Porteous & Others v Inspector McMartin

FILE NUMBER(S): IRC 1591, 1592, 1593, 1594, 1595 of 2005

CATCHWORDS: Appeal - application for stay of penalties but not of convictions - principles for grantings stays in civil and criminal proceedings discussed - adequate reason for a stay must be shown by applicant - balance of convenience - stay refused for corporate applicants - stay granted for personal applicants - costs reserved

Criminal Appeal Act 1912 s 5AA Fines Act 1996 s 10 LEGISLATION CITED: Occupational Health and Safety Act 1983 ss 15 16 33(2) 49(4) 50(1) 53 Supreme Court (Summary Jurisdiction) Act 1967 s 4(1)(a) Industrial Relations Act 1996 s 196

Abigroup Contractors Pty Limited v WorkCover Authority of New South Wales (Inspector Maltby) (unreported, 1 December 2003, Walton, Boland and Haylen JJ) Broken Hill Chamber of Commerce and CFMEU (NSW Branch) [2002] NSWIRComm 244 Campbells Cash and Carry Pty Limited v National Union of Workers, New South Wales Branch (2001) 104 IR 400 Commissioner of Police v Police Association of New South Wales (2005) NSWIR Comm 132 Green v Brown (2000) 102 IR 30 State of New South Wales (Department of Public Works and Services and Department of Education and Training) v WorkCover Authority (NSW) (Inspector Page) (2000) 101 IR 131 Stephen Finlay McMartin v Newcastle Wallsend Coal Company Pty Limited & others [2004] NSWIRComm 202 CASES CITED: Stephen Finlay McMartin v Newcastle Wallsend Coal Company Pty Limited & others [2005] NSWIRComm 31 Transport Industry - Waste Collection and Recycling (State) Award (2000) 102 IR 192 Water Industry Salaried Officers' Union v Professional Officers' Association (NSW) (1987) 22 IR 178 United Mexican States v Cabal (2001) 209 CLR 165 Workcover Authority of NSW (Inspector McMartin) v Newcastle Wallsend Coal Company Pty Ltd & Others (2002) 116 IR 283 Zelbarry International Pty Ltd v Inspector Christensen [2004] NSWIRComm 183

HEARING DATES: 04/04/2005; 04/26/2005; 04/28/2005

APPLICANTS Mr S Rothman SC and subsequently Mr B Hodgkinson SC Mrs W Thompson of Counsel

Solicitor: Ms Fiona Inverarity PricewaterhouseCoopers Legal LEGAL REPRESENTATIVES:

RESPONDENT Mr S Crawshaw SC Mr B Docking of Counsel

Solicitor: Mr Martin Carrick Geoffrey Edwards & Co

• 3 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

Matter No IRC 1591 of 2005 RICHARD MYLES PORTEOUS v INSPECTOR STEPHEN FINLAY McMARTIN

Application by Richard Myles Porteous for appeal from judgments of Justice Staunton and interlocutory judgment of Justice Wright given on 14 June 2002, 9 August 2004 and 11 March 2005 in matter numbers IRC 3212, 3215 and 3221 of 2000.

Matter No IRC 1592 of 2005 NEWCASTLE WALLSEND COAL CO PTY LTD v INSPECTOR STEPHEN FINLAY McMARTIN

Application by Newcastle Wallsend Coal Co Pty Ltd for appeal from judgments of Justice Staunton and interlocutory judgment of Justice Wright given on 14 June 2002, 9 August 2004 and 11 March 2005 in matter numbers IRC 3198, 3199, 3200, 3201, 3202 and 3203 of 2000.

Matter No IRC 1593 of 2005 JOHNATHON ERIC HUMPHRIES ROMCKE v INSPECTOR STEPHEN FINLAY McMARTIN

Application by for appeal Johnathon Eric Humphries Romcke from judgments of Justice Staunton and interlocutory judgment of Justice Wright given on 14 June 2002, 9 August 2004 and 11 March 2005 in matter numbers IRC 3234, 3235, 3236 and 3237 of 2002.

Matter No IRC 1594 of 2005 OAKBRIDGE PTY LIMITED v INSPECTOR STEPHEN FINLAY McMARTIN

Application by Oakbridge Pty Limited for appeal from judgments of Justice Staunton and interlocutory judgment of Justice Wright given on 14 June 2002, 9 August 2004 and 11 March 2005 in matter numbers IRC 3204, 3205, 3206, 3207, 3208 and 3209 of 2000.

Matter No IRC 1595 of 2005 MARK ROBINSON v INSPECTOR STEPHEN FINLAY McMARTIN

Application by Mark Robinson for appeal from judgments of Justice Staunton and interlocutory judgment of Justice Wright given on 14 June 2002, 9 August 2004 and 11 March 2005 in matter numbers IRC 3230, 3231, 3232 and 3233 of 2000.

JUDGMENT OF THE COURT [2005] NSWIRComm 122 1 At about 5:30am on 14 November 1996, four men working at the Gretley Colliery drowned when a great rush of water flooded the underground roadway they were building. This tragic accident gave rise to 52 charges against two corporate defendants (Newcastle Wallsend Coal Co Pty Ltd and Oakbridge Pty Limited) and eight personal defendants (Messrs Richard Myles Porteous, Phillip John Pritchard, Michael John Coffey, Christopher Wayne Nicholls and Terence Shacklady) under ss 15, 16 and 50(1) of the Occupational Health and Safety Act 1983 ("the Act"). 2 In the course of those criminal proceedings, the defendants filed two notices of motion seeking various orders, including orders that the summonses be struck out, dismissed or stayed permanently. In the interlocutory judgment Steve McMartin v The Newcastle Wallsend Coal Company Pty Ltd & Others (2002) 116 IR 283, Wright J, President rejected the defendants' submissions that (a) proceedings had not been validly commenced because the applications for summonses were made to the Registrar and not to a judge of the Commission in Court Session; (b) the applications for summonses failed to comply with s 49(4) of the Act; (c) the summonses issued by the Registrar were of no legal effect; and (d) the applications were invalid on the basis that the accompanying prosecutor's affidavits were not properly or validly sworn. Wright J also directed the prosecution to file and serve a document setting out the form of orders sought under s 4(1)(a) of the Supreme Court (Summary Jurisdiction) Act 1967. 3 In Stephen Finlay McMartin v Newcastle Wallsend Coal Company Pty Limited & others [2004] NSWIRComm 202, Staunton J found three of the personal defendants (Messrs Porteous, Romcke and Robinson) and both corporate defendants (collectively, "the appellants") guilty of numerous charges pursuant to ss 15, 16 and 50(1) of the Act. In Stephen Finlay McMartin v Newcastle Wallsend Coal Company Pty Limited & others [2005] NSWIRComm 31, Staunton J convicted the appellants and imposed penalties. 4 Pursuant to s 196 of the Industrial Relations Act 1996 and s 5AA of the Criminal Appeals Act 1912, the appellants have appealed each of the three decisions referred to above and sought a stay of the fines (but not the convictions) imposed by Staunton J in Stephen Finlay McMartin v Newcastle Wallsend Coal Company Pty Limited & others [2005] NSWIRComm 31, pending determination of their appeal. The appellants have not sought a stay of the directions regarding costs (noting that at this stage the order as to costs is only that the corporate defendants pay 90% of the prosecutor's costs and that the parties are to seek to reach agreement on the quantum; failing which the matter is to be referred to the Registrar of the Court for assessment) and, in the result, as Mr B Hodgkinson SC (who appeared later in the stay proceedings for the appellants) pointed out, no stay can be ordered at this stage. 5 Thus, this decision only relates to the application for a stay of the fines imposed by the Court at first instance only. 6 Through a combination of their notices of appeals (including their amended notices of appeals) and submissions made on their behalf by Mr S Rothman SC (with whom Mrs W Thompson of counsel appeared) the appellants have articulated the following grounds in support of their applications for a stay:

1. The appellants' liability to pay the fines is dependant upon the resolution of the issues on the appeal;

2. In the circumstances and the interests of justice, the appellants should not be required to pay any fine until the issues raised on appeal have been determined; and

3. The prosecutor is not the Crown and there is no evidence that the fine would or could be repaid. 7 Further, by their amended appeals (leave to amend the notices of appeal having been granted on 26 April 2005), the individual appellants have withdrawn the ground in support of their applications for a stay that the total fine imposed is more than can be afforded without substantial borrowing and have contended, inter alia, that payment of the fines would involve significant financial hardship. GENERAL PRINCIPLES 8 The principles governing stays in civil proceedings of decisions appealed against are well-settled in this jurisdiction: see, in particular, Water Industry Salaried Officers' Union v Professional Officers' Association (NSW) (1987) 22 IR 178; Green v Brown (2000) 102 IR 30 at [16]; Re Transport Industry - Waste Collection and Recycling (State) Award (2000) 102 IR 192 at [19]; Campbells Cash and Carry Pty Limited v National Union of Workers, New South Wales Branch (2001) 104 IR 400 at 409; and the decisions of the Full Benches in Broken Hill Chamber of Commerce and CFMEU (NSW Branch) [2002] NSWIRComm 244 at [11] and Commissioner of Police v Police Association of New South Wales [2005] NSWIRComm 132 at [33]. It is not necessary to demonstrate special or exceptional circumstances to warrant the imposition of a stay. Rather, the applicant must demonstrate an adequate reason for the stay (simply filing an appeal or seeking a stay is not sufficient) and that the balance of convenience (including fairness and the competing rights of the parties) favours the stay. In some cases it may be appropriate to consider, on a preliminary basis, the prospects for success on appeal. 9 This case concerns, however, an application for a stay of orders in criminal proceedings and the application has been contested by the prosecutor - a relatively recent phenomenon in this jurisdiction. There have been two recent decisions on contested stays in criminal proceedings: Abigroup Contractors Pty Limited v WorkCover Authority of New South Wales (Inspector Maltby) (unreported, 1 December 2003, Walton, Boland and Haylen JJ) and Zelbarry International Pty Ltd v Inspector Christensen [2004] NSWIRComm 183. Neither decision purported to depart from the principles established in civil proceedings. 10 In Abigroup v WorkCover Authority, notwithstanding a significant fine (the corporate defendant was fined at first instance a total of $1,500,000), the application for a stay was refused on the basis that the appellant/applicant had failed to demonstrate an adequate reason for granting the stay. The importance of establishing an adequate reason for a stay should not be underestimated. This is often a preliminary consideration to the balance of convenience, including factors such as prospects of success of the appeal. This requirement is a corollary to the established principle that the mere filing of an appeal will not be enough - not every applicant for a stay is so entitled. The extent to which the appellants have fallen into this error in the present case is illustrated by the submission of Mr Rothman that once prejudice is shown on one side but not the other, the applicant's initial onus is discharged. This submission confuses establishing an adequate reason for a stay with an assessment of the balance of convenience. 11 In Zelbarry International Pty Ltd v Inspector Christensen, Boland J granted a stay. On the prosecutor's assessment of Zelbarry, it appears that Boland J (in considering first the prospects of success on appeal and secondly the balance of convenience) did not really take into account the onus resting on the applicant to demonstrate an adequate reason for a stay. If this is the correct interpretation of Zelbarry, I would have to respectfully disagree with that aspect of the decision. However, the better view is that Zelbarry represents the more orthodox approach: it is possible to discern from the judgment bases upon which Boland J may have concluded that the applicant had discharged the onus, including the significant scale of the penalty for a first offence in the context of a plea of guilty and the small size of the applicant company. 12 Finally, the prosecutor relied upon the High Court authority of United Mexican States v Cabal (2001) 209 CLR 165 concerning stringency in applications for stays of orders of imprisonment. I agree with Mr Rothman that the case has no direct application to the present case, given the absence of two key factors in the High Court's reasoning: the High Court stressed the importance of avoiding interference with custodial sentences and the undesirability of making a conviction appear contingent until confirmed on appeal. As Mr Rothman correctly noted, in this case the appellants are not seeking a stay of their convictions: only of the fines. However, despite these distinctions, United Mexican States v Cabal gives some weight to this observation: whatever may be said on potential differences between stay applications in civil and criminal proceedings, it will be at least as difficult to obtain a stay in criminal proceedings as in civil proceedings. 13 In my view, and consistently with the views expressed by the Full Bench of this Court in Abigroup v Workcover Authority and State of New South Wales (Department of Public Works and Services and Department of Education and Training) v WorkCover Authority (NSW) (Inspector Page) (2000) 101 IR 131 at [15], the principles applicable to the determination of applications for a stay in criminal appeals before this Court are generally those operating in the case of appeals in non-criminal matters. CONSIDERATION

14 The prosecutor did not dispute that the Court has jurisdiction to grant a stay, and I will proceed on that basis. In the present case, I am not satisfied that the corporate appellants have discharged their onus of establishing an adequate reason for the stay. In every criminal case where a fine has been imposed, payment will incur some financial adversity. In this case, Mr Rothman properly conceded that the ultimate "owner" of the corporate defendants is now a multi-national corporation, Xstrata, and that it has the capacity to pay. Nor did he raise capacity to pay as an issue before Staunton J in the context of fixing a penalty. In the absence of any facts particular to this case (which would not apply to every case), granting a stay to the corporate appellants would be tantamount to authorising the exercise of discretion to grant a stay in every appeal, contrary to established principle, including Abigroup v WorkCover. 15 For the above reasons, it is not necessary for me to consider the balance of convenience in relation to the corporate defendants. However, given the time taken by counsel for both parties on the subject, I will make the following remarks in point form: · I accept that, notwithstanding the respondent's contentions to the contrary, the corporate appellants have numerous grounds of appeal which are plausibly arguable (including grounds relating to the validity of the commencement of the proceedings, the nature of an offence under ss 15 and 16 of the Act, risk, causation, s33(2) of the Act, adverse inferences drawn against the appellants because they did not give evidence, the principle of totality, taking into account irrelevant prejudicial material not in evidence and s 53 defences); · The appeal process of itself raises some measure of uncertainty as to whether a judgment at first instance will stand: this is common to all appeals and cannot be sufficient to justify the granting of a stay. I reject the appellants' grounds in support of their application for a stay relating to deferral of the fines pending resolution of the issues on appeal; · There is no evidence to support either of the submissions made by the appellants as to financial trustworthiness: that as the prosecutor is not the Crown there is some risk that the fines would not be repaid in the event that the stays are not granted and the appeals are ultimately successful; or that there is no risk (if a stay is granted and the appeals should fail) that the penalties imposed will not be paid. Without such evidence (or any other basis) these submissions are unsustainable; and · Mr Rothman submitted that no unfairness would be visited upon the prosecutor if the stay is granted. It is unnecessary for me to decide whether or not this submission is correct: even if it was, it would not affect my decision in this case to refuse the corporate appellants' application for the reasons described above. 16 In conclusion, I refuse the application of the corporate appellants for a stay of the penalty orders of Staunton J pending the outcome of their appeals. 17 Turning then to the individual appellants, I accept that, in an appropriate case, evidence of significant financial hardship may establish an adequate reason for granting a stay. This has been contended by Mr S Rothman on behalf of Messrs Porteous, Romcke and Robinson. 18 Mr Rothman also contended that the personal defendants had suffered considerable hardship in the long, painful years following the tragic accident in November 1996 throughout the course of the coronial inquiry and the prosecutions in this jurisdiction, and that in all of the circumstances it would be unfair, in the light of the excessive burdens already suffered by the personal defendants, to impose a further financial burden (pending the outcome of their appeals).

19 I also accept that, notwithstanding the respondent's contentions to the contrary, the individual appellants have numerous grounds of appeal which are at least arguable; without wishing to pre-empt any consideration of these matters on appeal, I note in particular the grounds relating to the relationship between ss 15, 16 and 50 of the Act and the meaning of the term "a person concerned in the management of the relevant corporation" in s 50. It does appear that, particularly in the case of Mr Robinson (who was at the time of the accident a mine surveyor), there may be substantial matters to be reviewed by an appellate court. 20 The difficulty for the individual appellants lies in the incomplete nature of their substantiating evidence as to their financial position. Apart from affidavits sworn in October 2004 for the sentencing hearing (which I accept as applicable at the present time, on the basis of their solicitor's affidavit to that effect), no fresh evidence was adduced in support of their stay application. 21 It is apparent from the affidavits and the sentencing judgment that: · Mr Porteous (who was fined $42,000) has a gross income of approximately $160,000; supports his wife (who suffers from chronic fatigue syndrome) and three children; owns his house; and has a unit trust of approximately $200,000 set aside for the education of his three children and for retirement; · Mr Romcke (who was fined $30,000) has a gross income of approximately $180,000; supports his wife and four children; and has properties at Broke, Maitland and Mackay with respective mortgages of approximately 65 per cent, 60 per cent and 100 per cent of the properties' value; · Mr Robinson (who was fined $30,000) has a variable weekly income of approximately $1200 after tax (this extrapolates to approximately $62,000 per annum after tax) and he has a wife and three children. There is no evidence as to whether Mr Robinson's wife works, or whether they own any property. 22 I note that there was no suggestion of financial impecuniosity of the personal appellants in the proceedings at first instance; nor is there any evidence of any application for time to pay or to pay the fine by instalments pursuant to s 10 of the Fines Act 1996. 23 Mr S Crawshaw SC, who appeared on behalf of the prosecutor with Mr B Docking of counsel, noted that in the first instance proceedings there was evidence of other defendants having all (or nearly all) of their costs paid by the corporate defendant or a related entity. On this basis, Mr Crawshaw contended that it had not been demonstrated or even suggested that the personal appellants rather than a corporate appellant or another corporate entity would, in fact, fund the payment of the fine. However, there is insufficient evidence to draw an inference that the fines of the personal appellants will be funded by a corporate appellant or another corporate entity. I do not consider the evidence at first instance as to payment of costs of the other defendants by the corporate defendant (or a related entity) to be necessarily relevant to this issue. (I note that this conclusion does not, however, support the appellant's contentions that the respondent acted improperly in raising this issue). 24 In the original notice of appeal, the individual appellants had sought to rely on the ground of appeal that they would not be able to pay the penalty without incurring substantial borrowings. As already mentioned, the personal appellants have desisted from this ground in their amended notice of appeal. Mr Crawshaw had contended that the evidence as to their financial position does not give a picture that is detailed or exhaustive enough to make out this ground. I observe that the test for determining whether financial hardship would result from the payment of the penalty is not whether the payment can only be made by incurring substantial borrowings; rather each application requires a case by case examination of the individual appellant's financial circumstances. 25 Notwithstanding the somewhat limited nature of the individual appellants' financial evidence, I consider that the evidence presented at first instance is sufficient in this case to establish a significant level of financial hardship for each man and his family, against a background, as Mr Rothman described, of nearly nine years of difficulty since the accident. In my view, the individual appellants have established an adequate reason for a stay on these bases. In relation to the balance of convenience, I am prepared to accept that there will be no prejudice to the prosecutor should the stay be granted (nor did the prosecutor suggest otherwise), whereas, as I have noted, there would be considerable hardship suffered by the individual appellants in circumstances where they have arguable grounds of appeal and it may take some considerable time for the resolution of a lengthy, complicated appeal. This may be contrasted starkly with the position of the corporate appellants, in respect of which no evidence has been adduced suggesting financial or other hardship. 26 However, the applications for a stay of the penalty orders seek a stay without conditions. The present circumstances in which the individual appellants have pleaded financial hardship as a ground in support of their applications (as well as other grounds) give rise to the consideration as to whether an undertaking as to diligent prosecution of the appeals is appropriate. I note, in this respect, Rule 15 of the Criminal Appeal Rules, which provides: Where a person is ordered to pay money as a penalty or for costs, the Judge of the Court of Trial may suspend the payment thereof upon such person entering into recognisances (Forms No XX and XXI) to prosecute an appeal and abide the judgment of the Court thereon, before such persons, in such amount and with or without sureties, or upon any other terms and conditions that such Judge directs. 27 Whilst Rule 15 is not directly applicable (as it applies to a trial judge), it raises considerations relevant to the present applications. In all the circumstances of the applications of the individual appellants, I consider it appropriate to require undertakings to be given by the individual appellants to diligently prosecute their appeals as a condition to the stay of the penalty orders being granted. (The Court raised this issue during the hearing on 26 April 2005 and was subsequently provided with copies of a written undertaking given to the Industrial Registrar by Messrs Porteous, Romke and Robinsonsuch that they "will and will instruct [their] legal representatives to diligently prosecute the appeal against the convictions and abide by any subsequent judgment of the Court"). 28 In the applications before the Court, no orders have been sought in relation to the directions of Staunton J regarding costs and submissions as to moiety. As no applications have been made, I do not propose to make any orders regarding costs and moiety.

1. The order of Staunton J for the imposition of a penalty upon Richard Myles Porteous in each of Matters No IRC 3212 of 2000, 3215 of 2000, 3218 of 2000 and 3221 of 2000 is stayed until further order of the Court.

2. The order of Staunton J for the imposition of a penalty upon Johnathon Eric Humphries Romcke in each of Matters No IRC 3234 of 2000, 3235 of 2000, 3236 of 2000 and 3237 of 2000 is stayed until further order of the Court.

3. The order of Staunton J for the imposition of a penalty upon Mark Robinson in each of Matters No IRC 3230 of 2000, 3231 of 2000, 3232 of 2000 and 3233 of 2000 is stayed until further order of the Court. 30 The question of costs of the stay applications is reserved.

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