SafeWork NSW v E G Knight & Sons Pty Ltd

THE INCIDENT

1. On 9 May 2017, Mr Herz was undertaking the task of using the auger to fill a mobile stock feeder with grain. In doing so he attempted to step over the unguarded hopper intake area whilst the auger was in operation. He lost his balance and his left foot came into contact with and became entangled in the rotating screw flighting.
2. Mr Herz sustained significant injuries to his left foot including lacerations, fractures, tendon damage and a severe degloving injury.
3. He was transported to Dubbo Hospital where he underwent cleaning surgery. The next day he was flown to Royal North Shore Hospital and remained there as an inpatient for 11 weeks and underwent multiple remedial surgeries to clean and repair the damage to his left foot.
4. He subsequently returned to Germany as his visa has expired.

SYSTEMS OF WORK BEFORE THE ACCIDENT

1. Prior to the incident, the defendant had no formal documented safety systems. The defendant provided informal on the job training to its workers. It had no formal processes in place to update or inspect/audit machinery in relation to safety issues.
2. The defendant was aware of the risks associated with using the unguarded auger and the potential consequences of the risks. It was aware of the availability and suitability of guards as a measure to control the risk.
3. In a Record of Interview with SafeWork, Mr Knight said that the defendant had not considered upgrading the auger by installing guards because all the workers, including Mr Herz, were made aware the area of the hopper intake was dangerous.
4. The defendant had not undertaken a risk assessment of the auger, nor considered using guards as a measure to eliminate or minimise the risk of injury created by the unguarded moving parts.
5. There was no guarding on the intake area of the auger to prevent contact and/or entanglement with the rotating screw flighting. The auger's motor, drive belts and output area were not guarded.
6. Prior to the incident, the defendant had not developed or implemented a safe operating procedure for the auger, nor did it have the manual for the auger or any operating documents.
7. Workers on the farm 'learned on the job' how to operate the auger as there was no formal or documented instruction or training provided to the workers on the safe operation of the auger.
8. There was no system in place to ensure workers who operated the auger were competent to do so. Nor was there any requirement that the workers were to wear any personal protective equipment ('PPE'), such as protective boots.

Work Health and Safety Regulation 2011 (NSW)

1. The defendant, being a person conducting a business or undertaking, was required, under clause 34 of the Work Health and Safety Regulation 2011 (NSW) ('the Regulation'), to manage risks to health and safety, and identify reasonably foreseeable hazards that could give rise to risks to health and safety.
2. The defendant was required, under clause 35 of the Regulation, to eliminate risks to health and safety so far as is reasonably practicable, and if it was not reasonably practicable to eliminate risks to health and safety, minimise those risks so far as is reasonable practicable.
3. At the relevant time, the Regulation provided: '208 Guarding (2) The person with management or control of the plant must ensure that: … (a) if access to the area of the plant requiring guarding is not necessary during operation, maintenance or cleaning of the plant, the guarding is a permanently fixed physical barrier, or (b) if access to the area of the plant requiring guarding is necessary during operation, maintenance or cleaning of the plant, the guarding is an interlocked physical barrier that allows access to the area being guarded at times when that area does not present a risk and prevents access to that area at any other time, or (c) if it is not reasonably practicable to use guarding referred to in paragraph (a) or (b), the guarding used is a physical barrier that can only be altered or removed by the use of tools. …'

Code of Practice: Managing the risks of plant in the workplace

1. Prior to the incident, the SafeWork NSW Code of Practice's 'Managing the risks of plant in the workplace (July 2014)' ('the Code') was published and available. The Code deals with guarding of machinery, outlines the guarding hierarchy of controls, and makes specific reference to guarding rotating shafts (or screw flighting). The Code outlines a number of ways to control the risks of plant and maintain a safe system of work, including that; '(a) All workers should be provided with information, training, instruction or supervision that is necessary to protect them from risks arising from the use of plant, including the correct use of guarding and other control measures; (b) Different types of guarding should be used, such as permanently fixed physical barriers, interlocked physical barriers, and physical barriers fixed in position and presence sensing systems; (c) Various control measures should be available in order to provide adequate protection against the risk of plant, such as separate the hazardous plant from people, either by distance or physical barrier; (d) Any alterations are made to alter the design of the plant should be approved by the designer and manufacturer to ensure all relevant safety issues have been considered and another risk management process should be carried out again; and (e) Inspections of plant to identify any adverse effects of changes in processes or materials associated with plant and unsafe work practices associated with the use of plan.'

Australian Standard: AS 4024 (Series) Safety of Machinery

1. Prior to the incident, the Australian Standard AS 4024 (Series) Safety of Machinery ('the Standard') was published and available. The Standard provides guidance on reducing the risks to health and safety associated with machinery, including guarding design.
2. The Standard provides that where access to a hazard zone is not required during normal operation of the machinery, safeguards should be selected from the following: '(a) fixed guards; (b) interlocking guards with or without guard locking; (c) self-closing guards; (d) sensitive protective equipment, such as electro-sensitive protective equipment; or (e) pressure-sensitive protective devices.'

Safety Warning - Auger Amputations (SafeWork NSW)

1. On 11 December 2015, SafeWork NSW published a media release on its website outlining recent incidents in South West NSW that had resulted in limb amputations as a result of unguarded augers. The media release stated, among other things, that farms should ensure 'rotating screws, intake areas and belts are adequately guarded in augers... [and] hazard warning signs are in place.' This was available prior to, and at the time of the incident.

Fact Sheet- Get Grain Safe (SafeWork NSW)

1. Prior to, and at the time of the incident, SafeWork NSW had available on its website a fact sheet titled 'Get Grain Safe', which included information about safety measures to be taken in relation to, among other things, augers on farms. This fact sheet states: 'Augers can cause nasty injuries. To prevent your hands and feet from contacting the screw, you need to guard auger intakes. You can find guard designs with mesh and bar configurations that allow for both grain flow and operator safety. Don't forget to fit your augers with an accessible emergency stop switch and make sure any belts or other moving parts are guarded too.'

Industry Safety Standard - Grain Augers (WorkCover NSW)

1. In May 2009, WorkCover NSW (as SafeWork NSW was then known) published an Industry Safety Standard titled 'Grain Augers' (Auger Standard). The Auger Standard was endorsed by WorkSafe Western Australia. WorkSafe Victoria, and WorkSafe Queensland; and was available prior to, and at the time of the incident. The Auger Standard provides that: '(a) Guards must be used to prevent access to dangerous parts of the grain auger, including drive belts, pullers, chains, sprockets and drive shafts; (b) Auger screw/flighting should have two levels of guarding, an inner guard that is permanently fitted over the flighting, and a fitted outer guard; (c) The inner guard must be permanently fixed to the auger as close as practicable to the rotating screw, and must comprise longitudinal bars at a maximum of 75mm spacing and be of sufficient strength to prevent deformation; (d) The outer guard must comprise of a mesh with a maximum of 100 X 100mm apertures, and there should be at least 120mm between it and the inner guard; (e) Every auger must clearly display pictorial and written signs warning against the serious risks outlined in the Auger Standard, Including a warning not to operate the auger with no guarding; (f) The employer must provide appropriate personal protective equipment (PPE) to those involved in the grain auger operation. Hearing protection must be worn.'

Guarding Grain Augers - A practical Guide to Fitting a More Practical Guard (University of Sydney)

1. In November 2008, the University of Sydney published a guide titled 'Guarding Grain Augers - A guide to fitting a more practical guard' ('USYD Guide'). The USYD Guide outlines how to easily install a guard onto a grain auger intake to eliminate or minimize a risk of death or serious injury due to contact with the auger screw. The USYD Guide was available prior to, and at the time of incident.

SYSTEMS OF WORK AFTER THE INCIDENT

1. Following the incident, SafeWork NSW served the defendant with the following notice: '(a) Prohibition Notice (number 36805) in relation to the grain auger. The Prohibition Notice provided that the grain auger was not to be used until appropriate guarding was in place in relation to the auger intake area, the motor, drive belts, and grain spout (outake end).'
2. Following the incident, the defendant: 1. Installed an inner guard at the input to the auger, so that the screw flighting was guarded with the metal bars; 2. Installed an outer guard at the input to the auger, fitting the hopper with a metal mesh, which allowed grain to flow freely into the hopper whilst eliminating or minimizing the risk of human contact with the screw flighting; 3. Installed guarding on the auger's motor, drive belts, and outtake area; and 4. Provided workers with protective boots.
3. The inner and outer guards on the intake area of the auger were fabricated and installed by farm workers using materials that were available at the farm at minimal cost.
4. The defendant also conducted an audit of all its farm equipment. As a result thereof, a second auger that was being used at the farm was modified and new guarding was fitted. A further auger owned by a neighbour and being used on the farm, was returned back to the neighbour and was no longer used at the defendant's premises.

PRIOR HISTORY

1. The defendant has not previously appeared before the courts on health and safety matters, and co-operated with the SafeWork investigation.

CONSIDERATIONS

1. I have had regard to the objectives set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 ('Sentencing Act') for the purpose of sentencing.

OBJECTIVE SERIOUSNESS OF THE OFFENCE

1. 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.
2. The duty requires the identification of risks in the workplace and an assessment of measures to address such risks.
3. 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.
4. 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.'
5. 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.
6. 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.'
7. 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….'
8. 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.
9. 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.
10. The alternative was also a simple step - the defendant could have prohibited the use of the auger unless and until guards were fitted.
11. 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.
12. 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.
13. These factors point to an objectively serious offence.

DETERRENCE

1. 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.
2. 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.'
3. 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.
4. 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.

AGGRAVATING FACTORS

1. The injuries sustained by Mr Herz were severe and necessitated a prolonged period of hospitalisation and rehabilitation.

MITIGATING FACTORS

1. The defendant entered a plea of guilty at an early stage and is entitled to a discount of 25% based on the utilitarian value of the plea. S 21A(3)(e)
2. The defendant does not have any antecedents. S 21A(3)(e)
3. The defendant so-operated with the SafeWork investigation. S 21A(3)(m)
4. The defendant through its director, Mr Knight, has shown remorse and I accept that as genuine. S21A(3)(h).
5. Mr Knight and his extended family went to great lengths to assist Mr Herz and Ms Deuser after the incident.

CAPACITY TO PAY

1. 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.
2. 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.'
3. 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.
4. 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.
5. 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].
6. 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.''
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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].
17. 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.
18. 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.

COSTS

1. By agreement, the defendant is to pay the prosecutor's costs in the sum of $25,200.00 inclusive of GST.

PENALTY

1. My orders are: 1. (1) The defendant is convicted. 2. (2) The appropriate fine would be $100,000.00 but for the matters raised in paragraphs 66-82 above and that would be reduced by 25% to reflect a plea of guilty. 3. (3) I accordingly order the defendant to pay a fine of $5,000.00 4. (4) I order pursuant to s 122(2) of the Fines Act 1996 that 50% of that fine is to be paid to the prosecutor. 5. (5) I order the defendant to pay the prosecutors costs agreed in the sum of $25,200.00.

---

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: 19 July 2019