SafeWork NSW v MGK Constructions Pty Ltd

District Court of NSW|2019-09-18|Before: Service J

Judgment

MGK Constructions Pty Ltd (the offender) has pleaded guilty to an offence that being a person who had a health and safety duty pursuant to section 19(1) Work Health and Safety Act 2011 (the Act), it failed to comply with that duty and thereby exposed Vanikone Chanthavixay to a risk of death or serious injury contrary to section 32 of the Act.
The maximum penalty is a fine of $1,500,000.

Facts

The parties presented an Agreed Statement of Facts that can be summarised as follows.

The incident on 19 May 2017

On 19 May 2017 the offender's workers undertook the task of moving the lower roof trusses to the rear of the Premises. The trusses were then lifted by a mobile crane to the first floor of the Premises.
Mr Keramea saw that the void had not been covered and changed the system of work to standing trusses on the barricaded side of the void (that was protected by the internal wall frames). Once the trusses were lifted, the offender's workers stood and braced the trusses from the barricaded side of the void.
Mr Keramea instructed Mr Chanthavixay to nail the trusses to the top plate of the wall frames.
At approximately 9am, Mr Chanthavixay was standing on a step ladder on the first floor of the Premises while nailing a truss. The step ladder was adjacent to the stair void. While stepping down from the step ladder, Mr Chanthavixay fell approximately 3.6 metres through the stair void and landed on the concrete ground floor below.
Mr Keramea did not observe Mr Chanthavixay to use the ladder next to the void prior to the incident.
As a result of the fall, Mr Chanthavixay sustained a right sided parietal haematoma with laceration, right chest wall pain, a fractured finger and a soft tissue injury to his right ankle.

Systems of work before the incident

Provincial had a Work Health and Safety Management System in place. The system provided: … Falls Provincial Homes will manage risks associated with a fall by a person from one level to another that is reasonably likely to cause injury to that or another person. This includes the risk of falling:

In the vicinity of an opening through which a person could fall.

It was the practice of Provincial to engage an external company to install stair void protection at their sites. Provincial's supervisors were responsible for arranging the installation of void protection.
Where void protection was not yet installed at one of their sites, it was Provincial's practice to provide a temporary handrail or cover to the void from material on site, to prevent falls. Provincial did not provide any specific information or instruction to the offender about this practice.
Mr Bienkiewicz was responsible for arranging the stair void protection at the Premises. He arranged a booking for the stair void to be covered, after the incident, on 22 May 2017.
Provincial did not ensure that a temporary cover was installed over the stair void after the void was cut out. Provincial did not prevent workers accessing and performing work on the first floor while no stair void protection was in place.
The offender submitted a SafeWork Method Statement (SWMS) titled "Carpenter install frames and roof trusses" to Provincial on 1 January 2017.
The SWMS identified the risk of "falls through stair voids" during the task of roof truss installation. The control measure listed for the risk was "installation of stair void cover to be in place before access or working above".
The SWMS also identified the risk of "fall from heights" during the task of roof truss installation. The control measures listed in the SWMS for this hazard included: 1. all workers to be trained in the falling from heights with reference to the Code of Practice for Prevention of Falls in Housing Construction; 2. only a competent trained person is to work at heights.
Mr Chanthavixay had not seen the offender's SMWS prior to the incident. Mr Chanthavixay had not yet completed the "Work Safely at Heights" training course. He was scheduled to complete this course on 8 June 2017. Mr Chanthavixay was not aware of the Code of Practice for Preventing Falls in Housing Construction.
The offender was aware that no stair void protection was in place at the time of the incident.
The offender understood that void protection was to be installed by Provincial before work on the first floor commenced, as was the usual practice of Provincial.
The offender failed to instruct its workers not to perform work on the first floor level until void protection measures were in place.

Relevant guidance material

Clause 78 of the Work Health and Safety Regulation 2011 requires: Management of risk of fall (1) A person conducting a business or undertaking at a workplace must manage, in accordance with Part 3.1, risks to health and safety associated with a fall by a person from one level to another that is reasonably likely to cause injury to the person or any other person.
The SafeWork NSW Code of Practice "Managing the Risk of Falls at Workplaces" (April 2016) is an approved Code of Practice under section 274 of the Act.
The SafeWork Code of Practice states that: A person conducting a business or undertaking has more specific obligations under the WHS Regulations to manage the risk of a fall by a person from one level to another, including requirements to:  ensure, so far as is reasonably practicable, that any work involving the risk of a fall is carried out on the ground or on a solid construction  provide safe means of access to and exit from the workplace  minimise the risk of falls so far as is reasonably practicable by providing a fall prevention device, work positioning system or a fall arrest system.
Section 3.2 of the SafeWork Code of Practice provides: Protection of openings and holes Holes, penetrations and openings through which a person could fall should be made safe immediately after being formed. If a cover is used as a control measure, it must be made of material that is strong enough to prevent persons or objects falling through and must be securely fixed to prevent any dislodgement or accidental removal.
The WorkCover NSW Code of Practice "Preventing Falls in Housing Construction" (18 July 2014) is an approved Code of Practice under section 274 of the Act.
Section 8.3 of the WorkCover Code of Practice provides a safe method for guarding openings: Guarding openings All stairwells, atriums and voids through which a person could fall must be sturdily guarded, covered with an industrial safety net or sheeted over, regardless of the fall distance from the upper level floor. Guard railing should be provided in accordance with section 4.1 of this Code. In particular, toe boards should be fitted to prevent tools and materials from being kicked into the void. Voids and atriums must be guarded as soon as possible after laying sheet flooring, as illustrated in Figure 13. Where a person working from a stepladder or a working platform such as a trestle scaffold or similar, may fall over the guardrail and through the opening, the opening must be covered with temporary flooring, timber sheeting, an industrial safety net or similar, even if guardrails have been erected around it. Any coverings or temporary floors and their supports must be of robust construction capable of withstanding impact loads from any potential falls.
Section 3 of the WorkCover Code of Practice also provides: Void protection Where workers are working from trestles, ladders and mobile scaffolds on solid construction and they are located in close proximity to floor openings such as stairwells and partially completed floors, edge protection will not prevent a fall into the opening. The opening must be covered with covers designed to withstand likely impact and static loads and fixed to prevent any dislodgment or accidental removal.
The SafeWork Code of Practice and the WorkCover Code of Practice were both readily accessible and available in the public domain prior to and at the time of the accident.

Systems of work following the incident

On 19 May 2017 SafeWork NSW issued a Prohibition Notice to Provincial. On 22 May 2017 Provincial installed a void cover with a ladder access hatch over the stair void at a cost of $410.
Provincial has updated its WHS Management Plan and completed a construction project checklist.
On 19 May 2017 SafeWork NSW issued an Improvement Notice to the offender.

The Offender's Case on Sentence

The offender relied on an affidavit of Matthew Keramea, the sole director and secretary of the offender, affirmed 6 September 2019. Mr Keramea was present in Court but not required for cross-examination. The content of his affidavit can be summarised as follows.
The offender is a small family business, incorporated in July 2008, undertaking carpentry services mostly to the residential home building industry in the Lower and Upper North Shore areas of Sydney.
Matthew Keramea is a licensed builder with more than 17 years in the carpentry industry.
The income generated by the business is distributed through the MGK Family Trust. In June 2017 the business made a profit of approximately $270,000 of which $137,000 was distributed to Mr Keramea and the balance to a corporate beneficiary of the Trust. In the financial year ending June 2018 the business made a profit of around $200,000 of which approximately $74,000 was distributed to Mr Keramea and the balance to his family and the corporate beneficiary of the Trust.
Neither the offender nor Mr Keramea has been prosecuted for any alleged breach of safety laws.
The offender generally limits the type of work it undertakes to works costing up to $15,000. The offender works on four or five sites at the one time. The offender's workers generally all work at the same site simultaneously.
Mr Keramea works in the business as the lead worker and supervisor on all jobs. He had previously undertaken formal training in carpentry and joinery, general construction and building studies and had also completed various safety-focussed training courses with various builders.
The offender currently employees three builders/carpenters, including two adult apprentices. The offender has engaged apprentices since the business commenced and is committed to providing experienced new entrants into the industry.
At the time of the incident, Mr Chanthavixay had been enrolled in his apprenticeship for approximately 14 months. As part of his apprenticeship, he was required to undertake his formal training with a registered training organisation, Gimbal Training Group Pty Ltd. Mr Chanthavixay was required to undergo regular scheduled training on general building practices, building techniques and safety to complete his Certificate III.
Matthew Keramea expressed remorse personally and, on behalf of the offender, for the injuries sustained by Mr Chanthavixay. He accepted responsibility on behalf of the offender for the failures that led to Mr Chanthavixay being exposed to the risks on the day of the incident.
After the incident, Mr Keramea made enquiries as to Mr Chanthavixay's welfare. Mr Keramea visited Mr Chanthavixay during his admission in Royal North Shore Hospital and discussed with him a return to work about two to three months after the incident. In or about December 2018, Mr Chanthavixay made contact with Mr Keramea expressing an interest in returning to work for the offender. In those messages, Mr Chanthavixay described himself as having a difficult time following the incident and as being committed to working for the offender. At the time of these text messages, the offender's position was about to close down over the Christmas/New Year period and it did not expect to have sufficient work available to employ Mr Chanthavixay in 2019.
In response to the incident, Mr Keramea took steps in relation to the risk of unprotected voids and to improving the offender's safety systems.
On each job the offender has performed since the incident, Mr Keramea has stressed to his workers that they are not to undertake any work on upper levels until appropriate fall protection measures are put in place by the builder, such as void protection.
Following the incident, Mr Keramea took steps to amend the offender's SWMS and WHS Management Plan. The amended WHS Management Plan specifies that void protection is to be installed by the builder on any site. The SWMS also includes standard form toolbox talk forms, hazard assessments and incident reports so as employees can complete these forms if necessary. The amended versions have been provided to the offender's employees and each employee has signed a register to confirm that they have received a copy and reviewed its content.
In July 2017 the offender joined the Master Builders Association of New South Wales. Membership to the Association provides the offender, its employees and Mr Keramea with access to safety training manuals, safe work incident alerts and regular email communications on general safety practices in the building industry.
Earlier this year Mr Keramea completed a Certificate IV in Work Health and Safety and has also completed training through the Master Builders Association in working at heights, applying WHS requirements, policies and procedures in the construction industry. An employee of the offender has now completed training in WHS for supervisors.

Consideration

I have had regard to the objects of the Act set out in section 3 and the purposes of sentencing set out in section 3A Crimes (Sentencing Procedure) Act 1999.

Objective Seriousness

The risk posed by the unprotected stair void was obvious. It was the usual practice of the offender to not undertake work until the stair voids were adequately protected. The stair void was adequately protected on two sides because wall frames of the required dimensions were in place on two sides of the stair void.
The offender tried to work around the inadequate protection of the stair void by changing the system of work to have the workers work from the side of the building where adequate protection was in place. This administrative system was inadequate in a number of ways and did not prevent Mr Chanthavixay from working on the unprotected side of the void.
The likelihood of the risk occurring was moderate.
The potential consequences of the risk coming home were significant and included the risk of death.
On the basis of the pleading and the Agreed Statement of Facts I am not satisfied beyond reasonable doubt that more than worker was exposed to the risk pleaded. It is reasonably possible that the administrative system prevented the other employees of the offender being exposed to the risk. I am satisfied that Mr Chanthavixay was exposed to the risk and that his fall and injuries were a manifestation of the risk.
The offender accepted by its plea, that it should have ensured that Provincial installed protection for the stair void and/or requested Provincial to do so, instructed its workers not to undertake work on the first floor in the absence of void protection and that it should have provided Mr Chanthavixay with a copy of the Safe Work Method Statement that it had prepared in relation to the work. These steps were relatively inexpensive but to some extent inconvenient. The refusal to do work on the day of the incident may have caused some inconvenience to the offender in re-arranging its work schedule. However, they were clearly steps that the offender was required to take and were not grossly disproportionate to the risk. In my view, the relative expense and inconvenience involved in the steps that could have been taken by the offender is more significant than Provincial's.
Mr Chanthavixay suffered injuries that were thankfully not too serious. I would infer that he was able to make a full recovery and return to work as a carpenter at least by December 2018 but probably well before that date.
I have regard to the maximum penalty for the offence.

Deterrence

The penalty imposed in relation to the offences must provide for general deterrence. PCBUs must take the obligations imposed by the Act very seriously. The community is entitled to expect that both small and large businesses will comply with safety requirements. General deterrence is a significant factor when safety obligations are breached: Bulga Underground Operations Pty Ltd v Nash [2016] NSWCCA 37 at [180].
There is a need for specific deterrence in this case because the offender continues to operate a business in the construction industry. The offender has improved its safety systems in response to the incident. The offender's sole director has completed training via the Master Builders Association. One of the offender's employees has completed training in WHS for supervisors.

Aggravating Factors

The injury, harm and loss caused by the section 32 offences was substantial: section 21A(2)(g) Crimes (Sentencing Procedure) Act 1999. Both parties accepted that the aggravating factor was established by reference to Mr Chanthavixay's injuries.

Mitigating Factors

The offender does not have any previous convictions: section 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. The offender was incorporated on 16 July 2008.
The offender has good prospects of rehabilitation: section 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offender has demonstrated by the steps it has taken after the incident, that it has good prospects for rehabilitation.
The offender has demonstrated remorse: section 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. Matthew Keramea, on behalf of the offender, accepted responsibility for its actions and has expressed contrition and remorse.
The offender entered a plea of guilty: section 21A(3)(k) and section 22 Crimes (Sentencing Procedure) Act 1999. It is entitled to a discount on penalty that reflects the utilitarian value of that plea: R v Thomson & Houlton (2000) 49 NSWLR 383 and R v Borkowski (2009) 195 A Crim R 1 at [32]. The plea also indicates remorse: Borkowski at [32]. The appropriate discount is 25%.
The offender co-operated with the SafeWork investigation: section 21A(3)(m) Crimes (Sentencing Procedure) Act 1999.

Should the Court make a Restoration Order?

The court may make any of the other orders provided for by Division 2 of Part 13 of the Act, in addition to any penalty imposed, if the court finds a person guilty or convicts the person of an offence: sections 234 and 235 of the Act.
Section 237 of the Act provides:
237 Orders for restoration (1) The court may order the offender to take such steps as are specified in the order, within the period so specified, to remedy any matter caused by the commission of the offence that appears to the court to be within the offender's power to remedy. (2) The period in which an order under this section must be complied with may be extended, or further extended, by order of the court but only if an application for the extension is made before the end of that period.
From the evidence in this case, it appears that Mr Chanthavixay suffered some financial hardship as a result of his injury and subsequently being out of work. It appears unlikely that he would be able to pursue a work injury damages claim against the offender due to the extent of his injuries, although he may have other common law remedies available to him. It is likely that Mr Chanthavixay has suffered some reduction in his income as a result of being on workers compensation payments and it appears that at least for some time in December 2018 that he was out of work. At that time he asked the offender to re-employ him, but that was not possible. The economic loss suffered by Mr Chanthavixay in my view is directly related to the commission of the offence.
I raised with the parties the possibility of making an order under section 237 of the Act to compensate Mr Chanthavixay for that economic loss (the Compensation Order). Based on the limited information I had, the Compensation Order would have to have been a cushion for the losses that it is likely Mr Chanthavixay has suffered in the period after the incident.
At the sentence hearing, the offender did not submit against the making of the order, except as to quantum. The prosecutor expressed in principle, support for the Compensation Order.
The matter was re-listed at the request of the prosecution to argue that I did not have the power to make the Compensation Order. Whilst I now do not intend to make the order and accepting that the following comments are obiter dictum, I am of the view that I have the power to do so and I should state the reasons for that view, as a step in developing the applicability of section 237 of the Act, which has not been previously considered. The South Australian regulator has published in its website that a section 237 order was made for the payment of a worker's expenses in Boland v Kentucky Fried Chicken Pty Ltd [2017] SAIRC 16. At [28] of the decision it is recorded that the payment was made voluntarily by the PCBU and not pursuant to an order made by the Court.
The prosecutor contended that the purpose of section 237 of the Act read in context, provided the power to make an order to take steps to remedy any matter that still exists after the commission of the offence, that poses a risk to health and safety. The prosecution contends that this is because the purpose of the other sections in the Division is to improve health and safety systems of PCBUs at workplaces or otherwise. The prosecution also submitted that an order under the Division can be made 'in addition to any penalty', meaning that the additional order cannot be penal in nature.
Statutory construction begins with a consideration of the language used. Its meaning may require consideration in context, which includes the general purpose and policy of the provision, in particular the mischief it is seeking to remedy: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at [47].
Determination of the purpose of a statute or of a particular provision may be based not only on an express statement of purpose in the statute itself but also by inference from its text and structure and where appropriate, by reference to extrinsic materials. However, this process does not involve a search for what the legislature had in mind: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [78] and Certain Lloyd's Underwriters v Cross (2012) 87 ALJR 131 at [23]-[26] (Cross).
The question of whether a court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical drafting errors which, if uncorrected, would defeat the object of the provision. It is answered against a construction that fills gaps disclosed in legislation or makes an insertion which is too big or too much at variance with the language used by the legislature. Lord Diplock's three conditions in Wentworth Securities v Jones [1980] AC 74 at 105-107 should be considered before reading a provision as if it contained additional words and the additional words must be consistent with the wording of the provision: Taylor v Owners of Strata Plan 11564 (2014) 253 CLR 531 at [38]-[39] (Taylor).
Section 33 Interpretation Act 1987 provides that the interpretation of a provision that would promote the purpose or object underlying the Act shall be preferred to a construction that would not do so.
Extrinsic materials can be used as an aid to construction, but they are not a substitute for the language considered in context and cannot displace the meaning of the text: Re Bolton; Ex Parte Beane (1987) 162 CLR 514 at 518, Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39] and section 34 Interpretation Act 1987.
Section 3 of the Act relevantly provides: The main object of the Act is to provide for a balanced and nationally consistent framework to secure the health and safety of workers and workplaces by: protecting workers and other persons against harm to their health, safety and welfare through the elimination or minimisation of risks arising from work or from specified types of substances or plant, and… (e) securing compliance with this Act through effective and appropriate compliance and enforcement measures, and… In furthering subsection (1)(a), regard must be had to the principle that workers and other persons should be given the highest level of protection against harm to their health, safety and welfare from hazards and risks arising from work or from specified types of substances or plant as is reasonably practicable.
There is nothing of relevance to the argument in the extrinsic materials that were tendered.
In my view, the construction of section 237 contended for by the prosecution is untenable for the following reasons.
First, the language of section 237 is clear and unambiguous. It provides for a wide power to order remediation of matters, within the power of the offender to put right. It is certainly not limited to a payment of money, but that was the only practical way to deal with the facts of this case, because of the policy considerations relating to the specific performance of service and employment contracts. The language of section 237 would not exclude the making of a Compensation Order for property damage caused by the commission of the offence, for example if plant or structure belonging to a third party was damaged.
Second, the prosecution's argument cannot accommodate the temporal requirement of the section that the matter to be remedied must have been 'caused by the commission of the offence'. If the prosecution's argument is accepted that section 237 is aimed only at remedying a risk to health and safety, this would represent remedying a continuing offence, rather than a matter caused by the commission of the offence. There are powers other than section 237 in the Division that could be deployed to bring about the result contended for by the prosecution, including by ordering an injunction (section 240), ordering a work health and safety project (section 238) or by ordering the offender to enter into a work health and safety undertaking with appropriate conditions. Whilst it can be accepted that the prosecution's construction is open, it does not preclude the wider interpretation that the matters to be remedied are causally related to the offence and not merely the objects of the other orders in the Division. The making of the Compensation Order would still promote the effective and appropriate enforcement of the Act, by conveying the need for PCBUs to change their behaviour (by complying with the Act) in the same way that specific deterrence works or the issue of an improvement notice does.
Third, the prosecution's construction relies too heavily on the intended purpose of the section producing a result that cannot be reconciled with the plain meaning of the language used by the section: Cross and Taylor.
Fourth, a Compensation Order is made based on restitution and is not penal in nature. The Crimes (Sentencing Procedure) Act 1999 provides does not provide for the payment of compensation as a penalty in New South Wales and the payment of compensation cannot be the condition of a community corrections order: sections 88-90 Crimes (Sentencing Procedure) Act 1999. The procedure for victims compensation in New South Wales is set out in the Victims Rights and Support Act 2013, which is relevantly a state operated welfare compensation scheme and does not involve any element of criminal punishment: Campbell "Compensation as Punishment" (1984) 7 UNSW Law Journal 338. In my view, it does not cover the field where the power contained in section 237 exists.
I have concluded that it would not be appropriate to make the Compensation Order in this matter because of the paucity of information available about the loss suffered by Mr Chanthavixay. Any order I made could under estimate or overestimate his loss which would result in unfairness to Mr Chanthavixay or the offender. Further, the Compensation Order may have unintended consequences on any legal rights Mr Chanthavixay may have available to him. Finally, there has been no recent contact with Mr Chanthavixay, meaning that in this particular case that the order may be difficult for the offender to comply with and for the Court to enforce.
The sentence hearing was relisted at the request of the prosecution, quite properly, to question the extent of the Court's power under section 237 of the Act. That was entertained, despite the prosecution's original concession, because it is of importance as a step in interpreting the application of the legislation in these prosecutions. This was of general importance to the prosecution for which the offender conveniently acted as a contradictor, but the argument was not one contended for initially, or at all, by the offender. Further, the prosecutor was unsuccessful in its statutory construction argument. Accordingly, it is appropriate that the offender not be penalised in costs relating to the statutory construction argument and I will adjust the costs order appropriately.

Size of the offender's undertaking and capacity to pay

The offender led evidence about its relative size and capacity to pay a fine, which I have already referred to. It did not allege that it had a reduced capacity to pay. In my view, it has capacity to pay an appropriate fine. The quantum of the fine is partially determined by the relative size of the offender's operation. Nash v Silver City Drilling [2017] NSWCCA 96 at [59]-[60]. I have taken into account as one of the matters considered, that the fine that I intend to impose represents a significant proportion of the average yearly profit of the offender.

Penalty

The offender is convicted.
The appropriate fine is one of $100,000 which will be discounted by 25% to take into account the plea of guilty.
I impose a fine of $75,000.
I order pursuant to section 122(2) Fines Act 1996 that 50% of the fine is to be paid to the prosecutor.
The offender is to pay the prosecutor's costs of the proceedings, except for the costs of or incidental to the appearance on 20 September 2019, as agreed or assessed.

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: 24 September 2019

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (17 paragraphs)

Parties

Cases Cited (10)