SafeWork NSW v Cincram Group Pty Ltd

SafeWork NSW v Cincram Group Pty Ltd - [2022] NSWDC 613 - NSWDC 2022 case summary — Zoe

[5]

Background

The parties presented an Agreed Statement of Facts and this material is summarised below.
At the time of the incident Cincram employed 22 persons, including: 1. Mr Roberto Cavallo as General Manager. Mr Cavallo had been employed in the business since 2012. Mr Cavallo had previously worked in the roles of Warehouse Assistant and Business Operations Manager. Mr Cavallo reported to Cincram's directors. 2. Mr Ronnie Muyargas as Warehouse/Production Assistant. Mr Muyargas held a valid high risk work licence (Class LF). 3. Mr Chan Hu as Inside Sales/Customer Service. From October 2017 to 10 July 2019 Mr Hu was employed in the role of Warehouse Despatch. He was responsible for unloading and assisting other staff with the unloading of shipping containers. Following his change in roles Mr Hu continued to operate a forklift on occasions when asked to do so. Mr Hu held a valid high risk work licence (Class LF). Mr Hu reported directly to Mr Cavallo. 4. Mr Emanuel Manalang as part-time Production Assistant/Assembly.
Cincram's premises in Newington were situated within an industrial estate. There was no loading dock area which enabled trucks to be unloaded at trailer height.
As part of its business, Cincram imported palletised copper wiring from Reichle & De Massari Fareast (R & M), a company in Singapore.
Since 2013 Cincram engaged AquaAir Freight Services Pty Ltd (AquaAir) as the freight forwarder for products from R & M. AquaAir engaged a transport company, WSI Logistics Pty Ltd (WSI), to deliver consignments to Cincram's premises.
Cincram owned the following plant, which was used to assist with its warehousing operations: 1. Toyota electric reach truck model number 7FBR18 (the FLT). The FLT had a lifting capacity of 690 kg. 2. BT Lifter Toyota material handling pallet jack model number LHM230 (the pallet jack).
In or around 2013 AquaAir offered Cincram a number of delivery options including the delivery of consignments within containers loaded onto standard skeleton (skel) trailers; on side loader trucks; or unpacked from containers onto flatbed trucks. Side loader trucks were fitted with a mounted crane mechanism that enabled containers to be placed on the ground for unpacking.
Cincram instructed AquaAir that containers were to be delivered on skel trailers. In accordance with Cincram's instruction, all containers were delivered to the premises by this method.
From around 2013 Cincram commenced receiving consignments delivered in shipping containers. The containers were unpacked from an elevated position on the trailer of the delivery truck. Mr Cavallo was involved in most aspects of unpacking the containers, along with Cincram's former director Mr Tony Khoury.
The following method of work was implemented to unpack the containers from an elevated position: 1. The pallets closest to the container doors were removed using the FLT. 2. The pallet jack was lifted into the container on the tines of the FLT. 3. The raised tines of the FLT were positioned on the floor of, and within, the elevated container. 4. A worker climbed into the container and used the pallet jack to move pallets towards the container doors and into a position where they could be lifted by the tines of the FLT. 5. The FLT was used to lift and remove the pallets from the container. The pallets were placed onto the ground and subsequently moved into the warehouse by use of a pallet jack.
In October 2018 Mr Hu and Mr Muyargas had unpacked a container of palletised copper cable using the above method of work. Mr Cavallo had directed Mr Hu to unpack the container and observed the container being unpacked.

[6]

The Incident

On 23 October 2019 Cincram ordered a quantity of reels of palletised copper cable from R & M (the consignment).
The consignment was transported on pallets within a 20-ft shipping container. Each pallet held 18 reels of copper cable and weighed approximately 500 kg. The pallets were double stacked within the container (two stacks per row). The height of each double stack was 2.11 m.
On 18 November 2019 AquaAir told Cincram that the container would be delivered to the premises on 20 November 2019 between approximately 9.00am and 10.00am.
In response to a s 155 Notice issued to Cincram, Mr John Okeil, Managing Director, said that he gave an instruction to Mr Cavallo to call him when the container arrived. Mr Cavallo did not recall any instruction being given by Mr Okeil.
On 20 November 2019 at approximately 11.30am, WSI delivered the consignment to the premises. The consignment was inside a shipping container loaded onto the back of a skel trailer.
Mr Cavallo asked Mr Hu to assist him in unpacking the container. Mr Cavallo told Mr Hu to ask Mr Manalang to help him.
Mr Hu asked Mr Manalang to help by taking pallets into the warehouse using the pallet jack once he had unpacked them from the container.
The same method of work was used for unpacking the container as had been previously used by Cincram. Mr Cavallo was present during, and assisted with, the container unpacking operation.
At approximately 11.34am Mr Hu removed the first two double-stack of pallets from the container (closest to the container doors) with the FLT. The pallets were lifted in a double stack. The double stack of pallets weighed approximately 1000 kg, which exceeded the lifting capacity of the FLT which was 690 kg. The pallets were placed near the warehouse roller door. The pallets were subsequently moved by Mr Hu and Mr Manalang into the warehouse using a pallet jack.
Mr Hu removed the second double stack of pallets from the container (adjacent to the first double stack), again with the FLT. The pallets were lifted in a double stack and placed near the roller door. Again, the pallets were moved into the warehouse using a pallet jack.
Mr Cavallo placed a pallet jack onto the tines of the FLT.
Mr Hu lifted the pallet jack with the FLT and placed it within the container. Mr Hu positioned the FLT so that its tines were on the floor of and within the elevated container.
Both Mr Hu and Mr Cavallo climbed into the container. The distance from the floor of the container to the concrete ground below was 1.53 m.
Mr Hu commenced using the pallet jack to pull a double stack of pallets towards the edge of the container and towards the tines of the FLT.
Mr Cavallo climbed down from the container. Mr Cavallo and Mr Manalang stood on the ground on either side of the FLT watching Mr Hu manoeuvre the laden pallet jack towards the tines of the FLT. Mr Cavallo stood on the left-hand side of the FLT (facing the container) and Mr Manalang stood on the righthand side of the FLT.
Mr Cavallo operated the FLT to adjust the tines. Mr Cavallo returned to his position at the left-hand side of the FLT.
Mr Cavallo reversed the FLT away from the truck and the elevated container. Mr Cavallo drove forward and repositioned the tines of the FLT within the container.
The laden pallet jack which Mr Hu was handling became unbalanced. The upper pallet shifted and fell onto Mr Hu. Mr Hu was pinned between the fallen pallet and the apron guard of the FLT.
Mr Cavallo and Mr Manalang attempted to push the fallen pallet away from Mr Hu but were not successful.
Mr Cavallo tilled the mast of the FLT forward causing the double stack of pallets to fall from the tines and to the ground below. Mr Hu fell with the load to the concrete ground and struck his head.
An ambulance was called and Mr Hu was conveyed to Royal North Shore Hospital.

[8]

Guidance Material

Cincram had a duty under s 19(1) of the Act to ensure, so far as was reasonably practicable, the health and safety of workers engaged by the business.
Prior to the incident, the following industry guidance material had been published and was available to Cincram.
The SafeWork NSW Guide for Unpacking Shipping Containers dated October 2016 provided the following relevant information: "(1) The key hazards associated with unpacking shipping containers include unsafe systems employed to unpack containers. This includes: incorrectly using plant to unpack the container, for example, by using a forklift not designed to tow or to drag items out of the container; overloading plant: and not taking the rated capacities of attachments into consideration. (2) To manage risks, you must first identify all potential hazards associated with unpacking shipping containers, assess them when necessary, and eliminate the hazard so far as is reasonably practicable. If it is not reasonably practicable to eliminate this hazard, the risk must be controlled in accordance with the hierarchy of controls. (3) The items packed in containers vary significantly between small, large, heavy, light and bulky. Therefore, the management of associated risks will vary from one container to another. (4) Key principles for safe unpacking include: (a) Always establish a plan for safe unpacking before doing anything else. (b) Never allow workers inside the container if there is any risk of objects moving and trapping them. (c) Ensure workers who are unpacking containers are trained, supervised and competent. This will help them to select the right work processes that have the lowest risk, choose appropriate equipment and know when to call for assistance if safety is unclear or jeopardised. (5) Ask your supplier for a packing plan that includes a list of items, the weight of items, where the items are placed on the container and how the items are restrained. This information will help you develop a safe system of work for unpacking prior to the container arriving on-site. (6) Containers should be placed for unloading by selecting a suitable area for unpacking on level and undamaged ground. (7) Unpacking without a plan may lead to an unsystematic, ad hoc approach. This can ultimately expose your workers to risks. (8) Workers are at risk when they are unpacking heavy, awkward and unsecured items."
SafeWork NSW published a Video Safety Alert Unpacking Shipping Containers on 26 April 2018. The video was available on SafeWork NSW's website and provided the following relevant information: "(1) Work with the supplier to ensure the load is appropriately transported for safe loading and unpacking. (2) Plan before you unpack the container and consider what equipment you will need. (3) Choose an area with flat ground and unpack at ground level, where possible. (4) Instruct workers in safety procedures and make sure they are appropriately trained, instructed and supervised. (5) Use appropriate plant, such as forklifts with grabs, spikes or slippers to avoid manual unloading.
The SafeWork NSW Code of Practice Managing the Risk of Falls dated August 2019 provided guidance on how to manage the risks of falls in the workplace using the risk assessment processes. It relevantly provided: "(1) The WHS Act requires a PCBU to consult, cooperate and coordinate activities with all other persons who have a work health and safety duty in relation to the same matter, so far as is reasonably practicable. The Code provided an example of consultation as being '...the owner of a transport company with large trucks should consult the goods suppliers as well as the businesses having the goods delivered about how the risk of falls will be controlled during loading and unloading. This may include checking whether equipment is available at each site so that workers do not have to climb on top of loads on the truck and be at risk of falling'. (2) When assessing the risks of each fall hazard the following should be considered: what could happen if a fall did occur and how likely is to happen; the design and layout of elevated work areas including the distance of a potential fall; the proximity of workers to unsafe areas where loads are placed on elevated working areas, for example loading docks, and there is a risk of falling objects where work is to be carried out above people."

[11]

Evidence for the Defendant

Mr John Okeil swore an affidavit on 9 November 2022 (DX 1) and a second affidavit on 23 November 2022 (DX 2). Mr Okeil is a director of Cincram.
The origins of the business go back to 1994. At that time the business was called Joiners and Cabling Specialists Pty Ltd.
In February 2013 the business changed its name to JCS Technologies Pty Ltd.
On 6 November 2017 JCS Technologies (Aust) Pty Ltd was incorporated. Mr and Mrs Okeil were appointed directors. This was done as a result of the settlement of a dispute with a former director.
On 18 July 2018 the company name was changed back to JCS Technologies Pty Ltd.
As a result of the financial impact of COVID-19 on the business and also due to Mr Okeil suffering a stroke in October 2021, Mr and Mrs Okeil decided to sell the business. This was done by way of an asset sale completed in February 2022.
As part of the sale, the JCS Technologies Pty Ltd name was transferred to the purchaser (which is now known as JCS-WB Technologies Pty Ltd). The business changed its name to Cincram. Cincram no longer carries out the manufacture and distribution of fibre optic and copper communication products.
As a result of the asset sale, Mr and Mrs Okeil are required to stay on in the purchaser's business until December 2022 to assist them with the transfer of clients and suppliers. Mr and Mrs Okeil are currently contracting their services to JCS-WB Technologies Pty Ltd through Cincram. Cincram has been, and is being, paid $15,000 per month from February 2022 up until December 2022.
Mr and Mrs Okeil are the only employees of Cincram. Mr and Mrs Okeil do not propose to take on any further employees.
The Cincram business will remain registered to finalise its financial accounts and pay any outstanding liabilities.
The financial statements for Cincram have not yet been prepared. The accountant prepared a projected estimate of the net assets of the company as at 31 October 2022, showing that Cincram had net assets of $145,373.
The liabilities of the business include provisions for: 1. Unpaid long service and annual leave entitlements for Mr and Mrs Okeil (approximately $165,000). 2. Unpaid salaries, income tax and superannuation for Mr and Mrs Okeil (approximately $120,000). 3. A retention amount (to be paid if the purchaser achieves the same sales and margins as the prior year) (approximately $150,000). 4. A warranty claim for replacement test equipment which formed part of the original asset sale (approximately $78,000).

[20]

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 The Queen (No. 2) [1988] HCA 14; (1988) 164 CLR 465 at pp 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].
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].
In Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120 at [27] the High Court said: "The objective seriousness of an offence is to be assessed without reference to matters personal to a particular offender or class of offenders. It is to be determined wholly by reference to the nature of the offending."
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] NSWIRComm 71; (2000) 49 NSWLR 610 at [82]. 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. 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 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. Justice Basten at [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 [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 [event] 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, which were not even assessed, were straightforward and involved only minor inconvenience and little, if any, costs."
At [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 defendant's level of culpability are based upon the following: 1. The risk was foreseeable. Cincram should have known of the risk, which was the subject of specific guidance material dealing with the task of unloading shipping containers. 2. The likelihood of the risk occurring was significant. It was inherently dangerous to have a worker inside a shipping container in the first place, let alone having the worker manoeuvre an inherently unstable load. 3. The potential consequences of the risk were death or serious injury. 4. Simple and effective steps were available to eliminate or minimise the risk. 5. There was no great burden or inconvenience associated with the steps to be implemented. 6. Mr Hu suffered catastrophic injuries and is now condemned to life as a quadriplegic. 7. The maximum penalty for the offence is a fine of $1,500,000 which reflects the legislature's view of the seriousness of the offence. 8. Cincram did have a safety system, but it failed to recognise or address the risks involved in unloading shipping containers.
I find that the level of culpability of Cincram is in the mid range.

[24]

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: 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.
In Unity Pty Limited v SafeWork NSW [2018] NSWCCA 266 at [79] 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."
I take into account the size of the company in imposing a penalty.
However, the material contained in DX 1 did not give an accurate picture of the financial state of Cincram. Through the diligence of the prosecutor's legal representatives, the court was informed that a sale price of $1,300,000 for the business has already been paid to Cincram. This only became evident when the prosecutor obtained and tendered the Sale of Business Agreement and an associated Services Agreement (PX 2). There was no explanation why Cincram, which bore an evidentiary onus in relation to the issue of capacity to pay, did not disclose this in either affidavit sworn by Mr Okeil. As has been said before, it is not enough for a defendant to tender selected documents which only tell part of the financial story: SafeWork NSW v Meixing Jiang [2018] NSWDC 400 at [62]. A belated application for an adjournment to file a further affidavit, made during closing submissions, was refused. Practice Note 16 par 45 specifically requires all affidavits in relation to financial matters to be filed four weeks before the sentence hearing. There was no explanation why an incomplete and thus inaccurate picture of the financial state of Cincram was put forward in the affidavits.
I find that Cincram has failed to discharge its evidentiary onus and there will be no reduction of penalty because of a reduced capacity to pay.

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