SafeWork NSW v ADN Investments Pty Limited; SafeWork NSW v Adnan Yassine

Background

1. The parties presented an Agreed Statement of Facts which is summarised below. I have heard no evidence and have not embarked on any fact finding. The defendants will be sentenced on the material put before the Court by agreement.
2. Liverpool Developing Pty Limited [ACN 153 414 683] (Liverpool Developing) was the registered owner of the property 248-252 Liverpool Road, Enfield, in the State of New South Wales (the site). The site was a workplace for the purposes of s 8 of the Act.
3. In about January 2014, Liverpool Developing made the decision to develop the site into the Skyview Apartments, being a 6-storey mixed use development, comprising 16 residential apartments, commercial floor space and 2 basement levels of car packing.
4. On 18 September 2014, Burwood Council issued a Planning Certificate, pursuant to s 149(2) & (5) of the Environmental Planning and Assessment Act 1979, for the development of the site.
5. On 18 December 2014, Burwood Council issued a Notice of Determination of a Development Application, pursuant to s 81(1)(a) of the Environmental Planning and Assessment Act 1979, for the demolition of existing buildings at the site and for the construction of Skyview Apartments.
6. Liverpool Developing engaged Erector Group Pty Limited [ACN 095 922 357] (Erector) to undertake construction management and services, including excavation and demolition work, at the site.
7. Erector was the principal contactor at the site.
8. Mr Rong Feng Wang (Mr Wang) was the sole director and secretary of Erector.
9. Erector engaged ADN trading as "ADN Earthworks" as a subcontractor to undertake demolition, bulk excavation and detailed excavation at the site.
10. Mr Yassine was: 1. a director and an officer of ADN as defined in s 4 of the Act and s 9 of the Corporations Act 2001(C'th) and was the supervisor for ADN at the site; 2. a person who made decisions that affected the whole or a substantial part of the business of ADN, including decisions on work health and safety policies and procedures; and 3. a person with a health and safety duty under s 27 of the Act in his capacity as an officer of ADN, with an obligation to exercise due diligence to ensure ADN fulfilled its duties at law, including its health and safety duty.

Other Persons

1. The adjacent building next to the site, being 254 Liverpool Road, Enfield (the adjacent building), was jointly owned by Ms Andry Vareltsis, Mr Jimmy Vareltsis, Ms Chrisoulla Rossides and Ms Eleni Rossides.
2. At all material times, the adjacent building was a commercial and residential property. The adjacent building, situated on a narrow commercial allotment, was constructed in 1935 from brick on brick foundations with a timber floor at first storey level under a pitched-frame corrugated iron roof. The ground floor of the adjacent building was occupied by a commercial tenant L.A. Lulus Touch of Style Hairdressers, a hair stylist business owned and operated by Ms Chisoulla Rossides. The first floor of the adjacent building was a residential apartment, occupied by Ms Jocelyn Perry, who was an employee of L.A. Lulus Touch of Style Hairdressers.

Systems of Work

1. On 29 September 2015, Erector, as principal contractor at the site, engaged Geo-Environmental Engineering to conduct a geotechnical investigation into the site. Geo-Environmental Engineering informed Erector that the proposed development at the site was feasible but recommended that further investigation should be conducted once contractors and structural engineers finalised the excavation plan for the foundations.
2. Erector engaged Mr George Khalil (Mr Khalil), a structural engineer of ACSES Engineering Pty Limited, to provide technical drawings and a Proposed Residential Development Plan for the excavation work at the site.
3. Mr Khalil provided Erector with technical drawings and a Proposed Residential Development Plan for the site on 15 January 2016 that stipulated: 1. the size, type and extent of the foundations of the adjacent building must be determined and verified by the structural engineer, geotechnical engineer, builder and other relevant contractors prior to any construction work commencing; 2. prior to any construction work commencing and once the footings of any adjacent building are exposed, an engineer should be consulted to develop and implement appropriate support mechanisms for the footing, such as underpinning the footing and/or constructing a shoring wall that could support a load from the adjacent building; 3. Erector shall be responsible for maintaining excavations in a stable condition without affecting adjacent building or services. Where required, temporary shoring shall be provided to the sides of footing excavations for the adjacent building; 4. excavation shall not extend below a line dipping at 45 degrees for clay and 30 degrees for sand and away from the nearest underside corner of any existing footings; and 5. At no stage shall the base of the shoring wall capping beam be lower than the base of the adjacent building foundation or else a high-level shoring solution may be required. Levels of the existing structures must be confirmed prior to construction commencing at the site.
4. Erector provided ADN, as a subcontractor at the site, with the Geo-Environmental Engineering report and technical drawings. However, ADN was not provided a copy of the Proposed Residential Development Plan.
5. Before commencing excavation work at the site, ADN provided Erector with a Safe Work Method Statement (SWMS), which included a procedure for excavation work. The SWMS identified structural collapse of the adjacent building as a risk when excavating. The SWMS stipulated control measures to deal with this risk, being: 1. that appropriate shoring measures should be implemented and the supervisor should take note of the depth of the excavation, nature and faults in the earth or rock and the adjacent building and structures; and 2. to seek advice from a geotechnical engineer, prior to deep excavations close to an adjacent building or structure, on the appropriate shoring measures.
6. Mr Yassine said that there were supervisors on site from Erector, being Mr Henry Yan (Mr Yan), the primary supervisor for Erector, and a Mr Landon Lu (Mr Lu), the secondary supervisor for Erector. Mr Yassine stated he would see Mr Lu "walking around" the site but did not "bother talking to" Mr Lu and only ever spoke directly to Mr Yan, who would pass on any information to Mr Wang.

The Incident

1. On 29 February 2016, ADN commenced excavation work at the site, using an excavator. The excavation work was authorised to commence by Mr Wang and was to be done by Mr Yassine. Mr Yassine was instructed by Erector and Mr Wang, via e-mails, to excavate to "the bottom of the capping beam".
2. Erector and Mr Wang, via e-mails, indicated to ADN that failure to excavate to "the bottom of the capping beam" would cause a delay in the construction and may result in Erector seeking liquidated damages against ADN.
3. Sometime between 10 am and 12 pm, Mr Yassine commenced excavating the area next to the adjacent building. No shoring measures were implemented.
4. When the excavation commenced, customers of L.A. Lulus Touch of Style Hairdressers were continuously coming and going, with Christine Moeakiola (Ms Moeakiola), Andry Vareltsis (Ms Vareltsis), and Chisoulla Rossides (Ms Rossides) working throughout the day. During the day, they noticed constant shaking of the adjacent building. Supplies on the shelves were constantly falling.
5. At approximately 5 pm, excavation work was completed. Mr Yassine had excavated 450 mm below the capping beam level of the adjacent building's brick walls and brick footing. At this point, not all the excavation work for the capping beam was completed, with only the excavation work carried out in preparation for shoring piles to be installed.
6. At approximately 8 pm, Ms Perry (resident of the first-floor apartment) called Ms Rossides and told her that the building and walls of the adjacent building were starting to shake and looked likely to collapse. Ms Perry subsequently left her home.
7. At approximately 9:20 pm, Emergency Services (000) were called and informed that the adjacent building was beginning to collapse.
8. When the NSW Police arrived, they observed the eastern side wall of the adjacent building to have partially collapsed. The front wall of the adjacent building had cracked extensively and there was a strong smell of gas fumes. The NSW Police subsequently closed Liverpool Road in both directions as a precaution and established a 50m exclusion zone around the adjacent building.
9. By 3 am on 1 March 2016 the entire eastern side and rear of the adjacent building had collapsed.

Legal Obligation, Codes of Practice and Guidance Material

1. At the time of the Incident, ADN had a legal obligation under cl 35 of the Work Health and Safety Regulation 2011 which requires that a duty holder must, in managing risks to health and safety, eliminate risks to health and safety so far as is reasonably practicable, and if it is not reasonably practicable to eliminate risks to health and safety, minimise those risks so far as is reasonably practicable.
2. Guidance materials provided advice regarding any work involving excavation and demolition work was readily accessible and available in the public domain. Such guidance materials included: 1. Code of Practice: Excavation Work (July 2015) (Code of Practice). The Code of Practice provides practical guidance to excavation contractors, on how to manage the health and safety risks associated with excavation work. The Code of Practice applies to all types of excavation work; 2. AS2601-2001: The Demolition of Structures (published on 13 September 2001) (the Standard) is an Australian Standard that provides guidance to planners, engineers, contractors and interested parties on the planning and procedures for the demolition of a structure, on how to manage the health and safety risks associated with the demolition work and the subsequent excavation on a site; 3. SafeWork Australia: Demolition Work Code of Practice (published 3 February 2016) and SafeWork Australia: Demolition Work Code of Practice (published 27 March 2015) provides practical guidance to contractors on how to manage the health and safety risks associated with demolition work, including systems for establishing temporary supports or shoring to maintain stability and to prevent a building collapse during excavation; and 4. SafeWork Australia: Construction Work Code of Practice (July 2014) provides practical guidance to contractors on how to manage the health and safety risks associated with construction work, which includes any work connected with an excavation component, and engineering controls such as shoring the sides of the excavation to prevent a building collapse during excavation.

After the Incident

1. On 1 March 2016, Mr Martin Jenner, Burwood Council Senior Compliance Manager, authorised the remaining front section of the adjacent building to be demolished to prevent further collapse and to render the location safe for the public.
2. Mr Martin Dwyer, an engineer from NSW Public Works Advisory, declared the site located at 246, 246B, 256 Liverpool Road and the adjacent building to be unsafe and dangerous. As a result, NSW Police directed all persons to leave the site, to move outside the danger area and to not enter the danger area pursuant to s 60L of the State Emergency and Rescue Management Act 1989 (NSW).
3. Temporary fencing was erected around 246, 246B, 256 Liverpool Road and the adjacent building and the footpath of Liverpool Road was restricted.
4. On 4 March 2016, rectification work was completed and Mr Dwyer (for NSW Public Works Advisory) and Mr Khalil (for Erector) advised that it was safe for the occupants of around 246, 246B, 256 Liverpool Road and the adjacent building to return.

Evidence for the Offenders

1. Mr Yassine affirmed an affidavit dated 20 August 2019. He said that ADN has been operating for 12 years and acts primarily as a sub-contractor. The company has a diverse workforce and Mr Yassine has given advice to others who have wished to enter the demolition and excavation business. ADN has provided commercial sponsorship to a local sporting club and a local school. ADN has sponsored two employees on 457 visas.
2. Mr Yassine, besides being the company director, has operated machines and undertaken excavation work himself. He is the person primarily responsible for workplace health and safety. The ADN safety system includes: 1. Employee site specific inductions before commencing work; 2. Employee training prior to an employee commencing work for ADN; 3. Safe Work Method Statements; 4. Work health and safety management plans; 5. Toolbox meetings held weekly; 6. Daily checklists and pre-starts for plant; 7. Quality management system including inspection and test plan.
3. Mr Yassine said that the incident at Enfield was the first type of workplace incident in which ADN, or he personally, had been involved. He said that it was regrettable and unintentional. He expressed his remorse and recognised that the damage and the risks had been caused by the actions of ADN and himself. Changes had been implemented in the company's procedures as a result of the incident.
4. Mr Yassine personally operated the machine which did the excavation and undermining of the wall of the adjoining property. He acknowledged that he did not undertake the work in a diligent manner. He said that he felt pressured by the head contractor to do what they asked. He said that he now appreciated that pressure put on him was not a reason to ignore safety.
5. In paragraph 28 of his affidavit Mr Yassine gave evidence of the new policies which he and ADN had introduced. They include: 1. ADN no longer commences any work without written approval, evidence and reports provided by clients about the nature of the work, the associated risks and the minimisation of those risks; 2. After consideration of such material, if Mr Yassine now considers that the risk still arises, he will not do the work as stipulated, but continues to talk to the builder to come up with a safe solution; 3. There is now continuous and incremental monitoring of all works on site. In particular, the height of any neighbouring footings is checked on every excavation which is done; 4. Training of employees has increased; 5. ADN ensures that it acquires professional advice from qualified consultants for sensitive and risky work; 6. ADN is now more risk averse. It will not do work simply so that the work gets done, to the detriment of safety.
6. Since the incident, there have been no major work health and safety incidents. There was an enforcement notice issued on 25 November 2017, for the comparatively minor matter of leaving safety documentation in a car over the lunch hour, rather than having it on site.
7. Mr Yassine made it plain that safety at ADN is now paramount. He acknowledged and accepted the significant culpability of ADN and himself for the offences.
8. Mr Yassine was present in court but was not required for cross-examination, and I accept all of the evidence in his affidavit as truthful and sincere.
9. In his affidavit Mr Yassine said that he was willing to provide evidence for the prosecutor in any proceedings the prosecutor may bring against Liverpool Developing, Erector or Mr Wang. He has already provided documents to the prosecutor to assist them in considering whether to bring proceedings against any of those entities.

Consideration

1. I have had regard to the objects in s 3 of the Act and the purposes of sentencing set out in s 3A of the Crimes (Sentencing Procedure) Act 1999.

Objective seriousness of the offence

1. The proportionality principle requires that a sentence should neither exceed nor be less than the gravity of the crime having regard to the objective circumstances: Veen v The Queen (No. 2) [1988] HCA 14; (1988) 164 CLR 465 at 472, 485-6, 490-1 and 496. At common law, the term "objective circumstances" was used to describe the circumstances of the crime. The gravity of the offence was assessed by reference to its objective seriousness: R v McNaughton [2006] NSWCCA 242; (2006) 66 NSWLR 566 at [15].
2. The task requires the court to consider where in the range of conduct covered by the offence the conduct of the offender falls: Baumer v R [1988] HCA 67; (1988) 166 CLR 51 at 57. This assessment will generally indicate the appropriate range of sentences available which will reflect the objective seriousness of the offence committed, and set the limits within which a sentence proportional to the criminality of the offender will lie: BW v R [2011] NSWCCA 176 at [70].
3. The sentencing judge should take into account not only the conduct which actually constitutes the crime, but also such of the surrounding circumstances as are directly related to that crime and are properly regarded as circumstances of aggravation or mitigation: R v Wilkinson (No. 5) [2009] NSWSC 432 at [61].
4. The existence of a reasonably foreseeable risk to safety that is likely to result in serious injury or death is a factor relative to the gravity of the offence: Capral Aluminium Limited v WorkCover Authority of New South Wales [2000] NSWIRComm 71; (2000) 49 NSWLR 610 at [82]. The question of foreseeability of the risk is to be determined objectively.
5. The court must identify all the factors that are relevant to the sentence, discuss their significance and then make a value judgment as to what is the appropriate sentence given all the factors of the case: Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120. This approach to sentencing, known as the "instinctive synthesis" approach, involves the making of a global judgment without any attempt to state precisely how any given factor has influenced the judgment.
6. The Court of Criminal Appeal has recently examined the sentencing process with regard to the Act in the matter of Nash v Silver City Drilling (NSW) Pty Limited; Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96. His Honour Justice Basten at paragraph 34, under the heading 'Assessment of Risk' said: "The sentencing judge commenced his consideration with the proposition that 'greater culpability attaches to the failure to guard against an event the occurrence of which is probable rather than an event the occurrence of which is extremely unlikely'. However the truth of that proposition depends upon other considerations including (a) the potential consequences of the risk, which may be mild or catastrophic,(b) the availability of steps to lessen, minimise or remove the risk, and(c) whether such steps are complex and burdensome or only mildly inconvenient. Relative culpability depends on assessment of all those factors."
7. Further at paragraph 42 his Honour continued: "The culpability of the Respondent is not necessarily to be determined by the remoteness of the risk occurring, nor by a step‑by‑step assessment of the various elements. Culpability will turn upon an overall evaluation of various factors, which may pull in different directions. Culpability in this case is reasonably high because, even if the pressure event of the force which occurred might not be expected to occur often, the seriousness of the foreseeable resultant harm is extreme and the steps to be taken to avoid it, were not even assessed, were straightforward and involved only minor inconvenience and little, if any, costs."
8. At paragraph 53 his Honour dealt with the proper approach to considering the objective seriousness of offences under the Act, saying: "It is important to note that the risk to be assessed is not the risk of the consequence, to the extent that a worker is in fact injured, but is the risk arising from the failure to take reasonably practicable steps to avoid the injury occurring. To discount the seriousness of the risk by reference to the unlikelihood of injury resulting is apt to lead to error. The conduct in question is the failure to respond to a risk of injury, conduct which will be more serious, the more serious the potential injuries, whether or not they are likely to materialize. The objective seriousness of the conduct will also be affected by the ease with which mitigating steps could have been taken."
9. My findings about the level of culpability of both offenders are based upon the following: 1. The risk of death or serious injury flowing from the offenders' breaches was significant; 2. The risk manifested itself in the eventual collapse of the adjoining building. Fortunately no-one was in or near the building when it collapsed; 3. Both offenders were directly involved in creating the risk, by digging the clay out underneath the brick wall and footings of the adjoining building. It must have been immediately apparent to the offenders when the excavation went below the bottom row of bricks that there was nothing to support the wall vertically or laterally; 4. The risk of collapse was known to both offenders as experienced excavators. The risk was identified in the ADN SWMS; 5. The risk of collapse should have been known by both offenders given the material in the geotechnical report which they were handed; 6. There was publicly available material, in the form of the Guidance Material, which if followed, would have eliminated the risk of the collapse of the wall; 7. Notwithstanding these matters, the offenders went ahead with the work under time and cost pressures, but completely ignored their safety obligations.
10. I find that the level of culpability of both offenders is in the high end of the mid-range.

Deterrence

1. The penalty imposed in relation to this offence must provide for general deterrence. Contractors must take the obligations imposed by the Act very seriously. The community is entitled to expect that both small and large contractors will comply with safety requirements. General deterrence is a significant factor when safety obligations are breached: Bulga Underground Operations Pty Limited v Nash [2016] NSWCCA 37; (2016) 93 NSWLR 338 at [180].
2. The penalty must reflect the need for specific deterrence. ADN is still conducting a business. Its operations involve demolition and excavation, which are both inherently risky activities, unless safety precautions are observed.

Mitigating factors

1. Neither offender has any record of previous convictions: s 21A(3)(e) of the Crimes (Sentencing Procedure) Act 1999.
2. The offenders are otherwise of good character: s 21A(3)(f) of the Crimes (Sentencing Procedure) Act 1999. The steps which were taken after the incident demonstrate this. ADN has been in business for 12 years.
3. The offenders are unlikely to re-offend: s 21A(3)(g) of the Crimes (Sentencing Procedure) Act 1999.
4. The offenders have good prospects of rehabilitation: s 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. They have taken positive steps to guard against the risk of an incident such as this ever happening again. They have brought their documentation and procedures into line with those which, on all the evidence, should have been in place before this accident occurred.
5. The offenders have shown remorse for the offence: s 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. They have provided evidence that they accept responsibility for their actions.
6. The offenders entered a plea of guilty: s 21A(3)(k) Crimes (Sentencing Procedure) Act 1999. The court must take into account the fact that the offenders have pleaded guilty, when they pleaded guilty, and the circumstances in which they indicated an intention to plead guilty: s 22(1) Crimes (Sentencing Procedure) Act 1999. It is appropriate to give the offenders a 25% discount for an early plea. While the matters were mentioned eight times before a plea was entered, on six of those mentions the parties were in EU discussions.
7. The offenders gave assistance to law enforcement authorities: s 21A(3)(m) Crimes (Sentencing Procedure) Act 1999. The offenders co-operated at all times with the prosecutor and provided all documents requested in a prompt fashion.
8. Further, such assistance extended to Mr Yassine providing documents and offering to give evidence in relation to any prosecution of other persons involved in the building project. Pursuant to s 23(1) of the Crimes (Sentencing Procedure) Act 1999 (NSW) a court may impose a lesser penalty than it would otherwise impose on an offender, having regard to the degree to which the offender has assisted, or undertaken to assist, law enforcement authorities in the investigation of, or in proceedings relating to, the offence concerned or any other offence.
9. Section 23(2) requires the court to consider a list of matters including: the significance and usefulness of the offender's assistance; the truthfulness, completeness and reliability of any information or evidence provided by the offender; the nature and extent of the offender's assistance or promised assistance; the timeliness of the assistance or undertaking to assist; and any benefits that the offender has gained or may gain by reason of the assistance or undertaking to assist.
10. By s 23(3) a lesser penalty that is imposed in relation to an offence must not be unreasonably disproportionate to the nature and circumstances of the offence.
11. Section 23(4) provides: "A court that imposes a lesser penalty under this section on an offender because the offender has assisted, or undertaken to assist, law enforcement authorities must: (a) indicate to the offender, and make a record of the fact, that the lesser penalty is being imposed for either or both of those reasons, and (b) state the penalty that it would otherwise have imposed; and (c) where the lesser penalty is being imposed for both reasons - state the amount by which the penalty has been reduced for each reason."
12. Counsel for the prosecutor accepted in submissions that it was appropriate to consider the power under s 23. However, he pointed out that once Mr Yassine is sentenced for his offence, he would in any event be a compellable witness in any further prosecution of other entities involved at the site. That is so, but experience shows that many compellable witnesses in these types of cases do not co-operate by even attending a conference with the prosecuting authority.
13. I propose to reduce the penalty which I would otherwise impose on Mr Yassine, and I will deal with the formal requirements of s 23 in formulating my orders.

Capacity to pay a fine

1. I am required to have regard to s 6 of the Fines Act 1996 before imposing a fine. Where an offender seeks to have a fine reduced on the basis of a limited capacity to pay, it bears the evidentiary onus of convincing the court that it should exercise its discretion to limit the amount of the fine. The offender's capacity to pay is relevant but not decisive: Mahdi Jahandideh v The Queen [2014] NSWCCA 178 at [16]. A substantial fine may still be warranted as a result of the seriousness of the offence and the need for general deterrence.
2. In Unity Pty Limited v SafeWork NSW [2018] NSWCCA 266 the Court of Criminal Appeal said: "First, and more generally, questions of specific deterrence should take into account the size and scope of the operations of the defendant; a fine which may be crippling to a small business may have virtually no impact on the financial operations of a large corporation. The maximum penalty for the offence is undoubtedly set having regard to such a factor. Secondly, the Court is required to have regard to 'the means' of the defendant, pursuant to s 6 of the Fines Act 1996."
3. There was no submission about capacity to pay, so this issue does not arise.

Costs

1. The parties have agreed to an order that each offender is to pay the prosecutor's costs agreed in the amount of $15,000, a total of $30,000.

Penalty for ADN Investments Pty Ltd in Proceedings 2018/65203

1. My orders are: 1. The offender is convicted. 2. The appropriate fine is $240,000 but that will be reduced by 25% to reflect the plea of guilty. 3. Order the offender to pay a fine of $180,000. 4. Order pursuant to Section 122(2) of the Fines Act 1996 that 50% of the fine is to be paid to the prosecutor. 5. Order the offender to pay the prosecutor's costs agreed in the amount of $15,000.

Penalty for Mr Yassine in Proceedings 2018/64922

1. My orders are: 1. The offender is convicted. 2. The appropriate fine is $50,000 but that will be reduced by 25% to reflect the plea of guilty, by 5% to reflect assistance provided to date, and by a further 10% to reflect willingness to assist by giving evidence. The total reduction will be 40%. 3. Order the offender to pay a fine of $30,000. 4. Order pursuant to Section 122(2) of the Fines Act 1996 that 50% of the fine is to be paid to the prosecutor. 5. Order the offender to pay the prosecutor's costs agreed in the amount of $15,000, in addition to those costs ordered against ADN Investments Pty Ltd. I certify that the preceding 80 paragraphs are the reasons for the judgment of his Honour Judge Russell SC. Associate 6 September 2019

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 September 2019