WorkCover Authority of New South Wales (Inspector Larobina) v Drilltest Pty Limited and Douglas Stephen Miller

Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 Ferguson v Nelmac Pty Limited (1999) 92 IR 188 Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 McMartin v Newcastle Wallsend Coal Company and ors (2005) NSWIRComm 31 CASES CITED: Markarian v The Queen [2005] HCA 25: 18 May 2005 R v Gallagher (1991) 23 NSWLR 220 R v Thomson; R v Houlton (2000) 49 NSWLR 383 R v Way [2004] NSWCCA 131 Thorneloe v Filipowski (2001) 52 NSWLR 60 WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Limited trading as Old But New [2004] NSWIRComm 247

PROSECUTION: Mr M Cahill of counsel SOLICITORS: Criminal Law Practice Legal Group LEGAL REPRESENTATIVES: DEFENDANTS: Mr M Hay of counsel SOLICITORS: Willis & Bowring Solicitors

Matter No IRC 4860 of 2005 WorkCover Authority of New South Wales (Inspector Larobina) v Drilltest Pty Limited Prosecution under s 8(1) of the 2000

Matter No IRC 4861 of 2005 WorkCover Authority of New South Wales (Inspector Larobina) v Douglas Stephen Miller Prosecution under s 8(1) and s 26(1) of the Occupational Health and Safety Act 2000

1 The first defendant in this matter, Drilltest Pty Ltd (Drilltest) has entered a plea of guilty to an offence pursuant to s 8(1) of the Occupational Health and Safety Act 2000 (the Act). The second defendant, Douglas Stephen Miller, is a director of Drilltest and, by virtue of the deeming provisions of s 26(1), has also entered a plea of guilty to an offence arising under s 8(1) of the Act. 2 In relation to Drilltest, it is said that on 17 March 2004 the defendant: Failed to ensure the health, safety and welfare at work of its employees, and in particular, Andrew Talbot, contrary to section 8(1) of the Occupational Health and Safety Act 2000. 3 The particulars of the charge in relation to Drilltest are: (a) The defendant failed to provide a system of work for the operation of a truck mounted drilling rig that was safe and without risk to the health and safety of its employees. (b) The defendant failed to provide such adequate instructions and training to its employees as was necessary to ensure their health and safety at work whilst working with a truck mounted drilling rig. (c) The defendant failed to provide such guarding of the rotating auger bit of a truck mounted drilling rig as was necessary to ensure the health and safety of its employees in respect of the operation of the drilling rig. 4 The offence and the particulars pleaded in relation to Mr Miller are in identical terms. On that basis, I do not repeat them. 5 The prosecution has tendered an agreed statement of facts. In relation to the two defendants, the following is agreed: [1] At all material times Drilltest Pty Ltd (acn 052 193 567) was a company duly incorporated and whose registered office was at C/- Partlett Chave & Rowland, Suite 22 Charrington Court, 35 Old Northern Road Baulkham Hills in the State of New South Wales (the first defendant)

[2] Douglas Stephen Miller (the second defendant) of 4 Tahiti Place Kings Langley, in the State of New South Wales is and was, at all material times, a director of the first defendant.

[3] At all material times the first defendant operated a business that carried out drilling services for the purpose of obtaining soil and rock samples for building and development consultants, such as consulting environmental scientists and consulting engineers.

[4] At all material times the first defendant was an employer and employed Andrew Talbot as a labourer to assist in the operation of a truck mounted drill rig.

[5] At all material times the first defendant had been retained, by a company called First In Pty Limited, trading as Environmental

[6] At all material times the first defendant had been retained, by a company called First In Pty Limited, trading as Environmental Investigations, to drill and obtain core samples at residential building development site known as 46 - 48 Northumberland Rd at Auburn in the State of New South Wales (the site). [7] On 17 March 2004 the first defendant was drilling in the north-western corner of the site to obtain. Ehab Gerges, an engineer employed by First In Pty Ltd, was present on the site to provide directions to the first defendant with respect to sampling depths.

[8] On that day the second defendant was the drill operator and Mr Talbot was working as his "offsider". At this stage, the first defendant had employed Mr Talbot for approximately 3 weeks. Mr Talbot's duties included organising the tools and equipment required by the operator and handing them to the drill operator as and when required, assisting with collecting samples and shovelling soil away from around the auger during drilling.

[9] The task of organising and providing tools and equipment to the operator included Mr Talbot handling extensions for the drill that were attached to the auger as the drilling depth increased. As the depth increased, the drill operator would stop the drill and the drill extension pieces would be connected and fixed in place before drilling recommenced.

[10] When drilling had reached sampling depth, or had been completed, the auger was extracted from the drill hole by placing a fork plate around the drill extension.

[11] By approximately 9.30 that morning, the second defendant had drilled the first hole down to the required depth and then extracted the auger so that a soil sample could be obtained. Mr Talbot assisted the second defendant in collecting the sample and once this was done the auger was re-inserted into the hole to enable the second defendant to continue drilling to the next level at which a core sample was to be obtained.

[12] The second defendant continued to drill down further until he encountered hard bedrock at which time he was instructed by Mr Gerges that no further drilling and sampling would be required.

[13] At this point the second defendant prepared to remove the auger from the hole, which required him to turn and pick up an auger fork plate, which was on the ground behind him.

[14] At that time, Mr Talbot was standing back from and to the left of the auger. But, as the second defendant turned to pick up the fork plate, Mr Talbot moved in towards the rotating drill/extension shaft and the rubber glove Mr steel bolt that was protruding out from the connection between two Talbot was wearing on his right hand caught on a extensions. The rotation of the auger shaft caused Mr Talbot's right arm to become entangled.

[15] As the second defendant turned back towards the drilling rig he became aware that Mr Talbot had become entangled in the drill unit and immediately pressed the emergency stop button. But by the time the second defendant had operated the emergency stop button, Mr Talbot had been dragged in underneath the back of the truck and then out again on the other side of the unit by the rotation of the shaft.

[16] By the time the shaft had stopped rotating, Mr Talbot had been dragged through about one and a half rotations.

[17] Prior to the incident: (a) The first defendant's safety management system consisted of a two (2) page Safe Work Method Statement or JSA (job safety analysis). The JSA was developed by both directors of the first defendant, Douglas Miller and Kenneth Kerney-Ennis, based on their combined experience in drilling operations;

(b) The JSA appeared to be specific to the operation of drilling. But, the JSA did not make provision for any modifications to be made, or review to be undertaken to take account of different sites and/or locations;

(c) The JSA was mainly used for reference purposes and was issued to other parties if requested, such as a site supervisor;

(d) The JSA is also the only documentation representing any risk assessment the first defendant carried out for the drilling operation and the plant involved;

(e) While Mr Talbot received on the job training and instructions on how to perform the task according to the JSA, he had not seen the JSA prior to the incident on 17 March 2004.

(f) Further, a copy of the JSA was in the cabin of the truck at the site, but the information fields on it had not been completed;

(g) The first defendant had not considered, investigated or fitted guarding with respect to the elimination or control of the risks from the operation of the auger, in particular the rotation of the shaft, although the auger was identified as a hazard in the JSA;

(h) The control measure, the system of work, the first defendant used to ensure persons did not become entangled with the rotating auger was a requirement that persons keep a "safe distance" from the auger during drilling. This control measure was only implemented verbally. In any event, to perform his duties, from time to time, Mr Talbot was required to shovel soil away from the base of the auger, whilst drilling was in process. He was also required to approach the shaft to connect and disconnect extension pieces from the shaft.

[18] Immediately after the incident an extra emergency stop switch was installed and warning/reminder stickers were placed on the unit. The second defendant also gave more frequent verbal directions for persons to maintain a "safe distance" whilst the shaft was rotating.

[19] In addition, the JSA was reviewed and modified, including an additional "safe working direction that reads "No physical contact whatsoever to be made with moving parts".

[20] Further, prior to the commencement of work at each work location, the JSA is read through both visually and verbally for all persons working in proximity to the machine and then signed off by each of those workers.

[21] Subsequently, guarding, referred to as 'a cage', has also been fitted to the drilling rig involved in the incident.

[22] The 'cage' was fitted in response to the Improvement Notice 7-72355 issued by Inspector Larobina on 13 December 2004.

[23] The system of guarding now installed on the drill rig is likely to prevent inadvertent contact with the rotating shaft of the auger and the auger.

[24] As a result of the said failures Andrew Talbot was placed at risk of injury in the course of his employment on 17 March 2004.

[25] Andrew Talbot suffered serious injury, including head injuries and severe injuries to his right arm. As at 7 October 2004 he was still unable to return to work. 6 In addition to the agreed statement of facts, the prosecution has also tendered a bundle of documents including: (i) A Factual Inspection Report compiled by Senior Safety Inspector Alan Jones, dated 17 March 2004; (ii) A Drilltest Job Safety Analysis (JSA), undated, relating to, amongst other matters, drilling, sampling and well construction. It is, as I understand it, the JSA in place at the time of the accident; (iii) A Drilltest Job Safety Analysis (JSA) revised after the accident on 17 March 2004;

(iv) Copy of a WorkCover Improvement Notice issued by Inspector Larobina to Drilltest on 13 December 2004, together with a fax from Drilltest to Inspector Larobina in relation to that Notice dated 3 January 2005; 7 Also tendered by the prosecution, without objection, were a number of photographs, which have assisted me in understanding the nature of the machinery involved in the accident. 8 There were two affidavits of Mr Miller filed on behalf of both defendants. One was sworn on 6 October 2006, the second on 31 October 2006. As well, an affidavit of Mr Kenneth John Kerney-Ennis was tendered without objection. Mr Kerney-Ennis has been a co-director of Drilltest with Mr Miller since November 1991. In his affidavit, Mr Kerney-Ennis outlined his work history spanning 40 years in the drilling industry and the events leading to the formation of the corporate defendant. Mr Kerney-Ennis also described actions taken by Drilltest following the accident involving Mr Talbot. 9 In his first affidavit, Mr Miller detailed his 30 years of experience in the drilling industry and the system of work in place prior to and at the time of the accident as well as modifications to the system of work involving the use of the drill rig and the auger following the accident. His second affidavit attached certain financial statements on behalf of Drilltest. 10 Testimonials for both the corporate defendant and Mr Miller were attached to Mr Miller's first affidavit from a diverse range of persons who have known and worked with Mr Miller in the industry and utilised the services of Drilltest over a number of years. 11 Mr Douglas Miller and Mr Kenneth Kerney-Ennis were required for cross-examination.

Relevant principles 12 The overall approach to be followed in relation to the determination of penalty is to be found in the first instance within the statutory provisions of the Crimes (Sentencing Procedure) Act 1999 (CSPA) and in particular in relation to these proceedings, ss 3A Purposes of Sentencing, 21A Aggravating, mitigating and other factors in sentencing, 22 Guilty plea to be taken into account.

13 In R v Way [2004] NSWCCA 131 it was emphasised that the provisions of the CSPA referred to above are not to be construed as representing 'a departure from settled principles of sentencing practice, or an abandonment of the discretion that is essential to any system calling for individualised justice'. As was said at [59]: .... it is clear that the legislative policy.......so far as that can be discerned from the legislation itself, was not to create a straight jacket for judges...but rather were intended to provide 'further guidance and structure to judicial discretion.' 14 It is well settled that the starting point for considerations as to penalty is the objective seriousness of the offence charged: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 474.

15 The principle of foreseeability as a factor in determining the objective seriousness of an offence was considered and affirmed in the Full Bench decision of Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at 646. 16 On the issue of foreseeability, the Full Bench in Capral also stated: The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However, the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J, President, in Ferguson v Nelmac Pty Ltd (at 209-210) in these terms: ... reliance on 'hindsight' must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s 15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy. 17 The principles of general and specific deterrence are also relevant in sentencing considerations. The approach to be taken on that issue has also been dealt with in some detail in Capral at 643-645. Without detailing all that the Full Bench had to say on those issues I believe the approach to deterrence in the sentencing process is encapsulated in the following passage from the Full Bench in Capral at 644 as follows: ... both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Page v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39 at [40]-[43] we would expect such cases to be very rare, and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted.

18 In the context of the above well established sentencing principles it will also be necessary to have regard to those general matters going to aggravation, mitigation and other factors identified in s 21A (1) of the CSPA relevant to the defendant. As was said in R v Way at [56]:

... it is not to be overlooked that there is a well established body of principles that have been developed by the courts over a long period of time. By providing guidance in the form of a list of aggravating and mitigating factors in s 21A, the Parliament did not intend to overrule or disturb those principles or restrict their application. In so far as those principles refer to factors, whether objective or subjective, that affect the 'relative seriousness' of the offence, they are expressly preserved by s 21A(1)(c). 19 Ultimately, all of the above factors must be considered as part of 'a complex of inter-related considerations' (See R v Gallagher (1991) 23 NSWLR 220). Having said that, as was said by Spigelman CJ in Thorneloe v Filipowski (2001) 52 NSWLR 60 at 69, it still remains for the sentencing judge to ensure: ... that a sentence should be proportionate to the objective gravity of the offence. This necessarily requires a sentencing judge to consider, at some stage in the reasoning process, the sentence that is appropriate for the particular circumstances of the crime without reference to the subjective case of the particular offender. 20 In Markarian v The Queen [2005] HCA 25: 18 May 2005, the High Court, by majority (Kirby J dissenting) generally disavowed the sequential or two tiered approach to sentencing. In doing so, their Honours did not entirely reject the proposition that, in some circumstances, 'an arithmetical process' would be appropriate. As they said at [39]: Following the decision of this Court in Wong it cannot now be doubted that sentencing courts may not add and subtract item by item from some apparently subliminally derived figure, passages of time in order to fix the time which an offender must serve in prison. That is not to say that in a simple case, ... indulgence in arithmetical deduction by the sentencing judges should be absolutely forbidden. ... The law strongly favours transparency. Accessible reasoning is necessary in the interests of victims, of the parties, appeal courts, and the public. There may be occasions when some indulgence in an arithmetical process will better serve these ends . ... (emphasis added) 21 On that point, McHugh J also acknowledged the need, where appropriate, for the awarding of a nominated discount for 'some factor'. As he said at [74]: ...The distinction between permissible and impermissible quantification of "discounts" on a sentence will usually be found in whether the quantification relates to a sentencing purpose rather than some other purpose. So, the quantification of the discount commonly applied for an early plea of guilty or assistance to authorities is offered as an incentive for specific outcomes in the administration of criminal justice and is not related to sentencing purposes. The non-sentencing purpose of the discount for an early guilty plea or assistance is demonstrated by the fact that offenders are ordinarily entitled to additional mitigation for any remorse or contrition demonstrated with the plea or assistance, aside from the discount for willingness to facilitate the course of justice...

22 Overall, I observe nothing in Markarian that precludes me, properly in my view, from identifying a discount for the entry of an early plea of guilty. Additionally, to the extent that there are subjective and mitigating features relevant to the defendant, they are matters which also should be considered in accordance with the provisions of the Crimes (Sentencing Procedure) Act 1999, in particular s 21A(1) earlier referred to.

Considerations 23 As a corporate defendant with no prior convictions, the maximum penalty that can be imposed upon Drilltest is $550,000. As an individual with no prior convictions, the maximum penalty that may be imposed on Mr Miller is $55,000. 24 As set out in the facts, Drilltest was employed as a contractor by First In Pty Ltd, a geotechnical firm, to obtain soil and rock samples on a residential building site at Auburn. Mr Miller was in charge of operating the drill while Mr Talbot performed work as Mr Miller's offsider. 25 The drilling auger involved in the accident was attached to a hydraulically operated drilling rig, which was mounted on the rear of a truck. At the time of the accident, there was no guarding around the auger.

26 Mr Talbot's duties as offsider included organising tools and equipment, handing tools to Mr Miller, changing the extension attachments for the drill auger and shovelling soil away from the auger while drilling took place. All of these tasks required Mr Talbot to work in close proximity to the auger, sometimes while it was still rotating. 27 Where a worker was working in close proximity to an exposed and rotating auger, Drilltest's Job Safety Analysis (JSA) at the time of the accident specifically identified the hazard of the rotating auger and drill stem while undertaking the tasks of drilling, sampling and well construction. The JSA ranked the task of drilling and sampling as a high risk activity and specified that workers were to observe the following control actions to avoid the hazard: Keep safe distances (emphasis added) No loose clothing All personnel to be aware of "kill" switch and operation

28 Given the defendant's awareness of the risk to safety posed by the rotating drill as highlighted in the JSA and that Mr Talbot's work necessitated working in such close proximity to the auger, there was a clear and foreseeable risk to safety that required 'appropriate measures' to be taken. Those identified in [27] above were adequate up to a point. If employees were to work as closely to the rotating auger of the drill as Mr Talbot clearly was, then it needed more appropriate measures such as guarding in order to prevent the very real possibility of an employee getting caught up in it. 29 The JSA produced as being applicable prior to the accident on 17 March 2004 gave all the appearance of being what I would describe as a generic pro forma document that had been prepared by the defendants some time before. It was not a JSA that had been undertaken with the specific task being undertaken on 17 March 2004 in mind. It certainly was not completed as relating to the particular task being undertaken by Mr Miller and Mr Talbot on that day such as to suggest the hazards from the rotating drill involved in the task of drilling and sampling had been reinforced in the minds of Mr Miller and Mr Talbot for the job at hand. It would seem that the purpose of the generic JSA was predominantly to serve as a document to show to external parties, such as on-site managers, rather than as the basis for a safe system of work. Mr Talbot certainly had not seen the JSA at any time prior to the accident. 30 Mr Miller deposed that prior to the accident, he explained the contents of the JSA 'to all persons working close to the machine'. While that may be so, such instruction and training that that represented was clearly inadequate given what occurred. This was especially so, given that Mr Talbot was a relatively inexperienced employee and the tasks assigned to him required him working close to the rotating auger. 31 The inadequacy of the overall system of work, particularly the instruction and training of Mr Talbot, coupled with the inherent danger of the unguarded rotating auger, made it entirely foreseeable that an injury could occur. 32 As stated by the Full Bench in Capral at 650, 'a breach where there was every prospect of serious consequences might be assessed on a different basis to a breach unlikely to have such consequences'. 33 Further, as was stated in Capral, the presence of foreseeability 'will necessarily result in the offence being more serious in nature'. As such, the starting point for the determination of foreseeability within the context of the objective seriousness of an offence is whether there was 'an obvious or foreseeable risk to safety against which appropriate measures were not taken'. (Lawrenson Diecasting at 476). 34 It is relevant to the objective seriousness of an offence to consider if there were readily and easily available remediation steps which could have been undertaken by the defendant before the accident to prevent injury occurring. To put it another way, one should have regard to remediation or the extent of remediation that is done post the accident, as an indication of the extent to which foreseeability of injury was readily identifiable.

35 Some months after the accident, WorkCover issued an Improvement Notice requiring Drilltest to fit a cage covering the exposed auger. Correspondence between Drilltest and WorkCover reveal some difficulties encountered by the corporate defendant in doing that. However, the letters also demonstrate the defendants' efforts to cooperate with WorkCover and to comply with the issued Improvement Notice. The cage was fitted by January 2005. 36 The installation of a guard or cage around the auger was a step which could have been undertaken prior to the accident.

37 Drilltest also made additional modifications to the drill following the accident including installing warning stickers and an extra emergency switch on the drill. 38 The generic JSA was reviewed and modified to include a direction that "no physical contact whatsoever to be made with moving parts". Further, Drilltest required employees to read and sign off the JSA prior to the commencement of work. 39 Considering all of the above, I consider the offences as being objectively serious and will assess penalty on that basis.

40 The decision of the Full Bench in Capral clearly indicates that general and specific deterrence are factors that should be given weight in all but exceptional circumstances. The Full Bench said at 643-644 that: We consider that the extract from the judgment of Hungerford J in Fisher v Samaras Industries Pty Limited accurately states the approach that members of this Court should take in relation to the question of deterrence, both general and personal or specific, when sentencing an offender in relation to a serious breach of the legislation. It follows that those aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process.

41 In respect of specific deterrence, the Full Bench held in Capral at 644-645: In sentencing, a court may disregard the element of specific deterrence if satisfied that the risk of re-offending is low or non-existent. The court may form such a view as a result of the rehabilitation of the offender: R v Corner (unreported, Court of Criminal Appeal, 19 December 1997) or because the offender will not have the opportunity to commit a similar offence in the future: R v Macdonell (unreported, Court of Criminal Appeal, 8 December 1995). However, we think it unlikely that the weight to be attached to specific deterrence could be reduced to zero in cases of offences under the Act. 42 I consider general deterrence to be a relevant consideration in these proceedings. The work undertaken in the geotechnical drilling industry and the equipment used involves ever present risks to safety. 43 As to specific deterrence, Mr Miller deposed that the company and it's equipment, including the drill involved in the accident, were sold to another company, Drilltest (Australia) Pty Ltd (Drilltest Australia), in February 2005. Mr Miller also stated that Drilltest will be deregistered and wound up pending the conclusion of the current legal proceedings. The prosecutor conceded that in light of these matters, the weight accorded to specific deterrence for the corporate defendant should be minimal. I would agree. 44 As counsel for the prosecutor stated, and I accept, Mr Miller has learned "a significant lesson as a consequence of being involved in ... an horrendous incident". Nevertheless, specific deterrence is still a relevant consideration in relation to his offence. He is currently employed by another drilling company, Macquarie Drilling Pty Limited, where he acts in a supervisory role, including responsibility for drilling equipment.

45 Mr Miller stated that he is involved in discussions relating to machine safety in his present job and has been involved in the purchase of new machinery. In doing so, he has sought to acquire machinery with safety guarding over the auger that is configured to cease operation if the guard is open. According to Mr Miller, following the accident involving Mr Talbot, he has actively encouraged his new employer to acquire this type of machinery. 46 By all accounts, Mr Miller takes a more rigorous approach to ensuring that workers under his supervision adhere to safety rules and requirements. He is at pains to reinforce them with daily toolbox meetings. 47 The actions detailed above evince a genuine and ongoing commitment on the part of Mr Miller to workplace safety. The weight accorded to specific deterrence in relation to his offence shall be tempered accordingly. 48 In addressing the defendants' ability to pay a financial penalty, counsel for the defendants submitted that Mr Miller had the capacity to pay a modest fine. No direct submissions were made as to Drilltest's incapacity to pay any financial penalty imposed. However, an Annual Financial Report for the year ending 30 June 2006 and a bank statement for the corporate defendant as at 15 September 2006 were put before the court that clearly inferred a limited ability on the part of the corporate defendant to pay a substantial penalty. As well, both Mr Miller and Mr Kerney-Ennis gave evidence regarding the financial circumstances of the company. 49 In assessing the respective defendants' ability to pay a fine, the court is guided by s 6 of the Fines Act (1996) that provides: In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider: (a) such information regarding the means of the accused as is reasonably and practicably available to the Court for consideration, and (b) such other matters as, in the opinion of the Court, are relevant to the fixing of that amount. 50 Mr Miller and his wife own their family home, which, he said, was valued between $370,000 to $380,000. It is subject to a mortgage by the Commonwealth Bank which Mr Miller estimated to be approximately $58,000 to $60,000. As detailed in his affidavit, other assets in Mr Miller's possession include a 1995 Commodore and a small boat, which he estimated to be worth around $2,000. Additionally, Mr Miller earns $68,000 per annum as an employee of Macquarie Drilling Pty Limited. 51 In support of his evidence as to his financial circumstances, Mr Miller also tendered bank statements from two separate accounts. One of the accounts is in Mr Miller's name. According to Mr Miller, his wife's wages are deposited into that account. That account shows, as at 2 November 2006, a balance of $2,672.77. The other account, he said, is held in Mrs Miller's name and Mr Miller's salary from his present job is deposited into that account. The account statement shows a balance, as at 1 November 2006, of $907.06. The latter bank account statement revealed that Mr Miller is paid a net wage of $982.69 per fortnight. That amount was confirmed by an employee payslip from Macquarie Drilling Pty Limited for the period ending 31 October 2006. 52 The Annual Financial Report tendered on behalf of Drilltest included a Balance Sheet and a Trading, Profit and Loss statement for the 2006 financial year. Those statements revealed comparisons with the 2005 financial year. In the 2005 financial year the company made a net profit of $89,588. In 2006, the company made a net loss of $602.53. It was explained that the loss in the 2006 year was due to the decision of Mr Miller and Mr Kerney-Ennis to wind down the corporate defendant's work and to sell the business in February 2005 to Drilltest Australia. 53 The submitted financial documents and the evidence of Mr Miller and Mr Kerney-Ennis were somewhat deficient in presenting a clear picture of the true financial status of the company. The contract for the sale of Drilltest revealed that the business was sold in February 2005 for $250,000 (including GST). However, the Trading, Profit and Loss statement only records $212,090.21 from the sale of the business, leaving a shortfall of $37,909.79. Overall, the documentation provided does not readily assist to explain the nature of various transactions which occurred following the sale of the business nor were Mr Kerney Ennis or Mr Miller able to answer with certainty what some figures referred to in the Trading, Profit and Loss Statement actually represented. For example, for the 2005 tax year, Mr Kerney-Ennis was unaware what the sum of $163,984.49, identified as Direct Wages under the heading Cost of Goods Sold, actually represented. 54 The Notes to the Financial Statements for the 2006 tax year show that the company repaid loans made by Mr Kerney-Ennis and Mr Miller, amounting to $15,770.78 and $22,142.24 respectively. When cross-examined as to what moneys repaid those loans, Mr Kerney-Ennis confirmed that the money had been paid out of the purchase price of the company. That would appear to explain the shortfall of $37,909.79 in the recorded proceeds of the sale of the business in the 2005 tax year. 55 Mr Miller and Mr Kerney-Ennis both stated the company had paid all of its outstanding liabilities and that $50,035 was available in a bank account to pay any fine imposed by the Court. However, the Balance Sheet of Drilltest for the 2006 tax year reveals the company had retained profits of $71,745.75. Mr Kerney-Ennis explained that the $21,745.75 shortfall between that figure and the current sum of $50,035 identified in the company's bank statement was in another cheque account which, he said, was Drilltest's tax management account. That account, it was explained, is managed by Drilltest's accountant. Mr Kerney-Ennis was questioned as follows: Q. We are agreed then for present purposes...that in so far as one is talking about available cash funds held by the corporation there is a figure of approximately $71,745 in moneys held by the Company? A. At present, it should be. I think it's down to about $68,000. 56 Overall, I have to say the material produced by the defendants as to their respective limited capacity to pay a fine was somewhat unsatisfactory. It was, in my view, incomplete as far as placing a clear and detailed picture for the Court to have regard to. In relation to a defendant's ability to pay, I note the observation in WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Limited trading as Old But New [2004] NSWIRComm 247 at [51] as follows:

... where a defendant desires to plead incapacity to pay as a determinative issue in the imposition of penalty, it behoves the defendant to discharge the onus that such a submission invokes by placing before the Court all of the information it relies upon in support of that submission in order for the Court to give that information proper consideration in the exercise of its sentencing discretion. 57 Despite the uncertainty and questions raised by the tendered financial documents, what is apparent is that Drilltest was a relatively small company. Further, the business of the company has now been sold, which means that it remains, in financial terms, a company in name only. While it remains registered, it has no income, no assets and it is not trading. Accordingly, it's financial resources are limited. I accept the evidence of Mr Miller that it is intended to wind the company up once the current proceedings are concluded. 58 Likewise, I accept that Mr Miller is a man of relatively limited means who, as a director, may have to carry his share of the financial shortfall if the company's funds are insufficient to meet the penalty imposed as well as his own financial penalty. 59 Having regard to all of the above, the approach I propose to take is as that enunciated in Obing where the Full Bench cited, with approval, the decision of Wright J, President in Ferguson v Nelmac Pty Limited (1999) 92 IR 188 at 210 where his Honour observed: ... whilst I accept that the imposition of heavy fines would be a burden on the defendant and its financial resources and that consideration should be given appropriate weight on the question of penalty, it does not necessarily result in the Court not imposing a heavy penalty ... the penalty should reflect the objective seriousness of the offence. 60 There are additional subjective features that should be taken into account in the defendant's favour as part of my considerations on penalty. 61 Counsel for the prosecutor acknowledged both defendants entered their respective pleas of guilty at the first reasonable opportunity. Accordingly, the defendants are entitled to have that early plea taken into account in determination of penalty. In doing so, the Court is guided by the decision of R v Thomson; R v Houlton (2000) 49 NSWLR 383, the principles of which are well settled and need no elaboration and reinforced in s 22 of the Crimes (Sentencing Procedure) Act 1999. I assess the discount for each defendant at twenty five per cent. 62 The prosecutor agrees the defendants, via Mr Miller, cooperated with WorkCover during its investigation into the incident. Mr Miller visited Mr Talbot while he was hospitalised and Mr Miller, on his own behalf and on behalf of Drilltest, expressed contrition for the accident involving Mr Talbot. 63 I have already referred to the diverse range of testimonials tendered without objection attesting to the good character, professionalism and safety consciousness of both defendants in the conduct of their business. While no reference was made in any of the testimonials that the writers were aware of the charges against Mr Miller and the corporate defendant, no issue was taken to that on behalf of the prosecutor. 64 I accept those testimonials reflect the high regard that Mr Miller's peers hold of the manner in which he undertakes his work, as well as that of the company, and that he is of good repute and character. The fact that Drilltest operated from 1991 without a conviction would attest to the general safe conduct of work performed by the company during the period from 1991 to 2004. 65 Taking into account all the matters referred to, I assess penalty as follows: (i) In relation to Drilltest Pty Limited, I impose a penalty of $83,500. (ii) In relation to Douglas Stephen Miller, I impose a penalty of $9,425. 66 On the question of costs 'in and by a conviction or order', I note that s 253 of the Criminal Procedure Act 1986 has now been repealed as of 13 July 2006. On the question of costs to be awarded to the prosecutor, s 257B of the Criminal Procedure Act inserted by s 3 of the Courts Legislation Amendment Act 2006 and operative from 13 July 2006 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. 67 Further, s 257G of the Criminal Procedure Act now provides: 257G Calculation of costs The professional or other costs payable by a prosecutor or accused person in accordance with an order directing that the amount of costs is to be determined under this section are to be determined: (a) by agreement between the prosecutor and accused person, or (b) if no such agreement can be reached, in accordance with Division 11 of Part 3.2 of the Legal Profession Act 2004 (with or without modifications prescribed by the regulations). 68 However, the relevant Savings, transitional and other provisions applying to the above amendments provide:

49 Definition In this Part: amending Act means the Courts Legislation Amendment Act 2006. 50 Amendments

(1) An amendment made to this Act by the amending Act does not extend to proceedings instituted before the commencement of that amendment. (2) Such proceedings may be dealt with as if the amendment had not commenced. 69 Accordingly, the provisions of s 253 of the Criminal Appeal Act 1912 continue to apply to the orders I can make in these proceedings relevant to costs 'in and by a conviction or order': See my decision in McMartin v Newcastle Wallsend Coal Company and ors (2005) NSWIRComm 31 at [306] and [387]. 70 Accordingly, I make the following orders:

(1) Matter No IRC 4860 of 2005: WorkCover Authority of New South Wales v (Inspector Larobina) v Drilltest Pty Limited : Prosecution arising under s 8(1) of the Occupational Health and Safety Act 2000:

(i) The defendant is guilty of the offence charged.

(iii) I allocate a moiety to the prosecutor on the usual terms.

(2) Matter No IRC 4861 of 2005: WorkCover Authority of New South Wales (Inspector Larobina) v Douglas Stephen Miller : Prosecution arising under s 8(1) of the Occupational Health and Safety Act 2000 by virtue of s 26(1) of the Act:

(i) The defendant is guilty of the offence charged.

(iii) I allocated a moiety to the prosecutor on the usual terms. (3) Between them, I order the defendants to pay the costs of the prosecutor as agreed or assessed. Failing agreement, the matter may be referred to the Registrar for assessment .

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