SafeWork NSW v Williams Timber Pty Ltd; SafeWork NSW v Easy Fall Guttering Pty Ltd

Court of Criminal Appeal (NSW)|2021-09-06|Before: Beech-Jones CJ, Hulme J, Wilson J, Mr P, Jones CJ

Proceedings 2019/00230379; 2019/00230426; 2019/00230453 5 March 2021 Before: Strathdee DCJ File Number(s): 2019/320299; 2019/230379; 2019/230426; 2019/230453

Judgment

BEECH-JONES CJ AT CL: I agree with Wilson J.
R A HULME J: I agree with Wilson J.
WILSON J: This judgment concerns two appeals brought by the appellant, SafeWork New South Wales ("SafeWork"), pursuant to s 5AA(1)(b) of the Criminal Appeal Act 1912 (NSW). In each instance the respondent to the appeal is a company that was prosecuted in the District Court by SafeWork for an offence under the Work Health and Safety Act 2011 (NSW). The order against which SafeWork appeals in each case was an order of the District Court declining to award costs in favour of the prosecutor.

The Background to the Appeals

Each of the respondent companies were separately charged by SafeWork with a charge or charges relating to a failure to comply with a health and safety duty under the Work Health and Safety Act such that an individual was exposed to a risk of death or serious injury. In each case the relevant failure led to an employee or contractor working for the particular respondent to suffer a serious workplace injury.
On 13 October 2019 an employee of Williams Timber Pty Ltd ("Williams Timber"), the respondent to the first appeal, had part of a hand severed when working with a "running blade" used to mill timber. Williams Timber was later charged with an offence contrary to s 32 of the Work Health and Safety Act of exposing an individual to a risk of death or serious injury.
On 16 May 2017 a contractor working for Easy Fall Guttering Pty Limited ("Easy Fall"), the respondent to the second appeal, suffered serious spinal injuries after falling from a roof onto a concrete surface below when attempting to install guttering. Easy Fall was later charged with an offence contrary to s 32, together with two other related Work Health and Safety Act offences.
On 18 December 2020, following a plea of guilty, Williams Timber was sentenced in the District Court by her Honour Judge Strathdee for the s 32 offence. The prosecutor in those proceedings, SafeWork, sought an order for Williams Timber to pay its costs, but no costs order was made.
On 5 March 2021 the same judge imposed sentence upon Easy Fall for the three offences to which it had pleaded guilty. SafeWork, as prosecutor, asked her Honour to make an order for the payment by Easy Fall of its costs, but no order was made.
It is the failure in each instance to make a costs order in favour of the prosecutor, that is the subject of these two appeals, heard jointly since the issue is the same.

The Appeal Concerning Williams Timber

In the course of the District Court prosecution the prosecutor sought an order for Williams Timber to pay its costs as agreed or assessed. That order was specifically requested in written submissions filed by SafeWork in the District Court, wherein the sentencing court was asked, in addition to the order imposing penalty upon Williams Timber, to make the following orders: "(a) the defendant to pay the Prosecutor's costs as agreed or assessed; and (b) the Prosecutor receive a moiety of the sentence."
In oral submissions made by Counsel for SafeWork during the proceedings on sentence before her Honour on 9 December 2020, the application for a costs order in favour of the prosecutor was repeated: "I don't believe costs have been agreed, which is the usual thing that I normally forget. They have been agreed. I'm wrong again, your Honour. HER HONOUR: What's the figure? They are $22,000, so that order should be made. Unless there's something else I can assist your Honour with."
Counsel for Williams Timber did not demur from that statement, despite being called upon by her Honour immediately after it was made. The focus of submissions for Williams Timber was on matters in mitigation of penalty, including its capacity to pay a fine; no submission was made as to any order different to that sought by SafeWork relating to payment of the prosecutor's costs.
Sentence was imposed on Williams Timber on 18 December 2020: SafeWork NSW v Williams Timber Pty Ltd [2020] NSWDC 777. In her judgment, Strathdee DCJ set out the circumstances and gravity of the offence and detailed the subjective case advanced by Williams Timber. On the question of costs, her Honour said this, at [103] - [106]: "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 defendants, particularly in circumstances where there is evidence of a limited capacity to pay a fine. The costs payable to the prosecutor are an important aspect of the punishment of the defendants. 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: Environmental Protection Authority v Barnes [2006] NSWCCA 246 at [78]. In Mr Williams' affidavits (Exhibits 1 and 2), he has identified that there is an issue with resources and the current future of the company is uncertain. There are two aspects to this, both related to resources available to the defendant. The first is related to the bushfires and the likelihood that suppliers may not be able to meet their contracts. The second aspect is that a Bill which has been before Parliament which could mean that the properties that the defendant had previously purchased to future proof the business may not be available to be used as a resource. I accept that the defendant's future is uncertain, and I will allow some leniency in those circumstances. As I have accepted that the defendant may have some difficulty paying the fine, I am of the view that to waive the payment of the prosecution's costs forms a balance between the need for general deterrence, specific deterrence and the defendant's somewhat limited capacity to pay."
The sentencing judge concluded, at [108]: "On the basis that the defendant may have some difficulty in paying a fine imposed, I make no order as to costs."
The following orders were made: "(1) The defendant is convicted. (2) The appropriate fine for the defendant is $200,000.00 and that will be reduced by 25% to reflect a plea of guilty. (3) Accordingly, I order the defendant pay a fine of $150,000.00. (4) Pursuant to s 122(2) of the Fines Act 1996 (NSW), 50% of the fine imposed is to be paid to the prosecutor. (5) I make no order as to costs."
SafeWork complains that Strathdee DCJ was in error in failing to make an order for costs. The appellant advances the following ground of appeal: "The Trial Judge erred in dismissing the Prosecutor's application for costs, made pursuant to section 275B of the Criminal Procedure Act 1986, in light of one or more of the following: (a) The Trial Judge erred in finding that payment of the Prosecutor's costs is awarded by way of punishment of the Defendant, as opposed to compensation to the Prosecutor. At paragraph 103 of the judgment, the Trial Judge states: "…The costs payable to the Prosecutor are an important aspect of the punishment of the Defendant…". (b) The Trial Judge erred by not granting procedural fairness to the parties (in particular, the Prosecutor), by not informing the parties that she was contemplating making 'no order as to costs', and allowing the parties an opportunity to address, or put further submissions to, the Court regarding whether costs should be awarded to the Prosecutor. (c) The Trial Judge erred in finding that the Defendant had a limited capacity to pay a fine and/or costs, in circumstances where: (i) The Defendant did not make an application under section 6 of the Fines Act 1996, as acknowledged by the Trial Judge at paragraph 101 of the judgment; and (ii) There was insufficient, if any, evidence of the Defendant's financial situation and capacity in terms of assets, savings, or capacity to borrow money to pay a fine and/or costs. (d) The Trial Judge erred in not placing adequate weight on the agreement between the Prosecutor and Defendant, for the Defendant to pay the Prosecutor's costs in the amount of $22,000.00; and in circumstances where the Defendant, at no stage during the hearing, submitted that it should not pay the Prosecutor's costs."

The Appeal Concerning Easy Fall Guttering

During the hearing of the sentence proceedings against Easy Fall, SafeWork sought an order for a moiety of the fine imposed by way of sentence, and an order for payment of its costs. In its written submissions it noted that: "The Prosecutor seeks a moiety of any fines imposed pursuant to s 122 of the Fines Act 1996 (NSW). The Prosecutor seeks an order pursuant to s 257B of the Criminal Procedure Act 1986 that Easy Fall pay its costs and disbursements, in the agreed amount of $42,000".
That application was repeated in oral submissions before her Honour on 17 February 2021, when SafeWork submitted: "In terms of costs and moiety your Honour, I just need to check that there is--- HER HONOUR: 42,000 Yes, your Honour. The question of costs being taken into account in terms of the sentencing, we accept that the authorities as they presently stand say, where your Honour finds that there is an incapacity or some limited capacity to pay and utilise s 6 of the Fines Act then your Honour can look at-- HER HONOUR: Waive the costs? --the costs in terms of the overall and that may lead to the amelioration of the penalty to these extent that costs are going to be paid but, again, your Honour, that's obviously a difficult balancing exercise and we accept that."
Easy Fall took no issue with the prosecutor's application for costs. In written submissions, Easy Fall said: "The defendant concedes that the prosecutor is entitled to seek an order that the defendant pay the prosecutor's costs as agreed in the amount of $42,000. Nevertheless, in circumstances where (as here) capacity to pay is in issue, it is permissible for the court to have regard to the liability of the defendant to pay the prosecutor's costs when determining an appropriate level of penalty. Alternatively, the court should reduce the amount payable by way of costs." [Citations omitted].
Nothing further was said by Easy Fall on the subject of costs in oral submissions.
Judgment in the matter was handed down on 5 March 2021 and sentence imposed: SafeWork NSW v Easy Fall Guttering Pty Limited [2021] NSWDC 44. As might be expected, her Honour's reasons principally dealt with the circumstances of the offences, the gravity of the respondent's omissions, and the subjective case advanced on sentence by Easy Fall. Her Honour's conclusions as they relate to any costs order can be found at [119], [122] - [123], and [127] - [128] of the judgment, under a heading "Capacity to Pay", where she observed: "The defendant has raised the issue of their ability to pay any fine due to the financial circumstances of the defendant, and therefore makes an application under the s 6 of the Fines Act 1996 (NSW). The defendant through its learned Senior Counsel seeks a reduction of the fine to be imposed on the basis of its limited ability to pay, but accepts that it bears the evidentiary onus in establishing that I should exercise this discretion in its favour. […] It is for the defendant to place detailed financial information that fully discloses the company's financial circumstances to the Court so as a proper assessment of its capacity to pay can be examined. However, notwithstanding the capacity of a defendant to pay a fine, the penalty to be imposed must be reflective of the objective seriousness of the offence. Mr Axford, in his affidavits raises matters that he asks the court to consider as to the penalty, and the effect that it may have on himself, the defendant and his family. […] I accept that payment of a fine might be difficult for the defendant, and have been mindful of that in coming to my determination. However, the objective seriousness of the offences are such that it must be reflected in the penalty, and significant fines must be imposed to send a message to employers that they must take their obligations to protect their workers from a risk of injury very seriously. To reduce the fine significantly because the defendant will have difficulty paying it, would not provide the appropriate level of specific and general deterrence that is expected given the circumstances of this offending. Having taken into account the submissions with regard to difficulties that may be posed by the payment of a significant fine, and on that basis, I will not order the defendant to pay the prosecutor's costs".
The sentencing judge made orders as follows: "(1) The defendant is convicted. (2) The appropriate fine for the s 19 offence is $300,000.00 and that will be reduced by 25% to reflect the early plea. (3) Accordingly, I order the defendant pay a fine of $225,000.00. (4) The appropriate fine for the s 38 offence is $40,000.00 and that will be reduced by 25% to reflect a plea of guilty. (5) Accordingly, I order the defendant to pay a fine of $30,000.00. (6) The appropriate fine for the s 46 offence is $40,000.00 and that will be reduced by 25% to reflect a plea of guilty. (7) Accordingly, I order the defendant pay a fine of $30,000.00. (8) Pursuant to s 122(2) of the Fines Act 1996 (NSW), 50% of the fines imposed are to be paid to the prosecutor. (9) I make no order as to costs".
By its appeal, SafeWork raises the following ground: "The Trial Judge erred in dismissing the Prosecutor's application for costs, made pursuant to section 275B of the Criminal Procedure Act 1986, in light of one or more of the following: (a) The Trial Judge erred by not granting procedural fairness to the parties (in particular, the Prosecutor), by not adequately informing the parties that she was contemplating making 'no order as to costs', and inviting the parties to address, or put further submissions to, the Court regarding whether costs should be awarded to the Prosecutor. (b) The Trial Judge erred in reasoning that payment of the Prosecutor's costs is an aspect of punishment on the Defendant, as opposed to compensation to the Prosecutor. (c) The Trial Judge erred by taking into account the penalty to be imposed, in her determination of what costs order to make - stating in her judgment: [127] …To reduce the fine significantly because the defendant will have difficulty paying it, would not provide the appropriate level of specific and general deterrence that is expected given the circumstances of this offending. [128] Having taken into account the submissions with regard to difficulties that may be posed by the payment of a significant fine, and on that basis, I will not order the defendant to pay the prosecutor's costs. (d) The Trial Judge erred in not placing adequate weight on the agreement between the Prosecutor and Defendant, for the Defendant to pay the Prosecutor's costs in the agreed amount of $42,000.00 - in circumstances where: (i) The Defendant, at no stage during the hearing, submitted that it should not pay the Prosecutor's costs at all; and (ii) The Defendant made the following written submission: [75] The defendant concedes that the prosecutor is entitled to seek an order that the defendant pay the prosecutor's costs as agreed in the amount of $42,000. [76]. Nevertheless, in circumstances where (as here) capacity to pay is in issue, it is permissible for the court to have regard to the liability of the defendant to pay the prosecutor's costs when determining an appropriate level of penalty. Alternatively, the court should reduce the amount payable by way of costs."

Determination

Although the grounds of appeal filed by SafeWork in each appeal are perhaps rather prolix, at the heart of the complaint is the contention that the sentencing judge denied the prosecutor procedural fairness on the question of any costs order in each case, and misapprehended the function and purpose of such an order by treating it as part of the punishment imposed upon the convicted defendant.
At the outset, SafeWork's overarching complaint must, in each instance, be accepted. In failing to make a costs order against the defendant company the sentencing judge both denied the prosecutor procedural fairness and treated the payment of costs as part of the punishment for the offence or offences, rather than as compensation for legal expenses. To that extent there was clear error; it is not necessary to go beyond those aspects of the ground of appeal filed in each case by SafeWork.
The respondent companies were, in each case, represented by a Director of the company at the hearing of the matters before this Court. In the absence of legal representation, the submissions of each focused, as can readily be understood, on the capacity of the respective company to pay any further monies following the appeal proceedings. That is a feature of the matter to which I shall return.

Denial of Procedural Fairness

It is axiomatic that litigants before a court are entitled to procedural fairness; what that entitlement may mean will differ from case to case depending upon the particular circumstances. As a general statement the requirement to afford procedural fairness dictates that a court give a party to litigation before it an opportunity to be heard before an order adverse to the party's interests is made. The question will always be what is necessary to ensure that proceedings are fairly conducted. In Re Minister for Immigration & Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6, Gleeson CJ observed of the requirement for fairness, at [37]: "Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice."
In the proceedings against Williams Timber, SafeWork sought a costs order in the specific amount of $22,000 and Williams Timber, by its silence on the subject, accepted that a costs order in the particularised sum was appropriate. No question about that course was raised by her Honour, and SafeWork was not put on notice that the sentencing court might depart from the agreed position of the parties. In those circumstances it was reasonable for SafeWork (and the respondent) to conclude that a costs order would be made in the terms sought.
In thereafter declining to make the anticipated order in those circumstances, SafeWork was denied procedural fairness, specifically, the opportunity to adduce evidence as to the nature and extent of its costs and to put submissions to the court in support of its application for an order in its favour. As Garling J noted (with the concurrence of Macfarlan JA and Johnson J) in Weir v R [2011] NSWCCA 123, at [66]: "The key to determining whether there has been a breach of the requirement of procedural fairness is to ascertain the consequence of any departure from the dictates of proper procedure because what is ultimately in issue is whether unfairness has resulted from the process. The concern of the law is to avoid practical, and not merely theoretical, injustice" [Citations omitted].
Similarly, in proceedings against Easy Fall, SafeWork was given the reasonable expectation that an order for costs would be made in its favour. It had sought the order; Easy Fall had conceded it was entitled to such an order [1] , and the sentencing judge had said nothing that might have raised as uncertain the question of whether an order would in fact be made. In circumstances where the sentencing judge may have been contemplating making no award of costs, fairness required that her Honour warn the parties that she might take that course, and invite them to tender any evidence relevant to the question, and make any submissions in support of or against such an order being made.
If one considers the consequences of the departure from proper procedure, it was that the parties and, in particular SafeWork, did not make submissions to the sentencing court on the question of a costs order, in the reasonable belief that an order would be made.
Had SafeWork been afforded the opportunity to make submissions, it may be that the second error complained of in these appeals would not have been made.

Costs as Punishment

In declining to make an order for costs in favour of SafeWork against each of the respondents the sentencing judge made the second of the two material errors complained of by the appellant, that is, her Honour proceeded on the basis that an order for costs was a species of criminal penalty.
The power to make an order for costs in matters such as those under consideration is derived from s 257B of the Criminal Procedure Act 1986 (NSW), which provides: 257B When costs may be awarded to prosecutor A court may, in and by a conviction or order, order an accused person to pay to the registrar of the court, for payment to the prosecutor, such costs as the court specifies or, if the conviction or order directs, as may be determined under section 257G, if: (a) the court convicts the accused person of an offence, or (b) the court makes an order under section 10 of the Crimes (Sentencing Procedure) Act 1999 in respect of an offence.
Both Williams Timber and Easy Fall were convicted of an offence and the power to order costs against each for payment to the prosecutor was enlivened. Although it no doubt feels like an additional punishment to the offender ordered to pay the prosecutor's costs, a costs order of that nature is not made to penalise the offender; it is made to compensate the prosecuting authority for its legal expenses.
In Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 the High Court considered the purpose of a costs order in a summary prosecution, although in the context of a refusal to make an order in favour of a defendant against whom criminal charges had been dismissed. Mason CJ observed, at 543: "If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings".
To similar effect, McHugh J said, at 567: "An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connexion with the litigation …. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. … Once it is perceived that costs operate as an indemnity …, no ground exists for distinguishing between informants in summary proceedings who are public officials and those who are private persons. […] Once a legislature abolishes the rule that the Crown and those who institute summary proceedings in the public interest neither pay nor receive costs, the various rationales of that rule cannot be used to justify the exercise of the discretion to refuse to order the payment of costs of a successful defendant in summary proceedings".
The principle was discussed and applied in Nash v Silver City Drilling (NSW) Pty Ltd; Attorney General for New South Wales v Silver City Drilling (NSW) Pty Ltd (2017) 93 NSWLR 338; [2017] NSWCCA 96 in relation to an appeal against a refusal to order costs in favour of the prosecutor in a Work Health and Safety Act prosecution.
Whilst ss 4 and 6 of the Fines Act 1996 (NSW) require a court in imposing a fine and in imposing costs to have regard to a defendant's means, that does not have the effect of converting costs to a species of punishment. Where capacity to pay is an issue, the correct approach is to reduce the fine to be paid by the offender, rather than to reduce the amount awarded as costs in favour of the prosecutor.
In the case of Williams Timber, the sentencing judge was conscious of the financial position of the company, which was likely to become parlous due to various external factors, such as the impact of the 2019 - 2020 bushfires. Describing a costs order as "an important aspect of the punishment of the defendants", she determined that the appropriate way to ameliorate the impact of penalty upon Williams Timber was by declining to order costs.
Similarly, when sentencing Easy Fall her Honour accepted that the company might have difficulty in paying a fine because of its straitened means, but was concerned that any reduction in the penalty to reflect the company's incapacity to pay would lead to a fine that was incapable of reflecting the seriousness of the offences. She thus determined to leave the penalty undisturbed, but made no costs order in favour of the prosecutor.
In the ordinary course, it is open to sentencing judges to act on the basis of an agreement between the prosecutor and the defendant concerning costs, and then consider what impact the award of costs may have on the means of a defendant to pay a fine under s 6 of the Fines Act. It is noted that a sentencing court is required to consider information regarding the means of a defendant when exercising the discretion to fix the amount of a fine; it is not necessary for a defendant to make an application to the court to consider means when assessing the amount of a monetary penalty.
In sentencing Williams Timber, and in sentencing Easy Fall, her Honour was in error in treating a costs order as a form of punishment, and using the refusal to make an order as a means of ameliorating penalty. Such amelioration as was held to be necessary after considering the means of each defendant should have been delivered by mitigation of the fine.

The Discretion Not to Intervene

Error having been established, consideration must be given as to whether this Court should intervene and order each respondent to pay the costs of the respective prosecution at first instance, or exercise the discretion to decline to intervene.
There are a number of pertinent considerations.
The first of those considerations is delay. In the case of Williams Timber sentence was imposed on 18 December 2020; SafeWork's appeal was not filed until 29 March 2021, about three and a half months later. In the case of Easy Fall, sentence was handed down on 5 March 2021; the appeal was filed on 27 July 2021.
Whilst not an extensive delay in either instance, neither appeal was filed promptly, a relevant feature to the exercise of the discretion.
The means of each respondent is another consideration.
Williams Timber sought to read the affidavit of a director, Andrew Williams, sworn on 23 August 2021, which dealt in part with the company's difficult financial position. Although SafeWork objected to Mr Williams' affidavit, I would admit it into evidence, at least insofar as it informs the Court of the means of Williams Timber, a matter relevant when determining the order the Court is to make. Section 5AA(4) of the Criminal Appeal Act gives the Court the power to make any order that could have been made at first instance, and a court considering the imposition of a costs order is required pursuant to s 6 of the Fines Act to consider a defendant's means.
On the basis of both the evidence that was before the sentencing court, and the contents of Mr Williams' affidavit, I am satisfied that Williams Timber would struggle to pay a costs order in the amount of $22,000, particularly in circumstances where the fine imposed upon it would not be reduced.
Easy Fall would also find it difficult to pay a costs order, in its case of $42,000. The company relied upon its financial difficulties before the sentencing court and those difficulties may be accepted. As with Williams Timber, the fine Easy Fall was ordered to pay remains unchanged.
That points to the final feature of relevance to the exercise of the discretion, a feature which is in my view determinative of the issue. No appeal was filed against the fines imposed upon each of the respondents at first instance; only the refusal to make a costs order is subject to challenge. Were this Court simply to order the respondents to pay SafeWork's costs, there would be no corresponding amelioration of the fines. Such an outcome would be productive of unfairness to each respondent in circumstances where it is clear that the sentencing judge sought to ameliorate the overall sum of monies payable by the defendants in recognition of their respective limited means.
As Williams Timber said in its submissions to this Court: "The Prosecutor appears to be running a technical argument about the costs. They are saying the costs are not part of the fine and they should be considered differently and therefore they should be entitled to their costs. If they are correct, then it seems as though the Judge got it wrong. However, it also appears that what the Judge was trying to do and what the Prosecutor suggests she could have done end up being the same thing. The company pays an amount of $150,000. It is either made up of $150,000 of fine and no costs or $128,000 of fine and $22,000 of costs. Either way it is the same amount - $150,000. What the Prosecutor appears to be seeking to do is undermine the intent of the Judge's decision by making the total cost to the company $172,000. If the Judge did get it wrong, then I would ask that the matter be corrected to reflect the appropriate breakdown and not penalise the company anymore."
There is considerable force in that submission.
For those reasons, I would exercise the Court's residual discretion not to intervene, despite the error at first instance.

Conclusion

The orders I propose are as follows: 1. In SafeWork v Williams Timber Pty Ltd: Appeal dismissed. 2. In SafeWork v Easy Fall Guttering Pty Ltd: Appeal dismissed.

Endnote

In this Court SafeWork sought to read an affidavit of Aiman El-Roubaei, affirmed on 1 September 2021, to prove Easy Fall's consent to a specific amount costs order. Easy Fall objected to the affidavit, since it raised matters not in evidence in the original proceedings. The affidavit should be rejected. It is not necessary to go beyond the record of the District Court proceedings to properly determine the appeal. 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: 01 October 2021

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