Salvatore Scevola v Inspector Robert Sealey

Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Workers Compensation Act 1987 Workplace Injury Management and Workers Compensation Act 1998

Canimo v Venning (1993) 113 FLR 327 at 330 Dinsdale v The Queen (2000) 202 CLR 321 at 325 Hansford v His Honour Judge Neesham [1995] 2 VR 233 at 237 Hunter Water Board v State Rail Authority of New South Wales (No 2) (1992) 75 LGREA 22 at 23 Inspector Maddaford v Graham Gerard Coleman and anor (2004) 131 IR 21 CASES CITED: Llandilo Staircases Pty Ltd v WorkCover Authority (Inspector Parsons) (2002) 104 IR 204 R v Doan (2000) 50 NSWLR 115) R v Doyle (1987) 30 ACrimR 1 Scevola v Inspector Sealey [2005] NSWIRComm 173 3 June 2005 Thornlowe v Filipokski (2001) 52 NSWLR 60 U-Rect-It Pty Ltd v WorkCover Authority of New South Wales (Inspector de Silva) [2004] NSWIRComm 266

HEARING DATES: 11/10/05; 5/12/05; 16/12/05

APPELLANT: Mr A S Howen of counsel SOLICITOR: Mr P Vouroudis LEGAL REPRESENTATIVES: Photios Vouroudis & Co

RESPONDENT: Ms P Lowsen of counsel SOLICITOR: WorkCover Authority of NSW

CORAM: Walton J, Vice-President Haylen J Staff J 27 March 2006

Matter No IRC 6431 of 2002 Salvatore Scevola v Inspector Robert Sealey [No 2] Application by Salvatore Scevola for leave to appeal and appeal against a decision of Industrial Magistrate Reece given on 18.10.2002 in Matter No CIM20156934/02/2

JUDGMENT OF THE VICE-PRESIDENT [2006] NSWIRComm 72

1 The present proceedings, which involve an application for leave to appeal and an appeal, challenge the severity of the sentence imposed by Industrial Magistrate Reece on 18 October 2002. The Industrial Magistrate convicted the appellant of an offence under s 155 (1) of the Workers Compensation Act 1987 and s 244 (1) of the Workplace Injury Management and Workers Compensation Act 1998. 2 I have had the opportunity of considering the draft judgments about to be delivered by Haylen J and Staff J. 3 I agree with the reasons for judgment of Staff J and the orders proposed by him, dismissing the appeal. 4 In my view, there should be no order as to costs of the appeal, given the concessions made by both the appellant and the respondent in answer to questions raised by the Full Bench after the close of submissions on the appeal (see paragraphs [21] and[22] of the judgment of Haylen J).

5 By information and summons issued on 18 August 1998, the appellant was charged with an offence under the Workplace Injury Management and Workers Compensation Act 1998 in that, contrary to s 244, being the director of a corporation that had contravened the provisions of s 155(1) of the Workers Compensation Act 1987, was taken to have contravened the same provision unless that person satisfied the Court as to one of three defences available under s 244 of the 1998 Act. 6 The particulars of the charge were that between 1 September 1998 and 30 June 2000, the company of which Mr Scevola was a director, Automotive Detailing Pty Ltd, had not taken out workers compensation insurance coverage for its employees as required by the provisions of s 155 of the Workers Compensation Act 1987. The company was convicted of an offence under s 155 of the 1987 Act in March 1999 for failing to insure for workers compensation liability between 8 November 1994 and 17 June 1998 and fined $1,000. Mr Scevola pleaded not guilty to the offence but was ultimately convicted by his Honour Industrial Magistrate Reece and fined the sum of $5,000 plus professional costs and court costs. Mr Scevola seeks leave to appeal, and if leave be granted, to appeal against that conviction and penalty although, as finally pressed on appeal, limits the appeal to a challenge to the severity of the fine and his Honour's refusal to deal with the matter under s 10 of the Crimes (Sentencing Procedure) Act 1999 ("the Sentencing Act"). 7 Before his Honour, the Industrial Magistrate, Mr Scevola, his mother and one of his brothers gave evidence by way of written statement together with oral evidence and were cross-examined on that material. The thrust of the case for Mr Scevola was that he was the youngest of a large family and after studying for the priesthood had eventually taken over the sole directorship of Automotive Detailing Pty Ltd with no real understanding of business practices and obligations. That company had effectively been established by his father and he had come to be the sole director at his father's direction and to hold the shares in the company so as not to affect the pension rights of his mother and father. His evidence, which was supported by both his mother and his brother, was that his father was a domineering man in the family who controlled the business and all other aspects of their lives and was a person who would not take advice, especially from his children, and would demand that they followed his direction: he was a person who instilled fear into his children. 8 In his evidence before the Local Court, the appellant, who represented himself, spoke of his late father as being "the most controlling factor in all the affairs of the business", frequently acting contrary to the appellant's advice. The appellant said that he felt unable to confront his father on business issues that needed serious attention, and he was never in a position to relinquish his duties and responsibilities in the company as it would have resulted in his ultimate exclusion from the family. He said he was frequently in deep conflict with his father in relation to the company's affairs, including taxation and government regulations. He had on more than one occasion indicated to his father that the company had to pay the workers compensation insurance premiums but his father dismissed that obligation as just another government tax and refused to pay the premiums. The appellant felt that he was unable to remedy this situation although he " ... knew that I would be the victim if one day anything ever did happen". The affairs of the company deteriorated and it was finally liquidated with debts in excess of $600,000 and the loss of the family home. It appears that after mid-2000 a new business entity was created with the appellant and his four brothers being directors of the company: since the opening of this business, the appellant asserted that workers compensation premiums had been maintained. 9 In cross-examination in the Local Court, the appellant accepted that he was aware from 1998, when interviewed by WorkCover Inspectors, of the company's obligation to pay workers compensation premiums. He accepted that during the period of the charge he was aware of the liability to pay the premiums. An issue arose as to whether or not the appellant's answers in a January 2002 interview with WorkCover Inspectors were truthful. In that interview the appellant had told the Inspectors that the company had workers compensation cover for as long as it had engaged employees: in cross-examination, he said that he misunderstood the question because in 1994 he had been spoken to by the Inspectors and had signed a number of documents leading him to believe that all the requirements of the business had been met. The appellant argued before the Local Court that because his father actually controlled the company and because of his overbearing nature, the appellant was in no position to influence the affairs of the company - this was submitted to be a defence recognised by the Act. His father's domineering nature was such that the appellant was prepared to disobey the law, at least to "a degree". He had spoken to his father on two or three occasions about the obligation to pay workers compensation premiums and he wanted to discharge his duties as a director. He had considered resigning as a director but believed that step would cause ramifications within the family and his mother had pleaded with him not to take that step. 10 It was drawn to the appellant's attention during cross-examination that in neither of the two interviews with WorkCover Inspectors had he raised the role of his father in the business and the personal relations between them as the reason for the workers compensation premiums remaining unpaid. In response, the appellant stated that he had not raised that matter during those two interviews because his father was still alive: he was not prepared (and neither was his mother) to stand up to his father as they would be physically abused. The appellant's father had died in March 2000 and the second interview with WorkCover Inspectors had occurred in February 2002 - the appellant had not mentioned in this interview, after his father's death, of the critical role played by his father in the operation of the company. 11 Although Mr Scevola was a director and ultimately the sole director of the company, he said that he did little more than perform day to day duties in the vehicle detailing business of the company. The business decisions were taken by his father, with the business administration and records dealt with by an external bookkeeper and other persons. His father would count the takings every day and would take whatever he wanted from the receipts and was thought to be a heavy gambler. The children were in fear of their father and were never prepared to persist in a view that was contrary to that expressed by him and were also fearful that if contrary actions were taken, it would lead to unbearable tensions within the family and possibly the splitting of family relations. This was said to be a fairly traditional role exercised by a father in a Calabrian family and their friends appeared to have similar family relationships. 12 Mr Scevola had been educated to a tertiary level while studying for the priesthood and was possibly better educated than any other member of his family. While he was not accustomed to business practices he knew that the workers compensation premiums were required to be paid and as director of the company wished to pay those premiums but did not do so because of his father's opposition and his unwillingness to create a serious upheaval within the family by defying his father's directions. His mother had pleaded with him not to resign as a director nor to challenge his father's views and as a result, over the period of the charge, the workers compensation premiums were not paid by the company. Mr Scevola conceded that when interviewed by WorkCover inspector about this matter he had not mentioned his father's domineering control of himself and family as well as the business but had simply relied upon his youth and lack of business experience as to why the premiums had not been paid. It was only after the sudden death of his father before the proceedings in the Local Court that allowed this evidence to be given and given in circumstances that would now not threaten family unity. 13 His Honour, Industrial Magistrate Reece, accepted the evidence of the defendant and his family as to the domineering role his father played in both the family and the family business but concluded that those circumstances did not provide a defence under s 244 of the 1998 Act. Mr Scevola was the sole director of the company and in holding that position he was best placed to ensure the company complied with the requirements of workers compensation legislation: indeed, he was aware of the obligation and wished to pay the relevant premiums. Although the defendant relied upon the overbearing control of his father and certain character references, including his own considerable community activity, his Honour was not prepared to give the defendant the benefit of the court's discretion under s 10 of the Sentencing Act, considering that as with related occupational health and safety legislation, this court's approach that the s 10 power would only be exercised in rare circumstances, was equally applicable in the present case. 14 His Honour, the Industrial Magistrate, commenced his decision by considering whether or not the appellant had made out a defence under s 244(1)(b) of the Workplace Injury Management and Workers Compensation Act 1998 in that he was not in a position to influence the conduct of the corporation in relation to the alleged contravention. His Honour referred to the evidence of the appellant and his family about the controlling and dominating nature of his father and how he strongly controlled the finances of the company: he accepted that evidence on the balance of probability. His Honour also accepted that, although not formally involved, the appellant's father kept a "keen interest" in the running of the business. His Honour then noted the two Records of Interview in 1998 and 2000 where the appellant did not mention this controlling influence of his father, and noted the appellant's explanation that his father was still alive at both times and he was fearful of making that disclosure. His Honour further noted that the appellant was asking the Court to accept that he had lied, covered up or given incorrect information in the two previous Records of Interview but was now, in these proceedings, telling the truth: his Honour formed the view that this proposition "obviously ... undermines his creditability in general and undermines the veracity of the evidence given before the Court in these proceedings". 15 His Honour then recorded the appellant's desire to keep the family together by not raising these issues and the fact that he was an educated and worldly person and one unlikely to be easily bullied or swayed. His Honour then said that, given the evidence, he was not persuaded "that in a factual circumstance, the defendant was prevented from ensuring that the company took out the appropriate workers compensation premium". While his Honour had accepted that the appellant's father was "forceful and domineering", he did not accepted that as being the reason for the non-payment of the premiums and again referred to the appellant's lack of credibility because of the inconsistencies in the present submission for the appellant and what was said in the two earlier records of interview. His Honour then stated that even if he had accepted the factual reasons submitted by the appellant for the non-payment of the premiums, he could not accept that the statutory defence had been made out. The appellant was in fact the person in the company who was signing documents and acting on its behalf and was clearly in a position to influence the conduct of the corporation. It was on those grounds that his Honour held that the statutory defence was rejected and the offence proved. 16 What next occurred was the subject of some scrutiny on appeal. His Honour, having rejected the defence relied upon by the appellant and having found the offence proved, immediately commenced the task of sentencing the appellant and early in the prosecutor's submission his Honour inquired what was the maximum penalty for a contravention of this particular provision, and again raised the same question a little while later during submissions, leading to the prosecutor seeking some instructions on that matter and other statutory provisions. Towards the end of the submissions on sentence, the prosecutor informed his Honour that the maximum penalty was $55,000 to which his Honour replied that figure was likely to be the jurisdictional limit as well as the statutory limit, a view confirmed by the prosecutor. His Honour thought that the maximum penalty was the same as applied in Occupational Health and Safety prosecutions although stating that he did not intend to impose the maximum penalty available. 17 In the course of dealing with the appellant's submissions, his Honour noted in exchanges with the appellant that he had mislead the Inspectors in two interviews and his Honour also confirmed that he had not accepted the appellant's explanations. His Honour received submissions from the appellant as to his personal financial circumstances and then proceeded to deliver ex tempore reasons for fixing the penalty. His Honour stated that he did not accept the explanation both factually and in a legal sense as put forward by the appellant but he took into account the fact that he had a clean record but balanced against that was the fact that, during the two Records of Interview, he was clearly aware that the premiums were payable and that counted against him in arriving at an appropriate penalty. His Honour took into account the appellant's good character and community activities which he accepted and also, to the extent that there was material before him, took into account his financial circumstances. It was noted that the new company was operating appropriately within the terms of the Act but that the previous company was operating for a very long period in an inappropriate fashion and, in particular, during the nearly two year period covered by the information in this case. It appeared to his Honour that the appellant may have personally learned a lesson as to his obligations and that while it was unlikely he would repeat this particular offence, there were nevertheless considerations of general deterrence. In announcing the orders of the Court, his Honour stated that he would enter a conviction " ... and impose, the maximum penalty being $55,000 ... a fine of $5,000 and make an order as to the Court costs, expenses and disbursements ... ". THE APPEAL 18 As earlier indicated, it was the eventual position of the appellant to challenge only the severity of the penalty and to seek to establish reasons why the Court would exercise its discretion under s 10 of the Sentencing Act. The respondent conceded in its written submissions that leave to appeal should be granted because his Honour had operated on the misunderstanding that the offence carried a maximum penalty of $55,000 when in fact the maximum penalty was $22,000. The respondent, however, opposed the tendering of fresh evidence on appeal and in particular medical evidence as to the psychological state of the appellant arising from his relationship with his father. If that evidence was received the respondent indicated that it would challenge that evidence by calling medical evidence of its own. These events led to a contest as to the nature of the appeal and in particular the appellant's assertion that the appeal was a hearing de novo with the ability to use the evidence before his Honour and any further evidence desired to be called on appeal. 19 These issues (as to the nature of the appeal as a de novo hearing and the application to call fresh evidence) were dealt with as preliminary issues by the Court as currently constituted and were the subject of a separate decision (see, Scevola v Inspector Sealey [2005] NSWIRComm 173, 3 June 2005).

In essence, the Full Bench decided that although leave to appeal was required and there was no right to call additional evidence in a de novo hearing, circumstances had been established that warranted allowing fresh evidence and in particular, fresh evidence as to the appellant's state of mind at the time of the offence. Shortly before the relisting of the appeal to hear this fresh evidence, the appellant's legal representative notified the Court that a psychologist's report that had been filed would not now be relied upon by the appellant. Fresh evidence had been allowed that did little more than update evidence given before his Honour, especially as to the present circumstances of the appellant. MERIT CONSIDERATIONS ON APPEAL 20 It has been noted earlier that both the appellant and the respondent approached this appeal on the basis that his Honour, Industrial Magistrate Reece, had undertaken the sentencing exercise in the mistaken belief that the maximum penalty for this offence (and the jurisdictional maximum able to be imposed by the Local Court) was $55,000 when, in fact, the maximum penalty was $22,000. While conceding this position, the respondent nevertheless argued that the penalty imposed was reasonable in all the circumstances of the case and was not vitiated by his Honour's misunderstanding. 21 In the course of the preparation of reasons for decision and considering the legislative provisions raised in the appeal, it became evident that the parties may have proceeded upon a misunderstanding of those statutory provisions. Having regard to that possibility, the Registrar of the Court wrote to the parties requesting written submissions in relation to the following questions: 1. Is it the case that the maximum penalty prescribed by s 155 of the Workers Compensation Act 1987 for an offence against that section is 500 penalty units (or $55,000, having regard to s 17 of the Crimes (Sentencing Procedure) Act 1999)? 2. Is the effect of s 245(2) of the Workplace Injury Management and Workers Compensation Act 1998 to impose a cap on the penalty imposed by the Local Court in the present matter of 200 penalty units (or $22,000)? 3. If the answer to both questions 1 and 2 is "yes", does the principle in U-Rect-It Pty Ltd v WorkCover Authority of New South Wales (Inspector de Silva) [2004] NSWIRComm 266 (see also R v Doan (2000) 50 NSWLR 115 ) require the Industrial Magistrate when assessing penalty to have regard to the maximum penalty fixed by s 155 of the Workers Compensation Act 1987 rather than the jurisdictional limit imposed by s 245(2) of the Workplace Injury Management and Workers Compensation Act 1998 (provided that the limit is not exceeded)? 22 The effect of the written responses received to the Registrar's letter was that, unlike the stance taken during the entirety of the appeal hearing, both the appellant and the respondent now accepted that the answers to all three questions was "yes" and that the maximum penalty for this offence was $55,000, while the jurisdictional limit imposed upon his Honour the Industrial Magistrate was $22,000 at the time of dealing with this offence. While accepting this position, the appellant argued that his Honour had been misinformed on a number of matters (although ultimately corrected in relation to some of them) including the jurisdictional limit and, when his Honour expressed the view that the maximum penalty was likely to be the same as the jurisdictional limit, that misapprehension was not corrected by the respondent in circumstances where the appellant was representing himself without legal assistance. The appellant submitted that his Honour had then undertaken the sentencing task without a clear understanding as to the statutory provisions and the process was thereby tainted. In addition, the subjective circumstances warranted a reduction in the penalty imposed. Written submissions for the respondent conceded the confusion about the issues raised by his Honour but argued that the penalty had been approached on the basis that the maximum was $55,000 and thus there was no error of relevance: the only error related to the jurisdictional limit and that error had no operative effect on the sentencing process since the penalty imposed of $5,000 did not exceed the jurisdictional limit. 23 The decision of the Full Bench in U-Rect-It accepted that the proper construction of the Occupational Health and Safety Act 2000 in s 105(2) was that the maximum penalty that could be imposed in the Local Court of $55,000 was a jurisdictional limit applicable in that Court, but that the maximum penalty for any particular offence would be as set out by the Act: In that case, a breach of s 8(1) would result in the maximum penalty of $550,000 for a first offender or $825,000 for a subsequent offender. Adopting the approach of the Court of Criminal Appeal in Doan, the Full Bench held that when a prosecution under the Act was dealt with by the Local Court, the effect of the jurisdictional limit was to restrain the Local Court to that amount in imposing a penalty and that it was wrong for the Local Court to regard the $55,000 limitation as being reserved for the worst class of case. The Court of Criminal Appeal in Doan accepted that this was a question of construction and that is the approach adopted by the Full Bench in U-Rect-It. The structure of s 155 of the Workers Compensation Act 1987 and s 245(2) of the Workplace Injury Management and Workers Compensation Act 1998 do not require a different construction nor was any such approach argued for by either the appellant or the respondent. 24 The appellant had essentially approached this case on the basis that there had been an error by his Honour the Industrial Magistrate treating the offence as carrying a maximum penalty of $55,000 when, in fact, the maximum penalty was $22,000. That point was conceded by the respondent to the appeal (although both now accept that not to be the case) and the appellant proceeded on the basis that the identified error required the Court itself to undertake the sentencing task working on the basis that the maximum penalty for the offence was $22,000. The appellant argued that the subjective factors were such that the penalty of $5,000 imposed by his Honour was excessive and that some lower figure should be imposed on appeal if the appellant's application under s 10 of the Sentencing Act was not successful. 25 Having regard to the concessions now made by the appellant and respondent, an issue on appeal is whether anything turns upon the fact that his Honour was correct in proceeding on the basis that $55,000 was the maximum penalty for the offence although mistaking the jurisdictional limit on his Court of $22,000 by regarding the jurisdictional limit as the same as the statutory maximum for the offence. 26 In Doan, the Court of Criminal Appeal canvassed a number of decisions in relation to similar provisions and concluded that, despite the legislative context in which each decision was made, a clear approach as a matter of principle could be seen to emerge from those cases. In particular, references made to the Queensland decision of R v Doyle (1987) 30 ACrimR 1 where Shepherdson J (without dissent from the other members of the Court) stated: A Magistrate, in deciding whether to deal with a housebreaking or similar offence under s 443(eb) should look at the spectrum of sentences up to the maximum term for the particular offence and if he elects to deal with the case summarily he may impose a penalty within that range taking care not to exceed the maximum term prescribed by s 443, namely imprisonment with hard labour for two years. 27 To similar effect was the South Australian case of Canimo v Venning (1993) 113 FLR 327 at 330 where Perry J observed: It is true that in the case of a ceiling on the maximum sentence which may be imposed on a Court exercising summary jurisdiction, the Court should first look at the maximum sentence imposed by the relevant statute, and work to that. If a penalty is arrived at by that process beyond the jurisdictional maximum, the jurisdictional maximum will confine the penalty to be imposed. In a similar vein in Victoria, Brooking J (with the agreement of Hampel and Smith JJ) in Hansford v His Honour Judge Neesham [1995] 2 VR 233 at 237 said: I think it is absurd to suggest that the statutory maximum for an offence is irrelevant to the determination by a Magistrate of the appropriate sentence. 28 Having considered the effect of those decisions, Grove J in Doan then stated: [35] The result of true construction of statutory provisions in New South Wales is that, what has been prescribed is a jurisdictional maximum and not a maximum penalty for any offence triable within that jurisdiction. In other words, where the maximum applicable penalty is lower because the charge has been prosecuted within the limited summary jurisdiction of the Local Court, that Court should impose a penalty reflecting the objective seriousness of the offence, tempered if appropriate by subjective circumstances, taking care only not to exceed the maximum jurisdictional limits. 29 In the present appeal, the respondent is correct to draw attention to the fact that his Honour the Industrial Magistrate was aware of the maximum penalty for the offence but submits that his error as to the jurisdictional limitation is irrelevant because the ultimate fine did not exceed $22,000. We do not think this matter can be dismissed so simply. Many judgments of the supervisory courts, including the High Court, have commented on the complexity of the sentencing task and the care to be exercised by a court in weighing numerous factors that frequently point the court in different directions. In the public debate that often takes place in the media concerning particular sentencing judgments, the complexity of the task is rarely, if ever, acknowledged or, seemingly, understood. A person found guilty of a criminal offence is always entitled to have the law applied, including the law in relation to sentencing principles. Confidence in the legal system is a two way-street: a defendant is entitled to expect the adoption of correct procedures and a consideration of all the relevant law, not just some of it. Applying the approach in Doan required his Honour to consider a sentence in the context of the statutory maximum for the offence, the jurisdictional limitation on penalties operating in the Local Court, the penalty that would reflect the objective seriousness of the offence tempered by relevant subjective circumstances (if any) and finally, imposing a penalty that would not exceed the maximum jurisdictional limit. We are unable to conclude that this was the task undertaken by his Honour the Industrial Magistrate in this case. In having considered only part of the process (as a result of confusion in the prosecutor's camp continued during the course of this appeal) it cannot be said with any confidence that his Honour must have considered the remaining elements of the task simply because the penalty imposed was below both the maximum statutory limit and the jurisdictional limit. The law and the processes of sentencing are not properly observed and justice not achieved by a result which, by happenstance, appears to fall within what might have been done properly in any event. 30 Having regard to this error, the intervention of the Court is attracted and it falls to the Full Bench to re-sentence the appellant and to exercise its own sentencing discretion. It is also to be remembered that the appellant ultimately pursued the appeal on the basis of the severity of the penalty imposed by his Honour the Industrial Magistrate. Having regard to the penalty of $1,000 imposed on the company for a breach of the same provision for a prior period to that nominated in the Particulars of the present breach, the fact that the period is nearly twice as long in its non-compliance as that of the appellant and the subjective factors identified with more clarity on appeal where the appellant was legally represented, the Court concludes that the penalty was manifestly excessive in all the circumstances. (Dinsdale v The Queen (2000) 202 CLR 321 at 325). 31 In sentencing the appellant anew, a number of matters require consideration. Having regard to the evidence called in the Local Court and the additional evidence allowed on appeal, it remains clear that at the time of this offence over a period of September 1998 to June 2000, the appellant was aware that the workers compensation premiums were to be paid, that the company was employing persons and that there was an obligation to ensure that workers were covered. Besides being aware of the obligation and its obvious workplace and social purpose, there is no evidence of the appellant seeking the assistance of the company bookkeeper or the persons responsible for the accounts of the business, in persuading his father that the payments had to be made. Ultimately, the assessment must be made that he was a person educated to tertiary level and despite his youth and lack of business experience, was fully aware of the obligation to pay the workers compensation premiums. It is something of a novel proposition that the seriousness of breaching the law can be in some way excused because of the domineering control exercised by his father. Nevertheless, his Honour accepted the evidence called by the appellant in relation to the domineering nature of his father. As a consideration going to penalty, this Court also accepts that evidence but it is evidence that has limited influence in setting an appropriate penalty. 32 A further issue debated on appeal was the effect of his Honour's statement that although he accepted that the appellant's father was domineering and a controlling influence in the business, that evidence was not factually accepted as the reason for non payment of the premiums nor was the defence made out. His Honour noted that the inconsistent answers given in two Records of Interview where the domineering nature of his father was not raised, reflected adversely on his credit. It is not entirely clear what his Honour decided when dealing with these aspects of the case. It is clear that his Honour accepted that the appellant was a person of good character with no prior convictions and who had since operated a company in an appropriate manner and that his father was an overbearing person who meddled in the affairs of the subject company. His Honour then clearly rejects the submission that the statutory defence was made out but it is not so clear as to whether his Honour concluded that it was only the statutory defence to which these comments were being directed or whether he was concluding both that the statutory defence was not made out and that he did not believe the appellant's evidence as to the reason why the premiums were not paid. Ultimately, this issue is not of great moment in light of the fact that the sentencing discretion will have to be exercised afresh by this Court on appeal. It is sufficient for that purpose to note that his Honour concluded that the statutory defence had not been made and that there were issues of credit that arose because of the appellant's failure to raise the direction and domineering nature of his father in the two interviews with the WorkCover Inspectors. Those matters are taken into account in assessing, afresh, an appropriate penalty. 33 As noted earlier, there is evidence that the appellant has continued in business after this offence, has obeyed the law in relation to the payment of workers compensation premiums and the business obligations associated with the running of a business and has come to terms with the error that he made (as he submitted) in giving in to his father's pressure. Indeed, his Honour concluded that the appellant was unlikely to offend in his way again - a conclusion in which the Court would concur. He continues to be active in community affairs and is obviously highly regarded by a wide variety of people with whom he has come into contact. There seems to be a suggestion in this material that his ambitions to run for public office at a Local Government or State Parliamentary level may be removed by a conviction but there is no evidence to support such a conclusion. Undoubtedly, a conviction may weigh in the public mind when they come to exercise the franchise but as recent events disclose, political figures may find themselves in breach of the law in circumstances which they have to explain to their constituency and which that constituency will have a valid interest in weighing. That consideration urged on behalf of the appellant therefore bears little on the setting of an appropriate penalty. 34 The principle of general deterrence has a role to play in setting an appropriate penalty and indeed it is of concern that from time to time proceedings are brought in the Local Court and sometimes arise for consideration on appeal in this Court involving the failure to pay workers compensation premiums. There is no indication given by the respondent prosecutor as to how widespread is this offence but that does not detract from the necessity to take into account general deterrence in setting a penalty in this case. In relation to specific deterrence, given the evidence as to the appellant's behaviour since this offence and the conclusion that he is unlikely to offend again in this way, there is a more limited role for the operation of that principle but nevertheless there is some, relatively minor, role for that consideration. 35 Bearing in mind the considerable evidence as to the good citizenship of the appellant, the high regard with which he is held in his community and more generally, the fact that he has no prior convictions, the circumstances in which he became the sole director of this business and the overbearing influence of his father in this particular offence, it may be said that there are significant subjective factors to be taken into account: these considerations cannot, however, be elevated above the objective seriousness of the offence. In addition, the sparse information supplied to the Court as to the financial circumstances of the appellant nevertheless suggest that he is of limited means and living under circumstances of financial restraint. It is of some significance that the company was fined $1,000 for a failure to pay workers compensation premiums over a period of nearly 4 years, whereas this offence covers a different period of under two years. Bearing those matters in mind it is appropriate that a penalty of $2,250 be substituted in this case. 36 There has been some discussion on appeal as to the appropriateness of the Court exercising its discretion under s 10 of the Sentencing Act not to record a conviction in this matter. Some of that debate revolved around whether or not it is appropriate for offences against workers compensation legislation to be regarded as so closely connected with occupational health and safety legislation that this Court's cautious approach to the circumstances in which the s 10 discretion should be exercised, should be extended to this category of offence (see Llandilo Staircases Pty Ltd v WorkCover Authority (Inspector Parsons (2002) 104 IR 204). However, the appellant ultimately pursued his appeal in the light of the principles stated in Llandilo. 37 Amongst the matters to be considered by the Court in considering an application under s 10 of the Sentencing Act is the person's character, antecedents, age, heath and mental condition, the trivial nature of the offence, the extenuating circumstances in which the offence was committed and any other matter that the Court thinks proper to consider. In Thornlowe v Filipokski (2001) 52 NSWLR 60, the Court of Criminal Appeal was dealing with an application under s 10 of the Sentencing Act arising from a prosecution concerning serious pollution contrary to the provisions of the Marine Pollution Act 1987. In that case, Chief Justice Spigelman noted that the discretion conferred by s 10 was wide ranging and that there was no warrant for treating the scope and range of matters which were proper for a sentencing judge to take into account in a narrow way but, nevertheless, it was a discretion that was to be exercised judicially. His Honour also noted that in relation to environmental offences and under Occupational Health and Safety legislation it had been often stated that it would be a rare case when dismissal under the equivalent of s 10 of the Sentencing Act was seen as appropriate (in particular see Hunter Water Board v State Rail Authority of New South Wales (No 2) (1992) 75 LGREA 22 at 23). That approach has more recently been emphasised by a Full Bench of this Court in Inspector Maddaford v Graham Gerard Coleman and anor (2004) 131 IR 21. 38 In the present case it cannot be said that the offence is trivial. While the appellant's antecedents are generally favourable, he understood fully his obligations under the law in relation to an important matter concerning the company's workforce and allowed himself to be dictated to by the strength of his father's wishes, rather than ensuring that this important piece of legislation was complied with. While the relationship with his father gives some understanding as to how this offence came to be committed, it does not, of itself, provide the basis for the exercise of the discretion available under s 10 of the Sentencing Act: indeed, the evidence showed that for a period after his father's death, the required workers compensation premiums were not paid nor was there any evidence of the appellant securing the support of other business professionals engaged by the company to impress upon the appellant's father the requirements of the law. These circumstances do not amount to extenuating circumstances, nor do they otherwise provide a basis that would warrant the exercise of the discretion. The appellant's application pursuant to the provisions of s 10 of the Sentencing Act must therefore be rejected.

1. Leave to appeal granted and appeal as to severity of penalty upheld. 2. The penalty imposed by his Honour Industrial Magistrate Reece of $5,000 is set aside and a penalty of $2,250 is substituted on appeal. 3. The parties are to pay their own costs of the appeal. 4. The remaining orders of his Honour Industrial Magistrate Reece are to stand. JUDGMENT OF STAFF J

40 I have had the opportunity of reading the draft of Haylen J in this matter and do not intend to canvass generally the charges, facts, or relevant issues which are concisely set out in his Honour's judgment. I agree with his Honour's conclusion that s 10 of the Crimes (Sentencing Procedure) Act 1999 is not appropriate in this matter. However, I am unable to agree with his Honour's remaining conclusions and orders, which are firstly, the appeal as to severity of penalty be upheld and secondly, that the penalty imposed by his Honour Magistrate Reece of $5,000 be set aside and a penalty of $2,250 be substituted. 41 In respect of the first matter, the offence with which the appellant was charged was a breach of s 155 of the Workers' Compensation Act 1987 (failure to provide workers' compensation insurance coverage for employees) and s 244(1) of the Workplace Injury and Management Act 1998 (contravention of s 155 of the Workers' Compensation Act 1987). The maximum monetary penalty for a breach of s 155 by a corporation, or by a director, is $55,000. The jurisdiction limit of the Local Court when dealing with a breach of s 155 is $22,000. 42 At the sentencing hearing, the Magistrate enquired of the parties what was the maximum penalty. This question was not immediately answered as there was a request for an order for double the avoided premium and submissions in respect of costs and s 10 of the Crimes (Sentencing Procedure) Act 1987. 43 There then followed a short adjournment to enable the prosecutor to locate the costs schedule and ascertain the maximum penalty. Upon resumption, the prosecutor clarified that there was no capacity to order double the avoided premiums. In my view, it is clear that the Magistrate was aware that the double avoided premiums did not apply when he considered the question of penalty. 44 The following exchange then took place: O'Connor: The maximum penalty, I understand, is $55,000. Bench: That's certainly the jurisdictional limit. Is that also the, yes, it's probably the same amount, yeah. It's also the statutory provision as well, is that right? O'Connor: Yes, I believe that's correct, your Worship. Bench: Yes, so it's a general - yeah, that's the same penalty that applies in safety matters. 45 His Honour's reference to "the same penalty that applies in safety matters" is clearly a reference to the maximum penalty for a first offence committed by a personal defendant for a breach of the Occupational Health & Safety Act 2000, that being also $55,000. The jurisdictional limit is also $55,000 for a first offence committed by a personal defendant under the Occupational Health & Safety Act. 46 The error committed by his Honour was that in prosecutions for breach of s 155 of the Workers' Compensation Act, the jurisdictional limit is $22,000. 47 His Honour was correct in believing that the maximum penalty was $55,000 but was in error in believing that the jurisdictional limit was also $55,000, when in fact the jurisdictional limit was $22,000. Based on that error, the matter went ahead. 48 In my view, the error as to jurisdictional limit had no operative effect on the sentencing process, as the penalty imposed, $5,000, did not exceed the jurisdictional limit, and the operative consideration for sentencing purposes in assessing the objective seriousness of the offence, was the maximum penalty (which his Honour properly understood). 49 In U-RECT-IT Pty Limited v WorkCover Authority of New South Wales (Inspector de Silva) [2004] NSWIRComm 266, Wright J, President, Walton J, Vice-President and Marks J considered the requirement of a Magistrate to have regard to the statutory maximum penalty, rather than the jurisdictional limit. At [16] - [18], their Honours stated: [16] … During the course of the hearing of the appeal the appellant agreed that the proper approach to be taken to the assessment of penalty before an Industrial Magistrate was that exemplified by the decision of the New South Wales Court of Criminal Appeal in R v Doan (2000) 50 NSWLR 115. Those proceedings dealt in part with circumstances where proceedings for an offence could be taken before either the District Court or a Local Court with different maximum terms of imprisonment applicable. The judgment of the Court was given by Grove J (Spigelman CJ and Kirby J agreeing). His Honour distinguished between a jurisdictional maximum penalty and a maximum penalty for an offence triable within the jurisdiction. His Honour said at [35]: "In other words, where the maximum applicable penalty is lower because the charge has been prosecuted within the limited summary jurisdiction of the Local Court, that court should impose a penalty reflecting the objective seriousness of the offence, tempered if appropriate by subjective circumstances, taking care only not to exceed the maximum jurisdictional limit". [17] There is a decision of the Appeal Division of the Supreme Court of Victoria in Hansford v His Honour Judge Neesham and Ors [1995] VR 233, which is to similar effect. The judgment in that case was that the maximum penalty prescribed for the offence was to be taken into account by a magistrate in sentencing by reference to the maximum available penalty rather than the limit of jurisdiction imposed on a Local Court. As Hampel J said, succinctly, "the gravity of the offence must be assessed by reference to the statutory penalty provided for it" (at p 241). [18] Accordingly, in assessing penalty by reference to the objective seriousness of the offence on a worst possible case basis an Industrial Magistrate is required to have regard to the maximum penalty fixed under the Act, rather than the jurisdictional limit imposed by s 105. Of course, an Industrial Magistrate may not impose any greater penalty than that provided for by s 105. In this respect we adopt what was said in WorkCover Authority of New South Wales v Chen and anor [2004] NSWIRComm 247. 50 His Honour was correct in assessing the seriousness of the offence with reference to the maximum penalty of $55,000, and would have been in error had he assessed the seriousness of the offence with reference to the jurisdictional limit. 51 Turning to the second issue, I do not regard the penalty imposed as manifestly excessive when regard is had to the penalty imposed on the company of $1,000. The issue of parity by reference to the penalty imposed on the company was not the subject of consideration by the Magistrate in his judgment, nor was it a ground of the appeal. 52 This issue was raised during argument in the appeal. Ms P Lowson, counsel for the defendant explained it, without demur from the appellant, this way: It is important to recognise the circumstances in which the company came to be fined which are these, there had been a period of four years in which the company had operated between 1994 and 1998. The company was prosecuted in 1998 and fined $1,000 in respect of those charges. This appellant was charged in 2002 in respect of a failure to pay premiums after that event, in other words, after the company having been brought before the court and after the appellant appearing in that hearing and being dealt with as he describes it, "I went to court and I was fined $1,000." That was in respect of a prior time. What then occurred notwithstanding having been prosecuted for these offences there continued to be a failure to pay the insurance premiums for two years subsequently after that prosecution. So it was in respect of a different offence altogether that this appellant was found guilty. 53 There were no submissions put against this by the appellant that would change the position. The principal focus of the appellant was that the offence be dealt with pursuant to s 10 of the Crimes (Sentencing Procedure) Act 1999. 54 In my view, his Honour committed no error in imposing a penalty of $5,000. The appeal should be dismissed. 55 I would make the following order: 1. The appeal is dismissed. 56 As to the question of costs, I have had the opportunity of considering the observations of Walton J, with which I agree. 57 I would further order that: 2. Each party should pay their own costs of the appeal.

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