Morrison v Clarence Coal Pty Ltd and Centennial Coal Company Limited

Industrial Relations Commission (NSW)|2007-10-19|Before: Marks J, Mr J

CITATION: Morrison v Clarence Coal Pty Ltd and Centennial Coal Company Limited [2007] NSWIRComm 270

PROSECUTOR Department of Primary Industries PARTIES: DEFENDANTS Clarence Coal Pty Ltd Centennial Coal Company Limited

CATCHWORDS: Occupational health and safety prosecution - guilty plea - penalty - other equipment available which would have created safer work environment - processes and procedures in place supplemented by appropriate training which prohibited the use of machine in the manner it which it was used when incident occurred - circumstances in which work was being carried out at time of incident was in breach of established protocols - failure to ensure training was carried out and rules were followed - serious breach of the Act - general ad specific deterrent effect of penalty - both defendants have professed awareness of their responsibilities under the Act - comprehensive systems to ensure to the extent possible compliance with obligations - defendants expressed contrition and regret - no prior conviction for breach of OHS legislation - culpability of each defendant is equal

LEGISLATION CITED: Occupational Health and Safety Act 2000 ss47A, 8(1), 8(2)

Inspectors Bestre and Doyle v Jontari Pty Ltd and ors [2007] NSWIRComm 190 CASES CITED: Inspector Green v Metropolitan Administration Services Pty Ltd [2005] NSWIRComm 12 WorkCover Authority (NSW) (Inspector Green) v Big River Timbers Pty Ltd (2006) 156 IR 341

HEARING DATES: 16, 17, 18 and 19 October 2007

PROSECUTOR: Mr S Crawshaw SC Mr I Bourke of counsel Solicitor: Crown Solicitor Mr S Sivarajah LEGAL REPRESENTATIVES:

DEFENDANTS Mr J Phillips SC Mr M Shume of counsel Solicitor: Sparke Helmore Solicitors Mr G McCann

Matter No IRC 2664 of 2006 Rodney Dale Morrison v Clarence Coal Pty Ltd Prosecution pursuant to s 8(1) of the Occupational Health & Safety Act 2000

Matter No IRC 2664 of 2006 Rodney Dale Morrison v Centennial Coal Company Limited Prosecution pursuant to s 8(2) of the Occupational Health & Safety Act 2000

1 These proceedings concern prosecutions brought by Rodney Dale Morrison, a person appointed an inspector under s 47A of the Occupational Health & Safety Act 2000 ("the Act") charging two defendants, Clarence Coal Pty Ltd ("Clarence") and Centennial Coal Company Limited ("Centennial"), with breaches of ss 8(1) and 8(2) of the Act respectively. 2 Ss 8(1) and 8(2) of the Act are in the following terms: 8 Duties of employers

(1) Employees An employer must ensure the health, safety and welfare at work of all the employees of the employer. That duty extends (without limitation) to the following: (a) ensuring that any premises controlled by the employer where the employees work (and the means of access to or exit from the premises) are safe and without risks to health, (b) ensuring that any plant or substance provided for use by the employees at work is safe and without risks to health when properly used, (c) ensuring that systems of work and the working environment of the employees are safe and without risks to health, (d) providing such information, instruction, training and supervision as may be necessary to ensure the employees' health and safety at work, (e) providing adequate facilities for the welfare of the employees at work. (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. 3 The charges are constituted by amended applications for order filed in Court on 11 September 2007. The defendants pleaded guilty to the charges as set out in the amended applications for order and this judgment deals with the question of penalty only. 4 The charges, although different in the sense that they relate respectively to ss 8(1) and 8(2) of the Act, are substantially in similar terms. That against Clarence alleges that "on or about 12 July, 2004, being an employer, at Clarence Colliery, a place of work situated at Lithgow in the State of New South Wales, failed to ensure the health, safety and welfare at work of all its employees, in particular Ben Houlison, Darren Baxter, Richard Sharp, Bradley Gordon, contrary to subsection 8(1) of the Act." The charge against Centennial alleges that that defendant was an employer, that it had a place of work situated at Lithgow and that it failed to ensure that the same named persons who were not its employees were not exposed to risks to their health and safety arising from the conduct of its undertaking while at its place of work. 5 The particulars of each of the charges were in identical terms namely: "(a) The Defendant failed to provide or maintain an adequate system of work for tasks related to the floor trenching task (sometimes known as "floor brushing") including the removal of electrical cable during the process of re-locating ("flitting") a continuous mining machine in 609D panel of the said mine as it failed to prevent workers working in unsafe locations on or about the said continuous mining machine whilst it was not isolated. (b) The Defendant failed to provide adequate information and instruction to persons not in the employment of the Defendant for tasks related to the floor trenching task including the removal of electrical cable during the process of re-locating a continuous mining machine in 609D panel of the said mine. (c) The Defendant failed to undertake an adequate assessment of risks arising from tasks related to the floor trenching task including the removal of electrical cable during the process of re-locating a continuous mining machine in 609D panel of the said mine." 6 The sentencing proceedings against each defendant were conducted concurrently with evidence in the one being evidence in the other. 7 There was tendered into evidence a statement of agreed facts which is in the following terms: "1. Clarence colliery is an underground coal mine situated approximately 15 kilometres east of Lithgow (Clarence Colliery). Approximately 138 persons worked at the colliery in July 2004. 2. The following facts applied at all material times. COMPANIES INVOLVED WITH CLARENCE COLLIERY 3. Centennial Coal Company Ltd (Centennial) was a corporation whose registered office was situated at BT Tower, Level 18, 1 Market Street, Sydney, NSW. 4. Clarence Coal Pty Ltd (Clarence Coal) was a corporation whose registered office was situated at BT Tower, Level 18, 1 Market Street, Sydney, NSW. 5. Clarence Colliery Pty Ltd was a corporation whose registered office was situated at BT Tower, Level 18, 1 Market Street, Sydney, NSW. 6. Clarence Colliery was owned by the participants in the Clarence Unincorporated Joint Venture (UJV). The UJV comprised Coalex Pty Ltd which had a 51% participating interest, Clarence Coal Investments Pty Ltd which had a 29% participating interest, Japan Energy Australia Pty Ltd which had a 5% participating interest and SK Australia Pty Ltd which had a 15% participating interest. All those companies except SK Australia Pty Ltd were wholly owned subsidiaries of Centennial. Through these companies Centennial indirectly owned an 85% interest in the Clarence Colliery. 7. Clarence Coal and Clarence Colliery Pty Ltd were wholly owned subsidiaries of Coalex Pty Ltd. 8. The UJV designated Clarence Colliery Pty Ltd as the operator of Clarence Colliery. 9. Clarence Colliery Pty Ltd did not employ any person at Clarence Colliery. The UJV paid the costs of Clarence Colliery Pty Ltd, including the cost of paying all of the persons who worked at Clarence Colliery who were employed by Clarence Coal. These employees included Jeffrey Savage, Paul Field, Darren Baxter, Richard Sharp, Bradley Gordon and Ben Houlison. 10. Centennial had interests in the following collieries through other companies: Angus Place; Anvill Hill; Awaba; Berrima; Charbon; Cook; Ivanhoe; Mandalong; Munmorah; Myuna; Newstan; Springvale; and Wyee (Centennial Group). EMPLOYEES OF CENTENNIAL 11. The Managing Director of Centennial had responsibility for all aspects of the business of the Centennial Group, including safety and risk management . 12. The other directors of Centennial were involved in the promotion and monitoring of occupational health and safety (OHS) performance, across the Centennial Group. 13. Centennial employed and appointed the Mine Manager of Clarence Colliery. The Mine Manager had responsibility for all activities at the site including OHS, environment, production and employee matters. The Mine Manager, pursuant to the Coal Mine Regulation Act 1982 and its subordinate Regulations, controls the colliery site. 14. The Mine Manager of Clarence Colliery was also the General Manager of Clarence, Charbon, Berrima and Ivanhoe collieries. The General Manager in his position as Mine Manager was based at Clarence Colliery on a day-to-day basis. The other collieries each had their own Mine Manager with responsibility for all activities at the site including OHS, environment, production and employee matters. 15. The Centennial Group had several operational General Managers who each oversaw a number of collieries. 16. Centennial also employed the Chief Operating Officer (in July 2004 the position of Chief Operating Officer was designated as General Manager Operations) Manager Safety and Systems; and Group Coordinator OHS Systems. These employees visited Clarence Colliery, as well as the other collieries in the Centennial Group, as part of their duties. 17. The said Chief Operating Officer had Centennial Group wide responsibility for all aspects of operations including OHS, environment, financial performance, production performance. His duties included monitoring the implementation of, providing leadership for, and promoting OHS in the Centennial Group. 18. The said Manager, Safety and Systems had Centennial Group wide responsibility for promoting, advising and monitoring OHS performance. 19. The Manager, Safety and Systems and Group Coordinator OHS Systems carried out internal audits of all collieries against each individual colliery's implemented systems. 20. Under the Coal Mine Regulation Act 1982 (NSW) (CMRA) the duties and functions of the Mine Manager were extensive and of a high level of responsibility. They included the Mine Manager having full charge and control of all employees at the colliery and all operations at the colliery (section 37(1)(d)). The Coal Mines (Underground) Regulation 1999 also imposed duties on the manager of a colliery. 21. The Mine Manager had the highest level of on-site supervisory control of matters at Clarence Colliery and responsibility or control over all OHS matters at Clarence Colliery. MEETINGS AND REPORTS OF CENTENNIAL 22. The directors of Clarence Coal and Clarence Colliery Pty Ltd were the same persons who were the directors of Centennial. The Boards of Directors of Clarence Coal and Clarence Colliery Pty Ltd did not have separate meetings from the Board of Directors of Centennial. 23. The Board of Centennial set policy on OHS matters, titled Safety and Risk Management Policy (Policy). The Chief Operating Officer applied the Policy through a strategy document, titled Health and Safety Risk Management Strategy (Strategy). The Policy and Strategy were provided to the collieries within the Centennial Group for implementation. Each colliery operated under different circumstances and as a result had to implement site specific systems. 24. The Board of Centennial required reports to be provided in order to monitor performance of the individual collieries in line with its Policy. 25. Centennial had a process in place to provide the Board with relevant information as to the operation of the collieries. Mine Managers were required to supply reports on a monthly basis (Mine Manager's Reports), to the Chief Operating Officer, who in turn prepared a report for the Board to review (Chief Operating Officer's Report). 26. The Mine Manager's Reports addressed: a) safety and risk management (which includes positive performance indicators, safety activities, lag performance indicators and monthly injury and notifiable incidents); b) environmental (which includes incidents/non-compliance and performance); c) operations and production (which includes information on development and extraction panels); d) process and engineering measurements (which includes information on process performance); e) cost variance analysis (which includes information on budget compliance); f) technical services (which includes information on strata control, ventilation and colliery planning); g) employment (which includes information on numbers of employees, sick leave, etc.); h) industrial issues (which includes information on enterprise agreement negotiations); and i) statutory (which includes information on regulatory compliance). 27. The General Manager's Reports summarised the Mine Manager's Reports. 28. The Board of Centennial considered the General Manager's Reports at its monthly meetings and used them to monitor colliery performance against its Policy. The Managing Director and Chief Operating Officer attended the monthly Board meetings. The Manager Safety and Systems attended those meetings when requested to advise on strategic approaches to OHS. 29. The Board visited one of the Centennial Group's mining regions twice per annum. On each visit they would visit multiple collieries, conduct at least one underground inspection and hold their Board meeting at one of the collieries. In March 2004 the Board visited the Western district, conducted an underground inspection at Clarence Colliery and held their Board meeting there. 30. All budgets across collieries in the Centennial Group are generated by each colliery's Mine Manager and his team. The budget would then be presented to the Chief Operating Officer, finance and marketing who would then consider the budget and a budget document would then be produced and presented to the Board. 31. The Board was responsible for approving budgets for each colliery annually. The Board relied upon information and advice from Mine Managers and the Chief Operating Officer in approving the budget. The Centennial management team monitored the budget for Clarence Colliery. 32. The Chief Operating Officer provides a weekly report, which has information on safety statistics (positive and lag indicators) and incidents for all collieries within the Centennial Group, to the Managing Director (Weekly Report). The Weekly Report was prepared using information provided by operational General Managers. 33. The Group Coordinator OHS Systems also provided monthly reports to the Manager Safety and Systems who in turn provided monthly reports to the Chief Operating Officer. These reports covered all collieries within the Centennial Group and were used by the Chief Operating Officer in the Chief Operating Officer's Report to the Board of Centennial. Annexed and marked A is an example of the Manager Safety and Systems' report, which is titled "Centennial Coal Safety and Risk Management Report", dated June 2004. 34. The Chief Operating Officer received daily and weekly reports from the operational General Managers about safety and incidents at their collieries. 35. If there was an accident at a colliery a safety alert was put on Centennial's Wide Area Network (WAN), by the Mine Manager, which is then sent to each individual account on the WAN and is unable to be deleted until opened. 36. The Chief Operating Officer convened a meeting of all Mine Managers and operational General Managers of collieries within the Centennial Group quarterly. The first item of the agenda was safety. The Managing Director attended approximately one in every three of these meetings. CENTENNIAL POLICIES AND ACTIONS 37. As previously identified, the Board of Centennial set policy on OHS matters. These policies included the Policy and an Occupational Health and Safety Consultation Policy. Both these policies were signed by the Board and provided to the collieries within the Centennial Group for implementation. When adopted by the collieries, they were signed by the Mine Manager. They were incorporated in the Clarence Colliery's Mine Safety Management Plan. Annexed and marked B is a copy of the policies applied at Clarence Colliery, dated 4 September 2003. 38. The Board of Centennial commissioned a modified OHS management systems audit. Annexed and marked C is a copy of audit titled "Final Report Occupational Health and Safety Management Systems Audit, Centennial Board of Directors", dated August 2003 (2003 Audit). 39. The Board considered the 2003 Audit and commissioned the preparation of an action plan. Annexed and marked D is a copy of This action plan titled "OHS Audit 2003 Action Plan". 40. Centennial commissioned audits specific to collieries. Annexed and marked E a copy of a Jim Knowles Group audit on Clarence Colliery. THE INCIDENT 41. On 11 and 12 July 2004, miners were required to carry out tasks associated with lowering the floor level in "D" heading of the 609 panel of Clarence Colliery (609D panel). This job (also known as "floor brushing" or "floor trenching") involved the use of a remote-controlled continuous mining machine to cut a trench in the floor to a depth of about one metre. One of the tasks related to the floor brushing was the removal of electrical cable during the process of relocating ("flitting") a continuous mining machine in 609D panel. Cable-handling is a core risk of the continuous miner. 42. Mr Savage held the position of Undermanager in charge at Clarence Colliery, pursuant to s39 of the CMRA. 43. Mr Field held the position of Deputy at Clarence Colliery, pursuant to s. 42 of the CMRA. He had been appointed a Mine Deputy on 15 July, 2002. At the time of the events the subject of these proceedings, Mr Field had worked in the mining industry for approximately 12 years. 44. Mr Field was the Deputy in charge of 609D panel on the 11-12 July, 2004 pre-shift and night shift. Mr Field gave instructions to the work crew for the carrying out of the work, and allocated tasks to each of the miners. 45. In late June/early July, 2004, preparations were made for the carrying out of work in 609D panel, in order to remedy a problem involving water seepage, which if left unattended would have caused a ventilation hazard. This remedial work involved action to lower part of the floor in 609D panel, in the vicinity of "18 cut-through" in 'D' heading, so as to assist the drainage of excess water through the area. 46. On 29 June 2004, a surveyor inspected the relevant work site and painted a "grade line" on the rib (the wall) of the colliery, to assist mining personnel in grading the floor of the colliery to the correct level. 47. In the week prior to 11 July 2004, Undermanager in Charge visited the proposed work site and conducted an informal, on the job risk assessment of the work necessary to carry out the remedial task. In that week, the work site was also visited by Clarence Colliery's Mine Manager, who discussed the proposed work with the Undermanager in Charge, and day shift Undermanager. Floor brushing to the extent of cutting out a metre-deep trench was not an everyday task at the Clarence Colliery. 48. The Undermanager in Charge gave instructions for the carrying out of the work during the pre-shift of Sunday 11 to Monday 12 July, 2004. These instructions were discussed by the Undermanager in Charge and the Deputy on Friday 9 July. The instructions from the Undermanager in Charge were to cut an area of floor for 20 to 30 metres at a certain level (indicated by the grade line) to allow water to flow through. The undermanager in Charge also issued brief written instructions confirming the work to be carried out. The Undermanager in Charge left these instructions in his office written on a "pad" for the Deputy to tear off as his instructions. Relevantly to this job, they stated: · "DEP - REQD FOR BRUSHING 18 - 19D 609D, GRADE MARX UP ON RIB TO SUIT HEAD HEIGHT, S/Cs TO STOW SPOIL SEE DIKS NOTE FOR LOCATION IN A/S 9/7 UMGRS REPORT · SHARPY - SET UP CM4 FOR BRUSHING FLOOR 18 - 19D AND GO 49. The task involved the use of a remote-controlled continuous mining machine to cut a trench in the floor, approximately 4 metres wide and 1 metre deep. The pre-shift crew were assigned to the floor brushing task. As the task was not completed by the end of the pre-shift, Mr Sharp remained to assist the Deputy and oncoming night shift crew to complete the work task. Inexperienced miners Messrs Houlison and Baxter arrived with the night shift crew in 609D panel at approximately 1am on 12 July 2004. 50. The work task required the re-location of the continuous mining machine to the work site. 51. When the floor brushing was completed, the distance between the floor and roof, in the vicinity of 18 cut-through 'D' heading, had been increased by approximately one metre. 52. In order to relocate the mining machine to the next work location (for use by the day shift) it was necessary for the electrical cable to be retrieved from the roof-mounted "seagulls" upon which it had earlier been hung. 53. The usual method of cable retrieval using a handheld device, known as a "perch", was made more difficult due to the increased height of the roof. 54. Retrieval of the electrical cable was initially carried out by Mr Baxter, who climbed onto the "boom" of the continuous mining machine in order to reach the cable. Mr Baxter remained on the boom of the continuous mining machine while it was trammed to a location immediately underneath a "seagull". The boom was then raised (Mr Sharp operating the remote control machine, with Mr Baxter on the boom) to a height to enable Mr Baxter to remove the cable from its place on the seagull. Once this was done, the boom was lowered, and the machine trammed to the next seagull (with Mr Baxter still on it). 55. Mr Houlison climbed onto the machine to assist Mr Baxter in retrieving electrical cable from the roof. Messrs Baxter and Houlison made their own decisions to climb onto the mining machine and were not instructed to do so by Mr Field, or anyone else working in 609D panel. 56. Messrs Houlison and Baxter remained on the continuous mining machine while it was trammed from seagull to seagull, with the boom of the machine being raised and lowered to enable them to retrieve the machine's electrical cable. Electrician Mr Gordon also assisted by attending the cable to keep it from being pinched by mining machine tracks. 57. Use of the continuous mining machine as a "work platform" in this manner was contrary to safety rules applicable to those machines. Those rules required (inter alia) the enforcement of safety zones (known as "no standing" and "control" zones) around a continuous mining machine, during the operation of a machine. 58. Safety rules applying to the continuous mining machine required that it be correctly "isolated" prior to any person getting onto the machine, or entering a "no-standing" zone. 59. Messrs Houlison and Baxter remained on the mining machine as it was trammed from one seagull to the next. Mr Sharp, with Messrs Houlison and Baxter on the boom of the machine, was in the process of turning the continuous miner from 'D' heading into 18 cut-through. At this point the boom of the continuous miner was positioned under roof that was significantly lower as a result of geological faulting. Annexed and marked F is DWG No 7-135.2 plan, which depicts a cross section of the accident site. While engaged in this process, the mining machine pivoted, causing the boom of the machine to move suddenly towards the roof of the colliery where Mr Houlison was crushed. The accident was not caused by any defect in the continuous mining machine. Baxter took evasive action and was not injured. 60. As a result of the accident, Ben Houlison suffered spinal injuries, resulting in paraplegia. 61. At the time of the accident, four persons (viz, Messrs Houlison, Baxter, Sharp and Gordon) were located within the "no standing" zones of the machine, although only Mr Houlison suffered actual injuries. 62. Mr Field, was nearby, but not in the immediate vicinity, when the accident occurred. Mr Field was aware that the continuous mining machine was being used as a work platform to recover cable from the roof. 63. The unsafe handling of electrical cable using the continuous miner when not isolated had occurred on previous occasions at the mine." 8 It will be observed that [3] to [40] deal in essence with the respective functions of Clarence and Centennial. I shall return to this aspect of the matter after considering such evidence as is available with respect to the incident that gave rise to the proceedings. The description of that incident and other matters associated with it are contained within [41] to [63] of the statement of agreed facts. 9 There were two aspects of the incident that became significant for the purpose of these proceedings. The first involved the use of the boom, which was part of the continuous mining machine, to lift up the two employees concerned so that they could reach the cable and unhook it. It was submitted by the prosecutor and agreed by the defendants that there was other equipment available consisting of what, in effect, was a front-end loader with a basket replacing a bucket as a means of raising and lowering the employees which would have provided a far safer work environment. The second aspect was the fact that the continuous miner machine was being moved with the two employees situated on the boom at the time that the incident occurred. This of itself created a dangerous situation, especially in the circumstances of what in fact occurred. Superimposed upon these two aspects was the fact that procedures established by both defendants prohibited any person being in the near vicinity of the continuous miner machinery whilst it was capable of being operated, including the raising and lowering of the boom and its movement across the floor of the mine area. The defendants conceded that all of these matters were comprehended within the task of removal of electrical cable referred to within paragraph (a) of the particulars of the charges. 10 Some first hand account of what occurred is contained in an extract of evidence given in proceedings before the Chief Industrial Magistrate by Graham Collier, which was tendered into evidence in these proceedings. It was Mr Collier's evidence that he was able to observe the continuous miner machine moving. He saw a person on the back of the miner, presumably the boom, taking cable off a seagull and appearing to have trouble doing so. He then observed, "The other chap got up on to the miner to help lift the cable off and they lifted the cable off the seagull and dropped it down to the ground. The machine then appeared to start moving forward and started turning round to the left. At this stage, both men had either sat on the side of the boom or sat in the boom. As the miner went around, started to go around the corner I described it as the machine rocked up violently towards the back. One man dived into the boom and the other man wasn't quite quick enough to get down quick enough, and basically that's it." 11 Although Mr Collier did not observe the area on which the machine was moving at the time, he had an opportunity of doing so "later". He observed that the floor was uneven with the right-hand side of the cut having been made deeper than the left side. He thought that there might be "six inches, maybe a foot height difference in the floor." It may be inferred beyond reasonable doubt that this is what caused the boom of the miner to be suddenly propelled vertically so as to crush Mr Houlison as it moved over this uneven area. 12 For completeness, I observe as is made plain in the statement of agreed facts that the circumstances in which the work was being carried out at the time of the incident was in breach of established protocols requiring all persons to stay clear of certain "No Standing" and "No Go" zones around the continuous miner machine whilst it was "active".

The interrelationship of the defendants 13 I have previously observed that a large part of the statement of agreed facts is directed to the respective functions of and interrelationship between the two defendants. 14 It would appear from the statement of agreed facts that the principal, and indeed perhaps the only, role of Clarence was to employ persons who worked at the Clarence Colliery. The operation of the colliery, however, was conducted by Clarence Colliery Pty Ltd, which is not a defendant in these proceedings. Centennial appears to have been the ultimate holding company of a number of subsidiaries which ultimately owned an 85% interest in the Clarence Colliery and which, through its personnel, exercised a degree of ultimate control over and had involvement in the operations of Clarence Colliery. This was through specific involvement in the activities of Clarence Colliery or by reason of overall involvement in all of the collieries in which Centennial had an interest, as set out in [10] of the statement of agreed facts. Specifically, Centennial through its board of directors and senior management had overall involvement in the establishment of policy and protocols dealing with occupational health and safety matters throughout the group, including, specifically, the Clarence Colliery. Furthermore, as appears from the statement of agreed facts, there was ongoing involvement in monitoring occupational health and safety matters.

The objective seriousness of the offences 15 The particulars of charge made against each of the defendants are in the same terms. They include the failure to undertake an adequate assessment of the risks associated with the task being undertaken, a failure to provide adequate information and instruction to the persons concerned in carrying out that task directed, presumably, to matters involving safety and a failure to provide or maintain an adequate system of work for carrying out those tasks. 16 It was not disputed by the defendants that there was available to the employees of Clarence a machine known as the "Eimco" which was capable of using a basket as a device to lift employees up to a height to enable cable to be retrieved from the roof. It was also not disputed that there were processes and procedures in place supplemented by appropriate training which prohibited the use of the continuous miner in the manner in which it was utilised when this incident occurred. 17 There can be no doubt that the incident occurred because those responsible at the time for overseeing the manner in which the work was carried out and those who participated in the performance of the work on that occasion failed to have proper regard to matters of common sense when considering questions of safety. Internal investigations carried out by Centennial after the incident concluded as such and concluded furthermore that "…. the trained operators and personnel present and supervision present failed to ensure that their training was carried out and the rules were followed." (Statement by John Hempenstall, Group Manager, OHS Systems, Centennial Coal to senior investigator on 24 October 2005). 18 The statement of agreed facts refers to prior incidents involving use of the continuous miner. Evidence given in the proceedings was that the first incident occurred on about 17 December 2002 when an employee had climbed onto the machine to adjust a roof sight. The continuous miner had been turned off but the isolation switch had not been engaged. The person concerned was issued with a disciplinary letter. In another incident the operator was discovered climbing onto the continuous miner, which had not been turned off. He was given a verbal warning, was required to attend for counselling and was informed that a further breach could lead to his dismissal. Following this incident, the "local check inspector" was asked to raise the requirement for isolation of the machine with the workforce at a monthly meeting. 19 There can be no doubt, in my opinion, that objectively viewed, this incident constituted a serious breach of the Act. The defendants did not contend otherwise. Indeed, the action taken by the defendants following the incident was indicative of the serious manner in which they viewed it. 20 After the incident the following steps were taken: a) the whole workforce at the colliery was retrained in the existing isolation procedures including the existence of "no-go zones" around the continuous miner machine; b) toolbox talks were given by supervisors and others with mention of disciplinary action if these protocols were broken; c) audit sheets were altered to add reference to no standing zones and isolation procedures; d) procedures relevant to the continuous miner machine were reviewed externally; e) letters of reprimand were issued to the panel deputy and the miner driver on duty at the time and toolbox talks were conducted with the workforce informing them of those letters of reprimand. 21 In determining the appropriate penalty in each case, it is also necessary to take into account both the general and specific deterrent effect that the imposition of the penalty will create. In terms of general deterrence, I observe that the mining industry is, as is well known, inherently dangerous and it is necessary to ensure that all involved in the industry are constantly reminded of the potential dangers created for the health and safety of persons who work in that industry. In terms of specific deterrence, I note that Centennial is a substantial participant in the coal industry and that Clarence operates and continues to employ a relatively large number of employees at the coalmine. As against this, however, I take into account that both defendants have professed awareness of their responsibilities under the occupational health and safety legislation and other legislation which impacts upon the operation of coalmines and have put in place, as is disclosed in the evidence, comprehensive systems to ensure to the extent possible compliance with those obligations. 22 There are a number of subjective factors that must be taken into account in determining the amount of penalty. 23 The defendants pleaded guilty immediately upon the prosecutor amending the charges on 11 September 2007. In the circumstances of these proceedings, I am prepared to apply the usual discount of the order of 25% to reflect the utilitarian value of the pleas so entered. Furthermore, there is evidence that the defendants expressed contrition and regret for what occurred and provided assistance to the injured employee beyond that which was required by reason of their statutory obligations. Furthermore, neither defendant has any prior conviction for a breach of any occupational health and safety legislation. This is a matter, in my opinion, of some significance given the nature of the industry in which the defendants operate and the substantial nature of their undertakings. 24 The defendants submitted that a subjective element should include the fact that they co-operated with inspectors appointed by the prosecutor in carrying out their enquiries after the incident. Although the prosecutor submitted that the defendants were so required by statute, it is plain on the evidence that the defendants' personnel co-operated fully to ensure that the requirements of the inspectors were complied with in a timely and fulsome fashion. I take this into account in determining penalty. 25 There is also evidence that the defendants had in place a comprehensive policy and plan designed to assist in the discharge of their responsibilities under relevant occupational health and safety legislation. There can be no doubt, in my opinion, that there was a general awareness of safety matters, that the defendants were vigilant in reviewing and reinforcing compliance with their safety requirements, and conducted audits on a regular basis to ensure that this occurred. Furthermore, Centennial, for its part, closely monitored the Clarence Colliery management team to ensure, amongst other things, that the workforce at the colliery was retrained on the existing isolation procedures on a variety of equipment including the continuous miner machine, that the profile of hazard awareness and risk assessment was lifted, and that disciplinary action was taken against a number of persons. 26 All of these subjective matters will be taken into account by me in determining the appropriate penalty. 27 One of the matters for consideration is the respective culpability of each of the defendants. The defendants described Centennial's role in relation to the Clarence Colliery as having "the overall control of the operation of Clarence Colliery through the employment of the Mine Manager, its policies and provision of management of the Clarence Colliery and the overall conduct of and responsibility for occupational health and safety at the colliery." By contrast, the activities of Clarence, as I understand them from the statement of agreed facts, appears to have been limited to the employment of the persons who performed work at the mine other than the Mine Manager. 28 As I have previously observed, the incident occurred as a result of the failure of a number of persons to observe directions and procedures established by, at the least, Centennial and another of its associated corporations in circumstances where, on the evidence, the persons concerned had received instruction and training and two of whom at the least were highly experienced in coalmining operations. As against this, the evidence was that the task being undertaken at the time was not an every day occurrence and could be classified as something out of the usual. Nevertheless, this is not the case of an isolated and casual act of negligence of an employee working alone. At least four employees and their immediate supervisor were all aware of what was going on in breach of established directions and procedures. 29 In that Centennial had undertaken overall responsibility for occupational health and safety matters at the colliery and was actively involved in the administration of those policies, and in that Clarence as an employer was obviously obliged to actively consider the safety of its employees, I would assess the culpability of each of the defendants as being equal. I make this assessment having regard to the totality of the circumstances as are revealed by the evidence, and without attempting to undertake any qualitative or indeed quantitative analysis of the respective rights, duties and obligations of each of the defendants. The complex arrangements by which the Clarence Colliery in particular was operated was said to be inherited by Centennial when it acquired an interest in an existing joint venture arrangement. This is not a case of a simple joint venture where one is able to assess with some sort of precision the contributions made by a number of the venturers to the overall operation of the venture. The assessment that I have made reflects more my understanding of the culpability of each of the defendants by reference to the obligations imposed upon them by the Act. As I have said, I would assess their culpability as being equal. 30 There is one further matter to which reference should be made before considering the quantification of the each of the penalties to be imposed on each of the defendants. 31 The defendants submitted that each of the penalties which I determined to fix for each of the defendants should be further reduced to reflect the fact that there was ultimate common ownership of each of the defendants, that there were overlapping responsibilities and that the ultimate directing minds and management of both defendants were the same as they impacted upon the operations of the Clarence Colliery. 32 In making these submissions, the defendants relied upon observations which I had made in Inspector Green v Metropolitan Administration Services Pty Ltd [2005] NSWIRComm 12. Those proceedings involved in part prosecutions brought for breach of the occupational health and safety legislation by two companies one of which employed a worker who was injured whilst using equipment owned by the other defendant. Both corporate defendants were owned by the same shareholders and shared common directors. One was utilised in effect as a labour hire company to supply labour for use by the other. In determining the appropriate penalty I said in part "29 The approach which I have thus far taken in connection with the quantification of penalty has been consistent with that propounded by Staff J in A-Team Concrete (Inspectors Sharpin v A-Team Concrete (Aust) Pty Ltd 2004 NSWIRComm 182.) . That is, I have endeavoured to weigh the respective culpabilities of the defendants and I have endeavoured to measure their actual culpability in relation to the detriment to safety which brought about this incident. There are obviously overlapping responsibilities, as I have indicated. However, this begs the question as to whether some ameliorating approach should be adopted. The cases to which I have referred reveal starkly the opposing principles. On the one hand it may be asserted that the shareholders and guiding minds of the corporate entities have chosen to conduct the totality of the business operations by using two corporate structures, for whatever reason. Having done so, they have created two entities, both of which are amenable to prosecution in the circumstances of these proceedings. Having chosen to operate the aggregate of the business activities through these structures, they cannot be heard to complain that penalties should be imposed as if they were two distinct corporate entities operating at arms length. The other extreme is to regard both corporations as, in the aggregate, representing the means of carrying on the one business operation and, accordingly, there would be an element of double counting in imposing two separate and distinct penalties appropriate to each of them where the same common failings have created the breach of different but related provisions of the legislation.

30 It is a trite observation that the duty of the court is to impose such penalty which is appropriate in all the circumstances so as to reflect the intention of the legislature. There can be no doubt that if the shareholders, who are identical in both companies, had resolved to utilise the one corporate entity to operate the business of both defendants there would only be one prosecution before the Court, alleging a breach of s 15(1) of the Act and that there would be no prosecution brought under s 16. Whilst I acknowledge that the different approaches, which are to be found in the authorities to which I have referred, are available and can both be justified, it seems to me on balance that it is preferable to adopt an approach which ameliorates the aggregation of penalties which would otherwise have been imposed on two corporate entities which are closely related by way of identical shareholders and which share common overall management, especially where only one incident gives rise to the proceedings and there is a large degree of overlap in the factual circumstances which have created the breaches. Ultimately, it was the failure to ensure that Mr Sagiotis was adequately supervised so as to ensure that he wore the safety harness when operating the equipment that brought about his untimely death. For these reasons I propose to test the resultant aggregate penalties against what might otherwise be ordered to be paid by way of penalty in the event of one defendant, making due allowance, of course, for the differential maximum penalties and for the differential subjective features." 33 In assessing penalty, I reduced each of the penalties that I would otherwise have applied by 40%. 34 My judgment in that matter was referred to in passing by a Full Bench of this Court in WorkCover Authority (NSW) (Inspector Green) v Big River Timbers Pty Ltd (2006) 156 IR 341. The Court (Wright J President, Walton J Vice-President and Staff J) referred to the fact that the respondents in those proceedings had argued that "those cases are distinguishable on their facts; it was submitted that the respondents were 'interlocked' in such a way as to warrant the approach taken by Marks J in (the Metropolitan Administrative Services case)." 35 The Full Bench in Big River Timbers made no further reference to my judgment. However, that appeal dealt with the circumstances of two corporate defendants involved in the manufacture of plywood and flooring. The first corporate defendant controlled the business activities and owned the plant and the second operated an employment company and employed the person whose injury gave rise to the proceedings. 36 The approach for the fixing of appropriate penalties in these circumstances taken by the Full Bench in Big River Timbers consisted of applying an appropriate penalty to each of the corporate defendants by reference to their culpability ensuring that the principle of parity was applied. The Full Bench made no reference to and did not apply any further reduction of the kind that I had referred to in Metropolitan Administrative Services. 37 It seems to me that the factual circumstances that applied in Big River Timbers are relevantly indistinguishable from those that apply to the two corporate defendants in the context of these proceedings. On this basis, and having regard to the approach to sentencing which was applied by the Full Bench in Big River Timbers, I am of the opinion that it would be inappropriate to apply any further reduction on the basis which I accepted in Metropolitan Administrative Services because I apprehend it is inconsistent with the approach of the Full Bench in Big River Timbers by which, of course, I am bound. 38 The defendants also relied on a decision of Haylen J in this Court in Inspectors Bestre and Doyle v Jontari Pty Ltd and ors [2007] NSWIRComm 190. His Honour's judgment was published on 3 August 2007, after the decision of the Full Bench in Big River Timbers. 39 The judgment of Haylen J is instructive in referring to a number of circumstances in which approaches to sentencing have been taken by this Court, especially at appellant level, where proceedings have been taken against two corporate defendants arising out of the same incident, both of whom are closely related by reason of shareholding and the "controlling mind". His Honour's judgment discusses Big River Timbers, an earlier Full Bench decision and my decision in Inspector Green. 40 The circumstances in Inspector Bestre v Jontari were relevantly different to the circumstances that apply in these proceedings. Those proceedings arose out of incidents where persons working as cleaners at public schools had been assaulted. One of the defendants, Tempo Services Pty Ltd ("Tempo"), held a number of contracts for the cleaning of government premises including public schools. Tempo had utilised a number of wholly owned corporations for the purpose of providing labour at each of the schools. For example, the defendant Jontari Pty Ltd ("Jontari") was the employer of the workforce by which Tempo carried out its cleaning services at a particular public school. Jontari was one of over 250 such companies used by Tempo. Whilst all of the persons who performed work cleaning public schools and other premises, pursuant Tempo's overall contractual arrangements, were employed by each of these wholly owned subsidiary companies, those companies did not, in effect, perform any other part in the overall operations of the Tempo business. The subsidiary companies had no assets and did not make any operating profit. Their sole expense was referable to the wages paid to employees and other usual add-on costs, the amount of which were made to each of the subsidiary companies by Tempo and then paid out to or on behalf of the employees. All of the operational matters involving the management of these employees were undertaken by Tempo personnel. Each of the employees was held out as being an employee of the Tempo group, given training by Tempo group personnel and wore Tempo uniforms. All of the work systems including those relating to occupational health and safety matters were undertaken by Tempo personnel. 41 During the course of his reasons for judgment, Haylen J said, "43 The proper treatment of closely related defendants has raised some difficulty from time-to-time in the exercise of this part of the Court's jurisdiction. Members of the Court, have, on occasions, raised with the prosecutor the rationale for charging both the corporate entity and the director in circumstances where the evidence has disclosed that the incorporation of the business is little more than an action taken, usually on the advice of a financial consultant, and is the means by which a person or a family has chosen to conduct its business. Those queries have usually been met with a reply that the principle of totality is available to ensure that the aggregate penalty is appropriate. That rather loose and imprecise reference to the principle of totality has disguised difficulties with cases of this nature. It cannot be doubted that it is within the realms of the responsibility of the prosecutor to decide what charges are to be preferred and against what entities. The clarification by the Full Court in Big Rivers of the circumstances in which the principle of totality applies should result in prosecutors closely examining what entities are charged or what charges are continued where the evidence demonstrates a close connection between two defendants involved in the same incident. An important question that often arises in such circumstances is: what ends of justice are served by multiple prosecutions? Different circumstances may lead to different answers to this question, but it is a question that should be considered.

44 In Inspector Green v Metropolitan Administration Services Pty Ltd and anor [2005] NSWIRComm 12, reference was made to what was regarded as the two extremes of approaches demonstrated by reference to matters decided under Occupational Health and Safety legislation in this jurisdiction. One extreme was described as the approach in Haynes v C I & D Manufacturing and the other end of the extreme seemed to be the judgment in McDonalds Australia Ltd , namely, that the principle of totality could not apply to multiple defendants but only to one defendant facing multiple charges. In Metropolitan Administration Services Pty Ltd , the Court was faced with the situation of two corporations and a director being found guilty of a breach of the Act arising from the same incident in circumstances where the two corporations were owned by the same shareholders and shared common directors. The Court resolved what was seen to be the conflict in the decided cases by adopting an approach that ameliorated the aggregation of penalties which would otherwise have been imposed on two corporate entities which were closely related by way of identical shareholders and that shared common overall management in circumstances where only one incident gave rise to the proceedings and where there was a large degree of overlap in the factual circumstances which created the breaches." 42 His Honour then considered what he described as "the unusual nature of the relationship between these defendants" and determined that the appropriate approach to sentencing would involve an application of "some basic concepts". At [48] and [49] his Honour said, "48 Given the unusual nature of the relationship between these defendants, the question arises as to what sentencing options are properly open to the Court having accepted that, in terms, the principle of totality does not apply in relation to the subsidiary companies. It is appropriate in this particular exercise to return to some basic concepts. Section 3A of the Crimes (Sentencing Procedures) Act 1999 sets out the purposes for which a Court may impose a sentence on an offender. Those purposes include: ensuring that the offender is adequately punished for the offence; preventing crime by deterring the defendant and others from committing similar offences; protecting the community from the offender; promoting the rehabilitation of the offender; making the offender accountable for their actions; and, to denounce the conduct of the offender. It is the Court's duty to reconcile and rationalise these purposes in considering the sentence appropriate to the particular offence. In R v Engert (1995) 84 A Crim R 67, Gleeseon CJ, at 68, after discussing the purposes of punishment as set out in Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465, stated: 'A moments consideration will show that the interplay of the considerations relevant to sentencing may be complex and on occasion even intricate ... . It is therefore erroneous in principle to approach the law of sentencing as though automatic consequences follow from the presence or absence of particular factual circumstances. In every case, what is called for is the making of a discretionary decision in the light of the circumstances of the individual case, and in the light of the purposes to be served by the sentencing exercise.' 49 The need to ensure that the offender is adequately punished for the offence is essentially linked to the concept that the sentence must ultimately reflect the objective seriousness of the offence. In the present case there is no doubt that each offence is a serious breach of the Act for reasons already set out. However, in a real sense the breaches are those brought about by the actions and omissions of Tempo and not of the conduit entities. It may be argued that Tempo has chosen its own corporate structure and if that left it open to charges in relation to the same incident in relation to itself and its wholly owned subsidiaries, then so be it. However, the circumstances of each case are to be scrutinised in the sentencing process: not every wholly owned subsidiary or closely related defendant charged in relation to the same offence will be a mere conduit exercising no control and playing no part in the day to day employment relationship. Further, while it may be for the prosecutor to lay charges that cannot limit the Court in the way in which it approaches the sentencing exercise. A related consideration is that while the wholly owned subsidiaries acted as mere conduits, in fact they had the power to exercise control over the employees and did not do so. In the circumstances of the present case that type of analysis has little potency because the directing minds of the corporate entireties were the same persons: they chose to have the labour hire entities act without control and as mere conduits and chose to use Tempo as the de facto employer and in a practical sense standing in the shoes of the employer. The seriousness of the offence of the labour hire entities has to be judged in that context." 43 After considering a number of the factual matters, his Honour determined that having regard to the minimal role played by the corporate subsidiaries he would afford to them an approach permitted under s 10 of the Crimes (Sentencing Procedure) Act 1999 by requiring them to enter into a good behaviour bond and otherwise discharging them. 44 In my opinion, the factual circumstances that were considered by Haylen J in Inspector Bestre v Jontari are relevantly different from the factual circumstances that concern the defendants in these proceedings. The defendant Clarence Coal was more than a mere conduit as was the case in the proceedings before Haylen J and, through its involvement in occupational health and safety matters and in the deployment of staff and the like, participated to a much greater extent in the overall operations of the mine. Accordingly, I reject the defendants' submissions that I should apply the same or a similar approach to that adopted by Haylen J in those proceedings. 45 The maximum penalty that applies to each of the corporate defendants is $550,000. Having regard to the objective seriousness of each of the offences, which I have described, taking into account the need for both general and specific deterrence, but affording each of the defendants a discount by reference to the matters to which I have referred, I fix a penalty to be paid by each corporate defendant of $80,000. 46 The prosecution sought a moiety and costs, which were not opposed. 47 Orders

Each of the defendants is found guilty of the offence with which it is charged and is fined the sum of $80,000 with a moiety to the prosecutor.

The defendants are each liable to pay one half of the costs of the prosecutor assessed by the Court in default of agreement.

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

Under the Coal Mine Regulation Act 1982(NSW)

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