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

WorkCover Authority of New South Wales (Inspector Larobina) v Drilltest Pty Limited and Douglas Stephen Miller - [2006] NSWIRComm 371 - NSWIRComm 2005 case summary — Zoe

[43]

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.

[45]

... 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...

[49]

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.

[54]

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:

[55]

... 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

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