Safework NSW v Proflow Plumbing and Maintenance Pty Limited

District Court of NSW|2019-10-17

Solicitors: SafeWork NSW (Prosecutor) MCK Lawyers (Defendant) File Number(s): 2018/372525

Judgment

Proflow Plumbing and Maintenance Pty Limited (the offender) has pleaded guilty to an offence that as a person who had a work health and safety duty pursuant to s 19(2) of the Work Health and Safety Act 2011 (NSW) (the Act) it failed to comply with that duty and thereby exposed Leslie James Sloan to a risk of death or serious injury contrary to s 32 of the Act.
The maximum penalty for the offence is a fine of $1,500,000.

Systems of Work Prior to the Incident

At the end of the first day of work, the excavator had been parked over the trench, effectively blocking off access to any person. On the afternoon before Mr Sloan fell into the trench, Proflow had left the trench uncovered and no barricade was erected.
The Proflow work vehicle had materials in it, such as star pickets and barrier mesh. These materials could have been used to cordon off the area surrounding the trench. Other material such as form ply or structural ply could have been used to cover the trench. Plywood costs less than $80 per sheet and could have been cut to cover the trench. Other material which could have been used to barricade the trench was readily available.
Proflow did not adequately instruct and supervise its employees in relation to ensuring that workers did not leave the site unless and until the trench was fenced, barricaded or covered and safety signs were erected to prevent persons accessing the trench work site.

Legal Obligations, Codes of Practice and Guidance Material

The work undertaken by Proflow was "excavation work" as defined in the Work Health and Safety Regulation 2011 (NSW) (the Regulation). Clause 305(1) required Proflow to manage risks to health and safety associated with excavation work in accordance with Part 3.1 of the Regulation. Clause 305(2)(a) directed attention to the risks associated with "a person falling into an excavation".
At the time of the Incident, Proflow had an obligation under Part 3.1 of the Regulation. Clause 34 required that a duty holder must, in managing risks to health and safety, identify reasonably foreseeable hazards that could give rise to risks to health and safety.
Clause 35 of the Regulation required that a duty holder must, in managing risks to health and safety, eliminate risks to health and safety so far as was reasonably practicable, and if it was not reasonably practicable to eliminate risks to health and safety, minimise those risks so far as was reasonably practicable.
Guidance materials and Regulation 79 providing advice regarding any work involving the risk of a fall into an excavation were readily accessible and available in the public domain. Such materials included: 1. The Excavation Work Code of Practice 2015, approved under s 274 of the Act, which applied to all excavations including trenches. It provided practical guidance to Proflow on how to manage health and safety risks associated with excavation work. The risk of a person falling into an excavation or being trapped by a collapse are risks which a PCBU must manage. 2. Clause 79(3) of the Regulation which said that a person provides adequate protection against the risk of a fall if the person provides and maintains a safe system of work, including by providing a fall prevention device if it is reasonably practicable to do so.

Systems of Work Following the Incident

Following the incident Proflow purchased 1.8-metre-high temporary fencing and safety signs to erect at work sites to prevent persons entering their work sites.
In answer to a Notice issued to Proflow under s 155 of the Act, Proflow created a "Risk Assessment" for the site which recorded that all areas of the job site were to be barricaded.
Proflow also developed and implemented new Safe Work Method Statements (SWMSs) to include site security and fencing around trenches and excavations.
Proflow workers have been trained in the new SWMSs and weekly toolbox meetings have been implemented. Written risk assessments are now carried out at all sites.

The offender's evidence

Mr Toufic (Terry) El-Esh swore an affidavit on 15 October 2019 (DX 1). He is the sole director and shareholder of the offender. He is 26 years of age.
He started the company in 2014 with financial assistance from his mother, and has continued to obtain loans from family members.
The offender has a turnover of between $550,000 and $1,000,000 per annum. Annexed to the affidavit was a copy of the income tax return for the 2014/2015 year of trading. The affidavit also annexed the profit and loss statement and balance sheet for 30 June 2019 and a printout of the company bank account. The Profit and Loss Statement showed an income of $990,880.11. Cost of sales was $407,275.91 leaving a gross profit of $483,604.20. Total expenses were $690,241.51, leaving an operating loss of $106,644.31. How this loss was funded was not the subject of any evidence. The largest expense of the company was $234,125.51 for advertising.
If the true picture of the offender's finances is contained in the Profit and Loss Statement, then Proflow has no capacity to pay any fine, and indeed should not even be in business as it is making an operating loss. However, no evidence was presented about the capacity of the offender to borrow money or raise funds from other sources if it is required to pay a substantial fine. Solvency depends not only upon cash flow, but also upon such additional matters - Sandell v Porter [1966] HCA 28; (1966) 115 CLR 666.
The offender also tendered the Balance Sheet for June 2019 (DX2). This showed that the company owned fixed assets of over $300,000, but had long term liabilities of about the same amount. How those liabilities were secured was not revealed in the evidence.
There was no evidence concerning the trading of the offender after 30 June 2019, and in particular there was no evidence as to whether the considerable investment in advertising had resulted in an increase in work and income. The final paragraph of the affidavit of Mr El-Esh contained the suggestion that he thought there were matters which could improve the offender's financial position. One of them was the conclusion of this prosecution.
The offender currently employs five staff including Mr El-Esh. Three are plumbers and two are apprentices. Most of the work of the offender is small plumbing and maintenance work.
In his affidavit Mr El-Esh said that to do the work at the Sloan property a trench which was deeper than usual had to be dug, as the sewer pipe was deeper in the ground than normal. Mr El-Esh went to the site on the day before the accident and observed that the excavator was sitting over the trench which had been dug. The trench at this time was shallow and the excavator completely covered it.
Mr El-Esh and his staff co-operated with the police and SafeWork investigations. He said that he was deeply saddened by the incident. He contacted Gary and John Sloan, offered his condolences, sent flowers to the family and offered to attend the funeral. The affidavit annexed a copy of his condolence letter to the family. The letter made an offer of continuing help for the family, if that were requested.
The affidavit said that before this accident the safety procedures of the offender were informal and relied on assessments and decisions made by Mr Baghdadi and Mr El-Esh himself. The system is now much more collaborative and documented. The offender has introduced written site-specific Risk Assessments, a Safe Work Method Statement and checks to ensure that all vehicles are equipped with barricades and safety equipment. Since the accident the offender uses two metre high temporary steel fences and covers all trenches which have been dug with a board. The offender also uses warning signs. Photographs of protected excavations were annexed to the affidavit.

Consideration

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

Objective seriousness of the offence

The proportionality principle requires that a sentence should neither exceed nor be less than the gravity of the crime having regard to the objective circumstances: Veen v The Queen (No. 2) [1988] HCA 14; (1988) 164 CLR 465 at 472, 485-6, 490-1 and 496. At common law, the term "objective circumstances" was used to describe the circumstances of the crime. The gravity of the offence was assessed by reference to its objective seriousness: R v McNaughton [2006] NSWCCA 242; (2006) 66 NSWLR 566 at [15].
The task requires the court to consider where in the range of conduct covered by the offence the conduct of the offender falls: Baumer v R [1988] HCA 67; (1988) 166 CLR 51 at 57. This assessment will generally indicate the appropriate range of sentences available which will reflect the objective seriousness of the offence committed, and set the limits within which a sentence proportional to the criminality of the offender will lie: BW v R [2011] NSWCCA 176 at [70].
The sentencing judge should take into account not only the conduct which actually constitutes the crime, but also such of the surrounding circumstances as are directly related to that crime and are properly regarded as circumstances of aggravation or mitigation: R v Wilkinson (No. 5) [2009] NSWSC 432 at [61].
The existence of a reasonably foreseeable risk to safety that is likely to result in serious injury or death is a factor relative to the gravity of the offence: Capral Aluminium Limited v WorkCover Authority of New South Wales [2000] NSWIRComm 71; (2000) 49 NSWLR 610 at [82]. The question of foreseeability of the risk is to be determined objectively.
The court must identify all the factors that are relevant to the sentence, discuss their significance and then make a value judgment as to what is the appropriate sentence given all the factors of the case: Muldrock 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 Court of Criminal Appeal has recently examined the sentencing process with regard to the Act in the matter of Nash v Silver City Drilling (NSW) Pty Limited; Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96. His Honour Justice Basten at para 34, under the heading "Assessment of Risk" said: "The sentencing judge commenced his consideration with the proposition that 'greater culpability attaches to the failure to guard against an event the occurrence of which is probable rather than an event the occurrence of which is extremely unlikely'. However the truth of that proposition depends upon other considerations including (a) the potential consequences of the risk, which may be mild or catastrophic, (b) the availability of steps to lessen, minimise or remove the risk, and (c) whether such steps are complex and burdensome or only mildly inconvenient. Relative culpability depends on assessment of all those factors."
Further at para 42 his Honour continued: "The culpability of the Respondent is not necessarily to be determined by the remoteness of the risk occurring, nor by a step‑by‑step assessment of the various elements. Culpability will turn upon an overall evaluation of various factors, which may pull in different directions. Culpability in this case is reasonably high because, even if the 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, which were not even assessed, were straightforward and involved only minor inconvenience and little, if any, costs."
At para 53 his Honour dealt with the proper approach to considering the objective seriousness of offences under the Act, saying: "It is important to note that the risk to be assessed is not the risk of the consequence, to the extent that a worker is in fact injured, but is the risk arising from the failure to take reasonably practicable steps to avoid the injury occurring. To discount the seriousness of the risk by reference to the unlikelihood of injury resulting is apt to lead to error. The conduct in question is the failure to respond to a risk of injury, conduct which will be more serious, the more serious the potential injuries, whether or not they are likely to materialize. The objective seriousness of the conduct will also be affected by the ease with which mitigating steps could have been taken."
My findings about the offender's level of culpability are based upon the following: 1. The risk of a person falling into an excavated trench was readily foreseeable and attention was drawn to such risk in the guidance material. As counsel for the offender submitted, the risk was known to the offender as the excavator was parked over the open trench on an earlier day at the residence. It is a risk which would have been recognised by a first year apprentice. 2. The likelihood of the risk occurring, when the offender was carrying out work at the residence of a 90 year old man who lived alone, was significant. Mr Sloan only had to step out his back door onto the undercover concreted area to be close to the unguarded trench. 3. The potential consequences of the risk were catastrophic, and included death, as happened in this case. 4. There were available steps to eliminate or minimise the risk. This is demonstrated by the simple measures now taken by the offender, including boarding up excavations, erecting temporary fences and placement of warning signs. 5. The burden or inconvenience of steps to eliminate or minimise the risk was minimal. Materials could be purchased easily and relatively cheaply. The offender did so after the event. The offender had some basic materials in its truck, but even these were not used. 6. The offender had no documented safety system. There was no evidence of any training given to its employees. 7. The death of Mr Sloan resulted from the conduct of the offender. 8. The maximum penalty for the offence is a fine of $1,500,000, which reflects the legislature's view of the seriousness of the offence.
I find that the offender's level of culpability is in the mid range. I reject the submission of counsel for the offender that it is in the high end of the low range. The offender knew of the obvious risk and did nothing to eliminate or minimise the risk.

Deterrence

The penalty imposed in relation to this offence must provide for general deterrence. Corporations 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 Limited v Nash [2016] NSWCCA 37; (2016) 93 NSWLR 338 at [180].
The penalty must reflect the need for specific deterrence. The offender is still conducting a business. Its operations continue to include excavation of trenches. I reject the submission of counsel for the offender that because the offender has improved its safety practices, there is no need to consider specific deterrence.

Aggravating factors

The injury, emotional harm, loss or damage caused by the offence was substantial: s 21A(2)(g) Crimes (Sentencing Procedure) Act 1999.
The offence was committed in the victim's home: s 21A(2)(eb) of the Crimes (Sentencing Procedure) Act 1999, as explained in Jonson v R [2016] NSWCCA 286.
The victim was vulnerable because he was almost 91 years of age, lived alone and had limited mobility: s 21A(2)(l) Crimes (Sentencing Procedure) Act 1999, as explained in Katsis v R [2018] NSWCCA 9.

Mitigating factors

The offender has no record of previous convictions: s 21A(3)(e) Crimes (Sentencing Procedure) Act 1999.
The offender is otherwise of good character: s 21A(3)(f) Crimes (Sentencing Procedure) Act 1999. The steps which the offender took after the incident demonstrate this. The offender has been in business for 5 years.
The offender is unlikely to re-offend: s 21A(3)(g) Crimes (Sentencing Procedure) Act 1999.
The offender has good prospects of rehabilitation: s 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offender has taken positive steps to guard against the risk of an incident such as this ever happening again. The offender has brought its documentation and its safety procedures into line with those which, on all the evidence, should have been in place before this accident occurred.
The offender entered a plea of guilty: s 21A(3)(k) Crimes (Sentencing Procedure) Act 1999. The court must take into account the fact that the offender has pleaded guilty, when the offender pleaded guilty, and the circumstances in which the offender indicated an intention to plead guilty: s 22(1) Crimes (Sentencing Procedure) Act 1999. It is appropriate to give the offender a 25% discount for an early plea as it pleaded guilty upon the prosecutor and the offender reaching agreement concerning the wording of the Amended Summons and the Agreed Statement of Facts.
The offender gave assistance to law enforcement authorities: s 21A(3)(m) Crimes (Sentencing Procedure) Act 1999. The offender co-operated at all times with the prosecutor and provided all documents requested in a prompt fashion.
I reject the submission by counsel for the offender that the offender has shown remorse for the offence within the meaning of s 21A(3)(i) of the Crimes (Sentencing Procedure) Act 1999. This requires the court to take into account, as a mitigating factor in determining the appropriate sentence: "(i) the remorse shown by the offender for the offence, but only if: (i) the offender has provided evidence that he or she has accepted responsibility for his or her actions, and (ii) the offender has acknowledged any injury, loss or damage caused by his or her actions or made reparation for such injury, loss or damage (or both)."
In his affidavit Mr El-Esh said that he was "deeply saddened by the incident". However, his evidence did not establish the two matters required under s 21A(3)(i).

Capacity to pay a fine

I am required to have regard to s 6 of the Fines Act 1996 (NSW) before imposing a fine. Where an offender seeks to have a fine reduced on the basis of a limited capacity to pay, it bears the evidentiary onus of convincing the court that it should exercise its discretion to limit the amount of the fine. The offender's capacity to pay is relevant but not decisive: Mahdi Jahandideh v The Queen [2014] NSWCCA 178 at [16]. A substantial fine may still be warranted as a result of the seriousness of the offence and the need for general deterrence.
In Unity Pty Limited v SafeWork NSW [2018] NSWCCA 266 the Court of Criminal Appeal said: "First, and more generally, questions of specific deterrence should take into account the size and scope of the operations of the defendant; a fine which may be crippling to a small business may have virtually no impact on the financial operations of a large corporation. The maximum penalty for the offence is undoubtedly set having regard to such a factor. Secondly, the Court is required to have regard to 'the means' of the defendant, pursuant to s 6 of the Fines Act 1996."
Earlier in this judgment I have recorded the limited evidence put before the court about the offender's means. To say the least, it gives an incomplete picture of the capacity of the offender to pay. Since the offender bears the onus of convincing the court that it should exercise its discretion to limit the amount of the fine, I find that it has not discharged that onus. As has been pointed out in earlier judgments, it is not enough to selectively put some financial documents before the court and ask the court to fill in the gaps and draw a conclusion about the financial capacity of an offender. The onus is on the offender to provide that material and demonstrate why there is a limited capacity to pay. The offender in this case has not done so.
However, having regard to the extract from Unity set out above I will take into account that the offender is a small company, and accordingly moderate the fine which I would have otherwise imposed.

Victim Impact Statements

The offender was convicted at the sentence hearing on 17 October 2019.
Counsel for the defendant referred the court to ss 30B - 30E of the Crimes (Sentencing Procedure) Act 1999 which deal with Victim Impact Statements. However those provisions only apply to proceedings commenced after 27 May 2019, being the commencement date of the Crimes Legislation Amendment (Victims) Act 2018 (NSW) - Clause 92 of Schedule 2 of the Crimes (Sentencing Procedure) Act 1999. These proceedings were commenced before that date, so the appropriate provisions concerning Victim Impact Statements are found in s 28 of the Crimes (Sentencing Procedure) Act 1999, in its pre-amendment form.
The provisions apply to an offence being dealt with by the District Court where the offence results in the death of, or actual physical bodily harm to, any person - s 27(2)(a).
A court to which a Victim Impact Statement has been tendered may receive and consider the statement at any time after it convicts, but before it sentences the offender - s 28(1). In the present case the offender was convicted by formal order on 17 October 2019, and immediately after conviction the five written Victim Impact Statements were received. The four sons of the deceased read out their Victim Impact Statements and their Statements were tendered. A fifth statement, from the daughter of the deceased, was tendered although not read out in court.
By s 28(3) where the primary victim has died as a direct result of the offence, a family victim in relation to an offence may give a Victim Impact Statement. The court must receive such a statement and may make any comment on it that the court thinks appropriate. Members of a primary victim's immediate family include children and grandchildren of the deceased - s 26.
A Victim Impact Statement of a family victim may be considered and taken into account by the court in connection with the determination of punishment for the offence, on the basis that the harmful impact of a primary victim's death on family victims is an aspect of harm done to the community - s 28(4) and s 3A(g).
The death of Mr Sloan occurred on his 91st birthday. The family was at the time travelling to his house to help him celebrate this milestone. Mr John Sloan was the first to the house. He discovered his father wedged in the trench. His father was still alive. John Sloan could not reach or help his father and called for emergency services. Judith Rudgley, the daughter of the deceased, arrived at the home and also saw her father lying in the trench. All of the family victims who gave Victim Impact Statements are haunted by the fact that their father, a proud, active and loving family man, died an agonising and degrading death over several hours, a death which was completely preventable.
There was some material in the Victim Impact Statements which made allegations about the business practices of the defendant and the credibility of Mr El-Esh. I have not taken those allegations into account on sentencing, as they do not relate to the harmful effect of the death of Mr Sloan upon family members. The harmful impact on all of Mr Sloan's children, and his wider family, is an aspect of harm done to the community generally, which I do take into account under s 28(4) of the Crimes (Sentencing Procedure) Act 1999.
Mr Sloan's children have honoured his memory by giving and reading their Victim Impact Statements. Ten members of Mr Sloan's family attended the sentencing hearing. It would be understandable if the family thinks that whatever punishment is imposed is inadequate. I want the family to understand that in determining a sentence, I am bound by legislation, the decisions of higher courts and the principles of sentencing set out earlier in this judgment.

Costs

The parties have agreed to an order that the offender is to pay the prosecutor's costs agreed in the amount of $26,400.

Penalty

My orders are: 1. The offender was convicted on 17 October 2019. 2. The appropriate fine is $400,000 but that will be reduced by 25% to reflect the plea of guilty. 3. Order the offender to pay a fine of $300,000. 4. Order pursuant to Section 122(2) of the Fines Act 1996 that 50% of the fine is to be paid to the prosecutor. 5. Order the offender to pay the prosecutor's costs agreed in the amount of $26,400.

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 October 2019

Crimes Legislation Amendment (Victims) Act 2018(NSW)

Work Health and Safety Regulation 2011(NSW)

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