SafeWork NSW v Aptec Constructions Pty Limited

District Court of NSW|2019-05-17

Solicitors: SafeWork NSW (Prosecutor) Clyde & Co (Defendant) File Number(s): 2017/350287

Judgment

Aptec Constructions Pty Limited (Aptec) (the offender) has pleaded guilty to an offence that as a person who had a work health and safety duty pursuant to s 19 of the Work Health and Safety Act 2011 (NSW) (the Act) it failed to comply with that duty and thereby exposed Mr David Liston-Smith to a risk of death or serious injury contrary to s 32 of the Act.
The maximum penalty for the offence is a fine of $1,500,000.

The offender's evidence

Mr Aoun affirmed an affidavit on 2 May 2019 and was cross-examined.
Mr Aoun said that Aptec has been in business since 2012. It currently has six full-time employees, of whom four are apprentices. Aptec was building at the work site for Tesmar. The affidavit gave no information about Tesmar. Cross-examination revealed that Mr Aoun is the sole director of Tesmar, as well as of six other companies.
In paragraph 19 of his affidavit Mr Aoun said that he was aware that there was no scaffolding around the perimeter of the structure where the concrete pour was to take place. He knew this two days before the accident. Mr Aoun gave no explanation as to why he allowed the concrete pour to go ahead, when there was no edge protection for the two concretors, or indeed for other workers who were on level 4 when the pour was taking place. There was no evidence as to whether edge protection had been in place when the steelwork on level 4 was done.
Mr Aoun said that prior to the incident Aptec had in place a general Work Health & Safety Management Plan, but a copy cannot be found.
On 30 November 2015 Mr Aoun held a toolbox meeting on site with Mr Liston-Smith and told him where he should stand to stay away from the unprotected edge. This was another recognition by Mr Aoun that level 4 had no edge protection of any kind.
Mr Aoun said that Aptec has improved its Work Health and Safety System since the accident. The WHS Management Plan was updated in December 2015. In April 2018 (over two years after the accident) Aptec reviewed its WHS Policy. On 8 April 2019 (approximately three and half years after the accident and only one month before the sentence hearing) Aptec updated its SWMS for working at height. Mr Aoun did not explain in his affidavit why those steps were not taken straight away after the accident.
In May 2018 Aptec employed a full-time safety officer for its construction work. Mr Aoun now conducts daily "walk overs" on site, which include reviewing the site for potential health and safety hazards. Of course, the risk created by the unprotected edge was known to Mr Aoun on the day of the accident, and for several days before. He did not need to conduct a walk over to see the problem. He already knew of it.

Consideration

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 (NSW).

Objective seriousness of the offence

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 R (No. 2) (1998) 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) 66 NSWLR 566 at [15].
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 (1998) 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].
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].
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) 49 NSWLR 610 at [89]. The question of foreseeability of the risk is to be determined objectively.
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.
The Court of Criminal Appeal has recently examined the sentencing process with regard to the Work Health and Safety Act 2011 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; 93 NSWLR 338. 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."
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."
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."
My findings about the offender's level of culpability are based upon the following: 1. There was a foreseeable risk to safety; 2. The risk was not just foreseeable, but it was a clear and obvious risk. 3. The risk was one known to and identified by the offender; 4. Measures such as edge protection were available and feasible; 5. There was considerable guidance material publicly available relating to the risk of falls from height at workplaces; 6. No temporary edge protection was installed on level 4 at the time of the incident; 7. The offender through Mr Aoun told Mr Liston-Smith to go up to level 4 and conduct the concrete pour, which involved working in the vicinity of the unprotected edge.
I find that the offender's level of culpability is in the high end of the mid-range.

Deterrence

The penalty imposed in relation to this offence must provide for general deterrence. Employers must take the obligations imposed by the Act very seriously. The community is entitled to expect that both small and large employers 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 at [180].
In my decision in Safework NSW v Ru Dong Li [2018] NSWDC 189 I listed 22 judgments of this court, delivered since the start of 2016, which involved a fall from height. Further research, and more recent cases added to that list, show that since the start of 2016, the District Court has delivered sentence in 37 cases involving a fall from height. I repeat what I said at paragraph [47] of my previous decision: "In the light of that troubling litany of death and serious injury, general deterrence is a very important factor in this case."
Many of the sentences delivered in cases which involve a fall from height involve a traumatic brain injury, often to a young worker. Such injuries are completely preventable. The court must place appropriate emphasis upon general deterrence in cases involving falls from heights.
Part of the sentencing process, and one of the objects of sentencing, is to prevent crime by deterring the offender and other persons from committing similar offences - s 3A(b) Crimes (Sentencing Procedure) Act 1999. The District Court publishes on Caselaw each and every sentencing judgment under the Act. Thus the industrial community is informed of the significant penalties imposed for offences under the Act, which in theory should have a deterrent effect on persons other than the offender. Further, additional purposes of sentencing include to denounce the conduct of the offender, and to recognise the harm done to the victim of the crime and the community - s 3A(f) and (g) Crimes (Sentencing Procedure) Act 1999. (Emphasis added)
The penalty must also reflect the need for specific deterrence. The offender is still conducting a construction business. Its operations continue to involve working at heights and the obvious need for edge protection.

Aggravating factors

The injury, emotional harm, loss or damage caused by the offence was substantial: s 21A(2)(g) Crimes (Sentencing Procedure) Act 1999. No evidence was presented regarding the current state of Mr Liston-Smith.

Mitigating factors

The offender has no previous convictions: s 21A(3)(e) of the Crimes (Sentencing Procedure) Act 1999.
The offender is otherwise of good character: s 21A(3)(f) of the Crimes (Sentencing Procedure) Act 1999. The steps which the offender took after the incident demonstrate this. The offender has been in business since 2012.
The offender is unlikely to re-offend: s 21A(3)(g) of the Crimes (Sentencing Procedure) Act 1999.
The offender has good prospects of rehabilitation: s 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offender has taken positive steps to guard against the risk of an incident such as this ever happening again. The offender has brought its documentation and its procedures into line with those which, on all the evidence, should have been in place before this accident occurred.
The offender has shown remorse for the offence: s 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. The offender has provided evidence that it has accepted responsibility for its actions and has acknowledged that the injury to Mr Liston-Smith was caused by its actions.
The offender entered a plea of guilty: s 21A(3)(k) Crimes (Sentencing Procedure) Act 1999. The court must take into account the fact that the offender has pleaded guilty, when the offender pleaded guilty, and the circumstances in which the offender indicated an intention to plead guilty: s 22(1) Crimes (Sentencing Procedure) Act 1999. It is appropriate to give the offender a 25% discount for an early plea.
The offender gave assistance to law enforcement authorities: s 21A(3)(m) Crimes (Sentencing Procedure) Act 1999. The offender co-operated at all times with the prosecutor and provided all documents requested in a prompt fashion.

Capacity to pay a fine

I am required to have regard to s 6 of the Fines Act 1996 (NSW) 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: Jahandideh v R [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.
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."
As part of his affidavit Mr Aoun provided some financial documentation relating to Aptec. He said that the financial statements had been prepared by Aptec's accountants "on the basis of accurate financial information provided by me".
In financial year 2017 the profit before tax made by Aptec was $33,761. In that year Mr Aoun was not paid a salary from Aptec.
In financial year 2018 the financial statements for Aptec showed a profit before tax of $31,766. A copy of the 2018 tax return showed that tax of $1,827.90 was paid. Again, Mr Aoun was not paid a salary from Aptec.
A copy of the interim financial statement for Aptec for the period 1 July 2018 to 28 February 2019 was tendered. This showed a profit before tax for those eight months of $46,393.
In paragraph 51 of his affidavit, Mr Aoun said: "In the event of Aptec Constructions being given a fine by the Court in this matter, which it is unable to pay, the company would become insolvent. Aptec Constructions would be forced to cease trading. The current six employees would be made redundant."
There was nothing in the affidavit to explain what would happen to the control which Mr Aoun exercises over eight corporations, of which Aptec is one and Tesmar is one, if Aptec became insolvent at a time when Mr Aoun was the sole director.
Mr Aoun was asked in the witness box how he was financially rewarded, if Aptec did not pay him a salary. He said that he received income from dividends. When asked, he was unable to explain how Aptec had sufficient funds to pay him any dividends, and did not recall how much he was paid in dividends.
It was pointed out to Mr Aoun, while he was in the witness box, that a loan made by his wife Ms Reema Aoun to Aptec was reduced from $168,021 on 30 June 2018 to $126,010 as at 28 February 2019. Mr Aoun had no explanation as to how a $42,000 reduction in that loan had been achieved, given the level of income and profitability of Aptec.
The loan from Mr Aoun's wife was the only non-current liability of Aptec as at 28 February 2019. The only current liabilities of Aptec were PAYG withheld, superannuation payable, trade creditors, and provision for GST. Aptec owed no money to any bank. Apart from the loan from Ms Aoun, as at 28 February 2019 Aptec had an excess of assets over liabilities of $154,092.
No information was provided to the court concerning the financial position of the seven other companies of which Mr Aoun was the sole director. Of course, it is only Aptec which is being sentenced in the present proceedings. None of those other companies have any liability, or indeed any obligation to assist Aptec in paying the fine which will be imposed. Nevertheless, there was no evidence that Aptec had no other source of funds, apart from income as a builder. A more complete picture of the financial strength or weakness of Aptec could have been presented, by evidence concerning any inter-relationship between those other companies and Aptec, and by evidence concerning any transfers of funds between the eight companies of which Mr Aoun is the sole director. A company is not insolvent within the meaning of s 95A of the Corporations Act 2001 (C'th) merely because it cannot meet an obligation out of cash flow. Regard may be had to monies which a debtor can raise from other sources - Sandell v Porter [1966] HCA 28; (1996) 115 CLR 666.
Aptec appears to be in a different position to a small single family company, where a significant fine would without doubt have a devastating impact.
For the offender, counsel submitted that there was no evidence about the financial position of the other companies in the group, and if Aptec were liquidated, the liquidator would not have access to the assets of other companies in the group. Counsel submitted that there was no evidence of any re-arranging of company financial affairs. Counsel also submitted that Mr Aoun's own financial position (as to which there was no evidence) is irrelevant. There was no evidence of any diversion of money from the company to Mr Aoun, or his family, or the other companies. Further, there was no evidence as to Aptec's ability to raise funds from any other source. All of those submissions are accepted.
I propose to mitigate the fine which I would otherwise impose, but I do so very reluctantly, given the limited disclosure made by the offender and by Mr Aoun to the court. In spite of the offender's apparent financial position, I find that a substantial fine is still warranted as a result of the seriousness of the offence and the need for general deterrence.

Costs

The parties have agreed to an order that the offender is to pay the prosecutor's costs agreed in the amount of $21,500.

Penalty

My orders are: 1. The offender is convicted. 2. The appropriate fine is $240,000 but that will be reduced to $160,000 by reason of capacity to pay and further by 25% to reflect the plea of guilty. 3. Order the offender to pay a fine of $120,000. 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 $21,500.

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: 07 June 2019

(C'th) Crimes (Sentencing Procedure) Act 1999(NSW)

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