 "The storage and handling of LP Gas" provide guidance material for dealing with LP gas cylinders. Appendix D of AS 4332:2004 specifically deals with appropriate procedures for management of leaks. The process of venting leaking consumer LP Gas cylinders which Mr Miller followed at the time of the subject incident was not in accordance with the guidance material. 20. Appendix M of AS 1596:2002 The storage and handling of LP Gas, recommends that emergency procedures be in place in the event of an LP Gas leak. 21. Mr Miller's work for BBC and Bunnings at their Dural and Tuggerah stores had involved LP Gas for 18 months at the time of the incident. His duties included gas cylinder exchanges and the filling of gas bottles for Bunnings customers. Mr Miller filled approximately four to five gas small gas cylinders per day from Bunnings' large gas cylinders. Mr Miller handled LPG cylinders in the course of his duties ranging from 190kg transfer bottles, customer gas bottles, forklift gas bottles and heater bottles. Mr Miller was also responsible for dealing with any faulty or leaking gas bottles that Bunning's staff located at the premises. 22. Mr Miller received training in relation to decanting LP Gas when he was working for the same employer at Bunnings' Dural store in about May 2004. 23. After his transfer to the Tuggerah premises, Mr Miller was listed at that site as an "authorised person" for the decanting of LP Gas from bulk storage gas cylinders into consumer cylinders for that site. It is not clear who determined that Mr Miller should be on the "authorised persons" list for LP Gas decanting at the Tuggerah premises, or who added Mr Miller's name to the list of "authorised persons" at those premises. 24. Mr Miller was not provided with any training with respect to LP Gas handling whilst he was working at the Tuggerah premises and no-one assessed whether Mr Miller was competent to work safely with LP Gas whilst he was at those premises. 25. At the time of the incident Mr Miller was unaware of how to deal safely with a leaking LP Gas cylinder and he did not fully appreciate the risks associated with the venting of a consumer LP Gas cylinder into the atmosphere. 26. Steve Kolletti, Lifestyles co-manager/co-ordinator was Mr Miller's direct supervisor from his commencement at the premises until mid 2005 when a trade co-ordinator was appointed whose role included directly supervising the gate keeper. Mr Tony Jones was appointed as the trade co-ordinator at the premises. He was not working on 10 December 2005. Mr Kolletti and another Lifestyles co-manager/co-ordinator Mr Bolger were responsible for supervision of the staff at the premises on 10 December 2005. 27. Mr Kolletti was involved in the recruitment of Mr Miller to the role of gatekeeper and had instructed him in his duties when he commenced work at the premises. Mr Kolletti was not trained in and had no experience with LP Gas. 28. Mr Jones had undertaken a course in LP Gas decanting and exchange with Elgas in approximately 2002 during his employment at Bunnings Budgewoi store. Mr Jones had not provided any training to Mr Miller in relation to working with LP Gas nor had he assessed his competency for working with LP Gas. 29. There were no systems in place at the premises to check that Mr Miller and his supervisors had any knowledge or training in LP Gas safety. 30. During the course of the investigation BBC and Bunnings provided WorkCover with a training and procedures manual for decanting LP Gas from the LP Gas supplier, Kleenheat that is dated prior to the incident. There are no records of that information being provided to anyone at the premises prior to 10 December 2005. 31. BBC/Bunnings had OHS policies/procedures/systems that they called B.S.A.F.E. This was already in place at the Tuggerah premises prior to Mr Miller commencing at the premises in February 2005, but did not cover anything in relation to LP Gas. This is the core OHS guidance the BBC and Bunnings Board of Directors developed and distributed to the management at each Bunnings work premises. The January 2004 version of the manual was current at the time of the incident and it contained two sections: 'overview' and 'safe work procedures'. The Safe Work Procedures (SWP's) cover approximately 19 topics. The January 2004 BSAFE manual did not incorporate a general provision, separate to the specific procedures outlined above, that set out the formal principles and formal processes of hazard management to be applied in the identification, assessment and control of any risks not specifically covered in the BSAFE manual. 32. BBC and Bunnings advised that the following information relating to the handling of LPG, including its status as a dangerous good, was available at the time of the incident: 1. a dangerous goods risk assessment on retail storage and handling of dangerous goods in consumer packages dated 22 May 2005. 2. a system of dangerous goods quarterly self assessments with a quarterly self assessment checklist dated 28 September 2005, 3. an annual health and safety/dangerous goods audit program including an audit completed on 8 December 2005, 4. Kleenheat Gas decanting LPG training and procedures manual, 5. a standard operating procedure for gas cylinder filling by decanting; and 6. a list of persons authorised to refill consumer LP Gas cylinder by decanting, Mr Miller was not aware of the contents and did not have a personal copy of the documentation at points 1 to 5 at the time of the subject incident. The complex manager at the premises was not aware of nor had a copy of the documentation at points 1, 4 and 5, at the time of the subject incident. Mr Kolletti had received no information or training in relation to LP Gas procedures. 33. Since the incident, the company has made the following changes: a) Company-wide: BSAFE now includes procedures for LP Gas decanting and managing emergencies. A computer-based training/assessment module for employees who perform LP Gas decanting has been developed and implemented. The emergency procedure was developed after the incident and laminated copies are on display throughout Bunnings Stores and cards containing the procedure have been given to each employee for quick reference. BSAFE now includes better systems for keeping training records. b) Incident Site: The 190kg LP Gas decant vessels (cylinders) that were used for filling customer's LP Gas cylinders have been removed from the premises and no decanting has been done at the premises since 10 December 2005. Decanting has been replaced by 'swap & go'. LP Gas 'authorised' persons and the site managers have been trained by Kleenheat about working safely with LP Gas. All team members have been trained one-on-one, what to do with a leaking gas bottle. "LP Gas leaks" is now a topic that is regularly discussed at morning tea talks. LP Gas has been included in the monthly hazard checklist that is completed by the OHS committee. 34. The following supporting documentation is annexed: a) 6 Colour photographs taken by Inspector Trotter 12 December 2005 and 8 February 2006 numbered 4, 9, 14, 24, 33 and 46; b) Factual Inspection Report of Inspector Trotter dated 14 December 2005; c) Testsafe Report dated 6 April 2006 d) B.S.A.F.E document dated January 2004 e) Kleenheat Gas Safe Decanting of LP Gas Training Procedures Manual dated August 2005 f) Bunnings Tuggerah Refill Listing (Nov 05) g) MSDS for commercial propane h) AS 4332-4004 - The storage and handling of gases in cylinders i) AS 1596:2002 - The storage and handling of LP gas j) Code of Practice for the Storage and Handling of Dangerous Goods k) Placarding on Kleenheat bulk cylinders l) Prior convictions certificates." 10 The evidence of Mr Taylor supplemented [22] of the agreed statement of facts in that Mr Taylor carried out training at the Bunnings Dural store between 2003 and January 2006. It was the evidence of Mr Taylor that his training involved showing a video recording produced by the Kleenheat organisation, which became evidence in the proceedings. That video deals predominantly with the operation of decanting LP gas from a large storage cylinder into smaller domestic cylinders. A manual produced by Kleenheat also contains a number of instructions in dealing with a leak in a cylinder where there is no fire. The instructions include closing the valve on the leaking cylinder if possible, keeping hands and face away from the escaping gas and trying to move the cylinder to the most open space away from buildings, people, drains and sources of ignition, standing the cylinder upright with the valve at the top, dispersal of the gas with a water spray and disposal of the empty cylinder. 11 The evidence of Mr Wilks covered in part the interrelationship between the two defendants and the occupational health and safety regime of each of the defendants and the Bunnings Group as a whole. Mr Wilks is Group Health and Safety Manager for Bunnings Group Limited. That group as at May 2008 operated 226 hardware stores throughout Australia and New Zealand, 14 trade centres and 8 frame and truss manufacturing plants in Australia. It currently employs approximately 27,000 people in Australia and New Zealand. In New South Wales, there are 64 stores and 6,513 employees. 12 The evidence given by Mr Wilks and the documentation annexed to his affidavit demonstrate an overall commitment to occupational health and safety matters and a comprehensive occupational health and safety regime. 13 However, as Mr Wilks properly conceded, there were deficiencies at the time of this incident in the documentation, training and procedures generally dealing with the handling of faulty gas cylinders. The circumstances of the breach

14 In general terms, the evidence given in the proceedings was non-controversial although, not unnaturally, the prosecutor and the defendants emphasised different aspects of the evidence. In general terms, I summarise on the basis of the evidence the manner in which the defendants breached the provisions of the Act as follows: 1. It was the responsibility of Mr Miller to deal with any faulty or leaking gas bottles at the Tuggerah store. 2. Mr Miller was unaware of how to deal safely with a leaking LP gas cylinder and did not fully appreciate the risks associated with the venting of a consumer LP gas cylinder into the atmosphere. In fact, Mr Miller was standing in a cloud of propane vapour at the time that the gas was ignited. 3. The personnel at the store believed that Mr Miller was the appropriate person to deal with faulty gas cylinders including leaks. 4. Mr Miller said in a record of interview with the WorkCover inspector that he had viewed a video demonstrating the safe decanting of LP gas in May 2004 whilst employed at the Dural store. 5. On two occasions prior to the particular incident giving rise to these proceedings Mr Miller had dealt with faulty cylinders by venting the gas into the atmosphere without using a water spray to disperse the gas on the ground. 6. The defendants were aware of the risks associated with handling LP gas cylinders but their occupational health and safety system did not at the time of the incident cover the handling of LP gas cylinders and in particular faulty cylinders, nor did the defendants have any general hazard management directions in their manual dealing with this matter. 7. Mr Miller was not provided with any training in handling LP gas cylinders whilst he worked at Tuggerah nor was his competency to carry out that work assessed whilst he was at Tuggerah. Indeed, there were no systems in place to check that Mr Miller and his supervisors had any knowledge or training in the safe handling of LP gas cylinders. The objective seriousness of the offence

15 The starting point for the consideration of an appropriate penalty is the assessment of the objective seriousness of the offence. There can be no doubt that the offences with which each of the defendants is charged are serious. The gas which is stored in the cylinders is highly flammable and is therefore potentially dangerous. It is also invisible to the naked eye, and because it is heavier than air tends to gather in a cloud on the ground. It is therefore essential that any person or entity that operates a business involving the handling of LP gas cylinders provide and maintain a safe system to allow this to occur. Likewise, it is essential that any person involved in handling those cylinders be given appropriate information, instruction, training and appropriate supervision in carrying out his or her work. Of course, the same care needs to be taken by all persons handling LP gas cylinders whether bound by the provisions of the Occupational Health and Safety legislation or not. In making this comment, I am mindful of the fact that LP gas cylinders when attached to equipment such as barbeques are part and parcel of the Australian way of life. However, in the circumstances of these proceedings, I am only dealing with these defendants and breaches by them of this legislation that applies to them and to all other persons who employ people throughout New South Wales. Deterrence 16 In assessing penalty, the Court is also required to take into account the general deterrent effect that a penalty will have within the employing community and as it affects all persons and entities who are subject to the provisions of the Occupational Health And Safety legislation. I shall take this into account because of the widespread use of LP gas cylinders throughout the general community and, as it follows, by persons who are at work. 17 Furthermore, the Court is required to take into account the specific deterrent effect that a penalty will have on a particular defendant. In the case of Bunnings, that organisation continues to operate a large number of stores throughout New South Wales and employ a large number of persons. Accordingly, I will take this matter into account. This is ameliorated to some extent by reason of the commitment of that company to its ongoing responsibilities under the Occupational Health and Safety legislation and the fact that it has now put in place processes that will hopefully avoid occurrences of this kind in the future. 18 In the case of BBC Hardware, the Court is informed that that company is no longer trading in New South Wales and accordingly it is not necessary to take any specific deterrent effect into account with respect to it. Subjective factors

19 In assessing penalty, the Court is required to take into account a number of factors that will have the effect of reducing the amount of the penalty imposed. None of them was controversial and the prosecutor quite properly agreed that all of them were appropriate to be taken into account in the exercise of the Court's discretion in assessing the amount of the penalties to be imposed. 20 The defendants pleaded guilty at the earliest appropriate opportunity and are entitled to a substantial discount of the order of 25% accordingly. The defendants expressed remorse and contrition for what had occurred. They actively assisted Mr Miller in his rehabilitation and recovery. 21 The defendants have always had a commitment to compliance with their occupational health and safety obligations. Immediately after this incident they took proactive steps to remedy the deficiencies in their systems which had been exposed and continue to apply their enhanced protocols and procedures. 22 The defendants are recognised as good corporate citizens. At a local level, they actively support a number of charities and assist in allowing charities to use their premises for fundraising purposes. Prior record

23 Each of the defendants has a number of convictions for breaches of Occupational Health and Safety legislation and predecessor legislation. Given the relatively small number of convictions over a long period of time, I am satisfied that in the circumstances of their operations, this represents an acceptable safety record. The prosecution did not contend otherwise. Interrelationship of the defendants

24 Each of the defendants is ultimately a wholly owned subsidiary of Wesfarmers Limited. There are further brief details contained in the statement of agreed facts, which I have earlier set out. 25 At an adjourned further hearing of these proceedings on 20 November 2008, an "additional agreed facts" document was filed which is in the following terms. "1. BBC Hardware Ltd's ("BBC") operating revenue for 2005/06 was $1.4 billion. 2. Bunnings Group Ltd ("Bunnings") operating revenue for 2005/06 was $2.4 billion. 3. BBC was the lessee of the premises at Tuggerah warehouse at all relevant times. 4. On 10 December 2005 BBC controlled the workplace at Tuggerah warehouse. 5. Bunnings employed Steve Koletti as at 10 December 2005. 6. Bunnings employed the complex manager of Tuggerah as at 10 December 2005. 7. As at the date of the subject incident, Mr Miller identified his employer as Bunnings previously BBC. 8. As at the day before the subject incident, Mr Ferguson identified his employer as "Bunnings Warehouse which is Wesfarmers". 9. As at the date of the subject incident Ms Pescud identified her employer as "Bunnings Warehouse Tuggerah". 26 In addition, an affidavit of Domenico Antenucci, the company secretary of Bunnings, was admitted into evidence. 27 The totality of the evidence given in the proceedings indicates that as and from about September 2001, the operations of BBC Hardware were progressively integrated into the Bunnings business. There was significant identity in the composition of the respective boards of directors of both companies and Bunnings management systems and support services replaced those that had previously been operated by BBC Hardware. This included occupational health and safety management systems and protocols. All of the BBC Hardware outlets were progressively rebadged as Bunnings stores and although some persons, including Mr Miller, remained employees of BBC Hardware, they regarded themselves as Bunnings employees, including using and wearing Bunnings clothing. 28 At the time that the incident occurred, Mr Miller and some other persons remained employed by BBC Hardware but the operations of the store were controlled by Bunnings personnel. Furthermore, Bunnings management and personnel systems were utilised for the purpose of the operation of the store including Bunnings occupational health and safety systems. 29 On this basis, the defendants submitted that each of the acts and omissions which constitute the particulars of the charges brought against each of the defendants "relate to failings by employees of (Bunnings) at a management level in promulgating, enforcing and maintaining the integrated (Bunnings/BBC Hardware) occupational health and safety system at the Tuggerah store…There was no independent BBC management structure and given the process of integration it would be both an unreasonable and artificial imposition to suggest that the Board of BBC had an obligation to maintain an occupational health and safety management system separate to that promulgated in BBC's rebadged stores…There are no 'independent' or separate acts, omissions or failings which are said by the prosecutor to have been committed by a worker and/or manager employed by BBC - as opposed to (Bunnings)". Having regard to these circumstances, the defendants submitted that BBC Hardware should not be penalised as a defendant that would be characterised as operating a separate and independent business. 30 Furthermore, it was submitted that the decision to adopt Bunnings management systems impacted upon the capacity of the BBC Hardware board of directors to comply with the obligations of that company imposed by the Act. 31 There are countless circumstances in which multiple defendants are charged with criminal offences arising out of the one course of events. In the "ordinary" circumstances where there is no particular relationship between the co-accused, the assessment of the penalty that should be imposed on each of the defendants raises no particular difficulty. The same observation may be made where there are multiple defendants who have a relationship such as familial, or as joint ventures. However, the situation may arguably be different where the multiple defendants are corporations owned by and controlled by the same persons. Such are the circumstances in these proceedings. Wesfarmers Limited is the ultimate owner of both defendants and their control at a directorial level is in the hands of persons who are, in the main, the same. The same managerial personnel were also involved in the operations of both defendants at the time that the incident occurred. Sometimes these arrangements are deliberately created by the ultimate owner of the corporations and sometimes, as was the case here, they are brought about as the result of successive acquisitions. 32 As any penalty to be imposed will ultimately be borne by the ultimate owner of the multiple corporations, should any particular consideration be given to that fact in assessing penalty? Although the defendants' submissions were not put in this way, they would have that ultimate effect if the submissions were to be accepted. Furthermore, if I were to accede to the defendants' submissions and take into account the diminished capacity of BBC Hardware to determine its own occupational health and safety policies and, therefore, the need to do so, coupled with a recognition that this was something which had been undertaken on its behalf by its co-defendant, Bunnings, would this translate into the imposition of a lesser penalty on BBC Hardware consistent with the sentencing principles which apply? 33 There are a number of cases that have dealt with circumstances where there are multiple corporate defendants with ultimate common ownership where their culpability is brought about by circumstances which overlap or where there is a commonality in those circumstances. 34 It would seem that on at least two occasions some adjustment in penalty has been made in the Federal Court of Australia to reflect these circumstances. 35 In Trade Practices Commission v Cue Design Pty Ltd (1996) 85 A Crim R 500, O'Loughlin J dealt with the imposition of a penalty for breach of provisions of the Trade Practices Act (Cth). Of the two corporate defendants, one manufactured and designed garments and wholesaled them to the other, which retailed the garments through a number of retail outlets and franchise operations. Each of them pleaded guilty to a number of counts that they had made misleading representations with respect to the price of certain items of clothing. Even though each of them undertook different aspects of the operations of the group of companies of which they were each a member, the offences of which they were charged appear to have been the same. 36 In imposing penalty, O'Loughlin J said, "…I also am of the opinion that it is appropriate to deal with this matter as if there had been one offender but to acknowledge the existence of the two defendants by imposing upon each a penalty equal to 50% of the whole. In reality, what happened was the implementation of one sales strategy by one business house. It would be unfair to impose a multiplication of penalties because of the number of outlets or the number of the companies in the group." (At 508). 37 Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [1999] FCA 1175 also involved prosecutions for breaches of the Trade Practices Act (Cth). There were two defendants, Dimmeys Stores Pty Ltd and Starite Distributors Pty Ltd. Starite Distributors imported and wholesaled goods, which were sold through stores operated by Dimmeys. The proceedings involved the importation of bicycles that did not contain markings as required by the legislation. Accordingly, each of the defendants was guilty of the same offences committed in connection with the different operations that they conducted. 38 In fixing the appropriate amount of penalty, Weinberg J in the Federal Court of Australia said, "39 Ms Strong submitted that I should not differentiate between the penalties imposed upon each defendant. I reject that submission. The evidence establishes clearly that Starite is beneficially owned by Mr Zappelli and the members of his family. He and his family also have a substantial interest in Dimmeys. By fining each defendant separately, the Court is, in effect, punishing Mr Zappelli and his interests twice. Their conduct may warrant separate punishment, but some recognition should be accorded to the fact that the two offences are closely related. In my view these factors warrant the imposition of a somewhat lower penalty than would otherwise be merited upon one of the defendants. I accept Mr Wheelahan's submission that the defendant to benefit should be Starite." 39 I have reproduced the totality of the consideration given by each of the judges in the Federal Court of Australia in Cue Design and Dimmeys Stores. There is no other discussion about the rationale for the approach adopted by each of their Honours. 40 I next turn to deal with the decision of the Full Court of the Industrial Court of New South Wales in WorkCover Authority of NSW v CI & D Manufacturing Pty Ltd [1995] NSWIRComm 288 ("Haynes"). 41 Two companies were found guilty of breaches of the Occupational Health and Safety legislation, one of which owned premises that it leased to the other being a wholly owned subsidiary. The offences arose out of the same incidents. In determining what would be the appropriate penalty, given the relationship between both corporate defendants and given that the offences arose out of the very same incident, the Full Bench said, "Should the prosecution of the closely related companies attract one penalty or two penalties assessed as against each company? The evidence available showed that Manufacturing at the time of the accident employed at the Somersby plant about 9 workers and that for purposes related to company structure was a company wholly owned by Industries. The personnel on whom the ultimate responsibility for ensuring the supervision of the employees rested at the time of the accident were the same.

We have come to the view on the evidence that the connection between the two companies was so intimate that it is permissible to view the offence in a global way. We are of the view that an appropriate penalty in all the circumstances would be a total fine of $30,000.

We have considered whether it was within the authority of the Court to order the payment of the fine as if the respondents were jointly and severally liable for the total amount. Were such a course available any risk that the impecuniosity of one respondent would cause undue hardship would be avoided with management being able to determine the most convenient method of funding the fine. We have been unable to come to the view that such a course is open to the Court.

In determining the way in which the totality of the fine should be apportioned, we have decided that Manufacturing and Industries are so clearly linked that each should bear the fine equally - $15,000 by Manufacturing and $15,000 by Industries." 42 The gravamen of the reasons for judgment appears to me, with respect, to be centred on the close relationship between the companies, namely the fact that one was wholly owned by the other. In effect, the Full Court determined that the matter should be approached as if there was but one offence, fixed a penalty appropriate to that "global" offence and apportioned the impost of the penalty on an equal basis. 43 The Full Court did not embark upon any detailed discussion of the rationale for adopting the approach that it did. Perhaps, no such detailed discussion was necessary because the rationale is obvious. Each of the defendants was charged with an offence of creating a risk to the health, safety and welfare at a place of work of, respectively, its employees and people other than its employees, arising from the conduct of the undertaking at that place of work. If there was but one defendant then, in appropriate circumstances, in so far as the one incident involved a breach of the absolute duty created by the legislation with respect to persons who were its employees and persons who were not its employees, the principle of totality would apply and the penalty would be subject to reduction in accordance with that principle. Any financial penalty which is imposed upon a corporation will ultimately be borne by the corporations' shareholders. Where two corporations are closely related in circumstances that their ultimate ownership vests in the same body of shareholders, penalties imposed on those corporate defendants will be borne by the ultimate shareholders. In those circumstances, it is appropriate to acknowledge that treating the two related corporate defendants as if they were entirely independent would result in the ultimate shareholders being penalised twice as a result of the same incident. In these circumstances, consistent with appropriate principles applying to the sentencing of offenders, there should be an adjustment of the penalties imposed so as to minimise any such injustice. Such a rationale would appear to me to be consistent with the approach in Cue Design Pty Ltd and Dimmeys Stores Pty Ltd in the Federal Court of Australia, which I have previously referred to. 44 In Inspector Green v Metropolitan Administrative Services and anor [2005] NSWIRComm 12, I dealt with a prosecution for breach of the Occupational Health and Safety legislation brought against two corporate defendants with common directorships and ultimate ownership arising out of the one incident. I discussed a number of single judge authorities, some of which ameliorated the penalties imposed in the same or like circumstances and some of which did not. I referred also to Haynes. 45 After considering these authorities, I said, "29 The approach which I have thus far taken in connection with the quantification of penalty has been consistent with that propounded by Staff J in A-Team Concrete . That is, I have endeavoured to weigh the respective culpabilities of the defendants and I have endeavoured to measure their actual culpability in relation to the detriment to safety which brought about this incident. There are obviously overlapping responsibilities, as I have indicated. However, this begs the question as to whether some ameliorating approach should be adopted. The cases to which I have referred reveal starkly the opposing principles. On the one hand it may be asserted that the shareholders and guiding minds of the corporate entities have chosen to conduct the totality of the business operations by using two corporate structures, for whatever reason. Having done so, they have created two entities, both of which are amenable to prosecution in the circumstances of these proceedings. Having chosen to operate the aggregate of the business activities through these structures, they cannot be heard to complain that penalties should be imposed as if they were two distinct corporate entities operating at arms length. The other extreme is to regard both corporations as, in the aggregate, representing the means of carrying on the one business operation and, accordingly, there would be an element of double counting in imposing two separate and distinct penalties appropriate to each of them where the same common failings have created the breach of different but related provisions of the legislation.

30 It is a trite observation that the duty of the court is to impose such penalty which is appropriate in all the circumstances so as to reflect the intention of the legislature. There can be no doubt that if the shareholders, who are identical in both companies, had resolved to utilise the one corporate entity to operate the business of both defendants there would only be one prosecution before the Court, alleging a breach of s 15(1) of the Act and that there would be no prosecution brought under s 16. Whilst I acknowledge that the different approaches, which are to be found in the authorities to which I have referred, are available and can both be justified, it seems to me on balance that it is preferable to adopt an approach which ameliorates the aggregation of penalties which would otherwise have been imposed on two corporate entities which are closely related by way of identical shareholders and which share common overall management, especially where only one incident gives rise to the proceedings and there is a large degree of overlap in the factual circumstances which have created the breaches. Ultimately, it was the failure to ensure that Mr Sagiotis was adequately supervised so as to ensure that he wore the safety harness when operating the equipment that brought about his untimely death. For these reasons I propose to test the resultant aggregate penalties against what might otherwise be ordered to be paid by way of penalty in the event of one defendant, making due allowance, of course, for the differential maximum penalties and for the differential subjective features. 31 As previously indicated the first defendant would otherwise be fined the sum of $78,000 and the second defendant the sum of $144,000. I propose to reduce these penalties so as to reflect in the aggregate what I perceive to be a more appropriate overall penalty and to apportion the reduction accordingly.

32 Having regard to this approach I propose to reduce each of the penalties by 40%, leaving a final penalty to be imposed on the first defendant of $46,800 and the second defendant of $86,400. The 40% reduction is intended to accommodate the overlapping areas of factual breach." 46 Inspector Green v Big River Timbers Pty Ltd and anor [2006] NSWIRComm 279 is a Full Bench judgment which also dealt with prosecutions under the Occupational Health and Safety legislation against two corporations with a close relationship. Whilst the judgment does not explicitly state the nature of that relationship, by implication from the contents of [7] it may be deduced that both corporate defendants had common directors and shareholders. 47 The appeal was brought by the prosecutor on the basis that penalties imposed by the Chief Industrial Magistrate "were manifestly inadequate." The approach adopted at first instance is summarised in [6] of the Full Bench judgment, namely, "6 First, we consider that his Honour misapplied the principle of totality. His Honour treated the two corporate defendants in these matters as one entity for the purpose of sentencing because they were "interlocked" (by which we understand him to mean the respondents were closely related corporate entities having a common governance and operations)." 48 On appeal, the respondents, who were the defendants in the proceedings below, conceded that the principle of totality was not applicable. The Full Bench summarised the position of the respondents on appeal as follows. "7 The respondents conceded that the principle of totality does not operate in relation to the corporate defendants merely because they have common directors and shareholders. No challenge was made, in this respect, to the decision of this Court in WorkCover Authority of New South Wales (Inspector Petar Ankucic) v McDonald's Australia Ltd (2000) 95 IR 383 at 454 to 460 and Inspector Sharpin v A Team Concrete (Aust) Pty Ltd & Ors [2004] NSWIRComm 182. However, the respondents argued that those cases are distinguishable on their facts; it was submitted that the respondents were "interlocked" in such a way as to warrant the approach taken by Marks J in Inspector Green (WorkCover) v Metropolitan Administrative Services Pty Ltd [2005] NSWIRComm 12. Although ultimately the respondents abandoned the contention that the principle of totality could apply strictly in this case, we propose to review the more recent consideration of this principle by the Court." 49 The Full Bench then went on to discuss the principle of totality, which was held to apply only to the circumstances of multiple offences brought against the one defendant. The Full Bench held that the totality principle did not and could not be applied to any proceedings which involved more than one corporate defendant, no matter how closely related. 50 The Full Bench, after reviewing a number of authorities including the judgment of Walton J VP in WorkCover Authority of New South Wales (Inspector Ankucic) v McDonalds Australia Ltd (2000) 95 IR 383 and of Staff J in Inspector Sharpin v A Team Concrete (Aust) Pty Ltd [2004] NSWIRComm 182, said, "18 We do not consider that on the facts this matter may be distinguished from those applying in McDonald's or A Team Concrete . It was not open on the facts of this case for his Honour to sentence as if he had one defendant before him.

19 However, we consider the error is more profound. We consider that it is inconsistent with the principle of totality to effectively treat two corporate defendants, even when facing similar charges arising out of the same sub-stratum of facts as a common entity, for the purposes of sentencing, no matter how close their corporate relationship (in terms of government, operations or employment)."

The Full Bench then determined to deal with the prior Full Court decision in Haynes , which I have previously referred to. At [21] and [22] the Full Bench said, "21 We note that his Honour in McDonald's referred to the judgment of the Full Bench in Haynes v C I & D Manufacturing Pty Limited (1995) 60 IR 149. In this respect his Honour considered the circumstances of this case as unusual, and proceeded to distinguish it. However, we were invited by the appellant to conclude that the judgment in Haynes v C I & D Manufacturing Pty Limited was wrong on the issue of totality and we propose to do so in order to ensure that the law in this area is clear.

22 It is not permissible, under the principle of totality, and for the reasons we have discussed, to treat two corporate respondents (distinguished by their separate incorporation) as a single entity for the purpose of sentencing and to the extent that the Full Bench in C I & D Manufacturing adopted a different approach as a matter of law and principle we consider that it is wrong. Plainly, any first instance judgments which have approached the principle of sentencing in like manner would involve error." 51 Haynes was overruled because it was said by the Full Bench that it had applied the principle of totality when considering the penalties that should be imposed on two corporate defendants and in determining to treat them as if they were a single entity for the purpose of sentencing. With respect, I am unable to ascertain that the Full Bench in Haynes purported to apply the principle of totality as understood in the conventional sense such as may be found in the discussion in the High Court of Australia in Pearce v the Queen (1998) 194 CLR 610. Indeed, it may be said that the Full Bench in Haynes did not purport to utilise any approach in principle to which some nomenclature or description might be given by reference to some principle established by any particular authority. My understanding of the approach taken by the Full Bench in Haynes accords with that of Haylen J who, in Inspector Bestre v Jontari Pty Ltd [2007] NSWIRComm 190, said, "42 There was no suggestion in the present proceedings that the decision in Big Rivers Timber was in error, nor was there any application that it be referred to a Full Court for reconsideration. Clearly, what the Full Court said in relation to the principle of totality was, with respect, correct: the principle deals only with a defendant found guilty of multiple offences. The Full Court carefully noted that the special circumstances in Haynes v C I& D Manufacturing had been distinguished in McDonalds Australia Ltd and had proceeded to declare Haynes v CI & D Manufacturing as erroneous to the extent that the Full Bench in that case applied the principle of totality. In the passages that have been reproduced from Haynes v C I & D Manufacturing , the Full Bench refers to approaching the setting of a penalty in a global way having regard to the intimate connection between the two companies but only in relation to considering and then rejecting the proposition that the two companies could be made jointly and severally liable for the one penalty. It was in this context that the Full Bench referred to determining the way in which 'the totality of the fine should be apportioned'. It is not apparent from those passages that the Full Bench applied the principle of totality rather than applying a general approach of fairness and apportioning culpability: nor do the cases referred to earlier by the Full Bench in support of that approach, in terms, rely on the principle of totality. It may be for this reason that the Full Court in Big Rivers expressed itself cautiously by holding that, to the extent that the decision in Haynes v C I & D Manufacturing applied the principle of totality, it was wrong." 52 I should observe that in disposing of the appeal, the Full Bench in Big River Timbers did not refer in any way to Metropolitan Administrative Services and the approach that I had taken in those proceedings. That approach did not involve the application of the principle of totality but applied an in principle approach of the same kind as was applied in the Federal Court of Australia in the cases to which I have earlier referred. 53 In these circumstances, it cannot be concluded that the observations as to the approach to sentencing made by the Full Bench in Big River Timbers are designed to exclude not only the application of the principle of totality to circumstances where there is more than one defendant but also any other approach inconsistent with ignoring completely the ultimate burden to be borne by the imposition of monetary penalties on more than one closely related corporation. 54 This matter was next considered in this Court by Haylen J in Jontari Pty Ltd, to which I have previously referred. I had occasion to discuss his Honour's judgment in Morrison v Clarence Coal Pty Ltd and Centennial Coal Company [2007] NSWIRComm 270. I said, "39 The judgment of Haylen J is instructive in referring to a number of circumstances in which approaches to sentencing have been taken by this Court, especially at appellant level, where proceedings have been taken against two corporate defendants arising out of the same incident, both of whom are closely related by reason of shareholding and the "controlling mind". His Honour's judgment discusses Big River Timbers , an earlier Full Bench decision and my decision in Inspector Green .

40 The circumstances in Inspector Bestre v Jontari were relevantly different to the circumstances that apply in these proceedings. Those proceedings arose out of incidents where persons working as cleaners at public schools had been assaulted. One of the defendants, Tempo Services Pty Ltd ("Tempo"), held a number of contracts for the cleaning of government premises including public schools. Tempo had utilised a number of wholly owned corporations for the purpose of providing labour at each of the schools. For example, the defendant Jontari Pty Ltd ("Jontari") was the employer of the workforce by which Tempo carried out its cleaning services at a particular public school. Jontari was one of over 250 such companies used by Tempo. Whilst all of the persons who performed work cleaning public schools and other premises, pursuant Tempo's overall contractual arrangements, were employed by each of these wholly owned subsidiary companies, those companies did not, in effect, perform any other part in the overall operations of the Tempo business. The subsidiary companies had no assets and did not make any operating profit. Their sole expense was referable to the wages paid to employees and other usual add-on costs, the amount of which were made to each of the subsidiary companies by Tempo and then paid out to or on behalf of the employees. All of the operational matters involving the management of these employees were undertaken by Tempo personnel. Each of the employees was held out as being an employee of the Tempo group, given training by Tempo group personnel and wore Tempo uniforms. All of the work systems including those relating to occupational health and safety matters were undertaken by Tempo personnel.

41 During the course of his reasons for judgment, Haylen J said, '43 The proper treatment of closely related defendants has raised some difficulty from time-to-time in the exercise of this part of the Court's jurisdiction. Members of the Court, have, on occasions, raised with the prosecutor the rationale for charging both the corporate entity and the director in circumstances where the evidence has disclosed that the incorporation of the business is little more than an action taken, usually on the advice of a financial consultant, and is the means by which a person or a family has chosen to conduct its business. Those queries have usually been met with a reply that the principle of totality is available to ensure that the aggregate penalty is appropriate. That rather loose and imprecise reference to the principle of totality has disguised difficulties with cases of this nature. It cannot be doubted that it is within the realms of the responsibility of the prosecutor to decide what charges are to be preferred and against what entities. The clarification by the Full Court in Big Rivers of the circumstances in which the principle of totality applies should result in prosecutors closely examining what entities are charged or what charges are continued where the evidence demonstrates a close connection between two defendants involved in the same incident. An important question that often arises in such circumstances is: what ends of justice are served by multiple prosecutions? Different circumstances may lead to different answers to this question, but it is a question that should be considered.

44 In Inspector Green v Metropolitan Administration Services Pty Ltd and anor [2005] NSWIRComm 12, reference was made to what was regarded as the two extremes of approaches demonstrated by reference to matters decided under Occupational Health and Safety legislation in this jurisdiction. One extreme was described as the approach in Haynes v C I & D Manufacturing and the other end of the extreme seemed to be the judgment in McDonalds Australia Ltd , namely, that the principle of totality could not apply to multiple defendants but only to one defendant facing multiple charges. In Metropolitan Administration Services Pty Ltd , the Court was faced with the situation of two corporations and a director being found guilty of a breach of the Act arising from the same incident in circumstances where the two corporations were owned by the same shareholders and shared common directors. The Court resolved what was seen to be the conflict in the decided cases by adopting an approach that ameliorated the aggregation of penalties which would otherwise have been imposed on two corporate entities which were closely related by way of identical shareholders and that shared common overall management in circumstances where only one incident gave rise to the proceedings and where there was a large degree of overlap in the factual circumstances which created the breaches.'

42 His Honour then considered what he described as "the unusual nature of the relationship between these defendants" and determined that the appropriate approach to sentencing would involve an application of "some basic concepts". At [48] and [49] his Honour said, '48 Given the unusual nature of the relationship between these defendants, the question arises as to what sentencing options are properly open to the Court having accepted that, in terms, the principle of totality does not apply in relation to the subsidiary companies. It is appropriate in this particular exercise to return to some basic concepts. Section 3A of the Crimes (Sentencing Procedures) Act 1999 sets out the purposes for which a Court may impose a sentence on an offender. Those purposes include: ensuring that the offender is adequately punished for the offence; preventing crime by deterring the defendant and others from committing similar offences; protecting the community from the offender; promoting the rehabilitation of the offender; making the offender accountable for their actions; and, to denounce the conduct of the offender. It is the Court's duty to reconcile and rationalise these purposes in considering the sentence appropriate to the particular offence. In R v Engert (1995) 84 A Crim R 67, Gleeson CJ, at 68, after discussing the purposes of punishment as set out in Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465, stated:

"A moments consideration will show that the interplay of the considerations relevant to sentencing may be complex and on occasion even intricate .... It is therefore erroneous in principle to approach the law of sentencing as though automatic consequences follow from the presence or absence of particular factual circumstances. In every case, what is called for is the making of a discretionary decision in the light of the circumstances of the individual case, and in the light of the purposes to be served by the sentencing exercise." 49 The need to ensure that the offender is adequately punished for the offence is essentially linked to the concept that the sentence must ultimately reflect the objective seriousness of the offence. In the present case there is no doubt that each offence is a serious breach of the Act for reasons already set out. However, in a real sense the breaches are those brought about by the actions and omissions of Tempo and not of the conduit entities. It may be argued that Tempo has chosen its own corporate structure and if that left it open to charges in relation to the same incident in relation to itself and its wholly owned subsidiaries, then so be it. However, the circumstances of each case are to be scrutinised in the sentencing process: not every wholly owned subsidiary or closely related defendant charged in relation to the same offence will be a mere conduit exercising no control and playing no part in the day to day employment relationship. Further, while it may be for the prosecutor to lay charges that cannot limit the Court in the way in which it approaches the sentencing exercise. A related consideration is that while the wholly owned subsidiaries acted as mere conduits, in fact they had the power to exercise control over the employees and did not do so. In the circumstances of the present case that type of analysis has little potency because the directing minds of the corporate entireties were the same persons: they chose to have the labour hire entities act without control and as mere conduits and chose to use Tempo as the de facto employer and in a practical sense standing in the shoes of the employer. The seriousness of the offence of the labour hire entities has to be judged in that context."

43 After considering a number of the factual matters, his Honour determined that having regard to the minimal role played by the corporate subsidiaries he would afford to them an approach permitted under s 10 of the Crimes (Sentencing Procedure) Act 1999 by requiring them to enter into a good behaviour bond and otherwise discharging them." 55 On one view of it, Haylen J in Jontari might have chosen to have imposed a penalty on the wholly owned labour hire company acting as a "mere conduit" on the basis that it was subjected to the absolute liability imposed upon it by the legislation as an employer and had failed to comply in circumstances where at law it could not escape liability by delegating its responsibilities. Such an approach would have exposed that defendant to an appropriate penalty without any mitigating effect of the kind that his Honour ultimately applied. However, consistent with his Honour's approach to the sentencing process and the proper application of sentencing principles, his Honour determined that the penalty should, in effect, be borne totally by the principal corporate defendant. 56 As I understand the approach of Haylen J, it was to confine the ratio of the Full Bench in Big River Timbers to one which excluded the application of the principle of totality to prosecutions against closely related multiple defendants, but did not exclude other approaches consistent with the appropriate and proper application of the principles of sentencing. 57 For completeness, I note that in Metropolitan Administrative Services I referred to a number of first instance judgments in this Court where the circumstances of the prosecution involved two closely related corporate defendants. Some of those judgments adopted a mitigating approach, and some did not. The judgments are described in [21] to [28] of that judgment. 58 I now turn to deal with the most recent Full Bench judgment, which is JT and LC Tippett Pty Ltd and RD and LF Tippett Pty Ltd v WorkCover Authority of New South Wales [2008] NSWIRComm 177. In those proceedings, there were two corporate defendants that were carrying on a partnership. They were each charged with the same breach of the Occupational Health and Safety legislation arising out of the same incident. The Full Bench posed the question for consideration in these terms. "89 The issue therefore for determination in this appeal is whether the principle stated in Big River Timbers should be maintained where a quite different, indeed unusual, position exists factually, namely that there are separate corporations the subject of charges, but the prosecutor concedes that the corporations form part of not just a trading business, but an actual partnership which is the employer. Furthermore, the corporations are facing the same offences and same charges and same particulars in respect of the one incident. In our view, for the reasons that follow, the circumstances of this matter are distinguishable from those found in Big River Timbers because the role of the entity here, which was the employer, was essentially in law, one employer entity. 59 After reviewing a number of authorities, the Full Bench said, "96 There has been no case before the Court where there has been a corporate, or non corporate partnership, as is the case here. In McDonalds one of the corporations was responsible for the organisational arrangements of the business and an associated corporation responsible for the finance and management of the business. The net effect was that there were two separate corporations having a close relationship based on certain factors, but different in that the corporations were carrying out different functions. The reality was that there were separate incorporations that were the subject of different offences under different provisions of the 1983 Act.

97 The appellants submitted that a global approach was adopted by O'Loughlin J in Trade Practices Commission v Cue Design Pty Ltd . As the trial judge observed, that decision involved multiple charges against the same defendant, as well as charges against a second defendant. O'Loughlin J found that the gravamen of each count against each defendant was the same, and, the defendants were part of the same corporate group. One defendant was the manufacturer, designer and wholesaler of women's garments. The other defendant retailed the garments. The offences involved attaching price tags to garments displayed in stores bearing higher prices crossed out and lower prices written below, when the garments had not been previously offered for sale at the higher price. O'Loughlin J held at 508: 'I also am of the opinion that it is appropriate to deal with this matter as if there had been one offender but to acknowledge the existence of the two defendants by imposing upon each a penalty equal to 50 per cent of the whole. In reality, what happened was the implementation of one sales strategy by one business house. It would be unfair to impose a multiplication of penalties because of the number of outlets or the number of the companies in the group.'

98 The trial judge rejected the approach of O'Loughlin J in the light of her conclusions as to Big River Timbers . It is unnecessary for us to rule upon the question raised in that respect because of the conclusions that we have reached as to the proper disposition of this aspect of the appeal.

99 Although the defendants have been found guilty of the same offence that was in the same terms and arose out of the same circumstances, their offences relate to corporate co-offenders who are in a partnership that is the employer. There is, therefore, a critical factual difference to that found to exist in Big River Timbers : in this case, the issue of totality does not arise because, as a result of the partnership, there is but one employer entity in law. We propose to proceed to sentence on this basis." 60 It will be seen that the Full Bench did not consider it necessary to refer to the approach of O'Loughlin J in Cue Design Pty Ltd which I have earlier described and which is set out in the Full Bench judgment. This was because the Full Bench was satisfied that the matter should be approached as if there were one defendant being the partnership which was the employer at law. 61 As I read the judgment of the Full Bench, it specifically eschewed any rejection of the approach of O'Loughlin J in Cue Design. Accordingly, it may be assumed that this is a matter that is not yet definitively settled at Full Bench level. In reaching this conclusion, I am cognisant that the Full Bench in Big River Timbers focussed predominantly on the application of the principle of totality and did not discuss the rationale for the approach typified by that of O'Loughlin J in Cue Design, which I adopted in Metropolitan Administrative Services and which I apprehend Haylen J to have followed in Jontari. 62 Some support for such an approach may be gleaned from observations of Gleeson CJ (as his Honour then was) in the New South Wales Court of Criminal Appeal in Tiger Nominees Pty Ltd v State Pollution Control Commission (1991) 25 NSWLR 715 (Mahoney JA and Campbell J agreeing with his Honour's reasons for judgment). The appeal proceedings concerned charges for breach of the Clean Waters Act 1970 against two corporate defendants who were in partnership and who were held vicariously responsible for the conduct of the employees of that partnership. After referring to the fact of the partnership and the proceedings brought against multiple offenders by reason of the partnership, his Honour said, "It is, of course, easy to imagine cases where justice would require that penalties be reduced below what otherwise might be in recognition of the circumstances that a multiplicity of offenders is accidental and quite unrelated to the merits of the case. In the present case, however, there is no reason in principle why Hemmings J was obliged to approach the penalising of the appellants as though they were in substance only one offender although, as I have indicated, the circumstance that his Honour was dealing with a partnership employer was an aspect of the facts that it was appropriate for him to bear in mind." (At 722). 63 It might be thought that corporate defendants being clearly related in that they have common shareholders, and who participate passively in a state of affairs that gives rise to a breach arising out of the same incident, would create circumstances calling for mitigation consistent with the observations of Gleeson CJ. In my respectful opinion, the circumstances considered by Haylen J in Jontari fall for consideration within this approach. Arguably, the circumstances of these proceedings call for a similar consideration. Bunnings, as part of the process of integration of the BBC Hardware business, had taken overall responsibility with respect to occupational health and safety matters upon staff, to the exclusion of BBC Hardware. 64 In these circumstances, I intend to consider whether it is appropriate in the context of these proceedings to ameliorate the penalties which would otherwise be imposed on each of the corporate defendants, having regard to their close relationship and in particular to the fact that the impact of any monetary penalties will be borne by the same persons, namely the shareholders of Wesfarmers Limited. 65 As I have previously observed, the maximum penalty which applies to each defendant is $825,000. In determining penalty, I shall have regard to the matters to which I have previously referred, namely the objective seriousness of the offences, the need for general and specific deterrence and the mitigating factors which I have described. 66 It is quite clear that in an overall sense, the control of the store was in the hands of Bunnings personnel and that overall Bunnings operational and other systems, including occupational health and safety systems, were utilised. Although BBC Hardware is not entitled to escape liability, in the sense that it cannot hide behind the requirement to abdicate the implementation of occupational health and safety measures to Bunnings, the more substantial culpability is that of Bunnings. In these circumstances, I would impose a monetary penalty of $130,000 on Bunnings. 67 This leaves for consideration the circumstances of BBC Hardware. It has a lesser culpability because of the matters which I have described, but it is not in the same category as the "mere conduit" described by Haylen J in Jontari. Without any further amelioration, I would have imposed on BBC Hardware a penalty of $95,000. However, I propose to further reduce the penalties so as to ensure that the shareholders of the Wesfarmers group, who will ultimately bear the burden of both penalties, are not unduly and unfairly penalised in circumstances where each of the prosecutions has been initiated by reason of the same incident and involves the exact same particulars of breach. 68 The aggregate penalty, without the application of any further mitigating circumstances, would be $225,000. The WorkCover Authority of New South Wales asserted that there should be no further discount applied by reason of the close relationship of the defendants and that it should be entitled to a moiety of that amount. 69 However, having regard to the approach to the assessment of penalty in the circumstances of these proceedings, which I prefer for the reasons that I have earlier set out, I propose to reduce the aggregate penalty by $85,000 leaving a net aggregate penalty of $140,000. This should be borne as to $130,000 by Bunnings and as to the balance, namely $10,000, by BBC Hardware. 70 The prosecution sought a moiety of the penalties and costs, neither of which was opposed. General recommendation

71 Tragically, experience shows that deficiencies in compliance with Occupational Health And Safety legislation in everyday matters are not highlighted until an incident occurs. This would seem to be the case in the context of these proceedings. Nevertheless, as I have previously observed, thousands of Australians must use LP gas cylinders weekly, especially on weekends. Having heard the evidence in these proceedings and having had the benefit of viewing the Kleenheat video, I have a renewed awareness of the dangers associated with the handling and use of LP gas cylinders. As is obvious, a consumer-sized cylinder should only be filled exercising particular care and using special equipment. Care needs to be taken also in making sure that the cylinder is earthed so as to avoid creating an ignition spark. The operation should take place well away from any possible source of ignition. In the same way, a faulty or leaking cylinder needs to be identified, if necessary using soapy water, the valve should be closed if possible and if there is no alternative to allowing the gas to escape, this should be done in an environment well clear of any possible source of ignition, using a hose to disperse the vapour which has escaped. I recommend that the WorkCover Authority of New South Wales take such steps as it feels are reasonable and appropriate to bring these dangers to the attention of all persons and entities who engage others to handle LP gas cylinders. If there were some Government agency that was able to create a message to similar effect for consumers, this would also, in my opinion, constitute a positive and proactive step in the interests of public safety. Orders

72 I make the following orders. 1. Each of the defendants is found guilty of the breaches of the Occupational Health and Safety Act with which it is charged and convicted accordingly. 2. I impose a penalty of $130,000 on Bunnings Group Limited and of $10,000 on BBC Hardware Limited with a moiety to the prosecutor. 3. The defendants are to pay the costs of the prosecutor in the proportion in which each of the penalties bears to $140,000, assessed by the Court in default of agreement.

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.

[1995] NSWIRComm 288

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