WorkCover Authority of New South Wales (Inspector Bishwa) v Graetz Investments Pty Limited and Coastal Transport

Industrial Relations Commission (NSW)|2005-10-28|Before: Staunton J

Industrial Relations Commission of New South Wales in Court Session

CITATION: WorkCover Authority of New South Wales (Inspector Bishwa) v Graetz Investments Pty Limited and Coastal Transport (NSW) Pty Limited [2005] NSWIRComm 410

PROSECUTION: WorkCover Authority of New South Wales (Inpector Bishwa)

CATCHWORDS: Occupational health and safety - pleas of guilty - general principles - objective seriousness of the offences - foreseeability - general and specific deterrence - consideration of principle of totality given intimate and linked corporate structure between the defendants - corporate entities pivot around sole person as real defendant - principle of parity considered as between the defendants - held approach is to ensure total criminality with respect to both offences is met - no prior convictions for either defendant - subjective features taken into consideration - financial circumstances of the defendants considered - penalties imposed - orders as to penalty, moiety and costs.

Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Occupational Health and Safety Act 1983 Occupational Health and Safety Act 2000

Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 Crown in the Right of the State of New South Wales (Department of Education and Training) v Keenan (2001) 105 IR 181 Ferguson v Nelmac Pty Limited (1999) 92 IR 188 Haynes v C I & D Manufacturing Pty Limited (1994) 60 IR 149 Haynes v C I & D Manufacturing Pty Limited and anor (No 2) (1995) 60 IR 455 CASES CITED: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 Pearce v The Queen (1998) 194 CLR 610 R v Way [2004] NSWCCA 131 WorkCover Authority of New South Wales v McDonalds and anor (1999) 95 IR 383 WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Limited trading as Old But New [2004] NSWIRComm 247

PROSECUTION: Ms K Nomchong of counsel SOLICITORS: Moray & Agnew LEGAL REPRESENTATIVES: DEFENDANTS: Mr R Warren of counsel SOLICITORS: Aubrey Brown Partners

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

CORAM: Staunton J DATE: 16/11/2005 Matter No IRC 3894 of 2004 WorkCover Authority of New South Wales (Inspector Bishwa) v Graetz Investments Pty Limited Prosecution arising under s8(1) of the Occupational Health and Safety Act 2000

Matter No IRC 3895 of 2004 WorkCover Authority of New South Wales (Inspector Bishwa) v Coastal Transport (NSW) Pty Limited Prosecution arising under s10(2) of the Occupational Health and Safety Act 2000 JUDGMENT [2005] NSWIRComm 410

1 The first defendant, Graetz Investments Pty Limited (Graetz) is a labour hire company involved in the transport business. It is one of a number of related companies in which the beneficial ownership was, and is, substantially held by Raymond John Graetz, the sole director and secretary of Graetz and other related companies. 2 The second defendant, Coastal Transport (NSW) Pty Limited (Coastal Transport) is engaged in the business of transport services involving the pick up and delivery of products of various kinds. Mr Graetz is also the sole director and secretary of that company. 3 There are two other companies which are clearly relevant in piecing together the corporate structure behind these proceedings. The first is Coastal Transport Services Pty Limited. Mr Graetz is also the sole director and secretary of that company. That company and the first defendant both provide services to the second defendant. 4 The other company is Coastal Transport Operations Pty Limited (CTO). Mr Graetz is also the sole director and secretary of that company. As best as I understand it, that company was formed in or about 2004 to take over the services previously undertaken by Graetz for Coastal Transport (NSW) Pty Limited. I will refer further to CTO as well as the overall corporate structure of Mr Graetz's transport operations later in this judgment. 5 Overall, Mr Graetz manages all the above corporate entities on a day to day basis. It is apparent the corporate entities were established by Mr Graetz on the advice of his accountant in order to operate a comparatively small sized transport business on the central coast of New South Wales. Although the reasons for such an approach to the running of his business was never spelt out in precise terms by Mr Graetz, it would appear it was a combination of finance as well as tax and regulatory advantages arising from such a structure. At the time of Mr Harkin's accident in 2002, all three companies then operating were grouped together for GST, payroll tax and worker's compensation. 6 On 9 August 2002, the first defendant employed Mr Gregory Harkin as a truck driver. He had been so employed since 15 May 2002. His services were contracted to the second defendant which conducted it's business in the name of Coastal Transport Services. 7 On 9 August 2002, Mr Harkin was driving an International table top truck, registration number SJM-896. That truck had a vehicle load crane attachment. On that day, Mr Harkin was using the truck to deliver concrete drainage products to a site at Wentworth Falls. To do that job, Mr Harkin used the vehicle loading crane on the back of the truck. 8 During the delivery operation, Mr Harkin experienced problems in getting the crane hook into position as it had become lodged or jammed. In trying to free the jammed jib and hook, Mr Harkin stood between the jib and the tray of the truck on the right-hand side of the vehicle in order to use the controls on that side of the vehicle. In doing so, the jib slewed to the left and jammed Mr Harkins' head and shoulders between the jib and the tray of the truck. 9 Mr Harkins sustained severe injuries to his back, head and shoulders. He was hospitalised for some ten days. He underwent extensive rehabilitation and he ultimately returned to full time work with the first defendant in or about April 2003. He resigned from that position in February 2005 to commence employment elsewhere. 10 As a result of the above incident, the defendants were each charged with an offence under the Occupational Health and Safety Act 2000 (the Act). 11 The first defendant, Graetz, was charged with an offence arising under s8(1) of the Act. The relevant particulars of the offence charged is that on 9 August 2002, the defendant, as an employer, failed: To ensure the health, safety and welfare at work of it's employees, including Mr Harkin, by reason that the defendant failed to provide and maintain a system of work that was safe and without risk to health. 12 The failures particularised were pleaded as follows: (a) the work was performed when the worker had not been provided with a Safe Work Procedure to be followed for the conduct of the work of shutting down the crane; (b) the worker operated the vehicle loading crane when he was not in possession of a certificate of competency for such work as required by clause 270(1) of the Occupational Health and Safety Regulations 2001; (c) the work was conducted when no proper risk assessment in relation to such work had been conducted; (d) the operation or attempted operation of the controls on the right hand side of the crane truck during the procedure for shutting down the crane, was unsafe; (e) the work was performed when there was no system in place to enable a safe shutdown of the crane to be carried out in the event of a malfunction jamming of the crane hook.

(2) The defendant failed to ensure that the plant to wit the said crane truck provided for use by the worker at work, was safe and without risk to health when properly used, in that: (a) there was a risk of entrapment between the boom and the tray of the truck in the event of operation of the crane controls on the right hand side of the crane truck for the purpose of shutting down the crane; (b) the crane truck had no warning signs displayed upon it warning of the risk of entrapment. (3) The defendant failed to provide such information, instruction, training and supervision in relation to the work involving the use of the crane truck, as was necessary to ensure the worker's health and safety at work, particulars of which failure include but are not limited to the following: (a) the HMF Instruction Manual in respect of the vehicle loading crane was not made available to the worker; (b) the on-the-job training provided to the worker was inadequate; (c) the risks associated with the unloading/reloading of the crane were not properly communicated to the worker; (d) the worker was not trained to recognise the hazards and risks associated with all aspects of the crane's operation particularly the risk of operating the control levers on the right hand side of the crane; (e) the worker was not instructed in the procedure to be followed in the event of any malfunction/jamming during the operation of the crane; (f) the worker was not informed of the correct or safe shutdown procedure to be followed in the event of a malfunction or jamming of the crane hook. 13 The second defendant, Coastal Transport, was charged with an offence arising under s10(2) of the Act. The relevant particulars of the offence charged is that on 9 August 2002 the defendant, being a person with control of a plant, that being a crane truck used by Mr Harkin at work, failed: To ensure that the crane truck was safe and without risk to health when properly used by reason that: (i) There was a risk of entrapment between the boom of the crane and the tray of the truck in the event of operation of the crane controls on the right hand side for the purpose of shutting down the crane. (ii) The crane truck had no warning signs displayed upon it warning of the risk of entrapment when its operation was conducted from the crane controls on the right hand side. (iii) The operation or attempted operation of the controls on the right hand side of the crane truck during the procedure for shutting down the crane was unsafe because of the risk of entrapment between the boom and the tray of the truck. (iv) There was no shut down procedures or instructions given to the operator when operating the controls on the right hand side of the crane truck in the event of a malfunction/jamming of the crane hook. (v) There was no shut down device accessible to the operator when operating the controls on the right hand side of the crane truck in the event of a malfunction/jamming of the crane hook. 14 Both defendants have entered a plea of guilty to the offences as charged. 15 A statement of agreed facts has been filed with respect to both offences. Not surprisingly, there is considerable overlap between the two statements. To avoid repetition, I set out in the first instance those matters relevantly common to both offences that have been filed in relation to the second defendant, adding only those additional agreed facts in relation to the first defendant. 16 In relation to the second defendant, they are: [1] The defendant was one of a number of companies in a group of related companies in which the beneficial ownership was, and is, substantially held by the sole director and secretary of each of these companies, namely Raymond John Graetz. The other two companies in the group were Graetz Investments Pty Ltd [ACN 092 521 741] and Coastal Transport Services Pty Ltd [ACN 003 207 136]. [2] At all material times Coastal Transport Services was a registered business name which business was carried on by Coastal Transport Services Pty Ltd. [3] At all material times the defendant also conducted its business under the trade name of Coastal Transport Services. [4] Graetz Investments Pty Ltd is the defendant in concurrent proceedings being IRC 3894 of 2004. [5] Pursuant to an agreement dated 1 July 2002 headed "Agreement for Provision of Labour Services" Graetz Investments Pty Ltd agreed to provide labour services to the defendant for the carrying out of its business operation. [6] At all material times Graetz Investments Pty Ltd employed Gregory Harkin ("the worker") as a truck driver. The worker had commenced employment with Graetz Investments Pty Ltd on 15 May 2002. [7] Pursuant to the agreement between the defendant and Graetz Investments Pty Ltd the worker was let on hire to the defendant and was engaged by the defendant to carry out duties as a truck driver in the defendant's transport services business. [8] At all material times one of the transport vehicles used by the defendant in its transport services business, was an International table top truck, registration number SJM 896, with a vehicle loading crane attachment with identification number HMF1403K28929305, normally referred to as Unit 23 ("the crane truck"). It was part of a fleet of vehicles operated by Coastal Transport Services. [9] At all material times on and prior to 9 August 2002 the worker had operated the crane truck in the course of his engagement by the defendant and was involved in conducting pick ups and deliveries for the defendant from various sites. [10] The vehicle loading crane attachment had two sets of control levers, located opposite each other, across the rear of the truck and at the crane base. Each set had six levers which controlled different movements of the crane which movements were marked accordingly on the levers. [11] The set of control levers on the left (passenger) side of the truck was used more often than on the right side, especially during the starting phase or the unfolding of the crane and when shutting down or folding of the crane. The access to the control levers on the right side was slightly obstructed when the crane (boom and the jib) was in a stowed or fully folded position. Once the main boom had been raised sufficiently, the operator could access and use the right side controls, if required. [12] At about 1.00pm on 9 August 2002 the worker had used the vehicle loading crane to deliver concrete drainage products to a site in Mitchell Street, Wentworth Falls. Having completed the delivery, the worker was in the process of folding the boom and jib of the vehicle loading crane and in doing so was using the control levers located on the left side of the crane truck. During the operation, the worker experienced some problems in getting the crane hook into position as it had become lodged or jammed. The jib and the hook had come into contact with and interfered with the control levers on the right side of the vehicle loading crane. [13] The worker then left the controls on the left side of the crane and went around to the controls on the right side where he attempted to free the crane hook. [14] The worker then attempted to free the jammed jib and hook by operating the levers on the right side control bank of the crane. In doing so, the worker was standing between the jib and the tray of the truck. While in this position the worker used the controls to attempt to free the hook and jib. The jib slewed to the left and jammed the worker's head and shoulders between the jib and the tray of the truck. [15] As a consequence of the incident the worker sustained severe injuries which required him being transported immediately to hospital. The worker was unable to attend to his normal work for a period of in excess of seven (7) days following the incident. [16] There was a risk of entrapment between the boom of the crane and the tray of the truck when the crane controls on the right hand side of the crane were being used for the purpose of shutting down the crane. [17] The crane truck had no warning signs displayed upon it warning of the risk of entrapment when its operation was conducted from the crane controls on the right hand side. [18] The operation or attempted operation of the controls on the right hand side of the crane truck during the procedure for shutting down the crane was unsafe because of the risk of entrapment between the boom and the tray of the truck. [19] There was no shut down procedure or instructions given to the worker for the operation of the controls on the right hand side of the crane truck in the event of a malfunction/jamming of the crane hook. [20] There was no shut down mechanism accessible to the operator when operating the controls on the right hand side of the crane truck in the event of a malfunction/jamming of the crane hook. 17 The additional relevant agreed facts in relation to the first defendant state: [1] When the worker commenced employment, the defendant assumed he was competent to operate the vehicle loading crane because of his prior work experience. [2] Prior to the date of the incident, the only training provided to the worker by the defendant was placing him with the out-going worker who was leaving the defendant's employ, for a period of two weeks. During that two week period, no specific instruction was given, only on-the-job observation. [3] The worker was not instructed in the procedure to be followed in the event of any malfunction/ jamming during the operation of the crane. The worker was not informed of the correct or safe shutdown procedure to be followed in the event of a malfunction or jamming of the crane hook. [4] The work was performed when the worker had not been provided with a Safe Work Procedure to be followed for the conduct of the work of folding the crane. [5] The defendant had in place an Occupational Health and Safety Policy as at 9 August 2002. However, the work was conducted when no proper risk assessment in relation to such work had been conducted by the defendant. [6] The operation or attempted operation of the controls on the right hand side of the crane truck during the procedure for shutting down the crane was unsafe. [7] The work was performed when there was no system in place to enable a safe shutdown of crane to be carried out in the event of a malfunction. [8] There was a risk of entrapment between the boom and the tray of the truck when utilizing the crane controls on the right hand side of the crane truck for the purpose of folding the crane. [9] The crane truck had no warning signs displayed upon it warning of the risk of entrapment as described in the immediately preceding paragraph. 18 In addition to the agreed facts in both matters, the prosecutor tendered without objection: (i) Copy of Records of Interview with Mr Raymond Graetz, the Managing Director of both defendants, dated 13 February 2003, 12 June 2003 and 2 June 2004 respectively. (ii) Copy of Record of Interview with Mr Gregory Harkin dated 13 February 2003. Mr Harkin was the driver of the truck on 9 August 2002 when the accident happened and he was injured. (iii) Copy of Record of Interview with Mr Michael Barnes dated 7 February 2003. Mr Barnes was the Operations Supervisor with Graetz and, in his words, was 'working Coastal Transport Services'. (iv) Copy of factual inspection report prepared by Inspector Jim Allison dated 15 August 2002. (v) Four photographs taken by Inspector Allison on 9 August 2002 showing relevant aspects of the truck being driven by Mr Harkin on 9 August 2002 with the crane mounted at its rear. (vi) Diverse documentary material going to Mr Harkins employment with Graetz, the defendant's occupational health and safety policies and associated material and information relevant to the crane in question. I will refer to the above material as necessary. 19 On behalf of both defendants, I have affidavits with annexures from Mr Raymond Graetz sworn on 23 February 2005, 10 October 2005 and 13 October 2005. 20 As earlier indicated, there is a linked corporate structure in relation to both defendants revolving around Mr Graetz. He explained that in some detail in his affidavit of 10 October 2005 which relevantly discloses: [2] … in 1986, I purchased a truck and trailer fitted with a crane and employed a driver working for a local timber yard…I purchased a shelf company named "Preslamp Pty Ltd" to operate the business. I registered the business name, "Coastal Transport Services", on behalf of Preslamp Pty Ltd. ... [7] (In 1998) I changed the name of the company from Preslamp Pty Limited to Coastal Transport Services Pty Ltd, to preserve our name, which was being duplicated in several places in the state. We still retained the business name registration. [8] In 2001, an opportunity arose to purchase some of the assets of Owens Transport Ltd. This company operated a transport business around the Central Coast from premises at 53 Gavenlock Road, Tuggerah. During the negotiations, I requested advice from Mr Bishop, my accountant, on the structure. He recommended that I form a new company to complete the purchase and operate it as a separate business. [9] The new company was named "Graetz Investments Pty Ltd". …In July, 2001, we moved the operation of Coastal Transport Services Pty Limited to 53 Gavenlock Road, Tuggerah, to save on rent. It quickly became apparent that to achieve economies of scale, and convert Graetz Investments Pty Ltd from a loss maker into profit, we would have to merge the operations. ... [10] I asked Mr Bishop to advise us on how to best integrate the companies. He hired Mr Ian Rodriguez of Lawler Partners to advise us. He recommended that we form a new company, Coastal Transport (NSW) Pty Ltd, the rationale being that most people shortened the name anyway, so we wanted to protect that as well. An added complication in the scenario was that the finance to purchase some of Owens Transport Ltd assets had to come through Coastal Transport Services Pty Ltd, so there had to be a complex series of intercompany transactions to get the trucks and the money in the right place. [11] The final scenario was that Coastal Transport (NSW) Pty Ltd would be the trading company and would have an agreement to hire trucks from Coastal Transport Services Pty Ltd and another to hire trucks and drivers from Graetz Investments Pty Ltd. Coastal Transport Services Pty Ltd employees would be transferred to Graetz Investments Pty Ltd and hired to Coastal Transport (NSW) Pty Ltd under a Labour Hire Agreement. This arrangement was put into place on 1st July, 2002 and all companies were grouped for the purposes of Payroll Tax, GST and Workers Compensation. 21 In his affidavit of 13 October 2005, Mr Graetz deposed to the establishment of Coastal Transport Operations Pty Limited (CTO) as follows: [52] As at 1st November 2004 I formed a new company Coastal Transport Operations Pty Limited (hereinafter referred to as "CTO"). Twelve (12) employees from Graetz Investments were transferred to CTO with full entitlements. CTO operates as a general transport trading company. There remains three (3) or four (4) employees working, employed by Graetz Investments. These employees drive trucks which are owned by Graetz Investments.

[53] Coastal is operating as a storage and distribution company. It maintains the same net asset position as it did at 9th August 2002.

[54] Graetz Investments has the same asset base that it did as at 9th August 2002. 22 In cross-examination, Mr Graetz confirmed he was the sole director and secretary of all four companies. That is, the two defendants before me as well as Coastal Transport Services Pty Limited and Coastal Transport Operations Pty Limited. On a day-to-day basis, Mr Graetz is clearly the controlling mind of all four companies that were established to facilitate the overall operations of his transport business. As he confirmed in cross-examination, the receipt and allocation of all monies within the four companies is under his control. 23 In addition to Mr Graetz's affidavits dealing with the intricacies of the corporate structure involving both defendants, there was also an affidavit read of Mr Terry Bishop, sworn 5 October 2005. Mr Bishop is a chartered accountant and acts as accountant for the second defendant, Coastal Transport (NSW) Pty Limited. 24 Without detailing all of the background to the corporate entities involving Mr Graetz as deposed to by Mr Bishop, he essentially corroborates the corporate history as detailed by Mr Graetz. For ease of understanding, a diagrammatic depiction of the corporate structure in place at the time of the offence is annexed to this judgment as Annexure A. As well, Mr Bishop deposed that: All three companies were grouped to administer GST, payroll tax and workers compensation. By grouping I mean that, because the companies were in common ownership by virtue of the common directors and the like, the GST legislation and the payroll tax legislation provided for those companies to be grouped when assessing GST and, on the other hand, when assessing the totality of payroll tax.

25 The defendants have no prior convictions. Accordingly, the maximum penalty for each offence is $550,000. 26 The overall approach to be followed in relation to the determination of sentence 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 and 22 Guilty plea to be taken into account. 27 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.' 28 The starting point for considerations as to penalty is the objective seriousness of the offence. That is a well established sentencing principle and was conclusively affirmed in the Full Bench decision of Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 474 when it was said that: ...the 'true measure of penalty lies in the nature and quality of the offence' ... 29 The principle of foreseeability as a factor in determining the objective seriousness of an offence as part of the sentencing process 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. 30 On the issue of foreseeability, the Full Bench in Capral also stated at 646: 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). 31 It is also necessary to consider the damage and injury suffered in the context of the evidence and 'in light of the principles which have been laid down in relation to the relationship between the seriousness of injuries which have been suffered, or which may have been suffered, and the gravity of the offence' (Capral at 650). 32 In relation to the offences before me, it is apparent that the core of the defendants' culpability revolves around the need to ensure the safe operation of the truck and particularly the vehicle loading attachment, that being the crane. Included in the material tendered by the prosecutor was an instruction manual for the crane. According to Mr Graetz, the truck with the crane attached (known as Unit 23) was purchased by the second defendant in 2001 from Owens Transport. At the time, no instruction manual was supplied 'because the crane had been bought and sold a number of times'. In his affidavit of 23 February 2005, Mr Graetz detailed his actions after Mr Harkin's accident on 9 August 2002 in relation to obtaining the relevant instruction manual as follows: [31] On 13th August 2002 I telephoned Transpec and told the person who I spoke with of the incident. I was concerned there may have been a fault with the crane operations. I was then informed and verily believe that an instruction manual for a similar crane would be sent to me. Annexed hereto and marked 'G' is the HMF crane instruction manual which was referred to in paragraph 20 above. 33 On perusal, Annexure G was identified as HMF Instruction Manual - Loader. What was disclosed at the commencement of proceedings before me was that the manual annexed to Mr Graetz's affidavit was not the manual Mr Graetz had sought and received from the manufacturer immediately after the accident involving Mr Harkin in August 2002. That manual was only produced at the hearing. That manual is titled HMF Instruction Manual s1580. It was an instruction manual for a similar crane and, according to the manufacturer's accompanying letter dated 13 August 2002, 'Even though it is for a 1580 model it will suffice'. 34 Counsel for the prosecutor was critical of Mr Graetz and the consequent reliability the Court was able to place on his evidence, particularly as to the assiduousness with which Mr Graetz pursued his occupational health and safety responsibilities on behalf of his corporate entities after the accident involving Mr Harkin. In support of such criticism, counsel for the prosecutor pointed to the copy of the manual referred to by Mr Graetz in his affidavit as Annexure G. As was subsequently confirmed by Mr Graetz in cross-examination, that document was not the manual he had received from HMF shortly after Mr Harkin's accident, contrary to what he had deposed in his affidavit. The document identified as Annexure G in Mr Graetz's affidavit was a manual provided to WorkCover by HMF as part of their investigations into the accident. It would appear that WorkCover, in turn, gave a copy of that manual to Mr Graetz some time after the accident and before February 2005. In short, Mr Graetz ended up with two manuals. 35 A perusal of the two manuals reveals a significant degree of commonality between them. The one provided to WorkCover is titled HMF Instruction Manual - Loader whereas the one provided to Mr Graetz is titled Instruction Manual s1580. 36 The criticism levelled at Mr Graetz relating to those documents centres around the fact that, in deposing that he had obtained the relevant manual from HMF immediately after the accident, Mr Graetz then purported to annex that to his affidavit. Instead, he annexed a copy of the manual given to him by WorkCover. Obviously, what he deposed to in his affidavit as to Annexure G was wrong. 37 As cross-examination confirmed, Mr Graetz did not properly read and check his affidavit against the annexures that formed part of it. I do not believe it was a deliberate act on Mr Graetz's part to mislead the Court. Indeed, it was his counsel who alerted the prosecution to the fact when the later manual was produced. Nevertheless, it does display a somewhat careless approach to an important issue. Significantly, counsel for the prosecution emphasised that by February 2005, when he swore his affidavit, Mr Graetz had both manuals in his possession. He was, it was contended, clearly able to identify the correct manual that he had received from HMF to annex to his affidavit, but he did not. 38 I accept such a proposition but I attribute no sinister motive to it. I do say, however, that Mr Graetz's failure to give proper attention to important detail that the swearing of an affidavit requires is symptomatic of an inattention to detail that, in many respects, is the hallmark of the offences of the corporate defendants that he controlled. 39 In the manual provided to Mr Graetz by WorkCover, the following appears in the Introduction: It is very important that you should familiarise yourself with the contents of this manual before putting the loader into operation, the same of course applies to any assistants or co-users of the loader.

This also goes for the other manuals and instructions delivered together with the loader, especially the safety manual, the RCL instruction manual , as well as the service booklet . 40 No similar advice appears in the manual sent by HMF to Mr Graetz in August 2002. 41 It was contended on behalf of the prosecutor that, at the very least, Mr Graetz should have been aware of that excerpt when he annexed the manual to his affidavit in February 2005 and accordingly, should have sought a copy of the safety manual referred to. In defence of that, Mr Graetz disposed of the truck/crane in 2004 so he was hardly going to get a booklet for a piece of plant he no longer had. I accept that but it somewhat misses the real point underlying that aspect of these offences. 42 To start with, when Mr Graetz purchased the truck on behalf of Coastal, there was no instruction manual. He did not try to obtain one at that time. There was no legal obligation on Mr Graetz to obtain such a manual. What there was however, was an obligation on Mr Graetz and his corporate entities to provide a workplace free of risks to safety. In operating plant and machinery such as the truck/crane combination, it could properly be said that an obvious way to ensure such a responsibility was met was to be aware of the manufacturer's operating and safety instructions. Absent such information only makes the task of the owner and operator of the plant and machinery much more onerous and potentially hazardous, it seems to me. That much is self evident. 43 In relation to the manual he did receive, Mr Graetz deposed: ... When I purchased the truck it was not supplied with a copy of the HMF instruction manual because the crane had been bought and sold a number of times. I contacted Transpec, the distributor of HMF cranes, to obtain a copy of the relevant manual. I was informed and verily believe that a manual was not supplied for that type of crane prior to the mid 1990's. I therefore believe there was not a manual for this type of crane. Unit 23 was a 1989 model. 44 Despite an inference in the above paragraph that Mr Graetz contacted Transpec to obtain a manual for the crane at the time of it's purchase, I am satisfied that no such inquiry was made until after Mr Harkin's accident in August 2002. 45 Mr Graetz further deposed: When I purchased Unit 23 from Owens Transport I was informed and verily believe that the crane on the vehicle had been modified to operate at less than 'ten tonne metre'. As I understand, a crane less than 'ten tonne metre' does not need a driver with a certificate of competency to operate the crane. As part of the purchase contract I was given warranties by the vendor stating that the vendor held all necessary statutory licences including licences and certificates for the operation of the truck. 46 When the truck was purchased, Mr Darren McDougall came with it. He had been the regular driver of the truck with Owens Transport and transferred his employment to the first defendant in April 2001. He did not have a crane licence as required by clause 270(1) of the Occupational Health and Safety Regulations 2001. 47 It was Mr McDougall who provided Mr Harkin with his on-the-job training in relation to the crane when he (Mr Harkin) commenced employment with the first defendant in June 2002. 48 Obviously, what was and would be critical in the safe operation of the truck and the attached crane was that Mr Harkin was provided with adequate information, training and supervision in relation to it. One of the starting points for that process would be the manufacturer's instruction manual. The defendants did not have that and, as I have already stated, did not obtain a copy until after the accident involving Mr Harkin. 49 As well, there was an obligation on the defendants to ensure Mr Harkin had a certificate of competency under the Occupational Health and Safety Regulations in order to operate the vehicle loading crane on his truck. 50 It would appear the defendants relied upon the fact that Mr McDougall did not have such a certificate and Mr Graetz's belief such a certificate was not necessary as far as the approach taken to Mr Harkin was concerned. That approach was to rely on Mr McDougall to train and instruct Mr Harkin with no formal steps taken to risk assess the steps to be taken in order to operate the vehicle crane safely. As well, on the latter issue, the defendants relied on Mr Harkin's statement at the time of engagement that he had 'previous HIAB crane experience' as being sufficient to permit him to operate the vehicle loading crane after two days on-the-job experience with Mr McDougall. Such an approach was, in all the circumstances, inadequate. Steps should have been taken by Mr Graetz, independent of any assurances given to him by Mr Harkin, to assess Mr Harkin's level of skill in the truck/crane operation in order to ensure for himself that Mr Harkin's prior experience and training was sufficient for the task he was to perform. 51 Against a background that I can only describe as relatively ad hoc as to instruction, training and supervision, it was entirely foreseeable that Mr Harkin would be confronted with potential risks to his safety in the safe operation of the crane. 52 Further, the clear inadequacy as to instruction, training and supervision and the absence of any overall safe system in place in relation to the safe operation of the vehicle loading crane certainly created a situation whereby, when a problem arose with it's operation, as it did, Mr Harkin was not able to handle it without exposing himself to the risk to safety that his accident highlighted. 53 The circumstances in which Mr Harkin placed himself between the jib and hook of the crane and the tray of the truck while using the controls on the right hand side of the truck to attempt to free the crane hook demonstrates only too clearly the risk to safety Mr Harkin created for himself. That risk to safety arises directly, in my view, from the failure of the defendants to ensure that Mr Harkin had, as part of the system of work in place, adequate training and instruction to enable him to deal with the jammed jib and hook without exposing him to risks to his safety. 54 Counsel for the defendants highlighted the fact that the vehicle loading crane attachment had two sets of control levers, one on each side of the truck. As the agreed facts disclosed: [11] The set of control levers on the left (passenger) side of the truck was used more often than on the right side, especially during the starting phase or the unfolding of the crane and when shutting down or folding of the crane. The access to the control levers on the right side was slightly obstructed when the crane (boom and the jib) was in a stowed or fully folded position. Once the main boom had been raised sufficiently, the operator could access and use the right side controls, if required. [12] At about 1.00pm on 9 August 2002 the worker had used the vehicle loading crane to deliver concrete drainage products to a site in Mitchell Street, Wentworth Falls. Having completed the delivery, the worker was in the process of folding the boom and jib of the vehicle loading crane and in doing so was using the control levers located on the left side of the crane truck . During the operation, the worker experienced some problems in getting the crane hook into position as it had become lodged or jammed. The jib and the hook had come into contact with and interfered with the control levers on the right side of the vehicle loading crane. (emphasis added) 55 Given that there were controls on the left-hand side of the vehicle, it was 'not foreseeable', it was contended, that a person such as Mr Harkin would be operating the crane into the fully folded position from the same side on which the crane folded. 56 As is clear, Mr Harkin was initially using the controls on the left side of the vehicle which was the side opposite to where the crane was located. A situation arose whereby the jib and hook became jammed with the control levers on the right side. It is apparent Mr Harkin moved to the right hand side of the vehicle to deal with the problem, as the agreed facts disclose as follows: [13] The worker then left the controls on the left side of the crane and went around to the controls on the right side where he attempted to free the crane hook. [14] The worker then attempted to free the jammed jib and hook by operating the levers on the right side control bank of the crane. In doing so, the worker was standing between the jib and the tray of the truck. While in this position the worker used the controls to attempt to free the hook and jib. The jib slewed to the left and jammed the worker's head and shoulders between the jib and the tray of the truck.

57 Further, as particularised, both defendants failed to ensure a safe working system generally and with respect to the truck/crane operation in that: (i) There was no shut down procedures or instructions given to the operator when operating the controls on the right hand side of the crane truck in the event of a malfunction/jamming of the crane hook. (ii) There was no shut down device accessible to the operator when operating the controls on the right hand side of the crane truck in the event of a malfunction/jamming of the crane hook. 58 I do not believe it would have been possible to have foreseen the precise circumstances that arose in the accident involving Mr Harkin but that is not the test. The obligation imposed on the defendants is to ensure a risk free work environment. The relevant section comprehends the commission of an offence where the relevant detriment to safety is simply a risk: see Haynes v C I & D Manufacturing Pty Limited (1994) 60 IR 149. 59 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. 60 In relation to the defendants, Mr Graetz's affidavit details the considerable steps undertaken at his direction after the accident involving Mr Harkin and before any prosecution commenced. They were: (a) All employees were requested to examine their own crane operations and report any faults or problems. (b) All employees involved in crane operations, irrespective of size, sat for and passed a Certificate of Competency to operate their cranes. No person is now permitted to operate any crane or other machinery without a Certificate of Competency irrespective of size. (c) The abovementioned safety policy was introduced. An example of how rigid I have been with the new safety policy is that I delayed a delivery of dangerous goods for six (6) hours due to the lack of a trained and licensed driver at our depot. This resulted in the loss of a client business which was worth $360,000.00 per annum in freight sales. (d) Every employee is undergoing a Certificate in Transport and Storage which is a trade certificate. The business has a properly constituted Safety Committee and all members have done a training course. Mr Gregory Harkin has now completed Certificate 1 and 2 and shortly will be completing Certificate 3. (e) All work employees have completed the safety awareness course run by the RTA. (f) GPS has been installed in all vehicles to monitor driver performance, fatigue, management and speeding. (g) Every driver has been inducted on every site he attends. (h) Mr Michael Barnes, Supervisor, who has a degree in management majoring in Human Resources has been appointed full time to manage our OH&S obligations, training, inductions, recruiting and all Human Resources matters. (i) In 2004 we budgeted in excess of $50,000.00 for OH&S training. (j) A crane safety procedure has been adopted from one developed in Queensland and approved by Queensland WorkCover. (k) Work methods statements have been developed for every procedure which has been assessed as "risky". (l) Daily inspections, which were in place since 1998, have been amended to include daily crane inspections. (m) Maintenance schedules in place since 1998 have been amended to include all equipment, not just trucks. (n) All management staff are regularly attending seminars and training courses on OH&S awareness. 61 As a general assessment, all of those steps are to be commended. All were steps that were available and able to be done by the defendants before the accident. 62 The 'above-mentioned safety policy' referred to in (c) above requires some clarification. As was confirmed in cross-examination, what Mr Graetz was referring to was what he identified as Annexure A to his affidavit. That annexure consists of seven pages from diverse sources that formed the basis of the occupational health and safety policies for Mr Graetz's transport group at the time of accident, made up of the three corporate entities earlier identified. According to Mr Graetz, those policies had been put in place in 1998 and would appear not to have been amended since that time. Counsel for the prosecutor contended that, in the circumstances of the transport industry, they were 'manifestly insufficient'. 63 I do agree the policies, while commendable to a point, leave much to be desired. There is a degree of generality which respect to some of the documents. Interestingly, in relation to the three page component detailing the occupational health and safety policy for Coastal Transport Services, it is stated explicitly that Mr Graetz 'as the owner' will be responsible for all aspects of occupational health and safety going to both systems of work, employee training and instruction and associated vehicle operation and maintenance. In other words, putting aside any shortcomings in such documents, it is abundantly clear, notwithstanding any devised corporate structure, that Mr Graetz was the pivotal entity for all matters pertaining to the operation of his overall transport business. 64 Mr Graetz's affidavit of 10 October 2005 details safety and training initiatives undertaken at his behest within the corporate group structure prior to the accident involving Mr Harkin. As he deposed: [4] In 1998, an industry accreditation system known as "Trucksafe" was proposed. It had started as a trial system by 200 volunteer transport operators throughout Australia. I immediately began the accreditation process and was accredited as number "TS 190" in June, 1998. It is a quality system designed for transport and includes a heavy emphasis on Maintenance Systems, Training, OHS&W and Management Systems. We are still accredited today and must pass an external audit every 2 years. [5] All our drivers, are highly trained, and have periodical medical examinations and all new employees are inducted into the system. Our vehicles are regularly maintained and kept in a constant state of safety and roadworthiness and are inspected by the drivers on a checklist every day. ... [12] I became aware of a course for a Training Scheme sometime during the first half of 2002. Immediately following the presentation, I approached Mr Lyle White, the Managing Director of Transport Training Pty Ltd, a subsidiary of NSW Road Transport Association Inc., and asked to have a course conducted at our company premises. …This was the first course which had become available in the Transport industry which addressed issues such as Hazard Identification, Risk Assessment and Safe Work Method Statements.

... [19] In 2002 our company was nominated as the NSW Road Transport Association Master Carrier of the Year Award. Part of the criteria for this award is an outstanding OH&S record among other equally important criteria. The company won that award in September, 2002. The nomination for the award had been made prior to the Harkin incident and the award was made on the outstanding record and commitment of the company. The full criteria for the award is: (a) Be an outstanding transport operator who has demonstrated commitment to promoting professionalism within the industry; (b) Have a commitment to safety, staff training and development; (c) Demonstrate support for industry issues; and (d) Promote good industrial relations with employees. 65 Those initiatives undertaken at the behest of Mr Graetz evince a generally commendable and positive approach to workplace safety. That generally commendable approach has been undermined, as these offences attest, by a failure on Mr Graetz's part to ensure his policy statements and initiatives translate into practical workplace safety standards that are rigorously enforced. 66 Overall, having regard to the relevant principles and the facts and circumstances of the offences before me, I assess them as being in the mid range of seriousness and will assess them on that basis. 67 In imposing penalty in these matters, regard must be had to general and specific deterrence. That much is evident from the decisions given by the Full Bench of this Court in Capral earlier referred to, particularly at paras [74] and [77]. In para [74] the Full Court said in relation to general and specific deterrence: It follows that both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process.

Para [74] goes on to state that 'the judge must indicate with some precision' if excluding either of those aspects in his/her considerations. On that point para [77] states: 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: ... or because the offender will not have the opportunity to commit a similar offence in the future: ... 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. 68 The defendants continue to operate in the transport industry albeit under a slightly different corporate structure and on a somewhat reduced scale, assisted by the corporate vehicle of Coastal Transport Operations Pty Limited. Ultimately however, the corporate entities that still operate remain under the day-to-day management and control of Mr Graetz. The nature of the transport business is one with inherent risks to safety. An element of specific deterrence is necessary, in my view, in order to ensure, as far as practicable, those remedial measures put in place by way of standards and systems of work are maintained. In saying that, I am mindful, via the activities of Mr Graetz, of the defendant's acknowledged overall good track record as far as their commitment to workplace safety is concerned. As well, the group's operations under the control of Mr Graetz are now much reduced. 69 In his affidavit of October 2005, Mr Graetz raised the financial circumstances of his transport group affecting, as he asserted, the ability of the defendants to pay a substantial penalty. As he said: [23] Finally, I state that since November 2004, the group of companies has had considerable trading difficulties. Coinciding with our move to the new Warnervale premises, we suffered a severe downturn in business and a simultaneous increase in our operating costs. We terminated the Agreement between Coastal Transport Services Pty Limited and Coastal Transport (NSW) Pty Limited which therefore led to the termination of the Agreement between Coastal Transport (NSW) Pty Limited and Graetz Investments Pty Limited. Coastal Transport Operations Pty Limited was formed to operate from the new depot at Warnervale and had an Agreement from 1st December 2004 to operate under the trading name Coastal Transport Services. It employed most of the drivers formerly employed by Graetz Investments Pty Limited. Coastal Transport (NSW) was to remain in the former depot at Gavenlock Road and develop a storage facility there. Unfortunately, it was unable to generate sufficient income to ensure a renewal of the lease. It therefore ceased to trade on 31st May 2005. Graetz Investments Pty Limited, in accordance with the original plan for its trucks, sold the remaining vehicles over the period November to June 2005, and had ceased to trade. Although we appear to have got through the worst of it, our results as a group to 30th June 2005 show a loss of $418,098.00. Annexed hereto and marked with the letters 'F' and 'G' respectively are copies of the Financial Reports for the year ended 30 June 2005 in respect of Graetz Investments Pty Limited and Coastal Transport (NSW) Pty Limited. Substantial fines for both companies could result in the collapse of the entire group. Even moderate penalties will almost certainly cause us to sell some of our only assets, a few unencumbered trucks. 70 As Mr Graetz clarified, the financial vulnerability he was referring to was 'to the group as a whole', meaning, as I understand it, all of the entities making up his transport group. 71 The financial statements referred to, annexed to Mr Graetz's affidavit, are only part of the picture as far as the true and relevant financial position of Mr Graetz and his transport business is concerned. In addition to the two corporate defendants before me, it is clear that the overall financial position requires information as to the two other corporate entities involved in Mr Graetz's transport business as well as Mr Graetz himself, including, as it became evident, the Graetz Family Trust. 72 As was said by the Full Bench 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]: ... 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. 73 On any view, the information before me is incomplete as far as being able to be satisfied that Mr Graetz and his corporate entities before me are as financially vulnerable as his affidavit suggests. 74 The financial circumstances of the defendants were also referred to in Mr Graetz's earlier affidavit of February 2005 in the following terms: [55] In the financial year ending 30th June 2001, CTS paid an amount of $72,000.00 for worker's compensation premiums. [56] In the financial year ending 30th June 2002, CTS paid an amount of $67,828.91 for worker's compensation premiums. [57] In the financial year ending 30th June 2003, CTS paid an amount of $83,920.00 for worker's compensation premiums, including penalties. CTS also paid an amount of $17,700.00 plus wages on training. [58] In the financial year ending 30th June 2004, CTS paid an amount of $105,871.41 for worker's compensation premiums including penalties. An amount of $37,000.00 plus wages on training. [59] In the financial year ending 30th June 2005, our worker's compensation premiums are in the sum of $142,559.96. In respect of these worker's compensation premiums I have obtained finance through Westpac Banking Corporation and I am paying $12,316.00 per month. [60] Approximately four (4) years ago I committed to building a new depot on 1.2 hectares of land which comprises offices, storage, truck wash and weigh bridge. This created approximately ten (10) new positions. The depot is now complete. [61] Currently the company is in a vulnerable financial position. The cost of the new development ran $250,000.00 over budget and was two (2) months behind. I am currently at the extent of my borrowing ability. To pay any substantial penalty I will need to sell company trucks and that in turn means that I will have to make redundant those drivers attached to those trucks. 75 In his later affidavit of 10 October 2005, Mr Graetz further deposed to the financial position of his transport group and the relevant corporate entities as set out above at para [69] above. 76 In cross-examination, Mr Graetz confirmed that the land on which the new depot at Warnervale was located was owned by the Graetz Family Trust. CTO pays rent to the Graetz Family Trust. Mr Graetz determines the rental to be paid. 77 Given the information I do have, the approach I adopt to sentencing in the matters before me is in accord with the observation 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. 78 It is abundantly clear that whatever penalty is imposed on the defendants, it will fall ultimately to be paid by Mr Graetz. In that regard, I note the observation of the Full Court of the Industrial Court of New South Wales in Haynes v C I & D Manufacturing Pty Limited and anor (No 2) (1995) 60 IR 455 at 457 as follows: In a number of cases decided under the OHS Act where the corporate structure of the defendant has been shown to be little more than the means of distribution of earnings arising from personal exertion, or where, as a matter of corporate structure, the burden of any fine levied would fall on one person or one family group ownership, the Court has seen it appropriate to impose a fine substantially less than if the corporation was functioning as a company with assets of a substantial kind. (See Gordon v MIJO (NSW) Pty Ltd; Ford v Warrah Ridge Pastoral Company Pty Ltd (unreported, Bauer J, 23 September 1994, Matter No CT1109 of 1993); Robins v C T Plumbing Pty Ltd (unreported, Fisher P, 16 December 1991, Matter No 522 of 1991) and Mauger v Krcmar Engineering Pty Ltd (1993) 47 IR 359). 79 The other matter to be considered is the principle of totality. The proper application of that in the sentencing process is to be found in the High Court decision in Pearce v The Queen (1998) 194 CLR 610. The principle of totality is of general application where a court is dealing with one offender and multiple offences. It is a principle designed to take account of multiple offences that contain common elements. It is applied to ensure that the defendant is not punished more than once for the common elements of the offences and to avoid the double jeopardy that would follow if that occurred: see Pearce v The Queen (1998) 194 CLR 610; Crown in the Right of the State of New South Wales (Department of Education and Training) v Keenan (2001) 105 IR 181 at 192-193. 80 In the proceedings before me, I have two defendants and two offences. That statement belies what are somewhat unusual factual circumstances relating to these offences. Before I consider those, it must be said at this point that counsel for the prosecutor did not concede that the principle of totality played any part in my sentencing considerations and that there was no suggestion of duplicity or double jeopardy in relation to the offences and the defendants before me. 81 The basis of the prosecution's contention to that effect is that the defendants are distinct corporate entities - Graetz being, in effect, the labour hire company for Mr Graetz's transport business while control of the plant such as the truck/crane for the purposes of Mr Graetz's transport business was vested in Coastal Transport (NSW) Pty Limited. As such, it was contended there were two distinct defendants and two separate offences. 82 On first blush considerations, the prosecution's contentions are correct. However, the factual background and circumstances giving rise to the two offences gives a complexion to these offences that, in my view, reveals a situation that is not as clear cut as the prosecution would assert. 83 To start with, it is abundantly clear that the defendants are part of a corporate structure revolving solely around the day-to-day running of the transport business operated by Mr Graetz. It is his business, he owns it and he is actively involved on a day-to-day basis in all aspects of it's operations, including the hiring and training of staff and the purchase and maintenance of the plant, including truck/cranes. As he said, 'CTS as a group has been owned and operated by me over the past eighteen years'. 84 Mr Graetz consistently referred to the decisions taken by him in the day-to day running of his business, incorporating as it did at the time of the offences, three corporate entities. He is the sole director, share-holder and secretary of all three companies. As he confirmed, that corporate structure was worked out by his accountant to suit him (Mr Graetz). 85 In addition to the three companies existing at the time of Mr Harkin's accident, there is now a fourth company, Coastal Transport Operations Pty Limited. That company was formed in 2004. Mr Graetz is the sole director and secretary of that company. As he confirmed in cross-examination: Q. So would it be fair to say that you are the controlling mind of each of the four companies that runs Coastal Transport Services? A. Yes. Q. And you are the person who would direct the manner in which monies and contracts are arranged between each of those four companies? A. Yes.

Q. And, for example, the licence agreement whereby Graetz Investments Pty Limited hired trucks to Coastal Transport (NSW) Pty Limited would have been an agreement you entered into for both companies? A. Yes.

Q. And the labour hire agreement that ran from Graetz Investments Pty Limited to Coastal Transport Services would also be a document that you exercised for both companies, is that correct? A. Yes.

Q. So the placement of contracts the company which received the income for the group is a matter under your control, is that correct? A. Yes. ...

Q. And it would be fair to say that the dividends or payments that are made to the Graetz Family Trust arising out of the income producing activities of the Coastal Transport Services Group would be a matter which you have control of, is that correct?

... A. Well, yes, under the lease. Under the lease agreement there is a rent to be paid. That is to the extent of my control.

Q. Do you determine that rent, Mr Graetz? A. Yes. 86 Additionally, the occupational health and safety policies produced by Mr Graetz clearly evidence a transport group approach to Mr Graetz's activities and identify Mr Graetz personally as the person to be responsible for precise safety measures in relation to driver/vehicle operations and maintenance, training and instruction as well as compliance with relevant statutory obligations. 87 The evidence overwhelmingly points to the real defendant in these proceedings as being Mr Graetz. As well, any penalty imposed will be borne by Mr Graetz. 88 In those circumstances, I am of the view that, notwithstanding the legal technicality of the two corporate defendants before me, they are intimately interlinked structures designed to facilitate Mr Graetz's control and operation of his personal transport business. 89 Such a structure has been considered as relevant for the purposes of penalty. In Haynes v CI & D the Full Bench stated: Should the prosecution of the closely related companies attract one penalty or two penalties assessed as against each company? The evidence available showed that Manufacturing at the time of the accident employed at the Somersby plant about nine workers and that for purposes related to company structure was a company wholly-owned by Industries. The personnel on whom the ultimate responsibility for ensuring the supervision of the employees rested at the time of the accident were the same.

We have come to the view on the evidence that the connection between the two companies was so intimate that it is permissible to view the offence in a global way. ... (emphasis added) 90 As is self evident in the offences before me, the person on whom the ultimate responsibility fell in relation to the failures as particularised was, and is, Mr Graetz. 91 Such an approach was also considered by Walton J, Vice-President in WorkCover Authority of New South Wales v McDonalds and anor (1999) 95 IR 383 at 454. In that matter there were two defendants, McDonalds Australia Limited and McDonalds Properties (Australia) Pty Limited, dealt with for breaches of s17 of the Occupational Health and Safety Act 1983. In considering the application of totality between the two defendants before him, his Honour reviewed the authorities on this point and, in doing so, considered the outcome in CI & D to the offences then before him and said as follows: The decision of the Court was based, in my view, upon the nature of the relationship between the two companies. ...

... The factual substratum for the decision was, therefore, relatively unique in that directly related companies were both responsible in various capacities for the management and control of the subject employees.

Nevertheless, the approach adopted by the court in CI & D does not sit comfortably with the principle of totality as stated in Holder, Camilleri's Stock Feeds and Postiglione and as applied in Pearce . Whilst the charges against the corporations in CI & D (and the assessment of penalty) were heard concurrently (and the defendants should have been assessed having regard to the principle of parity, which I have earlier discussed) the matter essentially concerned prosecutions brought against different corporate defendants for different offences under the Act.

... The principle of totality can be distinguished from the principle of parity which is directly relevant to the assessment of the appropriate penalty for co-offenders. Upon the basis of the authorities I have earlier referred to, the principle of totality would not require the sentencing of the defendants to be undertaken upon the basis that they were effectively treated as a single entity facing two charges.

It is not entirely clear that the decision in CI & D would suggest any contrary approach. On one view, the decision in CI & D is based upon the unusual circumstances applying in that matter where both defendants had supervisory responsibility for the employees concerned. In any event, the decision is, in my view, distinguishable from the factual circumstances in this matter . (emphasis added) 92 In my view, the factual circumstances relevant to the two corporate entities before me are unusual. They have been created solely to facilitate and maximise the distribution of earnings of Mr Graetz's transport business. He alone operates the business in all respects and he controls the employees and the plant and machinery they use. As was said in C I & D: The personnel on whom the ultimate responsibility for ensuring the supervision of the employees rested at the time of the accident were the same. 93 In the matters before me, it is self evident that the responsibility for instruction and training of employees as well as the supervision of the plant and machinery used by employees was the same. That is, Mr Graetz. 94 In McDonalds, Walton J Vice-President ultimately determined that the principle of totality did not require the two defendants to be treated as effectively one entity for the offences then arising. Specifically however, in relation to the approach taken by the Full Court in CI& D, he said there were a number of significant factual differences underlying the approach taken in CI & D and the matters then before him. As he identified: ... Firstly, the premises in CI & D were owned by Industries and leased directly to the subsidiary company, Manufacturing. In this matter, whilst there is a franchise arrangement, the defendants exercise control in relation to a third party. The nature of that control differs depending upon the particular interest of the defendant as arising between the lease and the licence. ...

... Furthermore, in CI & D both Manufacturing and Industries had direct responsibility for the employees. ... This would appear to have reflected the Court's finding as to the 'intimacy' of the relationship between Manufacturing and Industries.

Secondly, and consistent with the approach in McLoughlin v ICI Australia Operations Pty Limited, the gravamen of the offences in this matter are not the same as between the defendants. As previously mentioned, there are different summonses relating to different offences. The particularisation of the failures is different in each summons. Whilst charges were brought under differing sections of the Act in CI & D, the particularisation of the offence was closely related and to some extent interconnected, for example, in relation to the supervision of the employees . (emphasis added) Thirdly, the defendants faced the same maximum penalty in CI & D . Here, the first defendant has a prior conviction and, as I have earlier noted, thereby faces a higher maximum penalty than the second defendant. This raises practical difficulties for the approach contended for by the defendants. 95 As is self evident, there are significant commonalities between Graetz and Coastal Transport that render their offences as reflective of the 'intimacy' between them that the Full Court acknowledged in CI& D. They are: (i) The common denominator for the failures in both offences is Mr Graetz; (ii) Graetz was the labour hire company solely for Mr Graetz's business. It provided the services of it's employees to Coastal Transport (NSW) Pty Limited. Coastal Transport Services Pty Limited licensed the truck/crane company to Mr Graetz's other company, Coastal Transport (NSW) Pty Limited; (iii) Mr Graetz, at all times, had direct control and supervision of employees of Graetz and the truck/crane being operated by Coastal Transport; (iv) As with CI & D , while the charges are brought under different sections of the Act, the particularisation of the offences is closely related and, to some extent, interconnected. (v) The defendants face the same maximum penalty. 96 There is also overlapping and interconnectedness in the particularised failures between the two offences. For example, the offence against Graetz alleging an unsafe system of work, unsafe plant (the truck/crane) and inadequate training, instruction and supervision particularised, inter alia, the following: (i) The operation or attempted operation of the controls on the right hand side of the crane truck during the procedure for shutting down the crane, was unsafe; (ii) there was a risk of entrapment between the boom and the tray of the truck in the event of operation of the crane controls on the right hand side of the crane truck for the purpose of shutting down the crane; (iii) the crane truck had no warning signs displayed upon it warning of the risk of entrapment; (iv) the worker was not informed of the correct or safe shutdown procedure to be followed in the event of a malfunction or jamming of the crane hook. 97 The offence against Coastal Transport alleging the truck/crane was unsafe particularised, inter alia, the following: (i) The operation or attempted operation of the controls on the right hand side of the crane truck during the procedure for shutting down the crane was unsafe because of the risk of entrapment between the boom and the tray of the truck.

(ii) There was a risk of entrapment between the boom of the crane and the tray of the truck in the event of operation of the crane controls on the right hand side for the purpose of shutting down the crane. (iii) The crane truck had no warning signs displayed upon it warning of the risk of entrapment when its operation was conducted from the crane controls on the right hand side. (iv) There was no shut down procedures or instructions given to the operator when operating the controls on the right hand side of the crane truck in the event of a malfunction/jamming of the crane hook. 98 As is evident from a comparison of the above particulars as between the two defendants, there is a commonality as to the particularised failures that go, if anything, predominantly to system of work and instruction, training and supervision failures rather than anything fundamentally unsafe with the plant itself. 99 Given the intimacy between the two defendants and the common denominator of Mr Graetz as the core of all the failures in relation to both defendants, it is apparent, in my view, that the overlapping of the particularised failures cannot be ignored. 100 Ultimately, in my view, the approach to take in relation to the offences, having regard to the background factual circumstances relating to the corporate defendants and Mr Graetz, is to determine a penalty with respect to each offence to ensure the total criminality with respect to the offences is met. 101 As was said by Walton J, Vice-President in McDonalds at 460: In my view, the principle of totality does not require the two defendants to be treated as effectively one entity facing offences under s17 for the purposes of the assessment of penalty and should not be applied in this matter. Rather, there should be a proper weighing of the respective culpabilities of the defendants and, in this regard, attention should be paid in properly measuring the actual culpability of each defendant in relation to the detriments to safety involved in the accident. Where there is overlapping responsibilities then the Court will ensure that there occurs a proper apportioning of responsibility by the respective defendants . (emphasis added) 102 I consider the offence arising under s8(1) of the Act as the more culpable relative to the offence arising under s10(2) of the Act. 103 The plea in relation to Graetz has been entered at the earliest opportunity and the prosecution has acknowledged the defendant is entitled to a discount on that basis. I assess that discount at twenty five per cent. 104 In relation to Coastal Transport, the plea was somewhat later in coming due to what I can only describe as a delay on the part of the defendant in clarifying the issue of 'control' relevant to the truck, necessary for the purposes of an offence under s10(2) of the Act. I assess the discount on penalty for that offence as twenty per cent. 105 There are other factors I can properly taken into account as operating in the defendants' favour. 106 The defendants have no prior convictions, have fully cooperated with the investigation and have done all that they possibly could do to assist in the investigation into this matter. Mr Graetz, on behalf of both defendants, has done everything possible to assist Mr Harkin post the accident and has expressed genuine remorse for the injuries occasioned to him. 107 On behalf of Mr Graetz and indirectly the corporate defendants, three testimonials were presented to the Court. They were from: (i) Mr Peter Brown, Business Development Manager for the New South Wales Department of State and Regional Development in the Central Coast Region. (ii) Mr Gregory Bax who works for the Coastal Transport Group as a semi-trailer driver and has done since 1987. (iii) Mr Lyle White, the General Manager of the New South Wales Road Transport Association Inc. 108 All three gave a positive endorsement of Mr Graetz and his management of the Coastal Transport group from both a personal and management perspective, particularly safety. As Mr Brown stated: During the time I have known Mr Graetz I have in the course of my work inspected the operations of Coastal Transport on a number of occasions. On every occasion I have been impressed with the level of professionalism of the organisation, and its commitment to operational efficiency, business improvement, innovation, business ethics and safe work practices. 109 Likewise, Mr White on behalf of the New South Wales Road Transport Association confirmed Mr Graetz's commitment to safe work practices: On 27th July, 2002 Coastal Transport was the pilot company in a program designed to prepare all operators of transport vehicle and their supervisors and managers for safe operation in a transport workplace. This demonstrated the attitude of the company in being a leader in safe work practices in the Transport Industry. The company was recognized in the NSWRTA bulletin Transbiz for its progressive attitude.

The course content included instruction on the processes of hazard identification, risk assessment and risk management, in accordance with the requirements of the Occupational Health and Safety Act , and an assessment of the individual competence of the participants. 110 As a current employee with Coastal Transport Operations Pty Limited, Mr Bax expressed his support of Mr Graetz as an employer who has always emphasised safety issues and supported his drivers on such matters. As he said, since he commenced work for Mr Graetz in 1987: … He consulted with us as employees long before it became a legal requirement, and any safety concern has always been addressed. I have always been a sort of unofficial driver's representative as one of the senior drivers. We have never had a dispute, and any concern regarding conditions of safety has always been properly addressed at our regular safety meetings. 111 As the controlling mind of both corporate defendants, those positive endorsements of Mr Graetz, particularly as to workplace safety, are commendable. They are attributes that I believe can be taken into account as indicative of both defendants' commitment to workplace safety activated by the direct influence of Mr Graetz. 112 Taking these features into account, I consider a further discount on penalty with respect to each offence is appropriate. 113 Taking into account all the matters I have referred to, I determine a penalty in these matters as follows:

(i) Matter No IRC 3894 of 2004: WorkCover Authority of New SouthWales (Inspector Bishwa) v Graetz Investments Pty Limited: Offence arising under s8(1) of the Occupational Health and Safety Act 2000:

(ii) Matter No IRC 3895 of 2004: WorkCover Authority of New South Wales (Inspector Bishwa) v Coastal Transport (NSW) Pty Limited: Offence arising under s10(2) of the Occupational Health and Safety Act 2000: I determine a penalty of $33,600. 114 Accordingly, I order as follows:

(1) Matter No IRC 3894 of 2004: WorkCover Authority of New SouthWales (Inspector Bishwa) v Graetz Investments Pty Limited: (i) The defendant is guilty of the offence as charged. (ii) I impose a penalty in this matter of $48,750. (iii) I allocate a moiety to the prosecutor on the usual terms.

(2) Matter No IRC 3895 of 2004: WorkCover Authority of New South Wales (Inspector Bishwa) v Coastal Transport (NSW) Pty Limited: (i) The defendant is guilty of the offence as charged. (ii) I impose a penalty in this matter of $33,600. ` (iii) I allocate a moiety to the prosecutor on the usual terms.

(3) In relation to both matters, I order the defendant 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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At a glance

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Judgment (41 paragraphs)

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Cases Cited (11)