Lyco Industries Pty Ltd v Inspector Buggy

Burgess & Ors v Mount Thorley Operations Pty Limited (2002) 119 IR 52 CASES CITED: Forster v Osprey Manufacturing Pty Ltd [2003] NSWIRComm 161 Inspector Ruth Buggy v Lyco Industries Pty Limited [2005] NSWIRComm 298 Inspector Ruth Buggy v Lyco Industries Pty Limited [2005] NSWIRComm 423

APPELLANT Mr J Phillips SC Solicitor: Mr M Siebold McCullogh & Buggy LEGAL REPRESENTATIVES: RESPONDENT Mr R Reitano of counsel Solicitor: Mr G Diggins WorkCover Authority of NSW

Application for Leave to Appeal and Appeal against a Judgment of Justice Schmidt given on 25 August 2005 and 24 November 2005 in matter nos IRC 5078 of 2004 and 5079 of 2004

1 On 22 December 2005, Lyco Industries Pty Ltd lodged an application for leave to appeal and, if granted an appeal against the judgments of Schmidt J given on 25 August 2005 and 24 November 2005 in Inspector Ruth Buggy v Lyco Industries Pty Limited [2005] NSWIRComm 423 and Inspector Ruth Buggy v Lyco Industries Pty Limited [2005] NSWIRComm 298. 2 Inspector Buggy had brought prosecutions pursuant to s 18(1)(a) and s 18(1)(b) of the Occupational Health & Safety Act 1983 ("the OH&S Act") against the appellant. 3 The appellant is the manufacturer of hydraulically powered post driving machines which are manufactured at its premises in Victoria. Mr William Munton purchased one of the its machines from a supplier of agricultural equipment, Kentan Pty Ltd of Hexham, New South Wales. 4 On 23 May 1999, Mr Caine Hayward, one of Mr Munton's employees, was killed while operating a machine. The offences arose out of this incident. The appellant pleaded not guilty to two charges brought under s 18 of the OH&S Act. 5 It is the appellant's case that there was no jurisdiction in the Court to deal with the offences charged, because there had been no supply of the machine in New South Wales, said to be a crucial element of both offences. Reliance is placed on the provisions of the Victorian Goods Act 1958, which deals in s 39 with the question of delivery. The appellant submitted before her Honour that whilst it was alleged that the supply had occurred in Hexham, given the statutory provision made as to the place of delivery, it followed that the machine had been supplied to Kentan in Victoria and that no supply had occurred in the State of New South Wales. It followed that no offence had been committed in New South Wales. The defendant had, at no relevant time, been in the State of New South Wales. It was Kentan which had supplied the machine to Mr Munton in New South Wales. The respondent submitted that the evidence showed that the supply had taken place at Hexham. 6 Her Honour determined that the supply of the machine occurred in New South Wales and not Victoria and that the offences had been made out. Her Honour imposed a penalty of $90,000 in matter no IRC 5078 of 2004 and a penalty of $40,000 in respect of matter no IRC 5079 of 2004. The appeal is in respect of her Honour's finding that the supply of the plant took place in the State of New South Wales and that her Honour erred in law in holding that there was a territorial nexus with the State of New South Wales. 7 This judgment concerns an application made by the appellant for a stay of her Honour's decision. 8 At the commencement of his submissions, Mr J Phillips SC, who appeared for the appellant referred the Commission to Ch 4 Pt 7 of the Industrial Relations Act 1996 ("the Act"), noted the provisions of s 190 which provide, inter alia, that if an appeal is made under this part to a Full Bench of the Commission or a presidential member, the Court may, on such terms as it considers appropriate, order that the judgment be wholly or partly stayed pending determination of the appeal. 9 It was, however, common ground that s 190 does not apply because of the terms of s 196 which deals with appeals in criminal proceedings and provided that the Criminal Appeal Act 1912 applies to be appeals under s 196 and the other provisions of Pt 7 do not apply. Section 196 relevantly provides as follows:

196 Appeals from and references by members of Commission in criminal proceedings (1) This section applies (and the other provisions of this Part do not apply) to appeals and references to the Full Bench of the Commission in Court Session in respect of criminal proceedings taken before a judicial member of the Commission. (2) The Criminal Appeal Act 1912 applies to any such appeal or reference in the same way as it applies to an appeal or reference to the Court of Criminal Appeal in respect of criminal proceedings taken before a Judge of the Supreme Court in its summary jurisdiction. (3) For the purposes of subsection (2), a reference (however expressed) in the Criminal Appeal Act 1912: (a) to the Court of Criminal Appeal - is taken to be a reference to a Full Bench of the Commission in Court Session, and (b) to the Supreme Court - is taken to be a reference to the Commission in Court Session, and (c) to rules - is taken to be a reference to rules of the Commission, and (d) to the Attorney General - is taken to include a reference to the Minister, and (e) to the Director of Public Prosecutions - is taken to include a reference to the prosecutor in the proceedings before the Commission in Court Session, and (f) to the registrar - is taken to be a reference to the Industrial Registrar. (4) … 10 I am not presently convinced the parties common position on this matter is necessarily correct. However, in view of the conclusion that I have reached, it is not necessary to finally determine the issue. 11 Excepting only for the purpose of considering the parties submissions, if s 190 does not apply, then it is necessary to look at the Industrial Relations Commission Rules 1996 ("the Rules"). There was some debate between the parties whether r 85(1) applies in the present case, the appellant said it did whilst the respondent said it did not. Rule 85(1) is in the following terms:

85 Directions where procedure wanting or in doubt (1) Where any person desires to commence proceedings or to take any steps in a particular case before a tribunal and:

(a) the provisions of the Act and these Rules do not make any or adequate provision for a procedure to be followed and there is no established practice or usage of the Commission, or (b) a difficulty arises or doubt exists as to the procedure to be followed, the tribunal may give directions or make such orders with respect to the procedure to be followed as it considers necessary.

12 The terms of r 85(1) require that for that rule to be relevant, there is no provision in the Act or Rules that makes adequate provision in the particular case. Acting on the parties hypothesis that s 190 of the Act does not apply, I consider that r 89(5) applies which logically results in r 85(1) not applying. 13 Although the Court was not taken to r 89(5), that rule provides: 89(5) [Supreme Court practice and procedure] Where: (a) there are no relevant provisions; and (b) there is no established practice, procedure or usage; and (c) there is no Rule, order, direction or Practice Direction in force, the practice, procedure or usage for the time being of the Supreme Court, or, in the case of appeals, the practice, procedure or usage for the time being of the Court of Appeal or the Court of Criminal Appeal, as may be appropriate, is, as far as practicable, to regulate the practice, procedure or usage of the tribunal. 14 One must therefore look to "the practice, procedure or usage" of the Court of Criminal Appeal, the relevant provision of which is cl 15 of the Criminal Appeal Rules which has to be read with forms XX and XXI. Clause 15 provides: 15 Suspension of penalty or costs pending appeal Where a person is ordered to pay money as a penalty or for costs, the Judge of the Court of Trial may suspend the payment thereof upon such person entering into recognisances (Forms Nos XX and XXI) to prosecute an appeal and abide the judgment of the Court thereon, before such persons, in such amount and with or without sureties, or upon any other terms and conditions that such Judge directs. 15 Therefore, in my view, there is either power under s 190 of the Industrial Relations Act or cl 15 by virtue of r 89(5) of this Court's Rules. In the circumstances, I propose to approach the matter having regard to the terms of cl 15 of the Criminal Appeal Rules. Although the Regulation refers to the judge of the Court who heard the matter, the Court, as presently constituted, is not constituted by that trial judge, I conclude that cl 15 does not preclude me as vacation judge from dealing with the present matter. 16 Clause 15 provides that the power to suspend or stay the payment of the fine may be exercised on the basis that the appellant may be required to enter into a recognisance to prosecute the appeal, or upon such other terms as the judge directs. 17 I propose to grant a stay on terms for reasons which I now outline. Grounds of Appeal 18 The grounds of appeal are: 1. Her Honour erred in finding that the "supply" of the plant took place in the State of New South Wales. 2. Her Honour erred in construing the word "supply" so as to give it an extra territorial effect. 3. Her Honour erred in finding that there was a territorial nexus between one element of the alleged offence in the State of New South Wales. 4. Her Honour erred in failing to apply the provisions of the Goods Act of Victoria or in the alternative, the comparable provisions of the Sales (sic) of Goods Act (NSW). 5. Her Honour erred in construing the word "supply" contrary to the limit of jurisdiction contained within Section 3A of the Crimes Act New South Wales. 6. Her Honour erred in law in holding that there was a territorial nexus with the State of New South Wales. 7. Her Honour erred in holding that the purpose for which the plant was supplied constitutes an element of the offence. 8. Her Honour erred in failing to property construe the effect of section 3A of the Crimes Act (NSW). 9. Her Honour erred in using section 3A when this was not relied upon by the Prosecutor. 10. Her Honour erred in her interpretation of section 18 of the Occupational Health & Safety Act. 11. Her Honour erred in failing to find that once supply had taken place the offence was complete. 12. Her Honour erred in her assessment of the nature and the quality of the offence. 13. Her Honour erred in determining matters of totality and parity of sentencing." (sic). 14. There was no evidence that the plant was supplied for the purpose of use by persons at work in New South Wales. 15. Her Honour failed to find that it was not reasonably practicable for the Defendant to provide a fully enclosed guard. 16. Her Honour erred in finding contrary to the evidence, that there were no warnings on the machine itself. 17. Her Honour erred in making such a finding in circumstances where no such allegation had been pleaded against the Defendant. Relevant General Principles 19 I am prepared to accept, for the purposes of the stay application, the principles set out by Walton J, Vice-President in Burgess & Ors v Mount Thorley Operations Pty Limited (2002) 119 IR 52, particularly at [19] - [20] where his Honour said: [19] The principles which govern the exercise of discretion in considering an application for a stay in appeal proceedings have been elucidated in two comparatively recent decisions: Re Transport Industry - Waste Collection and Recycling (State) Award (2000) 102 IR 192 and Campbells Cash & Carry v National Union of Workers, New South Wales Branch (2001) 104 IR 400. The appellant is required to establish or demonstrate a sufficient and proper basis for a stay. The decision as to whether to grant a stay is a discretionary one, to be made by the Court after considering, among other factors, the balance of convenience and the rights of the parties. In certain cases, it may be appropriate to consider (as a very preliminary assessment) whether an appellant has a reasonably arguable ground of appeal or whether there is a serious question to be tried.

[20] I respectfully agree with the following principles which were succinctly stated in Re Transport Industry at par 19: "19 I consider that the following considerations derived from the discussion in the Cambridge Credit case are those relevant to apply in this matter:

(1) The mere filing of an appeal will not of itself provide a reason or demonstrate an appropriate case nor will it discharge the onus which the applicant bears.

(2) A court has an appropriate discretion whether or not to grant the stay and as to the terms that would be fair if a stay be granted.

(3) The onus is upon the applicant for a stay to demonstrate a proper basis for a stay that will be fair to all the parties.

(4) In the exercise of its discretion all considerations including the balance of convenience and the competing rights of the parties need to be considered and weighed.

(5) Where there is a risk that the appeal will prove abortive or nugatory if the stay is not granted then the normal exercise of discretion will result in the grant of a stay.

(6) Although, generally speaking, it is inappropriate in relation to an application for a stay to speculate as to the appellant's prospects of success, this does not prevent a court, in the context of considering the specific terms of the stay that will appropriately and fairly adjust the interests of the parties, from making a preliminary assessment as to whether the appellant has an arguable case." The Evidence 20 Mr Phillips tendered an affidavit of Richard Lyons, the joint managing director of the appellant. Mr Lyons annexed the Profit and Loss Account for the appellant for the period 1 July 2005 to 31 December 2005. This account showed total sales revenue of $6,401,067.21, less the total cost of sales (wages, manufacturing, material costs) of $4,756,763.90, giving a gross margin of $1,644,303.26. The nett profit before tax was -$916,969.40. 21 Mr Lyons also attached the appellant's Balance Sheet as at 31 December 2005. The Balance Sheet showed that an amount of $641,542 was held in deposit account BK1; that an amount of $2,383,493 was owing to the company; that fixed assets, machinery and equipment amounted to $2,790,302.78; that fixed assets - office furniture, fixtures amounted to $705,473.86 and that fixed assets - motor vehicles amounted to $734,733. 22 Mr Lyons deposed that the company had recently undergone a major relocation and consolidation of its operations from four separate locations into a single location which had resulted in the appellant's operating costs far exceeding their original estimates. The move, together with the national drought, had seen the appellant's most profitable product lines being replaced with low margin industrial and commercial sub-contracted products. 23 Mr Lyons deposed that, whilst he expected the appellant's financial situation to improve gradually throughout the year, the company was not in a position to pay the fines in full at this stage and if they did so, it would threaten the viability of the company which employs approximately 100 staff. 24 Mr Lyons annexed an application for time to pay which he forwarded to the Industrial Registrar on 14 December 2005. On 29 December 2005, the appellant paid the sum of $11,000 into the State Debt Recovery Office. The application sought to make an initial payment of $5,000, followed by $5,000 per month. 25 It was submitted that this application had been rejected although there was no evidence before me to this effect. In the application for time to pay, the appellant set out the balance it held in a CBA bank account of $34,487 and the approximate value of company motor vehicles which was said to be $303,000. These figures appear to be in conflict with those contained in the balance sheet referred to earlier in these reasons. 26 Mr Lyons deposed that in the event that the fine was payable immediately, the company would be required to sell assets and to make a number of employees redundant. 27 Mr Lyons was not available for cross-examination. Submissions 28 To demonstrate the strength of the appellant's case, Mr Phillips outlined the nature of his client's case on appeal. 29 He submitted that no territorial nexus existed between the State of New South Wales and any element of the offence. The appellant is registered in the State of Victoria and has its business in the State of Victoria. At no relevant time was the appellant present in the State of New South Wales. 30 Mr Phillips contended that if the supply of the post driver occurred outside of New South Wales, then the matter was beyond the scope of the OH&S Act. Senior counsel contended that in relation to the issue of "supply", the respondent relies on the defendant having sold the post driver to Kentan Pty Ltd. Counsel contended that it had been held in Forster v Osprey Manufacturing Pty Ltd [2003] NSWIRComm 161 by the Court that "supply" is not a continuing offence. Once the supply has taken place, the alleged offence is complete. Senior counsel contended that the appellant sold the post driver to Kentan Pty Ltd relying on the Sale of Goods Act 1923 (NSW), or the Goods Act 1958 (Victoria). Mr Phillips submitted that s 23 of the Sale of Goods Act (NSW) provides the rules for ascertaining the intention of the parties as to when property may pass where there is an unconditional contract for the sale of goods. 31 Counsel contended the property and the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment or the time of delivery, or both be postponed. Her Honour found that delivery took place at Hexham in New South Wales, which, it was submitted, was an error. 32 It was also submitted by senior counsel that her Honour's consideration of s 3A of the Crimes Act 1900 (now s 10C) led her Honour to make a finding, at [42] of her earlier decision which had not been argued by the defendant or raised by her Honour. 33 Mr Phillips submitted that her Honour's finding that delivery took place in New South Wales was clearly arguable. 34 Turning to the balance of convenience, Mr Phillips relied on the affidavit of Mr Lyons. 35 Mr Reitano of counsel, who appeared for the respondent, opposed the stay submitting firstly that in respect of the balance of convenience, that there had been nothing put by the appellant that demonstrated its inability to pay the penalty. Mr Reitano pointed to various inconsistencies contained in the affidavit of Mr Lyons regarding the financial position of the appellant, submitting that the Court should treat the financial material provided by the appellant with some caution. Mr Reitano submitted that the appellant did not have an overwhelming arguable case and that its application should be rejected. Consideration 36 In my view, it is appropriate to make a limited assessment of the appellant's prospects of success in this matter. That consideration is relevant to the balance of convenience and the terms of any stay. Such an assessment is necessarily preliminary. The Court has not fully heard the parties on the application for leave to appeal or the merits of the appeal. 37 I have set out earlier the questions raised by the appeal. The essential issues in the appeal relate to the nature of the transaction/s concerning the sale and supply of the post driver; whether the transaction occurred in Victoria and related issues as to when property and goods pass and consequent issues concerning the scope and application of the OH&S Act. 38 Her Honour rejected the appellant's argument that the transaction occurred in Victoria. That argument was also inconsistent with the decision of Wright J in Forster v Osprey Manufacturing Pty Limited. The judgment of Schmidt J was consistent with that of the President. 39 I conclude a relevant consideration is the appellant has available to it a legal issue that has not been determined by a Full Bench and this appeal provides an appropriate vehicle for that to occur, notwithstanding that, the appellant may have to convince the appeal bench that Wright J and Schmidt J were materially incorrect in their respective judgments. 40 Turning to consider the balance of convenience, whilst, on a preliminary assessment made at this stage of the proceedings, the appellant's prospects of success may be said to be not overly strong, this consideration needs to be balanced against the evidence called by the appellant. 41 I agree with the submissions of Mr Reitano that I should treat the financial material contained in the affidavit of Mr Lyons with some caution. There are some significant inconsistencies between the appellant's financial position as disclosed in its application to the Industrial Registrar for time to pay and the material contained in the appellant's balance sheet as at 31 October 2005. In particular, I note as at 31 October 2005, the appellant had outstanding invoices in excess of $2,000,000. 42 Balancing the competing interests, I am of the view that a stay should be granted with conditions. This will involve the payment of an amount of money in respect of the total penalties imposed on the appellant. 43 In my view, the appropriate course by analogy with forms nos XX and XXI referred to in cl 15 of the Criminal Appeal Rules, is to stay the orders of Schmidt J upon the basis of the payment of $30,000, including the $11,000 already paid, and also on the basis that the an undertaking be given on behalf of the company and Mr Lyons, the Managing Director, that the appeal will be diligently prosecuted and on the basis that the appellant provides appropriate security in a form suitable to the Industrial Registrar for the payment of the balance of $100,000 and an additional $30,000 for costs, at first instance, and on appeal. Should any difficulties arise in this regard, the matter can be referred back to me. 44 I therefore grant a stay of the orders made by Schmidt J on 24 November 2005 until further order of the Court on the following bases: 1. The appellant is to pay into Court $30,000 of the total penalty imposed by her Honour. 2. Such an amount is to be paid within 14 days of the date of this decision. 3. Appropriate undertakings be given to prosecute the appeal and appropriate security be provided to the Industrial Registrar for the payment of the balance of $100,000 and an additional $30,000 for costs. 4. The Court grants liberty to apply generally in relation to the stay of the orders under appeal if there is any matter that needs to be dealt with. 45 Formal directions will be made in the near future in respect of the appeal. The appellant and the respondent should assume that the time for filing and serving of appeal books and written submissions will operate from the date of today's decision. In respect of the appeal books, I grant an additional six weeks for that purpose as an interim measure. If further time is required, an application can be made to the Judge dealing with the directions.

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