(2016) NSWLR 338
Capral Aluminium Limited v WorkCover Authority of NSW [200] NSWIRComm 71
Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96
Orbit Drilling v The Queen
Source
Original judgment source is linked above.
Catchwords
(2016) NSWLR 338
Capral Aluminium Limited v WorkCover Authority of NSW [200] NSWIRComm 71Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96
Orbit Drilling v The Queen
Judgment (16 paragraphs)
[1]
Judgment
On 10 August 2020, Douglas Box Pty Ltd ('the defendant') pleaded guilty to an offence contrary to s 32 of the Work Health and Safety Act 2011 (NSW) ('the Act') that, by failing to comply with the health and safety duty imposed upon it by s 19(1) of the Act, it exposed workers and in particular Mr Norval McClean and Mr Matthew Duffell to a risk of death or serious injury.
The maximum penalty prescribed under the Act as at the date of the offence is a fine of $1,500,000.00.
[2]
BACKGROUND
Douglas Box Pty Ltd ('the defendant') was a person conducting a business or undertaking which involved the manufacture of wooden products, including pallets, boxes, crates and skips from their site at 21-23 Pullman Place, Emu Plains ('the site').
Mr Greg Evans ('Mr Evans') was employed as a full-time supervisor by the defendant and had been working for the defendant for about 15 years as a supervisor prior to the incident. One of his main duties was to supervise the forklift drivers.
Workforce Recruitment and Labour Services Pty Ltd ('WRLS') was a labour hire operation specialising in hire to manufacturing, warehousing and construction business sites including the defendant. As at 12 January 2018, about 10-12 WRLS employees were working on that site.
Mr Norval Edmond McClean ('Mr McClean') and Mr Matthew Duffell ('Mr Duffell') were engaged by the defendant through WRLS and were workers within the meaning of s 7 of the Act and performed work including operating forklifts. As at 12 January 2018 they were hired as labourers/forklift operators to perform general duties including loading and unloading trucks. Mr Duffell had worked at the site for about 8 months and Mr McClean for about 8 years.
At the rear of the site on a paved concrete area adjacent to the side fence there was on outdoor steel storage racking system. It comprised of pairs of upright beams connected to a diagonal frame bracing with upper and lower, front and rear horizontal pallet beams, and vertical brackets which were connected to the upright beams with connector hooks. Storage bays were created with upper and lower racks on each side of the middle pair of upright beams.
The functions of the storage rack included storage of metal crates filled with wooden offcuts. The storage rack was under the management and control of the defendant and as at the date of the incident it had been in use for approximately 10 years at the site.
[3]
THE INCIDENT
On 12 January 2018 at about 4.30am, Mr McClean commenced work at the rear of the site. He was instructed by Mr Evans, the site supervisor on the day, to load orders onto trucks and supervise the back work shed.
At about 6.00 am, Mr Duffell was operating a forklift at the rear of the site and had a metal pallet crate of wooden offcuts onto the left side of the top southern rack of the storage rack. He noticed that part of the horizontal pallet beam was disconnected, so he parked his forklift and attempted to put the beam back into position. Mr McClean observed this and went over to assist Mr Duffell.
As they attempted to reconnect the horizontal pallet beam, it became disconnected and collapsed downward. A metal pallet crate filled with wood offcuts sitting on top of the storage rack fell and struck Mr McClean who was knocked to the ground and the metal crate landed on top of him.
Mr Duffell tried to lift the metal crate off Mr McClean but it was too heavy, so he ran inside to get assistance. Two workers, Craig and Taylor Williams assisted Mr Duffell to lift the crate off Mr McClean and removed bits of wood that were scattered over him.
An ambulance was called and Mr McClean was transferred to Nepean Hospital. Mr McClean suffered serious injuries including:
Two fractured ribs (left side);
Fractures to his L4 and L5 vertebra;
Bleeding from the left kidney; and
Multiple fractures to the pelvis.
Mr McClean was discharged from hospital on 18 January 2018. Mr McClean made a Victim Impact Statement which was tendered and marked Exhibit B. In his Victim Impact Statement Mr McClean details the significant impact the accident has had on his life. He is living with chronic pain and continuing to undergo medical treatment from a spinal surgeon, an orthopaedic surgeon, a pain management specialist, a psychologist and a physiotherapist. He continues to take medication to try and control his pain and faces further surgery in the future.
The accident has had an enormous impact on his social life and close relationships, including with close family members and friends. He has also lost his other source of income working in the music industry as a tour manager which provided roughly half of his income in addition to his income from working for the defendant. He describes his current condition as follows:
'The accident on 12 January 2018 has left me permanently injured as well and (sic) mentally scarred.'
[4]
SYSTEMS OF WORK PRIOR TO THE INCIDENT
Prior to the incident, the defendant:
1. did not have a Safe Work Procedure in place for working with the storage rack that included an isolation (tag-out system) and reporting system when damage occurred to the storage rack;
2. did not provide any information, instruction and training for isolation and reporting when damage occurred to the storage rack; and
3. had no documented maintenance or inspection records for the storage rack.
[5]
GUIDANCE MATERIAL
Guidance materials that provided advice regarding any work involving the risk of carrying out work activities involving the storage rack were readily accessible and available in the public domain. Such guidance materials included:
The Australian Standard on Rack Shelving AS4084-2012 which requires any business with installed storage racks in their workplace to ensure compliance with the standards of safety, testing and maintenance set out in it. In particular:
1. Clause 6 requires that means be provided to prevent the dislodgement of the beams by occasional vertical forces;
2. Clause 8.1.1 requires end-users be properly trained in the correct use of the equipment, inspection and in what appropriate action to take when damage occurs;
3. Clause 8.1.4 requires conspicuous signage to be provided on the rack to indicate correct application and use of the equipment, prohibitions on unauthorised alterations, and to report any damage incurred due to impact so that its effect can be assessed; and
4. Clause 8.2 requires inspection and maintenance to be carried out on a regular basis.
The SafeWork NSW Pallet Racking Fact Sheet was available prior to and at the time of the incident on SafeWork NSW's website. The Fact Sheet provides practical guidance for standard pallet racking.
[6]
SYSTEMS OF WORK FOLLOWING THE INCIDENT
Prohibition Notice No 7-320689 was issued to Douglas Box on 12 January 2018 by SafeWork NSW. The Prohibition Notice compelled Douglas Box to immediately cease use of the storage rack near south boundary fence until an inspector was satisfied that all reasonable steps to ensure the storage rack system at the workplace (south side Dexion racks) were inspected, tested and maintained by a competent person.
Improvement Notice No 7-320702 was issued to Douglas Box on 15 January 2018 by SafeWork NSW. The Improvement Notice directed Douglas Box to ensure the health and safety of their workers who carry out working activities with, and in close proximity to, the racking system.
Douglas Box complied with the Prohibition and Improvement Notices and eliminated the risk by dismantling all racking systems at the site and sending them to a scrap yard.
[7]
THE RISK
The risk was the risk of workers, in particular Mr McLean and Mr Duffell, being exposed to a risk of death or serious injury as a result of being struck by falling storage rack parts, and/or items being stored on the falling storage rack parts.
[8]
SENTENCING
I have had regard to the objectives set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 (NSW) ('the Sentencing Act') for the purpose of sentencing. The purposes for which a Court may impose a sentence on an offender are as follows:
1. to ensure that the offender is adequately punished for the offence;
2. to prevent crime by deterring the offender and other persons from committing similar offences;
3. to protect the community from the offender;
4. to promote the rehabilitation of the offender;
5. to make the offender accountable for his or her actions; and
6. to recognise the harm done to the victim of the crime and the community.
[9]
THE NATURE OF THE DUTY
The nature of the duty is one that requires a PCBU to ensure as far as reasonably practicable the health and safety of workers at the workplace. The duty included ensuring, so far as is reasonably practicable, the provision and maintenance of safe plant, safe systems of work and the provision of information, training, instruction or supervision necessary to protect persons from risks to their safety: s 19(3) of the Act.
The duty required the defendant to identify risks in the workplace and adopt measures to eliminate or minimise them: Kirk v Industrial Commission of New South Wales [2010] HCA 1 at [34].
The notion of reasonable practicability is informed by the considerations found in s 17 of the Act. The defendant, by its plea of guilty, has admitted that the measures to ensure safety pressed by the prosecutor would have been reasonably practicable.
The duty is one of strict liability: s 12A of the Act. Consequently, there is no relevant mental element to the offence whether it be reference to intent, carelessness or recklessness.
In Markarian v The Queen (2005) 228 CLR 357 at [31], Gleeson CJ, Gummow, Hayne and Callinan JJ set out three reasons why sentencers should have particular regard to the maximum penalties proscribed by statute. Their Honours stated:
'…careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the relevant factors, a yardstick.'
[10]
SENTENCING PRINCIPLES
The penalties imposed must give effect to the intention of the Act, in particular, protecting workers and other persons against harm to their health, safety and welfare through the elimination or minimisation of risks arising from work: s 3A of the Act.
The court is to be guided by the provisions of the Sentencing Act which include:
1. Section 3A which sets out the purpose of sentencing;
2. Section 21A which sets out the aggravating, mitigating and other factors in sentencing; and
3. Section 22 which provides that a guilty plea is to be taken into account on sentence, as is the time when the plea was effectively indicated or entered.
The court is to approach a sentencing exercise on the basis of it being one of "instinctive synthesis": Markarian v The Queen (supra).
This approach to sentencing has been reiterated by Russell J in SafeWork NSW v HCM Building Pty Limited [2019] NSWDC 632 at [109] in this way:
'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 objective degree of foreseeability is a matter for the Court to have regard to when considering the gravity of the offence: Capral Aluminium Limited v WorkCover Authority of NSW (2000) 49 NSWLR 610 at [89].
The seriousness of the risk, its foreseeability and the ease or difficulty of removing the risk are primary factors used by the court in determination of the relevant penalty. The potential consequences of the contravention and any aggravating factors will also be relevant.
[11]
OBJECTIVE SERIOUSNESS OF THE OFFENCE
The duties of the defendant require that they ensure that the health and safety of workers as far as reasonably practicable. This duty is not delegable and the defendant had control and influence over the workers at the site. The duty requires the identification of risks in the workplace and an assessment of measures to address such risks.
Although the gravity of the risk, degree of foreseeability of the risk and the ease of implementation of remedial measures are relevant to the assessment of objective seriousness, I am not limited to taking in to account such factors. The court 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 423 at [61].
The primary factor to be assessed is the objective seriousness of the offence. Subjective factors play a subsidiary role: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (1999) 90 IR 464, 474-5. I accept that it is the nature and quality of the offence as pleaded to which I must have regard.
Subjective factors should not be permitted to produce a sentence which fails to adequately reflect the seriousness of the offence: WorkCover Authority (NSW) v Profab Industries Pty Ltd (2000) 49 NSWLR 700 at [714].
The gravity of the offence is determined by the extent of the duty holder's failure to ensure, so far as was reasonably practicable, that its workers were not exposed to risks to their safety: Orbit Drilling v The Queen; Smith v The Queen [2012] VSCA 82 at [62], and Veen v R (No. 2) (1988) 164 CLR 465.
An offence will be serious where there is an obvious or foreseeable risk to safety against which appropriate measures were not taken even though such measures were available and feasible: Morrison v Powercoal Pty Limited & Anor (No.3) [2005] NSWIRComm 61.
In Nash v Silver City Drilling (NSW) Pty Limited; Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96, Basten JA explained the approach to sentencing as follows:
'[34] 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 to guard against 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.
…..
[42] 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.'
…..
[53] The legitimate purpose of intervention in the present case are twofold. The first purpose is to identify the proper approach to considering the objective seriousness of the offences under the Work Safety Act. 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 materialise. The objective seriousness of the conduct will also be affected by the ease with which mitigating steps could have been taken.' (my emphasis)
The more obvious the risk, the ease with which it can be controlled or eliminated and the more serious the consequences of the offence, when considered together, the more serious the offence will be.
The Court is obliged to make an assessment of where on the scale of criminality the offence lies referable to the maximum penalty prescribed by the legislature: R v Cage [2006] NSWCCA 304 per Latham J at [17]-[18].
The maximum penalty for this offence by the corporate defendant is a fine of $1,500,000.00, which reflects the legislature's view of the seriousness of the offence.
By its plea, the defendant has conceded that there were steps which, in all the circumstances of the incident were reasonably practicable, and if taken, would have reduced the risk. It also involves admissions by the defendant that:
1. it exposed Mr Duffell and Mr McClean to the risk of death or serious injury as a result of its failures to comply with its duty; and
2. the serious injuries sustained by Mr McClean were a manifestation of the risk.
Although it was not highly likely that the risk would be realised, it arose, in part, as a consequence of the passage of time, and the effect of gravity and the elements on the storage racking.
The pleaded risk in the Amended Summons is the risk of being struck by falling storage rack parts and/or items being stored on the falling storage rack parts. This prosecution relates to the condition of the rack and the pleaded risk arising from that condition.
The risk of items falling from a rack are reasonably foreseeable. Although the rack had been there for about 10 years with no previous incident, the risk remained that if there was always a chance that the integrity of the storage rack could be compromised and that it should have been inspected regularly to ensure that nothing could fall from it.
There were a number of reasonably practical measures that could eliminate, or if not practical to eliminate, then minimise the risk to workers, namely:
1. Undertaking a risk assessment on the storage rack that addressed load capacity, proper use, upkeep and maintenance of the storage rack;
2. Engaging a competent person to inspect, certify and develop a regular inspection/maintenance program of the steel racking system;
3. Ensuring safety clips on the storage rack were in appropriate condition;
4. Displaying signage on the storage rack requiring isolation and reporting of damage if it occurred;
5. Developing, implementing and enforcing a safe work procedure, which included an isolation (tag out system) and reporting system when damage occurred to the storage rack;
6. Providing adequate information, instruction and training to workers to inform them of the risks associated with the use of the steel storage rack and the safe work procedure detailed above before commencing work.
These remedial steps were not likely to be of significant cost. Had a risk assessment been done, by way of regular inspection of the rack, the need to take steps to ensure the safety of the rack would have been identified. Similarly, had appropriate signage been present the risk could have minimized.
I accept that this is not a case of a defendant having disregard for its safety obligations. The defendant held toolbox talks, inductions, maintained training records and adopted safe work procedures for the operation of machinery used by the workers. Those steps show a consciousness of the issue, and the identification of the risks in respect of some of the significant parts of its operation.
[12]
DETERRENCE
In fixing a penalty in relation to this offence, an important objective feature is the need for specific and general deterrence. This is enshrined in s 3A(b) of the Sentencing Act.
General deterrence is a significant factor when safety obligations are breached. The fundamental duty of the court to ensure a level of penalty for a breach will compel attention to work health and safety issues so that persons are not exposed to risks to their health and safety at the workplace: Fisher v Samaras Industries Pty Ltd (1996) 82 IR 384 at 388.
When examining matters of deterrence, both specific and general deterrence apply: R v Miria [2009] NSWCCA 68. The Prosecutor submits that the facts of this case do not present any basis for departing from the established principles relevant to deterrence.
The Court of Criminal Appeal in Bulga Underground Operations v Nash [2016] NSWCCA 37; (2016) NSWLR 338 at [177]-[180] reaffirmed the principle that both aspects of deterrence are matters which should be normally given weight of some substance in the sentencing process, unless there are exceptional circumstances which would allow a Court to depart from this rule, citing with approval the decision of the Full Bench of the Industrial Court of NSW in Capral Aluminium Limited v WorkCover Authority of NSW [200] NSWIRComm 71; (2000) 49 NSWLR 610:
'[74] … It follows that both aspects of deterrence [specific and general] are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Page v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39 at [40]-[43]), we would expect such cases to be very rare and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted.
…
'[75] … Even where an offender demonstrates good character or a commitment to rehabilitation, the court may be obliged to have regard to the need for general deterrence: see R v Thompson (1975) 11 SASR 217 at 222. This is particularly so where the offence in question is prevalent in society and represents a serious threat to the community. The need for general deterrence in relation to serious offences under the Act is undeniable.'
General deterrence must be a significant feature of the sentence imposed upon the defendant. Similarly, general deterrence can be appropriately used to direct industry's attention to the consequences of inattention and the need for greater concentration on the potential risks associated with the operation of wall mounted storage systems in an industrial context.
The requirement to comply with the expectation of the community, that both large and small employers will comply with safety requirements, means that employers must take the obligations imposed by the Act very seriously. However, whilst general deterrence is a matter that I must consider in the sentencing process, it is not a factor to dominate the exercise of sentencing discretion to the exclusion of all factors.
In relation to specific deterrence, the attitude of the defendant to questions of workplace safety and any steps taken to improve the safety following a breach of a duty are relevant, as is the propensity for the defendant to reoffend. I note that immediately after the incident, the rack was removed and destroyed, thus the risk was eliminated.
In Inspector Howard v Baulderstone Hornibrook Pty Ltd [2009] NSWIRComm 92 Walton J observed at [241]-[242]:
'There is now ample authority for the proposition that the contribution of another entity to a risk to safety may be considered in mitigation in the assessment of penalty of a defendant. The authorities range from cases such as the present, where the contributing entity has provided services or advice which have contributed to the detriment to safety (McDonald's) to, more commonly, cases where the entity or entities are engaged in a common project, enterprise or task with the defendant which carries out the role of a principal, contractor or fellow sub-contractor: Morrison v Waratah; Morrison v Powercoal (2005); WorkCover Authority of New South Wales (Inspector Mansell) v Anytime Industrial Services Pty Ltd (2001) 110 IR 34; WorkCover Authority of New South Wales (Inspector Farrell) v Morrison (No 2) [2002] NSWIRComm 27; (2002) 112 IR 312; WorkCover Authority of New South Wales (Inspector Mansell) v Orica Australia Pty Ltd (2002) 116 IR 158 and WorkCover Authority (NSW) v Consolidated Constructions Pty Ltd [2001] NSWIRComm 263; (2001) 109 IR 316.'
In these circumstances I find that the need for specific deterrence is minimal as the director of the defendant, Mr David Douglas retired in 2018 and closed the business down, and it is no longer trading.
[13]
AGGRAVATING FACTORS
The injuries sustained by Mr McClean were significant and he continues to suffer greatly.
[14]
MITIGATING FACTORS
Section 21A(3) sets out the mitigating factors relevant to sentencing an offender. I note that the defendant, having traded for some 31 years, does not have a record of previous convictions: s 21A(3)(e) of the Sentencing Act.
The affidavit of Mr David Donald Douglas of 28 September 2020 was read and became Exhibit 1. Mr Douglas is a director of the defendant as well as his wife Fay Elizabeth Douglas. Mr Douglas has chosen not to deregister the company until these proceedings are finalised and has set money aside to allow for any penalty that may be imposed. His affidavit expresses remorse and contrition, and I accept that this is very genuine: s 21A (3)(i) of the Sentencing Act.
After the accident the Mr Douglas visited Mr McClean in hospital every day and maintained contact with him after he was discharged.
The defendant has no previous convictions for work, health and safety and I accept that the defendant is otherwise of good character: s 21A(3)(f) of the Sentencing Act. I further note that the defendant has given back significantly to the community by his work with the Department of Corrective Services and prisoners on day release with whom Mr Douglas worked closely during their incarceration and after their release. He also made many charitable donations.
The defendant entered a plea of guilty at an early stage in the proceedings, and I accept that they ought be afforded the conventional 25% discount based on the utilitarian value of the plea: s 22 of the Sentencing Act.
I accept that the defendant has co-operated with the SafeWork investigation and has co-operated with the prosecutor: s 21A(3)(m) of the Sentencing Act.
The appropriate fine is $100,000.00. The defendant is entitled to a discount of 25% for the early plea.
[15]
PENALTY
I make the following orders:
1. The defendant is convicted.
2. The appropriate fine is $100,000.00 and that will be reduced by 25% to reflect a plea of guilty.
3. I accordingly order the defendant to pay a fine of $75,000.00.
4. Pursuant to s 122 (2) of the Fines Act 1996, 50% of the fine imposed is to be paid to the prosecutor.
5. The defendant is to pay the prosecutor's costs as agreed in the sum of $40,000.00.
[16]
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: 10 November 2020