McColl v John Watson Building Services Pty Ltd and Dowdon Contracting Pty Ltd

Industrial Relations Commission (NSW)|2004-08-17|Before: Wright J, Walton J, Marks J, Ms P, Staunton J

Industrial Relations Commission of New South Wales in Court Session

CITATION : McColl v John Watson Building Services Pty Ltd and Dowdon Contracting Pty Ltd [2004] NSWIRComm 353 APPELLANT Inspector William McColl

PARTIES : RESPONDENT (IRC No 94 of 2004) John Watson Building Services Pty Ltd

RESPONDENT (IRC No 95 of 2004) Dowdon Contracting Pty Ltd FILE NUMBER: IRC 94 & 95 of 2004 CORAM: Wright J President; Walton J Vice-President; Marks J CATCHWORDS : Appeals - Occupational health and safety breaches - Prosecutor's appeal against inadequacy of penalty - Scant financial information before the Court - Problem identifying factors militating towards imposition of limited penalty - Application of discretion under Fines Act - Evidence considered - Penalties manifestly inadequate - Increased penalties imposed - No order as to costs. Criminal Appeal Act s 5D LEGISLATION CITED : Fines Act 1996 s 6 Occupational Health and Safety Act 1983 ss 15(1) 16(1) 50 Everett v The Queen [1994] 181 CLR 295 Ferguson v Nelmac Pty Limited (1999) 92 IR 188 Haynes v CI&D Manufacturing (1995) 60 IR 455 Maddaford v CSR Limited and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337 Inspector Gregory Maddaford v Graham Gerard Coleman & Anor [2004] NSWIRComm 317 Inspector Mansell v Eleven Lighting Pty Ltd [2002] NSWIRComm 339 Manpac Industries Pty Ltd v WorkCover Authority of New South Wales (2001) 106 IR 435 CASES CITED : Paprika Limited v Board of Trade [1944] 1 KB 327 R v Butler [1971] VR 892 R v Jacombe (unreported (New South Wales Court of Criminal Appeal, 19 December, 1974) R v Liekefett, Ex parte Attorney-General [1973] Qd R 355 The Queen v Tait (1979) 46 FLR 386 WorkCover Authority of New South Wales (Inspector Buggy) v Weathertex Pty Ltd (2003) 127 IR 60 WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284 WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Ltd trading as Old But New [2004] NSWIRComm 247 HEARING DATES: 08/17/2004; 09/02/2004 DATE OF JUDGMENT: 12/09/2004

APPELLANT Ms P McDonald of counsel Solicitor: Mr N Correy Moray Agnew Solicitors

RESPONDENT (IRC No 94 of 2004) LEGAL REPRESENTATIVES: Mr R Reitano of counsel Solicitor: Mr G Phillips Carroll & O'Dea Solicitors

RESPONDENT (IRC No 95 of 2004) Mr R Warren of counsel Solicitor: Ms F Inverarity PricewaterhouseCoopers Legal

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH CORAM: WRIGHT J, President WALTON J, Vice-President MARKS J Thursday 9 December 2004

Matter No IRC 94 of 2004 INSPECTOR McCOLL v JOHN WATSON BUILDING SERVICES PTY LTD Application by Inspector McColl to appeal against a decision of Justice Staunton given on 19 December 2003 in Matter No IRC 4322 of 2002

Matter No IRC 95 of 2004 INSPECTOR McCOLL v DOWDON CONTRACTING PTY LTD Application by Inspector McColl to appeal against a decision of Justice Staunton given on 19 December 2003 in Matter No IRC 4321 of 2002 JUDGMENT OF THE COURT [2004] NSWIRComm 353

1 These are appeals brought from a judgment of Staunton J which imposed penalties on each of the respondents, Dowdon Contracting Pty Ltd ("Dowdon") and John Watson Building Services Pty Ltd ("Watson"), which had pleaded guilty to certain breaches of the Occupational Health and Safety Act 1983 ("the Act"). In these appeals the appellant (who was the prosecutor at first instance) asserts that the penalties imposed on each of the respondents were manifestly inadequate.

2 The relevant facts may be stated shortly. Dowdon won a contract to demolish and remove certain materials from Blacktown TAFE. It subcontracted part of that work to Watson because it was thought that some of the materials contained asbestos and Watson was licensed to remove asbestos. As the relevant correspondence between the respondents indicated, Mr John Watson, Managing Director of Watson, was intended to be on site at all times because the arrangement with Dowdon was that there would be a "dedicated project supervisor who is in constant contact with the operators and Dowdon site supervisor" in order to "combat incidence (sic) within at (sic) the bubble". Mr John Watson was the nominated supervisor. He was "also responsible for the welfare of the men within the bubble and the execution of safe work procedures, he will also assist with evacuation in the case of emergencies by being familiar with evac points and liaising face to face with the operators and Dowdon".

3 The demolition work was isolated by setting up what was known as a "bubble" which consisted of securing plastic sheeting around the area. Mr John Watson decided he would use a high-pressure water-blaster to remove some glue and other material from the ceiling of the area being demolished. Mr Gordon, a director of Dowdon, was on the premises when the water-blaster arrived and told John Watson not to use it. Mr Gordon left the site. John Watson told a supervisor of the Watson company, Mr Bill Pope, not to use the water-blaster in the bubble area. John Watson was not then present at the site. Bill Pope disobeyed the instruction given to him and used the water-blaster. It was petrol-driven and the fumes contained carbon monoxide. Five employees of Watson were working in the bubble. Two of them were rendered unconscious for a short period of time, the other three became dizzy and nauseated but were able to make their own way out of the bubble. There were no serious injuries as a result of the incident.

4 Dowdon was charged with a breach of s 16(1) of the Act. It was alleged that it failed to ensure that persons not in its employment were not exposed to risks to health and safety arising from the conduct of its undertaking which involved the overall responsibility for the demolition and removal of material at the site. In particular it was alleged that Dowdon failed to ensure that the work was carried out in accordance with the work method statement agreed with Dowdon and, in essence, it failed to properly conduct overall supervision of the work.

5 The charge against Watson was brought under s 15(1) of the Act. In essence it was alleged that the carrying out of the work using a petrol-driven high pressure water-blasting machine in a confined space was itself an unsafe work practice, and that it failed to provide information, training, instruction and supervision of such a kind as would have avoided work being carried out in this manner.

6 Proceedings were also commenced against Mr John Watson personally under s 50 of the Act. There is no appeal from the conviction or penalty imposed on him.

7 The defendants pleaded guilty and an agreed statement of facts was filed. In addition further documentation was tendered without objection. This consisted of photographs and factual inspection reports tendered by the prosecution, affidavits of Robert Gordon and Maurice O'Connor on behalf of Dowdon and an affidavit of John Michael Watson on behalf of Watson. None of the deponents of the affidavits were required for cross-examination by the prosecutor and no challenge was made to the tendering of the documentary evidence.

8 In discussing the factual circumstances which gave rise to the prosecutions Staunton J described the action of Mr Pope in placing a petrol-driven piece of machinery into a confined working space without proper ventilation as being "foolhardy and dangerous". Her Honour characterised the breach by Watson as an objectively serious one and as "very serious". This was because it was the obligation of Mr John Watson to be present at the work site at all relevant times and her Honour was satisfied that if he had been present the water-blaster would not have been utilised.

9 With respect to the breach by Dowdon her Honour characterised this as being less serious. This is because there had been a request to remove the water blaster from the work site and an understanding that this would occur. Accordingly, her Honour characterised the breach by Dowdon as having failed "in its overall responsibility to properly supervise the work site by ensuring that the plant was indeed removed". This occurred by reason of the absence of Mr O'Connor, Dowdon's supervisor, from the site.

10 Her Honour then proceeded to assess penalty. The maximum penalty applicable to Dowdon was $825,000 by reason of a prior conviction. The maximum penalty applicable to Watson was $550,000. Her Honour referred to the need to have regard to the general and specific deterrent effect of the penalties to be imposed and it is clear from her Honour's judgment that she was cognisant of the need to assess penalty by reference to the objective seriousness of the offence.

11 Her Honour then dealt with the evidence concerning the financial circumstances of each of the defendants. She noted that they were each "relatively small companies", and that she was obliged to pay regard to the financial circumstances of each of the companies because of s 6 of the Fines Act 1996. We shall discuss the provisions of that section later in our judgment.

12 With respect to the financial circumstances of Watson her Honour referred to a statement made in Mr Watson's affidavit that his income was approximately $80,000 per annum from the company which he shared jointly with his wife. Her Honour noted that the information set out in Mr Watson's affidavit and financial information which accompanied it was "scant to say the least". There was reference to a company mortgage bank account showing a closing balance in August 2003 of $78,000 with a credit limit of $133,000. The mortgage was secured over the family home of Mr Watson and his wife which he estimated to be valued at approximately $850,000. The company continued to operate with 29 employees.

13 Mr Watson said in his affidavit that the company had an average annual turnover over the last 3 years of $350,000 and that it was owed $107,000 by Dowdon. Although the affidavit referred to the fact that an audit of the company was currently being undertaken and that audited records would be provided to the Court, no such audited records were made available. The average annual turnover figure was said to be a "net" figure.

14 Her Honour concluded that: "Overall, it is clear that (Watson) is a small company and while, on one view, trading reasonably profitably, it does not have a significant asset base. If anything, it would appear that the most significant asset of (Watson) is the family home of Mr and Mrs Watson".

15 With respect to Dowdon, financial statements were provided for the years ending 30 June 2000 and 30 June 2002. Her Honour referred to some apparent inconsistencies between entries in the profit and loss statements for the year ended 30 June 2002 which were explained by counsel for Dowdon as reflecting a financial year in which there had been a sale of shares in the company. Her Honour summarised the financial information as suggesting that Dowdon was "a relatively small company trading at a very modest profit for the year ending 30 June 2002 of $1,069, having a gross annual income on sales of almost $2 million dollars. As advised, Dowdon continues to operate in the building construction industry with some 15 employees".

16 With respect to Dowdon, there was evidence that Mr O'Connor had acquired an interest in the company.

17 Her Honour also referred in general terms to evidence given concerning the enhanced awareness of both defendants towards their occupational health and safety obligations and the "considered and extensive" steps taken by them at the time of the incident and since that time to comply with the requirements imposed by that obligation.

18 Her Honour made observations about the disobedience of Mr Pope in mitigating the penalty which should be imposed on the proceedings against Mr Watson personally. Her Honour did not make any such comment with respect to the corporate defendants.

19 Her Honour concluded that in addition to the discount of 25 per cent which should apply because of the early plea of guilty, the additional subjective considerations warranted each of the defendants receiving a further discount on penalty of 10 per cent.

20 Her Honour then determined to impose on Dowdon a "notional penalty" of $32,000 reduced to $22,750 after applying the discounts of 35 per cent. With respect to the defendant Watson her Honour imposed a "notional penalty" of $45,000 which was reduced to $29,250 after applying the same level of discount.

21 The difficulty which we face in dealing with her Honour's judgment on appeal is that her Honour did not identify what factor or factors led to the imposition of what her Honour described in each case as a "notional" penalty. It seems clear that her Honour's description of the penalties as "notional" was intended not to refer to the imposition of nominal or token penalties, but rather merely to indicate the initial penalty against which the relevant discounts were to be applied. What is clear, as we will discuss later in our judgment, is that the penalties imposed by her Honour were manifestly inadequate in all the circumstances. There can be no doubt, as was conceded by the prosecution, that the culpability of Dowdon was much less than that of Watson. It was the specific act of disobedience on the part of Watson's employed supervisor, Mr Pope, exacerbated by the failure of Mr Watson to attend the premises, which created the danger to the health and safety of the company's employees. However, there can be no doubt that the breach by Watson was a most serious one, as recognised by her Honour.

22 Section 6 of the Fines Act is in the following terms: s 6 Consideration of accused's means to pay (cf Crimes Act 1900 sec 440AB and Justices Act 1902 sec 80A) 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. 23 The application of the provisions of s 6 of that Act and legislation to similar effect were comprehensively reviewed by Marks J in Inspector Mansell v Eleven Lighting Pty Ltd [2002] NSWIRComm 339 at paragraphs [14] and following. That judgment also reviews the application of s 6 of the Fines Act to corporate defendants in prosecutions brought under the occupational health and safety legislation as determined by this Court both at single judge and appellate level as well as the standard of proof which applies, including the onus on a defendant to put forward such material by way of evidence as will assist a court in applying the provisions of s 6.

24 We agree with and adopt the following principles which may be distilled for present purposes from the discussion of the authorities contained within the judgment in Inspector Mansell v Eleven Lighting Pty Ltd: 1. This court is obliged to take into account the means of a defendant to pay any penalty by virtue of s 6 of the Fines Act . 2. The imposition of a fine on a corporation may have different ramifications to the imposition of a fine on an individual where imprisonment or some other penalty may be available as an alternative sanction. That alternative is not available in the case of a corporation. 3. A defendant who wishes to rely on the provisions of s 6 to temper the amount of any monetary penalty bears the onus of putting such evidence in support as is appropriate before the court and bears the onus on the basis of the balance of probabilities of satisfying the court as to the truth of such evidence and its relevance to the fixing of penalty. 4. Whilst it is for a corporate defendant to fully disclose its financial state, it is for the prosecutor to check that information in order to assist the court in determining the propriety of taking that evidence into account in imposing a monetary penalty. It is inappropriate for the court to exercise an inquisitorial role in this regard.

25 In addition, we note the following principles which have been settled for the consideration of the financial situation of the defendant: 1. In the context of determining penalties in prosecutions for a breach of occupational health and safety legislation by a corporation, it may be appropriate, in some limited circumstances, for the Court to have regard to whether the defendant's corporate structure is little more than a means of distributing earnings arising from personal exertion or where the burden imposed by a fine will fall on one person or family, compared with a corporation which is functioning as "a company with assets of a substantial kind": see Haynes v CI&D Manufacturing (1995) 60 IR 455 at 457. However, it is now also clear that the fact that a corporation may represent the alter ego of a person or family and that any penalty imposed on the corporation will consequently have a financial impact on that person or family does not, of itself, warrant a reduction in penalty: WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Ltd trading as Old But New [2004] NSWIRComm 247 ; Inspector Gregory Maddaford v Graham Gerard Coleman & Anor [2004] NSWIRComm 317 . 2. The financial position and the means of a defendant should be taken into account when determining penalty. It is well established that, notwithstanding such considerations, the penalty must ultimately reflect the objective seriousness of the offence: Ferguson v Nelmac Pty Limited (1999) 92 IR 188 at 209; WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284 at 308-309; Manpac Industries Pty Ltd v WorkCover Authority of New South Wales (2001) 106 IR 435.

26 We have already referred to the comment by Staunton J that the financial evidence with respect to the defendant Watson was "scant to say the least". The affidavit of Mr Watson states that the company had operated since November 1991. It had 29 employees which included Mr Watson and his wife and five casual employees. It was involved in major projects throughout 1992. "Recent projects" which it had undertaken included in 1995 a project at a cost of $2.4 million, in 1996 a project at a cost of $300,000 and between 1999 and 2001 "a range of small to medium projects, the largest of which was managing the asbestos relocation … at the Olympic site for Thiess Environmental". The affidavit which was sworn on 5 September 2003 said that the company was currently undertaking work for the AMP organisation.

27 We have also referred to the extent of the information provided to her Honour concerning outstanding loans. Importantly, however, no profit and loss statement and no balance sheet was provided by Watson to enable her Honour to be satisfied about the current assets and liabilities of the company and about the impact that a monetary penalty would have on its activities and viability. There was no evidence about whether any profits from prior years' activities had been accumulated. In our opinion, having regard to the fundamental principles as discussed earlier in these reasons, it is necessary for information of that kind to be made available by a defendant before a court can properly exercise the discretion required to be exercised by s 6 of the Fines Act. As was pointed out in Mansell v Eleven Lighting, the defendant is uniquely qualified to provide that information and is required to do so if it wants the benefits of s 6. A failure to do so will result in circumstances where the appropriate application of s 6 of the Fines Act cannot be undertaken and must fail. In our opinion, such was the case here.

28 In the case of Dowdon the affidavit of Mr Gordon indicates that the company was incorporated in November 1987. The directors and shareholders were Mr Gordon and a Mr Roy Dowling. Mr Dowling and Mr Gordon sold their shares in the company on 1 August 2001. A condition of sale was that they would indemnify the company for any legal costs and the payment of any fines imposed on the company in relation to the prosecution before this Court. Section 6 of the Fines Act can only be applied to the circumstances of the defendant, Dowdon. Even if it were permissible to go beyond the defendant's circumstances and have regard to the circumstances of third parties, there was simply no evidentiary material available to her Honour about them.

29 With respect to this defendant there was made available profit and loss statements for the years ended 30 June 2000 and 30 June 2002. That documentation did not include any accompanying notes and did not, more specifically, include any balance sheet which would be indicative of the assets and liabilities of the defendant within the relevant periods. We have already referred to the difficulty which her Honour expressed in having regard to the material in this documentation. We note that her Honour accepted the documentation as indicative of Dowdon being "a relatively small company trading at a very modest profit for the year ending 30 June 2002 of $1609 having a gross income on sales of almost $2 million dollars".

30 The profit and loss account for the year ended 30 June 2002, as her Honour noted, referred to "sales" of $1.9 million. An operating loss was shown at the end of that year of $35,000. This arose after expenditure of consultants' fees of $47,000, contract labour of $71,000, salaries of $495,000 and sub-contractors of $572,000. In the previous financial year sales were $745,000. In that year however there were no consultants' fees, contract labour was shown as $395,000, management fees of $39,000 and sub-contractors of $107,000. Furthermore, no amount was shown for interest in the 2001 year yet an amount of $18,400 was shown for interest in the 2002 year. In 2001, $39,000 was shown for management fees but no amount was shown for management fees in the 2002 year. Whether these changes in the nature of the expenditure between 2001 and 2002 represent changes in management style associated with the new ownership is a matter of conjecture. However it would be necessary to determine whether and to what extent any of that expenditure was paid to shareholders or interests associated with shareholders so as to test the trading position of the company in terms of the exercise of discretion under s 6 of the Fines Act. As is obvious, absent any understanding or appreciation of the value of the assets of the company and the level and nature of the liabilities, it is also difficult to undertake the task necessary in applying s 6 of that Act. In Mansell v Eleven Lighting Marks J commented about the various means available to shareholders to finance companies whether by way of shareholder funds, external borrowings or shareholders' loaned funds. Each of these circumstances will have differing implications for the exercise of discretion under s 6. In the same way, a balance sheet which represented the value of assets on a historical basis will need to be treated more cautiously than a balance sheet which reflected current market value of assets.

31 We conclude that if her Honour had determined to apply s 6 of the Fines Act in favour of either defendant, it would have been unsafe and inappropriate to do so on the basis of the evidence tendered by each of the defendants in the proceedings in order to discharge the onus which rested upon them.

32 It is necessary to expand on the last statement of principle set out above, at least in the context of an appeal brought by the prosecution against the penalty, commonly referred to as "a Crown appeal". The courts have been cognisant of the limited circumstances in which a Crown appeal against either sentence or penalty may be brought. The restraint to be exercised in such appeals was discussed by a Full Bench of this Court in WorkCover Authority of New South Wales (Inspector Buggy) v Weathertex Pty Ltd (2003) 127 IR 60 where it was held (at 74) that: "… an appellate court in a Crown appeal has an obligation to act with caution or restraint, given the principle of double jeopardy and the Court's overriding discretion not to intervene: see Kirby J's observations in Dinsdale v The Queen at 341 - 342 and in Wong v The Queen (2001) 207 CLR 584 at 624 …"

Some of the issues are discussed in the judgment of McHugh J in the High Court of Australia in Everett v The Queen [1994] 181 CLR 295. See also the joint judgment of Brennan, Deane, Dawson and Gaudron JJ in Everett at [299] and following. The judgment of the Full Court of the Federal Court of Australia in The Queen v Tait (1979) 46 FLR 386 focuses attention on the conduct of the prosecutor at first instance when determining the proper approach to be taken on an appeal brought by the Crown against sentence.

33 In the course of their judgment in The Queen v Tait, Brennan, Deane and Gallop JJ (at 389 - 390) said: "It would be unjust to a defendant to expose him to double jeopardy because of an error affecting his sentence, if the Crown's presentation of the case either contributed to the error or led the defendant to refrain from dealing with some aspect of the case which might have rebutted the suggested error. The Crown has been said not to be concerned with sentence (see e.g. Lawrence J. in Paprika Limited v Board of Trade [1944] 1 KB 327 at p.332), but when a statutory right of appeal is conferred upon the Crown, that proposition must be more precisely defined. It remains true that the Crown is required to make its submissions as to sentence fairly and in an even-handed manner, and that the Crown does not, as an adversary, press the sentencing court for a heavy sentence. The Crown has a duty to the court to assist it in the task of passing sentence by an adequate presentation of the facts, by an appropriate reference to any special principles of sentencing which might reasonable by thought to be relevant to the case in hand, and by a fair testing of the defendant's case so far as it appears to require it. If the proposition that the Crown is not concerned with sentence was ever construed as absolving the Crown from this duty, it cannot be so construed when a Crown right of appeal against sentence is conferred. The Crown is under a duty to assist the court to avoid appealable error. The performance of that duty to the court ensures that the defendant knows the nature and extent of the case against him, and thus has a fair opportunity of meeting it. A failure by the Crown to discharge that duty may not only contribute to appealable error affecting the sentence, but may tend to deprive the defendant of a fair opportunity of meeting a case which might ultimately be made on appeal. It would be unjust to a defendant, whose freedom is in jeopardy for the second time, to consider on appeal a case made against him on a new basis - a basis which he might have successfully challenged had the case against him been fully presented before the sentencing court. As McClemens CJ at CL said in R v Jacombe (Unreported, New South Wales Court of Criminal Appeal, 19 December, 1974), delivering the judgment of the New South Wales Court of Criminal Appeal: '… we would not seem to encourage any system which meant that cases were brought here under s 5D of the Criminal Appeal Act on bases which were not argued before the judge below.' Although the existence of error is the common ground which entitles the appellate court to intervene in appeals by the Crown and by a defendant (cf R v Butler [1971] VR 892; R v Liekefett; Ex parte Attorney-General [1973] Qd R 355) there would be few cases where the appellate court would intervene on an appeal against sentence to correct an alleged error by increasing the sentence if the Crown had not done what was reasonably required to assist the sentencing judge to avoid the error, or if the defendant were unduly prejudiced in meeting for the first time on appeal the true case against him."

34 The Federal Court in Tait emphasised the duty of a prosecutor to assist a court in avoiding appealable error. The proper application of s 6 of the Fines Act would quite clearly come within this requirement.

35 In resisting the appeal brought by the prosecution in these proceedings each respondent relied substantially on the approach taken by the prosecutor in the proceedings before her Honour. In the course of the proceedings the prosecution relied principally upon written submissions. They traversed the principles to be adopted by courts in the sentencing of defenders for breach of the occupational health and safety legislation but appear to us to have dealt with the particular facts relevant to each of the prosecutions in a cursory manner. During the course of oral submissions counsel for the prosecution took no steps at all to question the nature and extent of the evidence proffered by each of the respondents with respect to their financial circumstances. When invited to comment on the evidence that was adduced and the submissions made by counsel for each of the respondents, counsel for the prosecution said that he agreed with what her Honour had said about the defendant, Watson, "not having great resources. I do not cavil with that at all".

36 With respect to the defendant Dowdon, her Honour indicated that counsel for the prosecution made no submissions at all with respect to any of the evidence or submissions concerning the application of s 6 of the Fines Act.

37 We conclude that in all of the circumstances the prosecution failed in its duty to assist her Honour in evaluating the financial material upon which the respondents sought to rely in connection with the application of s 6 of the Fines Act and by failing to assist her Honour in making relevant submissions with respect to these matters. This failure has not only contributed to what we regard as appealable error but has tended to deprive the respondents of a fair opportunity of meeting a case which the prosecutor sought to make out against them on appeal. This, it seems to us, has created a situation which is unfair and which would, on a prima facie basis, deprive the prosecutor as appellant from otherwise succeeding in these appeal proceedings.

38 However, as earlier stated, these proceedings are further complicated because her Honour has failed to indicate clearly how the ultimate penalty was determined in each case. It is plain that her Honour had specific regard to s 6 of the Fines Act, and that she also considered the evidence before her, such as it was, regarding the defendants' respective financial means. It is also evident that her Honour considered other matters required to be taken into account in assessing penalty, such as the subjective factors which operated to mitigate the objective seriousness of the offences. In this regard the written submissions for the prosecution before her Honour traversed the relevant sentencing principles and, albeit briefly, the relevant facts which applied to the proceedings. We have already referred to the observations of her Honour that the breach by Watson was objectively a "very serious" one. We agree with that observation. On that basis, even allowing for the application of s 6 of the Fines Act, and after discounting the penalty which would otherwise apply, having regard to the relevant subjective factors, we consider the ultimate penalty imposed on Watson of $25,250 is manifestly inadequate in all the circumstances. This statement is made against the background of a maximum penalty of $550,000. Even in the case of Dowdon, where we agree with her Honour's observations that the offence is less serious, we consider the ultimate penalty of $22,750, where the relevant jurisdictional limit is $825,000, is manifestly inadequate in all of the circumstances.

39 The difficulty created is whether the respondents should be afforded the ameliorative approach to which they are entitled by reference of the failure of the prosecutor before her Honour with respect to the Fines Act question to which we have earlier referred in connection with the totality of the penalty in circumstances where we are uncertain as to all of the reasons for approach and all of the factors which her Honour took into account in determining the ultimate penalty.

40 On balance, it seems to us appropriate to approach the matter on the basis that the penalty imposed on each defendant was manifestly inadequate and that this Court should fix appropriate penalties. In doing so we take into account firstly the failure of the prosecution to adequately deal with and assist her Honour in the application of s 6 of the Fines Act. We also are mindful that these are appeal proceedings instituted by the prosecution and that some leniency needs to be afforded to each of the defendants by reason of the fact that they have been compelled to participate in more than one set of proceedings to determine the level of penalty. These matters, and relevant authorities, are discussed in the judgment of the Full Bench of this Court in WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Ltd t/as Old But New [2004] NSWIRComm 247 at [16] to [17]; see also Maddaford v CSR Limited and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337.

41 With respect to each defendant we agree that it is appropriate to apply a discount of 35 per cent against the penalty which would otherwise apply given the early plea of guilty and the other subjective matters to which her Honour had regard.

42 In connection with the defendant, Watson, we note that on the one hand the breach occurred because of the actions of the foreman, Mr Pope, in disobeying a direction that he remove the water-blaster from the site. It is clear that he had been directed to do so and that he had deliberately disobeyed that direction. On the other hand, if Mr Watson had been present as required by the terms of the engagement of the company, the incident would not have occurred. In all the circumstances, and having regard to the fact that the maximum penalty in the case of Watson is $550,000, and after allowing for the fact that this is a prosecutor's appeal against inadequacy of penalty, an appropriate penalty is $100,000 to which the 35 per cent discount should be applied leaving a net penalty of $65,000.

43 In the case of Dowdon it is obvious that its culpability is much less because the breach by that defendant focuses on the overall responsibility with respect to the operations being conducted by Watson. However, significantly, those operations involved only the employees of Watson and the breach was occasioned by the deliberate act of disobedience of Watson's foreperson. The evidence indicates that Dowdon took reasonable steps to ensure that the offending equipment was removed from the site and acted proactively in this regard. The effect of the evidence is that the sole operation which was underway at the time that the incident occurred was confined to the work being carried out by Watson and its employees. Having regard to the fact that this is a prosecutor's appeal as to inadequacy of penalty and taking into account that the maximum penalty in the case of Dowdon is $825,000 we are of the view that an appropriate penalty is $60,000 to which the 35 per cent discount should be applied, leaving a net penalty of $39,000.

44 Because of the nature of the appeal we are of the opinion that no costs order should be made.

45 We make the following orders: 1. Appeals upheld. 2. Penalties imposed by Staunton J in each of the proceedings are set aside. 3. The respondent John Watson Building Services Pty Ltd is fined the sum of $65,000 with a moiety to the appellant. 4. The respondent Dowdon Contracting Pty Ltd is fined the sum of $39,000 with a moiety to the appellant. 5. No order as to costs of the appeals.

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