Solo Waste Aust. Pty. Limited v Inspector McDonald

Appellant: Solo Waste Aust. Pty. Limited PARTIES: Respondent: Inspector McDonald

CORAM: Wright J President; Walton J Vice-President; Backman J

CATCHWORDS: Appeal - Occupational health and safety - s196 of the Industrial Relations Act 1996 - leave not required - corporate trustee administering two trusts - conviction for offence in relation to the Solo Waste Trust - previous conviction for an offence in relation to the Rico Family Trust - whether appellant a previous offender under s51A of the Occupational Health and Safety Act 1983 - nature of a trust - not a legal entity but an arrangement for administration of property vested in a trustee and held by trustee on behalf of other for a particular purpose - rights of trustee to indemnify itself against liabilities incurred in relation to Solo Waste Trust - appellant a previous offender under s51A - no error discerned at first instance - appeal dismissed - costs.

Industrial Relations Act 1996 s196 Occupational Health and Safety Act 1983 s15 s16 s51A LEGISLATION CITED: Trustee Act 1925 s59(4) Interpretation Act 1987 s21

Inspector McDonald v Solo Waste Aust. Pty. Limited [2004] NSWIRComm 211 Hardoon v Belilios [1901] AC 118 CASES CITED: Nick Kritharas Holdings Pty Ltd (In Liq) v Gatsios Holdings Pty Ltd [2001] NSWSC 343 Transport Workers' Union Of Australia (New South Wales Branch) v Leon Laidley Pty Ltd (1980) 42 FLR 168 WorkCover Authority of New South Wales (Inspector Dawson) v Plastachem Pty Ltd and Others (2001) 110 IR 351

Appellant Mr J Phillips, SC Solicitor Mr M Laurence Stacks - The Law Firm LEGAL REPRESENTATIVES:

Respondent Mr R Reitano, of Counsel Solicitor Mr M Carrick Geoffrey Edwards & Co. Solicitors

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

CORAM: Wright J, President Walton J, Vice-President Backman J

Appeal by Solo Waste Aust. Pty. Limited against a decision of Boland J given on 29 July 2004 in IRC 182 of 2003.

1 This is an appeal under s196 of the Industrial Relations Act 1996 ("the Act") against the decision of Boland J of 29 July, 2004 in which his Honour convicted the appellant and imposed a fine of $290,000.00: Inspector McDonald v Solo Waste Pty Limited [2004] NSWIRComm 211. 2 Leave to appeal is not required: WorkCover Authority of New South Wales (Inspector Dawson) v Plastachem Pty Ltd and Others (2001) 110 IR 351 at 359. 3 The issue raised in the appeal concerns his Honour's finding on sentence that the appellant, a corporate trustee which administered two separate trusts, was a prior offender having been previously convicted of an offence under the Occupational Health and Safety Act 1983 ("the 1983 Act"), in relation to a trust called the Rico Family Trust. The essence of the appellant's contention was that the Solo Waste Trust, which was the subject of the conviction before Boland J, should not have attracted the higher statutory maximum under s51A of the 1983 Act, because the nature of the relationship between the appellant and the Solo Waste Trust was such that the appellant was a legal entity separate and distinct from the entity which was convicted in relation to the Rico Family Trust.

Factual Background 4 The appellant conducted the business of collecting and processing recyclable materials at its materials recovery facility ("MRF") in Gateshead, Lake Macquarie. It employed about 70 people including Robert Hughes ("Mr Hughes") and Jason King ("Mr King") and had been in operation since 1996. Mr Hughes and Mr King were employed as sorters, sorting recyclable materials. On 15 February, 2001 Mr Hughes entered a hopper to clear material from the sides of the hopper with his boots. At the same time the auger (screw conveyor) which was located in the bottom of the hopper was running. Mr Hughes' left boot became caught in the auger and he was dragged into it. He suffered an amputation of his lower left leg.

5 The appellant at the time of the offence was a non-trading entity which acted as a trustee for the Solo Waste Trust and also for the Rico Family Trust. 6 There was little information before the learned sentencing judge as to the nature of the two trusts, or as to the relationship between the appellant and the two trusts. No evidence was tendered before Boland J as to the terms of the trusts administered by the appellant. 7 During the sentence proceedings on 15 July, 2004, Robert Emlyn Richards ("Mr Richards"), a director of the appellant, gave some evidence in relation to the circumstances surrounding the appellant's previous conviction on 19 May 1995 under the OHS Act 1983. According to Mr Richards, the offence the subject of the previous conviction was committed at the appellant's Chinderah site (Chinderah is a town on the border of New South Wales and Queensland). In relation to the Chinderah site, Mr Richards said that the appellant was trustee of the Reiker (sic) Family Trust. He also said that this trust and the Solo Waste Trust have different workers compensation policies. A letter was tendered on sentence through Mr Richards from the workers compensation insurer, QBE, confirming the existence of different policy numbers. Mr Richards also gave evidence that sometime in 1997 a contract was entered into between the Solo Waste Trust and three local councils in the Newcastle region, namely Lake Macquarie, Cessnock and Maitland Councils. Decisions of Boland J

8 Following the defendant's plea of guilty Boland J delivered an interlocutory judgment on 9 March, 2004 which dealt with an application by way of a Notice of Motion brought by the appellant to withdraw its plea. The principal ground upon which the appellant relied in its application was that the appellant and the Solo Waste Trust operated as separate legal entities and, that the Solo Waste Trust, not the defendant, was the relevant employer which conducted the recycling business at Gateshead. The evidence therefore, it was submitted, raised a serious doubt about the identity of the proper defendant in the sentence proceedings. 9 Boland J, in rejecting the appellant's arguments on the Notice of Motion, emphasised that at law a trust is not a juristic person, and, because there was no evidence before the Court that the Solo Waste Trust was a legal entity capable of entering into a contract of employment (which it might otherwise be capable of doing, if, for example, it was incorporated), it could not be an employer. In relation to the question as to the identity of the proper defendant his Honour was satisfied that it was the appellant in its capacity as corporate trustee of the Solo Waste Trust. 10 On 29 July, 2004 Boland J delivered judgment in the sentence proceedings. The appellant contended in those proceedings that its proper name was "Solo Waste Aust. Pty. Limited as Trustee for the Solo Waste Trust", and not, as described in the Application for Order as, Solo Waste Aust. Pty. Limited. It was the former named corporation, so the appellant contended before Boland J, that was the employer of Mr Hughes and Mr King on the day of the offence, even though it was the latter named corporation that was the entity registered under the Corporations Law. The appellant sought to develop this argument before Boland J by raising the point that because the appellant was a trustee of more than one trust, a distinction had to be made between its legal personality as trustee for the Solo Waste Trustee, and, as trustee for the Rico Family Trust. Because it held property for the benefit of two different trusts it had to be regarded as two distinct legal personalities. 11 The significance of the distinction, if made out, was because the appellant had a previous conviction in relation to an offence that occurred at Chinderah. The employer in relation to that workplace, and, in relation to the employees who worked there, was, according to the appellant, the Rico Family Trust. That being the case, the appellant in the proceedings before Boland J was not a previous offender and would not attract the higher statutory maximum penalty under s51A of the 1983 Act. 12 His Honour in rejecting the submission said, at [11]: "I do not accept that it is necessary for me to identify the defendant in these proceedings as "Solo Waste Aust. Pty. Limited as Trustee for the Solo Waste Trust". That a corporate entity might hold property in trust for more than one trust does not, in my opinion, give that entity a different legal personality in respect of each trust for the purposes of the Occupational Health and Safety Act . The employer of Mr Hughes and Mr King at the Gateshead place of work was Solo Waste Aust. Pty. Limited. That it may have been a trustee is, in my opinion, not relevant to the identity of the defendant. I would comment in passing that if I were to accept the defendant's contentions it could mean that any corporate entity with multiple work places could arrange to be a trustee for a different trust at each workplace and avoid liability in relation to a second or subsequent offence where that offence occurred at a different work place controlled by that entity." Grounds of appeal

13 On appeal, the appellant submits that Boland J's characterisation of the appellant as a second offender subject to the higher penalty, was wrong at law. The finding of Boland J that a corporate trustee does not, by virtue of holding trust property for more than one trust, have a different legal personality in respect of each trust was also an error. His Honour's failure to replace or amend the appellant's name with the name Solo Waste Aust. Pty. Limited as Trustee for the Solo Waste Trust in the proceedings, was another error. Submission of the Parties

14 In written submissions the appellant outlined the basic nature of a trust, relying in particular on various definitions of the concept set out in Chapter 1 of Jacobs Law of Trust in Australia (6th Edition 1997) by R P Meagher and W M C Gummow. The appellant also contended that the proceedings had given rise to an injustice, since, by regarding the offence as a second conviction, the trustee would therefore have a right of indemnity only out of the corpus and income of the Solo Waste Trust. 15 The respondent in his written submissions directed attention to the nature of a trust, submitting that it is a transaction with no legal personality. The respondent also emphasised that the appellant as named in the Application for Order was identified by its Australian Corporate Number (or ACN) and was the same person which carried on business as trustee for more than one trust. Consideration

16 There can be no doubt that a trust is not a juristic person. A trust could not have been prosecuted under the 1983 Act and cannot be prosecuted under the Occupational Health and Safety Act 2000. It is an arrangement for the holding and administration of property under which property is vested in a trustee or trustees which is held by them on behalf of another, or others, namely the cestui que trust or cestuis que trust (beneficiary or beneficiaries) for a particular purpose. The property is legally vested in the trustee. 17 In oral submissions, the appellant sought to advance a proposition that a trust was a body corporate, and, therefore a separate legal entity. The appellant sought to elicit support for this from the meaning of "person" as it appears in s21 of the Interpretation Act 1987, (the definition of "person" as including a "body corporate"). This definition, the appellant contended, should be adopted for the purposes of s51A of the 1983 Act. 18 In further support of the proposition, the appellant also placed reliance on a number of cases, including the observations of Deane J in Transport Workers' Union Of Australia (New South Wales Branch) v Leon Laidley Pty Ltd (1980) 42 FLR 168 at 181. In that case the appellant union was a state registered union under the provisions of the Trade Union Act 1881 (NSW). Registration conferred on the union a legal personality as distinct from its members at any particular time with the capacity to sue or be sued in its own right (cf s222 Industrial Relations Act 1996). The union was appealing against interlocutory orders made by Lockhart J. One of the questions on appeal was whether a state registered union was a "person" within the meaning of s45D (1) of the Trade Practices Act 1974 (Cth). The Court held that such a union was prima facie a "person" for the purposes of s45D(1) of the Act, and, a "body corporate" for the purposes of s45D(6). Deane J was of the view that the union's status as a "body corporate" depended more upon the construction of 45D(6) than on determining the precise character of the legal personality of a union registered under the Trade Union Act 1881. His Honour was of the view that the provisions of s45D(6) made it clear that the reference to a union being a "body corporate" was a reference to a union which has a separate legal personality and was capable of suing or being sued in its own name. 19 It is our view that the status of the union registered under the Trade Union Act 1881 (as discussed in the above case) is clearly distinguishable from a trust. While the union registered under the Trade Union Act was found to have conferred upon it the status of a separate legal entity by operation of statute, no such statutory provision (or any other basis) has been identified in the circumstances here which might convert the trust into a separate legal entity. 20 This should be sufficient to dispose of the matter but we would add that in construing the definition of "person" in s51A of the 1983 Act, it is to that Act that attention should be directed. When section 51A is properly construed and applied to the circumstances of these proceedings, it is plain that the definition of "person" in Section 21 of the Interpretation Act does not have the significance for which the appellant contends. Section 51A relevantly provides:-

51A Additional penalty for further offence against the Act (1)A Court that convicts a person of an offence (the current offence ) against this Act may, if the person has previously been convicted of an offence against this Act (whether the same offence or another), impose as additional penalty in respect of the current offence not exceeding the following penalties: (a) if the current offence is an offence against section 15, 16, 17 or 18 of this Act - 2,500 penalty units in the case of a corporation or 250 penalty units or 2 years imprisonment, or both, in any other case, or (b) if the current offence is any other offence against this Act - 50% of the maximum penalty for the offence (that is, 50% of the maximum penalty that would apply but for this section). 21 Section 51A applies to offences committed against sections 15, 16, 17, and 18 of the 1983 Act. Sections 15 and 16 impose liabilities on employers but Sections 17 and 18 impose liabilities more generally on "persons", such as suppliers and manufacturers. In the present proceedings the appellant was convicted of an offence under s15(1) of the 1983 Act. The focus therefore, should be on the previous offender as an "employer" which, by definition (see s4 of the 1983 Act), will direct attention to an individual (not being a trust) or, as applicable in this case, the "corporation", the subject of the s15 charge. 22 The appellant also, as noted earlier, contends that an injustice arises as a consequence of Boland J's finding, because the appellant as a corporate trustee, who has been convicted of two offences in relation to two trusts, may be able to be indemnified against liabilities incurred (the fine imposed by Boland J) wholly from the funds of Solo Waste Trust although part of that liability has, in substance, been incurred as a result of the previous conviction involving the Rico Family Trust. 23 We reject this contention for a number of reasons. First, the issue in the proceedings is essentially a legal issue concerned with the construction and application of section 51A of the 1983 Act. 24 Further, the rights of trustees to be indemnified has long been recognised. In Hardoon v Belilios [1901] AC 119 at 124 Lord Lindley described the right of a trustee to be indemnified out of the trust estate against any liabilities arising as, "clear and indisputable". See also Nick Kritharas Holdings Pty Ltd (In Liq) v Gatsios Holdings Pty Ltd [2001] NSWSC 343 per Hamilton J at [9] and [10], and, s59(4) Trustee Act 1925. 25 The right of a trustee, however, to be indemnified out of the trust funds only exists as against those liabilities which have been properly incurred in the administration of a trust. In Nick Kritharas Holdings, for example, a distinction was drawn between the vicarious liability of a corporate trustee for the negligent driving of a motor vehicle in the course of the trust business which would attract indemnity, and the deliberate conduct vis-a-vis third parties by the managing director on behalf of a corporation, which might deprive the corporate trustee of indemnity: at [16]. 26 In any event, if the appellant has a right to be indemnified against the fine imposed by Boland J, wholly from the Solo Waste Trust, it is difficult to see that this gives rise to an injustice. The appellant has chosen to order its affairs in the way that it has. It cannot now complain of a supposed injustice. 27 The appeal should be dismissed. Orders 28 The Court makes the following orders: 1. The appeal is dismissed. 2. The appellant is to pay the respondent's costs as agreed, or in default of agreement, as assessed. oo0oo

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