SafeWork NSW v E G Knight & Sons Pty Ltd

SafeWork NSW v E G Knight & Sons Pty Ltd - [2019] NSWDC 336 - NSWDC 2019 case summary — Zoe

BACKGROUND

At all material times the defendant was a person conducting a business or undertaking within the meaning of s 5 the Act.
The defendant's business or undertaking involved mixed farming operations, including farming sheep, cattle, and grain cropping. The business was operated at several adjoining properties in Mendooran including Boxwood. The farm was a workplace within the meaning of s 8 of the Act.
Nigel Charles Knight ('Mr Knight') and Kaye Knight ('Mrs Knight') are the directors of the company. They live on the property with their sons and families. Mr Knight works on the farm as manager and as a full time labourer. Mrs Knight does all the book work for the farm. Mr Knight was responsible for the overall planning and operation of the farm. His duties included allocating work tasks, discussing how tasks were to be performed with workers and undertaking work on the farm himself.
The defendant engaged other workers, including backpackers, on an 'as needed' basis.
The worker, Mr Herz and his girlfriend Sarah Deuser ('Ms Deuser'), were engaged by the defendant in about April 2017, in that they were employed by the defendant as farm labourers. Their duties included stick and stone picking, sheep herding, and other general labouring and cleaning work, including using the plant and equipment on the farm. Mr Herz and Ms Deuser both lived on the farm.
Their activities while at work were influenced and directed by the defendant in that the defendant allocated work tasks to both Mr Herz and Ms Deuser and they were supervised by the defendant while at work.
At all material times, the defendant owned, and had management and control of, a mobile grain auger ('the auger'). The auger was used at the farm to move material, such as grain, between different plant and equipment at the farm. The auger was comprised of an intake area, a longitudinal tube housing a rotating screw flighting, an outtake area and a motor. The intake area consisted of a hopper and an exposed length of rotating screw flighting.
At the time of the incident, the auger was fitted with warning signs which read 'SAFETY FIRST ENSURE ALL SAFETY COVERS ARE IN POSITION BEFORE OPERATING UNIT' and 'IMPORTANT SEE OWNERS MANUAL FOR OPERATING AND SERVICE INSTRUCTIONS'.
Prior to the incident, the auger was not fitted with adequate guarding over the motor, drive belts, output area, hopper or rotating screw flighting. The auger was not fitted with a start button but was started using a rope attached to the motor. It was not fitted with a stop button and was stopped by reducing the revs on the motor.
At the time of the incident, the defendant did not have any instruction book or operator's manual for the auger. It was used multiple times a day to fill the mobile stock feeder for feeding livestock at the farm.

[15]

OBJECTIVE SERIOUSNESS OF THE OFFENCE

The duties of the defendant require that it ensure that the health and safety of workers as far as reasonably practicable. As the defendant has pleaded guilty, it has admitted that the measures to ensure safety would have been reasonably practicable.
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.
In WorkCover (Inspector Calvez) v TAFE Commission [2014] NSWDC 108 at [11] Basten JA explained the approach to sentencing as follows: '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: the potential consequences of the risk, which may be mild or catastrophic; the availability of steps to lessen, minimise or remove the risk; and whether such steps are complex and burdensome or only mildly inconvenient. Relative culpability depends on assessment of all those factors. (Nash v Silver City Drilling (NSW) Pty Limited; Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96 at [34]. ….. 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.'
Had a very basic risk assessment been conducted, it would have been readily discovered that an unguarded hopper created the very real prospect of a serious consequence. I accept that the defendant knew about the availability and sustainability of guarding as a control measure, but did not avail himself of such measure.
The WorkCover Grain Augers Industry Safety Standard May 2009 requires the following, at paragraph 7.3, with regard to the use of the augers: 'Prior to use, the grain auger should be inspected to ensure it is functioning correctly, including all its safety features, such as guards. If any safety feature is not functioning correctly, the grain auger must not be used. The inner guard must be in position at all times when the grain auger is in use. The outer guard must be in position at all times when the grain auger is in use. The outer guard must be in position when using a hopper and wherever practicable for all other applications. Where it is not practicable to use the outer guard and it is removed - eg when the grain auger is being used in a silo with a narrow discharge shute that the guard will not fit into - persons must not be directly exposed to the auger flighting during operation.'
Further, at paragraph 7.8, inspection, maintenance and repair methods are detailed as follows: 'The grain auger must be inspected regularly in accordance with the manufacturer's instructions to ensure it is functioning correctly. All problems identified must be rectified prior to its use. All safety features must be maintained to ensure they are functioning as intended….'
From the guidance material it is readily apparent that the use of the auger in the manner in which it was being used by the defendant was in clear contravention of the guidance material. Any regard to the material would have immediately identified that operating the auger in the way that it was being operated would cause a risk to workers. Unfortunately, this did not affect the manner in which the auger was being used on 9 May 2017.
The inner and outer guards that were installed after the incident were fabricated and installed from scrap materials that were around the farm, by workers on the farm. This did not involve any cost, and was done relatively simply. These steps would have eliminated the risk.
The alternative was also a simple step - the defendant could have prohibited the use of the auger unless and until guards were fitted.
I accept that the risk was obvious and that it was known by the defendant. Risks and accidents involving farming machinery are notorious. The extent of harm if the risk came home was extreme and this is evidenced by the injuries sustained by Mr Herz.
Whilst the defendant had made Mr Herz aware of the danger of working in the area of the hopper intake was dangerous, that does not discharge his duty to eliminate the risk. Mr Harz was a foreign national undertaking work on a holiday visa, and to that extent he was a vulnerable worker. He had only been with the defendant for about one month before the incident occurred.
These factors point to an objectively serious offence.

[16]

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.
The Court of Criminal Appeal in Bulga Underground Operations cited with approval the decision of the Full Bench of the Industrial Court of NSW in Capral Aluminium Limited v WorkCover Authority of NSW (Inspector Mayo-Ramsay), [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: '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, WorkCover Authority (NSW) (Inspector 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. …' '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.'
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 offender to reoffend. Given the steps taken by the defendant after the incident, I accept that it is unlikely to reoffend. It is apparent to me, having heard Mr Knight give evidence, that he will now take his work health & safety obligations very seriously.
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, however it is not a factor to dominate the exercise of my discretion.

[19]

CAPACITY TO PAY

The defendant has raised the issue of its ability to pay any fine due to the adverse weather conditions including drought which has had a significant impact on the financial circumstances of the defendant.
Section 6 of the Fines Act 1996 provides as follows: '6 CONSIDERATION OF ACCUSED'S MEANS TO PAY In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider: (a) Such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and (b) Such other matters as, in the opinion of the court, are relevant tp the fixing of that amount.'
It is submitted by counsel for the defendant that the burden which will be imposed by virtue of a fine of a particular level will, to some extent, depend upon the financial circumstances and resources of the defendant. It is further submitted that the amount and method of payment of the fine will need to take into account, as far as practicable, the defendant's means and impecuniosity.
Mr Knight swore an affidavit on 24 June 2019 (exhibit A) which provided documents in support of the defendant's current financial circumstances, and that his and of his wife's financial circumstances, including tax returns and bank statements. However, I note that some of the accounts are unaudited and some tax returns are not signed, nor are there any notices of assessment.
The onus is on the defendant to satisfy the court on the balance of probabilities as to the truth of such evidence and its relevance to the fixing of penalty: McColl v John Watson Building Services Pty Ltd [2004] NSWIR Comm 353; 137 IR 310 at 224. The offender's capacity to pay in relevant but not decisive: Jahandideh v R [2014] NSWCCA 178 at [16].
In Inspector Beacham v J & L Marble Pty Ltd [2009] NSWIR Comm 100 Staff J said at [57]-[58]: 'The principles to be applied in respect of an application under s 6 of the Fines Act were discussed by Walton J, Vice-President in WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284 are as follows: '[83] The financial means of the defendant was a matter that was submitted in mitigation of penalty. In this regard I would adopt what I stated in Department of Mineral Resources v A M Hoipo & Sons (at par 50): 'It is proper, nonetheless, to have regard to the financial position and means of the defendant when considering the question of penalty: see Ferguson v Nelmac Pty Ltd (1999) 94 IR 188 at 209. The purpose of a fine is primarily to punish the offender. The burden which will be imposed by virtue of a fine at a particular level will, to some extent, depend upon the financial circumstances and resources of that offender. As a result, the amount and method of payment of a fine will need to take into account, as (2002) 112 IR 284 at 309 far as practicable, the financial resources and income of the defendant: see R v Sgroi (1989) 40 A Crim R 197 at 200-201.' [84] This approach was subsequently adopted in Manpac Industries where the Full Bench of this Court stated (at pars 81-82): '... Section 6 of the Fines Act 1996 provides that in exercising a discretion to fix the amount of any fine a court is required to consider the means of the accused and such other matters as are relevant to the fixing of that amount. That statutory injunction, of course, has long been recognised as an appropriate part of the sentencing process: see, for instance, Warman International (80 IR at 339); WorkCover Authority (NSW) (Inspector Dowling) v Overtop Pty Ltd (1998) 86 IR 319 at 333; and Profab Industries (49 NSWLR at 714; 100 IR at 76).' However, and given the primacy of the objective seriousness of an offence in determining an appropriate sentence, the financial situation of a defendant, in our view, needs to be carefully scrutinised. In Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 at 209 - 210, Wright J, President observed: '... Whilst I accept that the imposition of heavy fines would be a burden on the defendant and its financial resources and that consideration should be given appropriate weight on the question of penalty, it does not necessarily result in the Court not imposing a heavy penalty. ...... When viewed in the context of the statutory mandate in s 15 the offences were very serious and provided proper weight is given to the subjective considerations and insofar as deterrence is concerned some tempering thereof, the penalty should reflect the objective seriousness of the offence. ...' I would reiterate what the Court stated in WorkCover Authority (NSW) (Inspector Ankucic) v Lyndhurst Trading Co Pty Ltd (2000) 95 IR 462 at 476: 'Where the means of the defendant to pay any fine is raised, the proper course will be to assess the appropriate amount of the fine having regard to the gravity of the offence charged and then reduce the fine to take into account the defendant's means and impecuniosity: see R v Rahme (1989) 43 A Crim R 81 at 86.''
Counsel for the Prosecutor submits that as there is no cogent evidence that the defendant would have difficulty in paying a fine, I could not be satisfied that this position would be accepted. They submit that there is no evidence before me that would satisfy me that the imposition of a fine would force the defendant into insolvency. They further submit that the penalty must reflect the objective seriousness of the offence and not the capacity to pay.
Mr Knight gave evidence before me. It is clear to me that whilst the defendant is continuing to make purchases, a lot of the company's assets are tied up in the farm and farm machinery. The financial circumstances are such that Mr & Mrs Knight made an application for benefits under the Farm Household Allowance through Centrelink. They met the criteria to receive benefits as they were able to demonstrate hardship because of the drought and the subsequent effect it has had on their income and because they had no off-farm income or assets.
Mr Knight gave evidence that the defendant has an overdraft facility of $500,000 which is largely drawn down. The balance is being used to purchase feed, and the climactic conditions do not suggest that the defendant will again become self-sufficient in terms of feeding their own stock in the short to medium term.
I accept that the company has spent large sums of money to buy feed the lambs that they have left. This is been more than $200,000 this calendar year. There is only $122,925.09 left available on that overdraft. This is as a direct consequence of the drought and the failure of crops that they had in previous years grown to feed their livestock. Given the confluence of these factors, Mr Knight expects that the company will make a loss this financial year.
Mr and Mrs Knight have not drawn a wage for some time and are basically only covering the interest on the loans that they have over the properties. Both of Mr & Mrs Knight's sons and families live on the property and both boys are working on the farm. Thus the defendant supports all three families. This is becoming increasingly difficult given the devastating effects of the drought, and in particular the increasingly high cost of drought feeding.
Given the evidence by Mr Knight, whom I accept as a witness of truth, and relying on my judicial knowledge of the impact that the drought is having on Australian farmers, I accept that the defendant has a very limited capacity to pay, and that any fine I may impose will have to be met by increased borrowings, such as the parlous state of the defendant.
Counsel for the defendant submits the court should make additional or alternate penalties pursuant to ss 234 and 235 of the Act. It is submitted that I could make an order under section 239 of the Act - a court ordered WHS undertaking.
I accept the submission of the Prosecutor that this is not appropriate in the circumstances given the objective seriousness of the imposition of the risk and the fact that the risk came home, and is not appropriate having regard to specific and general deterrence. I accept those submissions.
Counsel for the defendant also submitted that I could make a training order (see SafeWork NSW v Yan Huai Wu and Zenger (Aust) Pty Ltd [2018] NSWDC 211; SafeWork NSW v Samuels [2019] NSWDC 111). The Prosecutor submits that this is also inappropriate in the circumstances, and I accept that submission.
The court is entitled to take into account the fact that the defendant will be liable to pay the prosecutor's costs when considering any monetary penalty to be imposed on the defendant, particularly in circumstances where there is evidence of a very limited capacity to pay a fine. The costs payable to the prosecutor are an important aspect of the punishment of the defendant. The Court can also have regard to the defendant's own costs that it will have to bear as a consequence of a breach of the Act: see Environmental Protection Authority v Barnes [2006] NSWCCA 246 at [78].
But for the mitigating factors, the financial position of the defendant and the extra-curial punishment the defendant is to receive by way of payment of the prosecutor's costs and its own legal costs, I am of the view that the appropriate fine would be $100,000. The defendant is entitled to a discount of 25% for the early plea.
However, I am satisfied that the defendant has a very limited capacity to pay a fine, and I therefore impose a fine of $5,000.

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