Inspector Walker v Earthquake Promotions Pty Ltd

Industrial Relations Commission (NSW)|2013-12-17|Before: Boland J

Judgment 1On 21 December 2011, Inspector Joanne Walker of the WorkCover Authority of New South Wales instituted proceedings under the Occupational Health and Safety Act 2000 ("the Act") against Earthquake Promotions Pty Ltd ("first defendant") and Clay Gill ("second defendant") alleging contravention of s 8(2) of the Act (in respect of Mr Gill it was alleged he contravened s 8(2) by virtue of s 26(1) of the Act). Sections 8(2) and 26(1) respectively provided: 2) Others at workplace An employer must ensure that people (other than the employees of the employer) are not exposed to risks to their health or safety arising from the conduct of the employer's undertaking while they are at the employer's place of work. ... 26 Offences by corporations-liability of directors and managers (1) If a corporation contravenes, whether by act or omission, any provision of this Act or the regulations, each director of the corporation, and each person concerned in the management of the corporation, is taken to have contravened the same provision unless the director or person satisfies the court that: (a) he or she was not in a position to influence the conduct of the corporation in relation to its contravention of the provision, or (b) he or she, being in such a position, used all due diligence to prevent the contravention by the corporation. 2The prosecutions arose out of an incident that occurred on 5 April 2010 at Tyagarah at the Byron Bay Blues Festival site when a gondola of a ferris wheel detached and fell 3 - 4 metres to the ground. Three passengers in the gondola were injured, one seriously. 3The defendants had initially pleaded guilty to the charges against them. However, subsequently the defendants sought to have the guilty pleas vacated. In Inspector Walker v Earthquake Promotions Pty Ltd [2013] NSWIRComm 56, having heard the evidence and submissions on the defendants' notice of motion, the Court made orders vacating the guilty pleas. 4On 27 November 2013, an amended application for order was filed in Court in Matter No IRC 1917 of 2012 (the charge against the first defendant). The first defendant entered a plea of guilty to the amended charge. On 17 December 2013, the charge against the second defendant was stood over to a date to be fixed. 5The amended application for order in respect of the first defendant alleged that it: being an employer on 5 April 2010 at the Byron Bay Blues Festival site, Tyagarah Tea Tree Farm, Lot 103-105 Pacific Highway, Tyagarah in the State of New South Wales ("premises") FAILED TO by its acts or omissions as particularised below ensure that persons other than its employees and in particular Nicola Alroe, Lily Havers and Katherine Malouf were not exposed to risks to their health or safety arising from the conduct of the defendant's undertaking while they were at the defendant's place of work contrary to section 8(2) of the Act. The particulars of the charge are: (a) The risk was the risk of serious injury to persons on or near an amusement device, namely a Ferris Wheel, when a gondola of the Ferris Wheel detached from the Ferris Wheel and fell to the ground due to the structural failure of the sweep axle causing it to brake (sic) away at both ends. (b) The defendant's undertaking was the operation of an amusement device, namely a Ferris Wheel. (c) The place of work was the Byron Bay Blues Festival site at the Tyagarah Tea Tree Farm at lot 103-105 Pacific Highway, Tyagarah in the State of New South Wales. Employees of the defendant, and in particular Paul Duggan and Chris Moore, were performing work for the defendant at the place of work at the time of the incident. (d) The defendant failed to properly inspect the ferris wheel to identify potential risks to the public, in that the defendant failed to conduct an adequate inspection of the gondola axles and in particular the load bearing surfaces, namely an inspection that should have included the removal of grease and dirt from these surfaces to adequately assess their integrity. (e) The defendant failed to carry out testing in accordance with Australian Standard AS 3533.3 Amusement rides and devices Part 3: In service inspection by failing to subject the load supporting shafts of the ferris wheel to periodic non-destructive testing. (f) As a result of the defendant's acts and omissions, Nicola Alroe, Lily Havers and Katherine Malouf were exposed to risk of serious injury and sustained serious injury.

Agreed statement of facts 6The prosecutor tendered an agreed statement of facts (ASF"). It was relevantly agreed that: At all material times, Earth Quake (sic) was an employer and employed Mr Chris Moore and Mr Paul Duggan. At all material times, Earth Quake's undertaking was operating a business which included transporting, assembling and operating amusement devices, including a ferris wheel. At all material times, Mr Gill was responsible for day-to-day decision making in relation to the operations of the business, including managing the booking of the Ferris wheel, transportation, erection, operation, maintenance and dismantling of the Ferris wheel, and all the associated record-keeping. 7The ASF described the ferris wheel in the following terms: The Ferris Wheel involved in the incident was manufactured in 1979 in South Australia with Design No. SA5 95970-5. The Ferris Wheel's identification number was X1158. At all material times, the Ferris Wheel was owned and operated by Earth Quake. ... Earth Quake held a Log Book for the Ferris Wheel. The Log Book contained details for the Ferris Wheel dating from 1998, including ownership, identification number, plant item registration, date of manufacture, design number and the class of amusement device that the Ferris Wheel fell within. The Log Book also included information on the inspection and operation of the Ferris Wheel, [sic] The critical components list, usually filled in by an engineer was not listed for this Ferris Wheel prior to the incident. Some of the documentation in the Log Book was provided to Earth Quake at the time it purchased the Ferris Wheel. On 27 November 2009, WorkCover NSW issued a 'Certificate of Plant Item Registration' for the Ferris Wheel, with an expiry date of 26 November 2010. At all material times, the Ferris Wheel was registered in New South Wales and Queensland. The Ferris Wheel arrived at the Site on 30 March 2010. It took approximately two days to erect the Ferris Wheel. 8The incident that resulted in the injuries to the three persons was described thus: On the afternoon of 5 April 2010, Nicola Alroe (aged 16), Kate Malouf (aged 15) and Lily Havers (aged 15) arrived at the Festival. At or about 7:00pm, Ms Alroe, Ms Malouf and Ms Havers purchased tickets for the Ferris Wheel and handed them over to Mr Moore, an employee of Earth Quake. Mr Moore subsequently directed them into a gondola. The Ferris Wheel commenced moving in an anti-clockwise direction and rotated approximately one and a half times. The gondola that Ms Alroe, Ms Malouf and Ms Havers were riding in stopped briefly at the top of the Ferris Wheel then continued to move slowly. The gondola then began to descend as the Ferris Wheel continued to rotate. As the Ferris Wheel was rotating, the gondola shook and there was a loud noise. The gondola continued moving and by the time it was approximately halfway down, one end of the sweep axle on the gondola broke away. The sweep axle then broke away at the opposite end, causing the gondola to fall. As the gondola was falling, it struck a winch which was directly below it. The gondola fell approximately 3 to 4 metres to the ground. Ms Alroe, Ms Malouf and Ms Havers were treated at the Site by St John Ambulance personnel and NSW Ambulance Paramedics and then conveyed by ambulance to Tweed Heads Hospital. As a result of the incident, Ms Alroe sustained soft tissue injuries to her thoracic spine and head, plus cuts and abrasions to her left arm, knee and ankle. As a result of the incident, Ms Malouf became unconscious and sustained right eye and facial bruising, multiple soft tissue injuries to the head, neck, shoulders, thoracic and lumbar spine, leg pain and limited mobility, and was diagnosed with a compression fracture of the L1 vertebrae (Lumbar Spine) and an unstable compression fracture of the T12 vertebrae (Thoracic Spine). As a result of the incident, Ms Havers sustained soft tissue injuries to her neck, concussion, chipped teeth, and ongoing headaches. 9There are Australian Standards that apply to the design, construction, operation and maintenance of amusement devices such as the ferris wheel. In this regard, the ASF stated: Clause 139 (2) of the Occupational Health and Safety Regulation 2001 requires Log Book records to be kept in accordance with Australian Standard AS 3533.2: Amusement Rides and Devices Part: 2 Operation and maintenance. Australian Standard AS 3533.3 Amusement rides and devices Part 3: In service inspection', requires load supporting shafts to undergo non-destructive testing. The Ferris Wheel was classified as a class 3 device and required non-destructive testing to be carried out every 2 years. This did not occur prior to the incident. Clause 139(2) of the Occupational Health and Safety Regulation 2001 requires that maintenance, repair, inspection and testing be carried out in accordance with 'Australian Standard AS 3533.2 Amusement rides and devices Part 2: Operation and maintenance'. Earth Quake failed to do this. At all material times, Earth Quake did not conduct an inspection that included the removal of grease and dirt from these surfaces to adequately assess their integrity. 10Following the incident, WorkCover issued Prohibition and Improvement Notices on the first defendant. On 7 April 2010, Mr Brian Bradley, a registered consulting engineer engaged by WorkCover, carried out an inspection of the ferris wheel at the site. The ASF described Mr Bradley's findings as follows: Mr Bradley inspected the broken ends of the gondola axle that were still attached to the Ferris Wheel and noted "the line of the break, an indication of rust on one section of the break, on the A side, a torn lip on the bottom of the break on the B side". After removing accumulated grease and dirt from the broken stub ends of the axle, Mr Bradley found evidence that the cracks had passed through indentations on the broken stub axle. Using a digital vernier calliper, Mr Bradley measured the diameter of the axle stubs, at both sides A and B, as near as possible to the cracks. Similar measurements were also taken on the central section of the axle that had snapped and broken away at the time of the incident. This crack was about 25mm long on the stub end and about 22mm long on the centre section of axle. Mr Bradley noted that these indentations would have acted as stress concentrations, which resulted in side "A" failing first and side "B" then not having the capacity to carry the total load and then also failing. Mr Bradley observed on the gondola axles, a pair of flanges, at each end of the axle that had been welded to act as locators for the gondola hangers. Mr Bradley also inspected three other gondola axles and also identified indentations on the axle bearing surface. Similar measurements were also taken of the three other gondola axles, and from the measurements taken Mr Bradley stated"...it was evident that significant wear had occurred on all the gondola axles examined between each pair of locating flanges i.e. inside the pair of flanges..." and that "The wear in the axle between the flanges was visible to the naked eye..." Mr Bradley indicated that the Ferris Wheel operator, during erection and/or dismantling of the Ferris Wheel, would also be unlikely to notice the extent of wear or the existence of the indentations unless the grease and dirt was cleaned off to show the state of the metal. 11Changes were made to the ferris wheel and these were described in the ASF: On 13 April 2010, Mr Jack Wade inspected the disassembled Ferris Wheel at Earth Quake's request. Following inspection, Mr Wade, at the request of Mr Gill, redesigned the support/sweep axle, using a hollow tube of high tensile steel which included an inner steel rod intended to act as a second mechanism of support should the axle fail again. Earth Quake subsequently engaged T J Welding to carry out the repair work on the Ferris Wheel. The complete Ferris Wheel structure, including sweeps, bracing and the main wheel (circle), was voluntarily rebuilt using new materials, including the modified gondola axle designed by Mr Wade. 12The ASF further stated: On 9 June 2010, Mr Wade inspected the completed work on the Ferris Wheel and indicated that it had been carried out "in a workmanlike manner and in accordance with....design assumptions". Mr Wade then reviewed the Log Book and added a critical components list, which specifically nominated the main axle of the Ferris Wheel as critical components. Mr Wade specified that the axles be non-destructive tested annually, and visually inspected every six months. It is conceded this had not been previously specified by an engineer or recorded in the critical component section of the logbook by any engineer prior to this date. Mr Wade also recorded in the Log Book that the Ferris Wheel is to be restricted to five adults per gondola, rather than its stated capacity of six. On 10 June 2010, Inspector Wong received correspondence from Mr Wade detailing the rectification work carried out on the Ferris Wheel. Mr Wade stated in this correspondence that he was satisfied that the Ferris Wheel was now safe to operate and that it now conformed to the requirements of Australian Standard AS 3533.1-2009 Amusement Rides and Devices Part 1: Design and Construction. Following the incident, Bluesfest made a decision not to have any amusement devices at the Festival that operated at height or speed, for the foreseeable future. The Inspector was informed that if Bluesfest made a decision to have any amusement devices at the Site in the future, it would require a more in-depth analysis of the Log Book for those devices: to determine what maintenance had been carried out, including non-destructive tests; to make sure that all necessary checks and periodic maintenance schedules had been adhered to; and seeking guidance on requirements for amusement device operators.

Prosecutor's evidence 13The prosecutor's documentary evidence consisted of: colour photographs of the incident scene including photos of the ferris wheel showing components such as the gondola and gondola axles; extracts from relevant Australian Standards; Registration Certificate for the ferris wheel; two reports of Mr J B Wade, consulting engineer, dated 10 June 2010 and 18 August 2010; report of Mr Brian Bradley, consulting engineer, regarding the incident and the condition of the gondola axles; prior convictions report (showing no prior convictions); expert report of Dr Gary Martin dated 24 October 2013; and "AS 3533.2 Supplement 1 Log Book for Ferris Wheel X 1158 (40 pages in total)".

Defendant's evidence 14The defendant's evidence consisted of the following: (1)Queensland Certificate of Inspection for Amusement Device dated 9 June 2010. (2)Report of Brian Bradley, Consulting Engineer, undated, entitled "Report on Ferris Wheel Incident at Ballina April 2010". (3)"Engineer's Certificate for Registration of an Amusement Device other than Cable Transit Device" issued by WorkCover NSW on 16 October 2012. (4)"Engineer's Certificate for Registration of an Amusement Device other than Cable Transit Device" issued by WorkCover NSW on 30 April 2012. (5)Renewal Registration Engineer's Certificate issued by Mr J Wade in respect of the ferris wheel in relation to an inspection conducted on 11 October 2010. (6)Engineer's Certificate issued by Mr J Wade in respect of the ferris wheel in relation to an inspection conducted on 12 September 2009. (7)Engineer's Certificate issued by Mr R J Sargent in respect of the ferris wheel in relation to an inspection conducted on 29 October 2008. (8)Engineer's Certificate issued by Mr R J Sargent in respect of the ferris wheel in relation to an inspection conducted on 3 October 2007. (9)Engineer's Certificate issued by Mr R J Sargent in respect of the ferris wheel in relation to an inspection conducted on 6 October 2006. (10)Document entitled "Record of Inspections" purporting to show inspections of the ferris wheel and/or its components conducted between 1998 and 2012. (11)Document entitled "Record of all repairs or alterations affecting the safety of the device" purporting to show repairs or alterations made to the ferris wheel between 2006 and 2012. (12)Company Tax return 2011 for "Earth Quake Promotions". (13)Income Tax Return Tax Estimate for 2011 for Mr Clay Gill.

Consideration 15As I recently observed in Inspector Cook v State of New South Wales (NSW Police Force) [2013] NSWIRComm 114 at [29]: [T]he primary factor the Court must consider when determining an appropriate sentence is the objective gravity of the offence. In determining the objective gravity or seriousness of the offence, the circumstances of the offence that the Court may have regard to include: (1) the nature and quality of the offence: Morrison v Powercoal (No 3) at [13]; Lawrenson at 474; Independent Cargo and Wool Services Pty Ltd v Inspector Mingare (Full Court, 10 March 1994, unreported) at 4 and Inspector Hannah v Wonar Pty Ltd (Full Court, 30 June 1992, unreported) at 9; (2) the foreseeability of the risk to health and safety: see Department of Mineral Resources (NSW) (Chief Inspector McKensey) v Kembla Coal and Coke Pty Ltd [1999] NSWIRComm 353; (1999) 92 IR 8 and the cases referred to therein at 27; (3) the gravity of the consequences of an offence: Capral Aluminium Ltd v WorkCover Authority of NSW [2000] NSWIRComm 71; (2000) 49 NSWLR 610 at [94]-[95]; Rodney Morrison v Powercoal Pty Ltd [2003] NSWIRComm 416 at [32]; Inspector Short v The Crown in the Right of the State of NSW (NSW Police) [2007] NSWIRComm 138 at [21]; (4) whether simple and straightforward remedial steps were available: Inspector Hannah v Wonar at 9; Lawrenson Diecasting at 476; Rodney Morrison v Powercoal (2003) at [33]; (5) the maximum penalty for the offence: Morrison v Powercoal (2005) at [16] and [17]; Markarian v The Queen at [30] and [31]; Inspector Legge v Intercast & Forge Pty Ltd [2006] NSWIRComm 182 at [26]; Inspector Short v The Crown in the Right of the State of NSW (NSW Police) at [21]; Cahill v State of NSW (NSW Police) (No 2) [2005] NSWIRComm 400 at [33]; (6) general and specific deterrence: Capral at [71-[80].

Nature and quality of the offence 16In pleading guilty to the amended charge the first defendant accepted that the risk was "the risk of serious injury to persons on or near an amusement device, namely a Ferris Wheel, when a gondola of the Ferris Wheel detached from the Ferris Wheel and fell to the ground due to the structural failure of the sweep axle causing it to brake (sic) away at both ends." The gondola fell approximately 3 to 4 metres to the ground. The fall resulted in the passengers in the gondola Nicola Alroe, Lily Havers and Katherine Malouf suffering injuries. 17The risk arose because the first defendant failed to conduct an adequate inspection of the gondola axles and, in particular, the load bearing surfaces, namely an inspection that should have included the removal of grease and dirt from these surfaces to adequately assess their integrity. The first defendant also failed to carry out testing in accordance with Australian Standard AS 3533.3 - "Amusement rides and devices Part 3: In service inspection", by failing to subject the load supporting shafts of the ferris wheel to periodic non-destructive testing. 18Clause 139(2)(a) of the Occupational Health and Safety Regulation 2001 required that the maintenance, inspection and testing of the ferris wheel was to be carried out in accordance with the Australian Standards. Clause 5.4 - Inspection, set out in AS3533.2 - 2009, required inspections to be carried out in accordance with AS 3533.3 -2003 and any ride-specific requirements. 19The types of inspection and inspection requirement applicable to devices such as the ferris wheel were set down in Australian Standard AS 3533.3 - "Amusement rides and devices Part 3: In service inspection", in particular in sections 5 and 11 respectively. As the prosecutor submitted, cl 12 of AS3533.3 set out the inspection and testing requirements for 'safety critical' components. Safety critical components were those components in the load path whose failure would result in loss of control, collapse and possible injury or even death. 20Further, that the safety critical components on the ferris wheel included the gondola sweep axle onto which the gondola was fixed. The gondola sweep axle would be regarded as [a] 'load supporting shafts (non-drive)', as it supported the load of the gondola and did not rotate, so a motor did not directly drive it. 21Clause 12 of AS3533.3 required non-destructive testing (NDT) of certain critical components of a mechanical or structural nature in order to provide evidence that those parts of the amusement device were free from faults. As the ferris wheel was classified as a class 3 device and the gondola sweep axles were load supporting shafts (non-drive) they should have been subject to NDT to be carried out every 2 years (Table C1 of AS3533.3 -2003). 22Notwithstanding the requirement for NDT, the first defendant failed to ensure that the load supporting shafts of the ferris wheel were subjected to periodic NDT prior to the incident, either every two years or at all. As the prosecutor submitted, the log book in evidence showed that there was no record of the gondola sweep axles undergoing NDT during the period for which the log book was maintained from approximately 1998 or during the period the ferris wheel was owned by the first defendant since 2006. 23I accept as correct the prosecutor's further submission that: The Defendant should have put in place a planned inspection and maintenance program for all moving and load bearing and structural members of the Ferris Wheel, which should have allowed for inspection every two years using UT [ultrasonic testing] and MT [magnetic particle testing]. Such a planned inspection and maintenance program should have been established and implemented by a competent person. No such program was established or implemented by the Defendant. The Defendant as part of a planned inspection and maintenance program should have undertaken an inspection of the gondola axles and in particular the load bearing surfaces prior to its construction and use. This was not done. As part of such an inspection it was necessary that the Defendant remove all of grease and dirt from these surfaces, in order to be able adequately assess their integrity. Such an inspection was necessary to determine whether there were any signs of damage, cracking or metal fatigue that required further testing or indicated a potential for a failure of that part of the Ferris Wheel. Such an inspection should have occurred at regular intervals, but not less than every 2 years. However the defendant failed to conduct any or any adequate inspection of the gondola sweep axles and in particular the load bearing surfaces including via the removal of grease and dirt from the services to adequately assess the integrity. This is significant in particular because when the gondola sweep axles were dismantled and stacked for transport and storage, they were stacked in a way which it is likely that a flange or other object may impact on the sweep axle between the pair of flanges. An inspection of the sweep axles after the incident demonstrated indentations and significant wear on several of the sweep axles between the pair of flanges. This damage was not able to be ascertained without the removing of the accumulated grease and dirt from the sweep axles between the pair of flanges. The failure to undertake such an inspection meant that the defendant was not in a position to ascertain whether there was any damage, cracking or metal fatigue in relation to the cotton reels (between the pair of flanges) of the gondola sweep axles as a result of the stress loading they were placed under or in relation to any damage caused to their surfaces from their loading, unloading and transport. 24The prosecutor referred to the reports of Mr Bradley, Mr Wade and Mr Martin regarding the cause of the incident. Mr Bradley was of the opinion that the cause of the collapse of the gondola axle was a combination of three factors, namely: (a) the general wear of the axle between the locating flanges; (b) localised indentations, caused by flanges of adjacent axles running on each other during transport, created a point of stress concentration. (c) the dynamic loading of the passengers when the weakest section of the axle is at the point of maximum stress. 25Mr Wade stated that the gondola sweep axle members had no reserve strength to allow for the wear of the bearing surface. He stated that damage to the bearing surface would have caused a stress concentration and that would aid in the initiation of a failure. Mr Wade opined that as the failure occurred with only three passengers in the carriage, it was, therefore, probable that the commencement of the failure had occurred at some unknown earlier time. 26Mr Martin noted that Mr Bradley's observation of cracked lengths and rusted cracks suggest the possibility of fatigue cracks, but not necessarily starting at the indentations, although it is possible that they did start at indentations. Mr Martin concluded that as no metallurgical examination of failure had been carried out and the mode of failure had, therefore, not been characterised, he was unable to conclude whether the failure was due to crack fatigue growth or thinning of the tube walls due to erosion caused by wear and subsequent ductile tearing or a combination of all three mechanisms. 27Mr Martin concluded that the failure to have the relevant NDT and physical inspections carried out meant that the wear and cracking in sweep axle at the cotton reels went undetected prior to its failure. 28There is a long line of authority in this jurisdiction that the responsibility for occupational health and safety at a workplace cannot be delegated. That is to say, a defendant will not escape liability by pleading that it had delegated responsibility for safety to another person or entity. Nevertheless, it may be a mitigating factor if an employer relied on the advice or work of a skilled and experienced person or person with relevant professional or trade qualifications that a particular process, structure, plant, machinery or device was safe provided the employer took steps to satisfy itself that, the individual relied upon did, indeed, possess the relevant skill, experience and/or qualifications and that skill, experience and/or qualifications was properly applied. The extent to which such matters will be taken into account in mitigation will vary depending on the particular circumstances. 29Notwithstanding the first defendant's failures to ensure safety, a significant mitigating factor in this case is that the ferris wheel was subject to periodic inspections by qualified engineers. I note that from time to time Mr Wade and Mr Sargent, both purporting to be qualified mechanical or structural engineers, signed off on "Engineer's Certificates" certifying the ferris wheel was safe to operate and that, inter alia, any required non-destructive testing had been carried out. 30Clause 114 of the Occupational Health and Safety Regulation 2001 relevantly provided: 114 Additional requirements for application to register amusement device An owner of an amusement device who wishes to apply to WorkCover to register an amusement device referred to in the Table to clause 113 must, in addition to complying with clause 113, provide the following at the time of making the application: (a) 2 photographs of the amusement device, (b) a certificate of a qualified engineer certifying that: (i) the engineer has, within 3 months before the date of the application, inspected the amusement device (including an inspection of the amusement device assembled and in operation without passengers), and (ii) in the engineer's opinion, the amusement device is mechanically and structurally capable, under the conditions of use specified in the application, of safely supporting, at any one time, the number of persons or the load stated in the application to be the maximum number of persons or the maximum load to be supported by the amusement device, and (iii) the engineer has checked that all necessary maintenance of, and repairs to, the amusement device have been carried out, that details of the maintenance and repairs have been accurately recorded in the log book for the amusement device by a competent person and that the operating and maintenance manuals for the amusement device are kept with it, and ... 31Given the requirement for NDT every two years, it would appear that the engineers had not checked that "all necessary maintenance of... the device have been carried out..." Moreover, it seems to me that if an engineer was charged with certifying the ferris wheel was safe, physical checks would be made of load bearing parts which may require dirt and grease to be removed in order that the inspection could be properly carried out. If this had been done by the inspecting engineers it is most likely the wear on the gondola axles would have been detected because, as Mr Bradley found, once the dirt and grease was removed, "[t]he wear in the axle between the flanges was visible to the naked eye..." 32As I have stated, none of this relieves the first defendant of liability. It owned and operated the device; it was known by the second defendant that the device was subject to certain regulations that required periodic testing to ensure safety; the first defendant had an obligation to ensure it was familiar with all of the requirements of the Regulation and Australian Standards in relation to maintenance of the ferris wheel and to satisfy itself that the engineers signing off on the safety of the device were complying with the Regulation. It would have been a simple matter for the first defendant to determine whether or not NDT had been carried out on the device in accordance with the Engineer's Certificates. 33The submission that Mr Gill was not well educated, and that he knew of no other operator of amusement devices that conducted NDT, is not a basis to further mitigate any penalty. To do so would undermine the clear public policy underpinning the legislation, that is, ensuring the safety of persons in places of work.

The foreseeability of the risk to health and safety 34An offence will be serious when it involves a risk to safety that was reasonably foreseeable (see, for example, WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Limited and Anor [2000] NSWIRComm 277; (2000) 95 IR 383 at [450], Capral at [82] and Kembla Coal at [27]). 35Was it reasonably foreseeable that the failure to carry out adequate inspection of the gondola axles and, in particular, the load bearing surfaces and the failure to subject the load supporting shafts of the ferris wheel to periodic non-destructive testing would give rise to the risk of serious injury to persons on or near the ferris wheel? In my opinion, the answer is unequivocally in the affirmative. 36It was obvious that the sweep axle, a load-bearing component of the ferris wheel, would be subject to wear during its use, erection, dismantling, transportation and storage. Unless it was adequately inspected and tested in accordance with regulatory requirements and appropriately maintained, it was foreseeable that the wear on the axle would reach a point causing it to fail. It was foreseeable that if this occurred whilst the ferris wheel was in operation, persons riding on the device would be placed at risk of injury. 37Notwithstanding the extent to which the risk was foreseeable, the first defendant relied entirely on others to ensure the risk did not arise. In doing so the defendant failed in its responsibility to take a proactive approach to safety in its workplace. The defendant failed to "be on the offensive to search for, detect and eliminate, so far as reasonably practical, any possible areas of risk to safety, health and welfare which may exist or occur from time to time in the workplace": WorkCover Authority (NSW) (Inspector Egan) v Atco Controls Pty Ltd (1998) 82 IR at 85 per Hill J.

The gravity of the consequences of an offence 38Although the damage or injury caused by a contravention of the Act does not, of itself, dictate the seriousness of the offence or the penalty, a breach where there was every prospect of serious consequences may be assessed on a different basis to a breach unlikely to have such consequences. In such a case, the occurrence of death or serious injury may manifest the degree of seriousness of the relevant risk: See Maddaford v CSR Limited and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337 at [17] - [18]. See also Capral at [94] and [95]; McDonald's at 428; and Morrison v Powercoal Pty Ltd (2003) at [32]. 39The risk manifested itself in injuries to Nicola Alroe, Lily Havers and Katherine Malouf. It is apparent from the nature of the fall that the injuries could have been far more serious and potentially fatal.

Whether simple and straightforward remedial steps were available 40There was nothing to prevent or hinder the defendant in taking steps to avoid or ameliorate exposure to the risk in this case. The measures available were remarkably simple and straightforward: an adequate inspection of the gondola axles and, in particular, the load bearing surfaces; and subjecting the load supporting shafts of the ferris wheel to periodic non-destructive testing.

Maximum penalty 41The maximum penalty in this case is $550,000.

General and specific deterrence 42I agree with the prosecutor that the sentence imposed upon the first defendant should reflect the need to deter others from failing to take a rigorous approach to the inspection and maintenance of amusement rides and devices in that industry. 43In relation to specific deterrence, the prosecutor quite fairly noted that after the incident the defendant arranged for the ferris wheel to be inspected by an engineer. Following the inspection the sweep axle was redesigned to include a second mechanism of support should the axle fail again. The ferris wheel was subsequently re-built using new materials. It was also subsequently re-inspected. The Log Book system used by the defendant was modified to add a requirement for the inspection and testing of critical components including the gondola axles and main axle. A new specification was provided by the engineer for the axles to be non-destructively tested annually and visually inspected every six months. 44This all weighs in the defendant's favour as an indication of the unlikelihood of it re-offending. As the prosecutor submitted, however, the defendant continues to operate in the amusement rides and devices industry where a structural failure in a device such as a ferris wheel would have potentially serious consequences for the defendant's employees, patrons and the general public. 45Accordingly, specific deterrence should be a factor taken into account in fixing the penalty to encourage the defendant to have regard to the need for a sufficient level of diligence in the future: see Capral at [77].

Guilty plea 46As I earlier noted, the defendant initially pleaded guilty to the charge in the original application for order, but subsequently sought to have that plea vacated. The Court did so. However, following the filing of an amended charge, the defendant entered a plea of guilty to that amended charge. 47The amended charge relied on two omissions by the defendant to ensure safety, namely failure to properly inspect the ferris wheel to identify potential risks and failure to carry out testing in accordance with the relevant Australian Standards. The original charge alleged in addition that the defendant failed to identify hazards, assess risks and implement appropriate control measures in respect of the maintenance and operation of the ferris wheel and failed to take steps to obtain relevant information in relation to the maintenance, inspection, repair and testing from appropriate sources. 48The gravamen of the offence was clearly the failure to properly inspect the ferris wheel and the failure to carry out the required testing. This is not a case where the amended charge is one of considerable less seriousness than the original charge. In any event, if a plea is entered a long time after a person is first charged, but at a time when a lesser charge is substituted for a greater charge, the advantages to the administration of justice are less, even though the plea may have been made at the earliest opportunity. In such a case there is no entitlement to a 25 per cent discount: R v Dib [2003] NSWCCA 117 at [5]-[6]. I would assess the utilitarian value of the plea as warranting a discount of 10 per cent.

Contrition and remorse 49The prosecution submitted it was not in receipt of any material from the defendant that provided evidence of any contrition and remorse on the part of the defendant for the circumstances of the offence. In particular, there was no evidence of steps that the defendant took to apologise to the three teenage girls who were placed at risk, or otherwise acknowledge the injury, loss and damage caused to them as a result of its failures. 50Section 21A(3)(i) of the Crimes (Sentencing Procedure) Act 1999 provides that a defendant is only entitled to the benefit of a discount for remorse if evidence is provided of an acceptance of responsibility for its actions, and an acknowledgement is forthcoming of any injury, loss or damage caused. 51I am prepared to accept the defendant is remorseful on the basis of statements made on Mr Gill's behalf by his solicitor. It is clear to me Mr Gill is most regretful for what occurred and distressed at the injuries suffered by the three teenage girls. Mr Gill has taken significant measures to ensure the ferris wheel is safe to operate in the future and this must count in his favour because it indicates good prospects of rehabilitation.

Co-operation with WorkCover Authority 52The prosecution, as do I, accepts the defendant co-operated fully with the WorkCover Authority throughout its investigation. I also accept the defendant is a good corporate citizen.

Capacity to pay; section 10 of Crimes (Sentencing Procedure) Act 53It was submitted that the defendant is a very small company and that the income earned "generally supports Mr Gill and his family and the costs of running those rides". It was further submitted the business generates very modest profits and, on average, Mr Gill's taxable income is approximately $20,000 per annum with the defendant's taxable income being about $1,000 per annum. 54It was submitted for the defendant a penalty of more that $4,000 would have a "crushing effect" on the defendant and that the Court should consider applying s 10 of the Crimes (Sentencing Procedure) Act. 55In respect of s 10 it is clear from the authorities that the section will be available only in rare and limited circumstances in proceedings such as that presently before the Court. In WorkCover Authority of New South Wales (Inspector Hopkins) v Profab Industries Pty Ltd (2000) 100 IR 64; (2000) 49 NSWLR 700, for example, the Full Bench stated at [26]: Nevertheless, in occupational health and safety offences before this Court the exercise of the discretion under s 556A (cf s 10 of the Crimes (Sentencing Procedure) Act 1999) must be considered as extraordinary and highly exceptional. When a defendant seeks its exercise cogent reasons must, in our view, be provided by the defendant for such exercise and also by the judge acceding to that submission. 56Whilst I accept that qualified engineers did not discover the flaws in the axle, when they should have, the ultimate responsibility for ensuring the effective maintenance and operation of the ferris wheel lay with the first defendant. If I were to accept the submission that the defendant should escape punishment by making orders under s 10 essentially because the failure to detect the flaws was that of engineers, I would be effectively accepting the defendant was entitled to delegate its responsibility for safety. 57The first defendant was undoubtedly culpable because it was its responsibility - not the responsibility of others - to ensure persons were not exposed to risks in its workplace. Whilst the defendant may have had a reasonable expectation qualified engineers would perform the inspection and testing work to a proper standard, the first defendant failed to ensure that occurred. Checking to see whether engineers did undertake adequate inspections did not involve a technical task beyond the defendant's competency or capability. It would simply involve periodic visual examination of what the inspectors did. If they did not check for wear on the load bearing surfaces of the axles by first removing dirt and grease, it would have been obvious to the observer familiar with the operation of the ferris wheel, and who knew where wear was likely to occur, that the inspection was inadequate. 58I do not propose to apply s 10 of the Crimes (Sentencing Procedure) Act. That leaves the question of the first defendant's capacity to pay a penalty. It may be accepted the first defendant is the alter ego of Mr Gill. It is a one-person operation and the burden of any fine will fall on Mr Gill and his family. 59Mr Gill does not submit he has no capacity to pay a fine and in any event the evidence he adduced regarding his means was quite inadequate, consisting only of the first defendant's tax return for 2011 and Mr Gill's Income Tax Return Tax Estimate for 2011. The onus is on the defendant to establish incapacity to pay and must bring evidence fully disclosing its financial state, not merely annual income, if it is to succeed in that respect: WorkCover Authority of NSW (Inspector Mansell) v Chen and Obing Pty Ltd t/as Old But New [2004] NSWIRComm 247; McColl v John Watson Building Services Pty Ltd [2004] NSWIRComm 353; WorkCover Authority of NSW v D J Gleeson Pty Ltd [2006] NSWIRComm 363. 60Nevertheless, s 6 of the Fines Act 1996 provides that: 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. 61Section 6 has been considered by this Court on numerous occasions, for example: Ferguson v Nelmac Pty Limited (1999) 92 IR 188 at 209; Department of Mineral Resources of NSW (Chief Inspector Terrey) v A M Hoipo & Sons Pty Ltd (2000) 99 IR 137 at [48] - [51]; Manpac Industries Pty Ltd (formerly t/a Pacific Concrete & Quarries Pty Ltd) v WorkCover Authority of NSW (Inspector Glass) (2001) 106 IR 435 at [56] - [57], [67], [81] - [83]; Inspector Green v Camilleri Properties Pty Limited [2006] NSWIRComm 90 at [21]; WorkCover Authority of New South Wales (Inspector Robert Mayell) v D J Gleeson Pty Ltd [2006] NSWIRComm 363. 62In Inspector Fraser v Karabelas (No 2) [2011] NSWIRComm 153, the Full Bench in considering s 6 of the Fines Act stated at [17] - [22]: [17] Section 6 of the Fines Act, therefore, operates on a broad basis: the Court is required to consider "such information regarding the means of the accused as is reasonably and practicably available to the court for consideration" and "such other matters as, in the opinion of the court, are relevant to the fixing of that amount." Those words do not suggest any narrow or confined consideration but they leave the court to assess the appropriateness and adequacy of the information according to the circumstances concerning each particular case. Individual directors and family companies may not be as well placed to provide extensive material or specialist opinions as other better resourced individuals or companies. [18] The three breaches committed by the respondent, Mr Karabelas, are serious offences occurring in the context of a prior conviction for a similar breach. The offences have been found to be aggravated in each case and represent a continuing disregard for safety at a large building site. The penalty to be imposed must reflect that situation except for an assessment of the extent to which that penalty should be reduced because of the financial circumstances of the respondent. [19] The evidence and submissions for the appellant/prosecutor highlight the inadequacy of the financial information provided by Mr Karabelas. The solicitor for the appellant/prosecutor drew to the attention of Mr Karabelas' legal representatives the inadequacy of the material provided in his affidavit and sought additional information and source documents. None have been forthcoming. No party has asked for an oral hearing and no objection has been raised to the Court receiving Mr Karabelas' affidavit nor has he been required for cross-examination. [20] While the Court accepts much of the criticism levelled by the appellant/prosecutor against the adequacy of the material provided, the absence of submissions and a more detailed response to the issues raised by the appellant/prosecutor may also be an indication of the straitened financial circumstances of Mr Karabelas. The present state of the evidence leaves the Court in a difficult position. Mr Karabelas has sworn to being in dire financial circumstances but the full extent of his financial circumstances is unclear. Bankruptcy notices were served in June 2010 and February 2011 but Mr Karabelas' affidavit does not state that bankruptcy proceedings have, in fact, been commenced. [21] A further issue arises for consideration. The terms of Mr Karabelas' affidavit did not raise the question of costs but logically, any inability to fully pay fines must also apply to costs. As no submissions were filed for the respondent, this aspect has not been developed. Costs have been recognised "as an important aspect" of punishment (see Environmental Protection Authority v Barnes [2006] NSWCCA 246; BC200606364) and as falling within the considerations required by the Fines Act (Inspector Jelley v Albright & Wilson (Australia) Ltd [2007] NSWIRComm 148; [2007] 164 IR 456). In the absence of precise figures or an estimate as to costs, this issue can only be taken into account in the broad exercise of discretion having regard to the fact that there have been two hearings, each occupying one day. [22] Applying the spirit of s 6 of the Fines Act, the Court can accept that Mr Karabelas is facing financial difficulties but the extent of those difficulties has not been established. Importantly, Mr Karabelas has accepted a limited ability to pay increased fines rather than asserting a total inability to pay any fine. His position, so described, may be met by an application to the Registrar for time to pay and/or to pay by instalments. The Court will, therefore, proceed on the basis that there will be some modest reduction in the penalties to be imposed. 63The position regarding the first defendant, putting aside questions regarding objective seriousness and maximum penalty, is not dissimilar to that dealt with by the Full Bench in Karabelas: evidence regarding capacity to pay is unsatisfactory and inadequate; the extent of the first defendant's financial circumstances is unclear; the first defendant accepted a limited ability to pay a fine rather than asserting a total inability to pay any fine; and it may be accepted the first defendant's capacity to pay a fine is limited. 64The first defendant submitted that because of its limited capacity to pay a fine there should be no order as to costs, or at worst, an order that the defendant pay 20 per cent of the prosecutor's costs. The defendant submitted it has already received a bill of costs from the prosecutor in the order of $35,000. 65As it was noted in Karabelas, costs have been recognised "as an important aspect" of punishment and as falling within the considerations required by the Fines Act. In Inspector Yeung v Donald Edwin Wilson t/as Wilson's Tree Service [2005] NSWIRComm 158; (2005) 143 IR 187, the Full Bench stated at [133]: In accordance with established principle, the court must make its determination in accordance with s 6 of the Fines Act. The court must also set the appropriate penalty for the offence giving proper weight to the objective seriousness of the offence. The court must then determine the appropriate costs order. Such a consideration, in our view, may also take into account the financial situation of the defendant. In so ordering the court must then determine that the total fine and costs order be an "acceptable total" or as otherwise said "just and reasonable". If the total penalty and costs order is viewed by the court to be excessive the court must make an appropriate adjustment to the costs order. The total must not be disproportionate to the offence. 66I propose to fix a penalty and costs in accordance with the principles stated in Karabelas and Wilson.

Conviction 67I am satisfied the plea of guilty was properly entered. The first defendant is convicted of the offence charged in the amended application for order.

Victim Impact Statement 68The Court received an unsworn victim impact statement from Ms Malouf. Ms Malouf was not required for cross-examination. In a thoughtful and balanced statement, Ms Malouf described the panic and hysteria she felt when the gondola fell. She was concerned she may have been rendered a quadriplegic. As it was, she suffered bruising, scratches and crush fractures to two vertebrae. 69As a consequence of the fall Ms Malouf missed school, significantly affecting her grades. Her injury was exhausting and painful. She began to have nightmares that were frightening and disturbing and often could not sleep. 70Ms Malouf felt the defendant had been "lazy or negligent" in failing to maintain the ferris wheel and disappointed no one from the defendant called to see how she was progressing or to apologise. 71Ms Malouf said she "will never go on a 'fun' ride again in my life". She regards herself as fortunate that the outcome was not more serious and grateful that she is alive and can walk. 72The Court is limited in the use it may make of victim impact statements. Nevertheless, they serve a useful purpose of providing the victim with an opportunity of publicly stating the extent of hurt or damage caused by the defendant and the effect the failure to ensure safety has had on the victim's life. As I have said before in other cases, it also assists this Court in driving home to those responsible for workplace safety the often devastating consequences that may flow from failing to ensure they provide and maintain a safe workplace.

Penalty 73In fixing the penalty I have taken into account the relevant objective and subjective factors referred to in this judgment. I have decided to fix the penalty at the lower end of the range available and important considerations in that regard have been the defendant's not unreasonable expectation he could depend on qualified engineers to comply with statutory requirements to conduct adequate inspection and testing of the ferris wheel, thereby mitigating the objective seriousness of the offence and that the first defendant is the alter ego of Mr Gill and thereby a very small company with limited means of paying a large fine. 74I fix a penalty of $40,000 with a moiety to the prosecutor. In addition, the defendant will pay one third of the prosecutor's costs.

Orders 75The Court makes the following orders: (1) The defendant is convicted of the charge in the amended application for order. (2) The defendant is fined an amount of $40,000 with a moiety to the prosecutor. (3) The defendant shall pay one-third of the prosecutor's costs as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 February 2014

[1999] NSWIRComm 353

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Cases Cited (29)