WorkCover Authority of New South Wales (Inspector Robins) v Labour Co-operative Ltd

PROSECUTOR Mr P M Skinner of counsel Solicitor: Mr G Phillips LEGAL REPRESENTATIVES: Carroll & O'Dea

DEFENDANT The Hon Mr J J Macken of counsel

JUDGMENT: - 27 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: HUNGERFORD J Thursday, 10 January 2002 Matter No IRC 2974 of 2000 WORKCOVER AUTHORITY OF NEW SOUTH WALES (INSPECTOR STEVEN ROBINS) v LABOUR CO-OPERATIVE LIMITED Prosecution under section 15(1) of the Occupational Health and Safety Act 1983. JUDGMENT [2002] NSWIRComm 2

1 On 20 September 2001, I gave judgment in this matter concerning a prosecution of Labour Co-operative Limited by Steven Robins, as an inspector of the WorkCover Authority of New South Wales, for a breach of s 15(1) of the Occupational Health and Safety Act 1983: see WorkCover Authority of New South Wales (Inspector Robins) v Labour Co-operative Ltd (No 1) [2001] NSWIRComm 223. The defendant pleaded not guilty. I concluded the charge against the defendant had been established and a finding was made that the offence had been proven. On 18 October 2001 I heard the parties on the question of sentence and this judgment deals with that aspect.

2 The defendant was charged with failing to ensure the health, safety and welfare at work of all its employees, in particular Julie Anne Lister, in that on 1 July 1998 at the premises of CSR Limited (trading as CSR Timber Products) at Raymond Terrace in the State when Ms Lister was operating heavy machinery she became trapped by a moving rack thereby suffering serious crush injuries to her head, chest and trunk. The precise way in which the defendant was alleged to have breached s 15(1) was particularised in the initiating summons as being that : (a) it failed to provide such information, instruction and training to Julie Anne Lister so as to enable Lister to carry out her duties at CSR safely and without risk to her health which included spotting up the wet lap on Press 4 in the Boardmaking Area of the premises. The information, instruction or training provided to Lister with regards to the safe system of work relating to the operations in the Boardmaking Area was insufficient in that the training provided by the Defendant did not highlight the hazards of presses and/or automated mobile plant;

(b) it failed to supervise Lister so as to ensure that Lister was only carrying out duties that she was qualified to perform and not required to carry out duties which were hazardous, without adequate training and supervision, given that Lister had had no previous experience operating heavy machinery and had no qualifications related to the operation of plant; and

(c) it failed to ensure that Lister was provided with adequate supervision and training by CSR whilst she was at its premises in that it failed to assess the effectiveness of the training or supervision provided by CSR to Lister.

3 The circumstances in which this matter arose and the immediate events leading to the subject incident were set out extensively in the earlier judgment (in pars [3], [5]-[15], [25]-[26] and [38]-[44]). For present purposes, however, they may be shortly stated. It appeared the defendant was a labour hire company providing labour to a wide range of industrial, commercial, construction, professional and clerical clients in the Newcastle area, including CSR Timber Products at Raymond Terrace; Ms Lister was engaged by the defendant to perform duties as a labourer at the premises of CSR Timber Products pursuant to an arrangement between it and the defendant under which the defendant regularly supplied labour. She attended two induction programmes by the defendant on 15 June 1998 (induction programme for CSR Timber Products) and on 19 June 1998 (occupational health and safety programme); she then attended work training at CSR Timber Products on 23 and 30 June and on 1 July 1998. Initially, Ms Lister worked, according to the evidence, on "a simple job", and on the third day, 1 July 1998, she was moved to the Boardmaking Area of the plant on production work as a "back end operator" in the team of workers operating heavy presses with movable racks. Up to the time of her work at the Raymond Terrace plant, Ms Lister had no experience in operating heavy machinery and she had no qualifications related to the operation of plant. In her own words during an interview with the prosecutor, Mr Robins, on 17 February 1999 she described what then occurred as follows : I was standing at Press 4 waiting for the automated loading rack to load Press 4 with wet lap. While the Press was being loaded I was standing on the right hand side of the Press, near the ladder. When the automated loading rack moved away, I walked to the left side of Press 4 to find the tool used for spotting. I walked to the left side of Press 4 as this is the side that the other three presses are spotted up from. When I got to the left side of Press 4, I realised that you have to spot up this press from the right side. As I went to walk back to the right side of Press 4, I was slowly trapped by the automated unloading rack, which was sent without my knowledge. When I was trapped I remember reaching for something to stop the automated unloading rack, but nothing happened. Ms Lister attributed the accident to her inexperience in the area, having worked according to the system of work concerned for only five or six hours, and to the lack of trip wires on the automated rack which could have been used to stop its movement in an emergency. She considered she could have been killed as a result of the incident.

4 Importantly for the present task in assessing an appropriate penalty, Ms Lister in her interview with Mr Robins on 17 February 1999 responded in the following way as to the instruction, training and supervision she received for her work : Q35. Who else functioned by this system of work and when did you see them? A35. David CONNELLY was training at the same time as me and he had "Spotted Up" earlier on in the day. We had swapped jobs when I was "Spotting Up". Dennis SANDS had shown me how to "Spot Up" earlier that day. Another guy whose name I can't remember was also "Spotting Up" on the day.

Q43. Who was directly responsible for promulgating and implementing the system of wok in place on the 01.07.98? A43. Dennis SANDS.

Q44. How was this achieved by Denis SANDS? A44. He was showing me what to do himself and explaining the "do's" and "don'ts".

Q54. Does the Labour Co-operative Pty Ltd have a safety induction training program for new employees? A54. Yes.

Q55. Were you given safety induction training when you first commenced employment with the Labour Co-operative Pty Ltd? A55. Yes.

Q56. When and by whom was that safety induction training given to you? (19.06.98) A56. On the 19.06.98 by John DODD and Greg COUPER.

Q57. Did that safety induction training highlight the hazards of presses and/or automated mobile plant? A57. Not that I can remember. I actually had no idea of what machinery I would be exposed to.

Q58. How long did that safety induction training take to be delivered? A58. It was a three hour video and a bit of a talk.

Q61. How did the Labour Co-operative Pty Ltd assess the effectiveness of the safety induction training provided to you? A61. There was no assessment.

Q62. Does CSR Ltd have a safety induction training program for new employees? A62. Yes, but the induction training held at the Labour Co-operative Pty Ltd not CSR Ltd.

Q63. Did that safety induction training highlight the hazards of presses and/or automated mobile plant? A63. No.

Q64. When and by whom was that safety induction training given to you? A64. On the 15.06.98 by Greg COUPER.

Q65. How long did that safety induction training take to be delivered? A65. It was a three to four hours.

Q68. How did CSR Ltd assess the effectiveness of the safety induction training provided to you? A68. There was no assessment.

Q70. Was any training given to you by the Labour Co-operative Pty Ltd in relation to the system of work in place on the 01.07.98 for "Spotting Up" the wet lap on Press 4 in the Boardmaking Area? A70. No.

Q71. Was any training given to you by the Labour Co-operative Pty Ltd that highlighted the hazards of presses and/or automated mobile plant? A71. No.

Q73. Was any training given to you by CSR Ltd in relation to the system of work in place on the 01.07.98 for "Spotting Up" the wet lap on Press 4 in the Boardmaking Area? A73. Only the on the job training with Dennis SANDS.

Q74. Was any training given to you by CSR Ltd that highlighted the hazards of presses and/or automated mobile plant? A74. Dennis SANDS showed me how to manually shut down the loading rack and showed me its path of travel. Dennis SANDS did point out that previously a guy had his leg crushed and that's why they installed the ladders. Dennis SANDS was talking generally about safety.

Q77. What supervision were you provided by the Labour Co-operative Pty Ltd prior to the accident? A77. None.

Q80. How was supervision provided to you? A80. Dennis SANDS was around the area, he wasn't directly supervising me prior to my accident.

Q81. Were either of the Cleeve MORRIS or Gary WALKER, the two shift team leaders, aware of any hazards in relation to the way that you were working on the 01.07.98? A81. They didn't have much to do with my training or supervision, so I would think no.

5 Importantly also, Denis Anthony Sands, who was a press operator employed by CSR Timber Products, made a statement on 9 March 1999 to the prosecutor which was admitted into evidence. As to the training and supervision of workers on the work in the Boardmaking Area, Mr Sands said in the statement : Q26. Why did the accident occur? A26. Julie LISTER's inexperience in the area. Training of new employees is inadequate. The amount of time spent training new employees is not enough, too much is expected too soon. There are exceptions that new employees will pick up the job very fast. I think it is safer to assume that everybody needs more time. At the debriefing after the accident on the 02.07.98, one of the conclusions drawn from the accident was that trainers have to be trained to train new employees. Fatigue for new employees not used to working 12 hour shifts in a stressful environment also needs to be considered.

Q32. Being mindful of Julie LISTER's accident, how did you ensure that no person or no object was in the path of the unloading rack, and that operation of the unloading rack did not present a danger to any person or object? A32. I assumed that Julie LISTER was aware of the movements of the automated racks. Julie LISTER was about an hour or so off being classed as fully trained on that job, that being the "back end person".

Q41. Who was directly responsible for promulgating and implementing the system of work in place on the 01.07.98? A41. I was. I was training her.

Q42. How was this achieved by yourself? A42. On the job verbal instructions and physical demonstrations.

Q43. How did the Labour Co-operative Pty Ltd assess the effectiveness of yourself promulgating and implementing the system of work for "spotting up" the wet lap on Press 4 in the Boardmaking Area? A43. The Labour Co-operative Pty Ltd did not assess me.

Q44. How did CSR Ltd assess the effectiveness of yourself promulgating and implementing the system of work for "spotting Up" the wet lap on Press 4 in the Boardmaking Area? A44. CSR Ltd did not assess me.

Q62. Did that training highlight the hazards of presses and/or automated mobile plant? A62. I highlighted those hazards.

Q63. How long did that training take to be delivered? A63. I was providing her with on the job training throughout that shift.

Q69. What is the extent of your role as a supervisor within CSR Ltd? A69. I'm not a supervisor, I was asked by Gary WALKER to train Julie LISTER to do the job.

Q70. Were you responsible for the supervision of Julie LISTER on the 01.07.98? A70. I was training her, but I was not her supervisor.

Q71. Who was responsible for the supervision of Julie LISTER on the 01.07.98? A71. Gary WALKER and Cleeve MORRIS share the team leader position. But Dennis RANDALL may also have some responsibilities.

Q72. What supervision was Julie LISTER provided prior to the accident? A72. Apart from my involvement in her training, Julie LISTER had no supervision.

Q74. Were either of the Cleeve MORRIS or Gary WALKER, the two shift team leaders, aware of any hazards in relation to the way that Julie LISTER was working on the 01.07.98? A74. They trusted me to provide Julie LISTER with on the job training.

6 Mr Sands was of the opinion, as expressed in the interview, that a safer alternative system of work for the "spotting up" performed by Ms Lister on Press 4 in the Boardmaking Area would have been for her as the "back end person" to be responsible for pressing the button that sent the loading and unloading racks back to their waiting positions after the press was loaded so as to ensure she would have been away from the moving racks.

7 Both Gary Fredrick Walker and Cleeve Jack Amos Morris, as the co-team leaders, gave statements to the prosecutor on 25 March 1999 which were admitted into evidence. Mr Walker said in his statement : Q19. Why did the accident occur? A19. I think the main reason the accident happened was Julie LISTER's inexperience with the job and the plant. In hindsight, I don't think the accident would have happened if the safety mechanisms were extended at the time of the accident. At the time I thought the safety mechanisms were safe.

Q27. How did the Labour Co-operative Pty Ltd assess the effectiveness of Denis SANDS promulgating and implementing the system of work for "spotting up" the wet lap on Press 4 in the Boardmaking Area? A27. They did not.

Q28. How did CSR Ltd assess the effectiveness of Denis SANDS promulgating and implementing the system of work for "spotting up" wet lap on Press 4 in the Boardmaking Area? A28. They did not to my knowledge.

Q43. Being mindful of Julie LISTER's accident, do you think that the training provided to Julie LISTER was satisfactory, explain your rationale? A43. No, it wasn't long enough. We were told by management, Denis RANDALL, and the Labour Co-operative, I didn't speak to anyone directly from the Labour Co-operative, that we had one day to train Julie LISTER in that job. One day is not enough because when I was learning the job about 6 years ago, you would have a week to two weeks of 8 hour shifts to learn the job. Generally speaking, I think a person needs a full week to learn the job safely and confidently.

Q44. What is the extent of your role as a supervisor within CSR Ltd? A44. I have no role as a supervisor, I am only classed as a Team Leader. There are no supervisors on site any more because of a big lay off about 3 years ago. there are no supervisors, there are self managed teams with Team Leaders.

Q45. How does the role of Team Leader differ from a Team Member? A45. A program gets sent to the Boardmaking Office. Then myself and Cleeve MORRIS let the team know what work is required to be done for the week. Myself and Cleeve MORRIS then organise the work between the team members. I also have to do end of shift reports, shift log books and pass on any information relevant to the team. I don't really know if I have any powers other than guiding and informing other team members. I class myself the same as the other team members except I do the extra administration tasks and informing the team members of what is going on.

Q50. Denis SANDS alleged in his interview on the 09.03.99 that he was asked to train Julie LISTER by Gary WALKER to "do the job", but that he was not her supervisor. What is your opinion about this allegation? A50. I agree that Denis SANDS was not Julie LISTER's supervisor, but was responsible for her training. In my opinion there are no supervisors on site any more and as a Team Leader I am more of a guide and an aid, more than a supervisor. In my opinion we are self supervised teams, not one person with more authority than the others.

Q59. Was there a safer alternative system of work different to the system of work in place on the 01.07.98 that Julie LISTER was functioning by at the time of the accident? A59. With the benefit of hindsight, yes.

Q60. What was this safer alternative system of work for "spotting up" the wet lap on Press 4 in the Boardmaking Area? A60. Basically what we have now, which includes an extended lanyard wire, the bump strip and the pressure pad on the corner where you "spot up" and operate.

Q61. Why was that safer alternative system of work not used on the 01.07.98? A61. Because we didn't realise that hazard existed.

Q62. Has the system of work changed since the accident? A62. Yes.

Q63. In what way has the system of work changed? A63. Changes to the plant itself, there has been a new back up procedure has been written in case the safety modifications go out of service. We also wear high visibility clothing in that area and over the whole site. We also wear hearing protection now.

8 Mr Morris gave similar evidence to that of Mr Walker in which he considered the training period provided to Ms Lister was "too short" and that with the team approach to work "there really is no supervisor for the Boardmaking Area". As to changes made to the system of work following the injuries to Ms Lister, Mr Morris said in his statement : Q59. In what way has the system of work changed? A59. There is now a safety mat on the back end of Press 4, near where Julie LISTER was injured. The racks now have an extended safety wire which runs vertical and horizontal. There are also bumber strips on the edges of the rack where Julie LISTER's head was caught. There is a flashing light above where the Back End person stands to indicate that the unloading rack is moving. We are now wearing fluorescent safety shirts to be seen. We are also now wearing hearing protection in the Boardmaking Area whilst production is operating.

Q63. What steps have been taken by CSR Ltd to prevent a recurrence of the accident? A63. Just the changes I mentioned before as well as proposed longer training for new starters.

9 The defendant's Marketing Manager, John Edward Dodd, also gave to the prosecutor an extensive statement on 21 April 1999. In relation to the training provided to Ms Lister for the work concerned, Mr Dodd said in the statement : Q102. What training did the Labour Co-operative Ltd request from CSR Ltd for Julie LISTER? A102. How to do the job properly and safely.

Q103. When and by whom was that training given to Julie LISTER by CSR Ltd? A103. The person responsible for training at CSR Ltd on the three shifts that she did work on the 23.06.98, 30.06.98 and 01.07.98.

Q104. Did that training highlight the hazards of presses and/or automated mobile plant? A104. I don't know.

Q105. How long did that training take to be delivered by CSR Ltd? A105. 12 hours on the three shifts.

Q110. Was any additionally training given to Julie LISTER that highlighted the hazards of presses and/or automated mobile plant? A110. Not by the Labour Co-operative Ltd.

Q112. Denis SANDS alleged in his interview that the training provided to Julie LISTER on the 2306.98 and 30.06.98 was in the "Value Adding" area which is completely different to that of the Boardmaking Area. Is this allegation correct? A112. Yes.

Q113. How did the Labour Co-operative Ltd assess the effectiveness of the training provided to Julie LISTER? A113. We did not get the opportunity to make an assessment.

10 Although Mr Dodd agreed "that the training period was not long enough", he explained that the defendant did not supervise Ms Lister while she was working at CSR Timber Products because it "would have expected CSR Ltd to provide supervision of our employees to the same standard as they do their own" and he expressed the view that what occurred to Ms Lister on 1 July 1998 was not foreseeable by the defendant "because of the training provided to [her] by the [defendant], the training [she] should have been receiving from CSR Ltd and the previous safe operation of this machinery for over a decade".

11 On 3 July 1998, Dr David Douglas, an occupational health, safety and environment consultant, visited the Raymond Terrace plant on commission by CSR Timber Products to investigate and report on the incident which occurred concerning Ms Lister. As to the underlying causes of the incident and what he perceived to be the risks to safety, Dr Douglas included the following :

· Use of casual labour. · Casuals hired by the defendant - adequate job task analyses for recruitment of suitable persons were not provided. · There was no information on health, fitness or past employment history and experience of new casuals recruited by the defendant. · The off-site induction provided by the defendant was not job specific; there was no test of comprehension. · The on-site induction and initial training were inadequate because of their brevity over only two days and without written job safe practices or current work instructions. · Ms Lister, whilst a keen trainee, was likely to have had little recent industrial experience and her keenness and apparent quick learning may have increased the perception of competency amongst those members of the team responsible for her supervision and training. Dr Douglas in his report made the following recommendations :

· CSR Timber Products should undertake detailed job task analyses of all jobs for use by the defendant in selection criteria. · The defendant should give a brief resume of the casual employee's experience and competency to CSR Timber Products. · The continued reliance on casual labour requires greater effort in task specific induction which must not be delegated to a labour hire firm, such as the defendant. · On-the-job induction and safety training must be documented and formally assessed by questionnaire and demonstration. · A formal on-the-job induction programme requires a specified time period of assignment to a "buddy", or on-the-job trainer, and formal testing of competency. · Two days does not appear to be sufficient training for work in the Boardmaking Area on the press floor. · Up-to-date work instructions should be developed for all tasks in the area. · The level of supervision of casual or inexperienced employees must be commensurate with the risk and complexity of the task to be performed. · The task being performed here by Ms Lister when she was injured will require closer supervision when a casual employee is performing it. · If casual employees, such as Ms Lister, are to be used then a permanent pool of casuals should be developed containing persons trained to an appropriate level and supervised closely.

12 In resisting liability for the alleged breach, the defendant, through its counsel, the Hon Mr J J Macken, and as recorded in the earlier judgment (in par [4]), raised no issue concerning the circumstances of the accident and the injuries occasioned thereby to Ms Lister. It conceded as being established all of the essential elements for the s 15(1) offence other than that the defendant was the relevant employer of Ms Lister, the causal connection of the defendant with the alleged detriments to safety and the defence available under s 53 of the Occupational Health and Safety Act. Each of those issues was found against the defendant and, thus, the offence was found to be proven. Relevant also, however, in a consideration of penalty is the nature of the responsibility of labour hire companies, as is the defendant here, which was dealt with in the earlier judgment (in pars [47]-[48]) in this way : [47] The nature of the responsibility of labour hire firms, like the defendant here, for liability to ensure the health, safety and welfare of their employees performing work at client's premises was considered by me in WorkCover Authority of New South Wales (Inspector Ankucic) v Drake Personnel Ltd t/as Drake Industrial (No 1) (1997) 89 IR 374 at p 382 in the following way : The failures here to ensure the safety of Mr Douglas arose in a situation where he was directed by his employer, the defendant, to perform work for a third party, Warman, at that third party's premises. In such a situation, my view is that an employer has a special responsibility to ensure the health, safety and welfare of its employees at the other workplace for no reason other than that that workplace is removed from the employer's direct management and control and would usually be at a location foreign, or at least unfamiliar, to the employees concerned. ...

It is no answer, in my view, in reduction of penalty otherwise considered appropriate for the defendant to plead reliance on Warman as the client to take appropriate steps to ensure safety in the workplace for all persons engaged at its premises. True it may be that Warman itself may have offended against the Occupational Health and Safety Act , but that does not, it seems to me, lessen the seriousness of the offences committed here by the defendant as the employer.

[48] In WorkCover Authority of New South Wales (Inspector Dubois) v Industry Staffing Services Pty Ltd t/as Action Workforce (1999) 89 IR 430 at p 433 I again had occasion to consider the liability of a labour hire company for the safety of its employees and applied the above approach as stated in Ankucic v Drake Industrial . That approach was considered by the Full Bench in the later case of Ch'ng v Drake Industrial where the majority of Wright J, President and Walton J, Vice-President commented (90 IR at p 456) The observations of Hungerford J set out above were made in the context of determining the appropriate penalty to be imposed following a plea of guilty. However, we consider that they are equally applicable when considering the liability of a labour hire company under the OH&S Act. A labour hire company cannot escape liability merely because the client to whom an employee is hired out is also under a duty to ensure that persons working at their workplace are not exposed to risks to their health and safety or because of some alleged implied obligation to inform the labour hire company of the work to be performed. In our view, a labour hire company is required by the OH&S Act to take positive steps to ensure that the premises to which its employees are sent to work do not present risks to health and safety. This obligation would, in appropriate circumstances, require it to ensure that its employees are not instructed to, and do not, carry out work in a manner which is unsafe.

13 As to the s 53 statutory defence, the earlier judgment (in pars [52]-[53]) stated : [52] I am of the view that the s 53 defence may only be considered, in the circumstances of this case and in light of the way it was argued, as inseparable from the causal connection question. In that respect, the unchallenged report by Dr Douglas identified various underlying causes of the incident in terms of the lack of adequate instruction, training and supervision and recommended improvements by specific steps as would affect instruction, training and supervision. I do not further particularise those matters as that would be merely repetitive and they are set out in detail above. Suffice it to say that a perusal of the other evidence in the proceedings given by persons such as Mr Dodd, Mr Walker, Mr Morris and Mr Sands was directly reflected in Dr Douglas' report as to the underlying causes (risks to safety) and recommendations for improvements. I am satisfied that if those measures had been implemented then the present risks to safety would not have existed. Further, I am well satisfied that it was reasonably practicable for the defendant to have ensured against such risks by adopting a positive and pro-active approach with CSR Timber Products to require steps be put in place to avoid the risks as a condition of it making available the services of Ms Lister.

[53] Although, of course, CSR Timber Products had the control of the premises at Raymond Terrace and in a physical sense was the entity to make any changes, nevertheless the defendant in relation to the risks here as to instruction, training and supervision had a very real measure of control to ensure such matters were adequate and so as not to create a risk to safety - that measure of control was simply a refusal to supply its employees to CSR Timber Products until appropriate and sufficient measures to ensure safety were implemented. As the majority observed in Drake Industrial v Ch'ng (90 IR at p 456), "... a labour hire company is required by the OH&S Act to take positive steps to ensure that the premises to which its employees are sent to work do not present risks to health and safety. ... to ensure that its employees are not instructed to, and do not, carry out work in a manner which is unsafe". I affirm the above findings which are apt to repeat for the purpose of determining the appropriate penalty.

14 Here, the essential failures of the defendant concerned its omissions in respect of the instruction, training and supervision of Ms Lister, omissions, in my view, very much within the responsibility of the defendant as the employer and as to which it had a special onus to ensure against. And that was so if for no reason other than that Ms Lister was working at a location remote from the defendant's day-to-day supervision and control and where it knew or ought to have known she was relatively inexperienced; she should, therefore, have received more careful attention in training and supervision if she was to perform the work concerned. I emphasise that it was no answer for the defendant to plead such matters as being within the sole ability of CSR Timber Products and not the defendant.

15 In the present phase of the proceedings concerning penalty, Mr Macken again called Mr Dodd to give evidence in support of mitigation. It appeared the defendant had approximately 22 permanent employees and up to 800 casual employees whose labour was hired to other companies, such as CSR Timber Products where in a period of the last 11 years the defendant had about 247 persons working at the Raymond Terrace premises. As to the particular structure of the defendant and its financial arrangements, Mr Dodd gave the following evidence : Q. It is a non-profit making organisation? A. We are set up as a non-profit organisation.

Q. All officers of the Co-operative are honorary? A. Yes, and no dividend is paid to anybody and basically the people who work for us actually own the company.

Q. It is a co-operative? A. Yes.

Q. They charge a small management fee to operate the Co-operative which is able to hire labour? A. Yes.

Q. If there is a surplus at the end of each year, above the level of the management fee needed to run the Co-operative, what happens? A. The money is usually invested back into the Co-operative, into training of employees, opening new branches, if we are in that sort of area if the money is available, developing new systems, developing training for employees, and training for full-time employees of the Co-operative. We have established an occupational health and training centre which has been up and running for the last twelve months.

Q. Is this operated as a community gesture by the Co-operative? A. Very much so.

Q. Do you take people off the streets and give them training? A. If people can't afford to do the courses that will eventually give them jobs we won't charge those people.

Q. Do people do that? A. We had a lady phone and she could not find anyone in their area to do a construction safety course, and traffic control course. She came down and booked into the course. She did one on the Friday and one on the Monday, and we didn't charge her anything. I believe she went back and now has a full time job.

Q. Is the purpose of the Labour Co-operative the provision of trained labour for people who are otherwise unemployed? A. Pretty much so, yes. The structure or philosophy behind it was to get people full time work, and then the place was going to close and give everything to charity. The way the world is now that won't happen, so we consented to getting people work. We have a client in Newcastle and we have given them full time jobs over the last eighteen months.

Q. And there is no charge made? A. No, we don't charge placement fees or 10 per cent of the gross wage. We don't do any of that. Our purpose is getting work.

16 Mr Dodd's evidence was directed also to the defendant's continuing concern with workplace safety by reference to its relationship with the WorkCover Authority in the Newcastle area and its participation as a representative on the labour hire industry reference group concerned with safety practices generally. The defendant's recent activities to improve safety in the workplace, on Mr Dodd's evidence, had been recognised in the reduction of the workers' compensation insurance premium paid by the defendant to GIO General Limited - in the four year period commencing on 1 July 1997 and ending on 30 June 2001, the defendant's wage costs had increased from $10,129,618 to $13,432,737 but with a reduction in the premium over that period from $1,104,487 to $686,650 "due to the implementation of good Risk Management and Safety Procedures together with the appointment of a Risk Manager". In that latter respect, the Risk Manager, Mr Neil Mitchell, was appointed to undertake that role in January 2001. Not insignificantly in light of what occurred in the present case, Mr Dodd's evidence as to the appointment of the Risk Manager was that workplace assessments were now "a lot more formal than in the past" but where previously "it was very much dependent on the marketing representative who had that company as a client to check out work sites".

17 As to the defendant's concern for Ms Lister following her injuries and the community nature of the defendant, Mr Dodd's evidence was : Q. The connection the Labour Co-operative had with Julie Lister since the accident, can you tell us what steps the Co-operative has taken in the rehabilitation or looking after her interests? A. When the accident occurred we had a representative on site as soon as we were notified, and that representative followed Julie to the hospital, making sure everything was done there, that the parents were contacted, and when the parents arrived the representative spent time with them. We offered to pay for accommodation for the parents if they needed it, and anything else we could do to help. Concerning the hospitalisation, I had a call from her partner who suggested that the conditions she was enduring at the hospital were not up to standard, so we moved her to a private hospital, with a private room, wash and laundry facilities. We kept in contact with her and organised rehabilitation programs for her, and had her working two days a week at the Blackbutt Reserve because she like animals, and said we would pay her time there, and she got involved in that and I believe she is working there a couple of days.

Q. Is that an abnormal thing for you to do? A. No, anybody who is injured and ends up in hospital requiring treatment, we have someone go to the hospital to make sure the person is getting help, making sure they are receiving adequate treatment and to let them know if they need anything, and also we give them telephone numbers, contacts and names. We usually do that with all our people. It is very much a case of they are working for us.

Q. Do you proffer counselling services when people are not injured? A. We have people who come in and discuss things with them, the fact they can't get a job, and we have people - their partners ring up and thank us for getting them jobs. It is very much a community organisation, and that is throughout the branches in New South Wales, and we try to run them along similar lines. We had Martin Ferguson come and see us, how we get work for older people. That sort of interest from a politician surprised me.

18 In relation to penalty, counsel for the prosecutor, Mr P M Skinner, led no evidence and relied upon the evidence admitted during the liability stage of the proceedings. I have set out above the major pieces of that evidence relevant to the question of penalty. Counsel advised that the defendant had no prior convictions for breaches of occupational health and safety legislation.

19 Mr Skinner submitted that in assessing an appropriate penalty against the defendant the nature and quality of the offence were to be seen in the context that the injuries to Ms Lister were serious and resulted from the use of heavy machinery so as to affect the degree of seriousness. A particular feature of this case, as identified by counsel, was that the defendant was a labour hire company so that any sentence imposed should take into account the element of general deterrence as an importance factor: see Drake Personnel Ltd, t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432 at pp 455-456. Nevertheless, counsel accepted, as he said, that "the defendant has a good record, and has since done much which stands in mitigation of the penalty to be imposed. ... further relevance of that is to assess the prevalence of labour hire companies who are non profit ... ." In addition, Mr Skinner helpfully referred to proceedings before Kavanagh J on 19 October 2001 being a prosecution by Inspector Robins of CSR Timber Products under s 16(1) of the Occupational Health and Safety Act in relation to the same incident as that before me concerning Ms Lister; CSR Timber Products had pleaded guilty and her Honour was concerned with the issue of sentence. Although counsel acknowledged it was a different charge, he drew attention to it because it arose out of the same circumstances; it was relevant, on this approach, to note that the co-offender also had been charged with an offence under the same statute and where elements of the charge against CSR Timber Products involved its supervision of work and the system of work in the Boardmaking Area on 1 July 1998 when Ms Lister was injured.

20 Mr Macken's argument was succinct and to the point. It is convenient to set out below what counsel put : Dealing with the last point, this question of a general deterrence, no-one would quibble with the principle of a general deterrence being imposed to encourage employers to make proper and effective occupational health and safety arrangements, but there may be cases when the imposition of a fine by way of deterrence could have the effect - unintended, of course - that it says to the employer, we don't agree with what you do, what safety precautions you take, what costs you go to, you are going to get a fine anyway, and the problem then is an employer would say, well, why bother?

The principle of general deterrence is to be looked at against the facts of a particular case. There is no rule of law that says if an accident occurs under all circumstances a fine has to be imposed. I won't go on to canvass all the details that are before your Honour, but if there was anything that an employer could do to ensure the safety of its workers beyond what the Co-operative in Newcastle has done, my imagination is not good enough to arrive at it.

There is no significance on the safety issue in it being non profit or community based. They are only significant in that they allow the surplus of the management fees to be ploughed back into training, including occupational health training, and that is relevant. It has an incredible record of a safety character from 1986 to the present time, one charge, one penalty, that is all, and the substantial wages bill of $13 million a year recognised for its safety record by the insurers with decreasing premium policies, and an attitude towards workplace safety, that could not be cavilled at. It has done everything that could be fairly said to be done and that is that. What do you say beyond that?

If there was any argument for the Court not to impose a fine at all, it would be to tell industry, particularly in the Hunter Valley, to tell the industry if they can meet the standards laid down and applied by the Co-operative, then that is the treatment the Court would give them, because nothing more could be done than is currently being done in this field of occupational health, and it should be encouraged to continue with that policy, and not deter - general or otherwise deterrence - by saying there is an injured girl. When someone says what on earth are you doing putting money into occupational health, it's not an attitude of the Co-operative because of its philosophy; others might take it, and it should not be encouraged.

21 The clear thrust of Mr Macken's submission was that it was really unnecessary to impose any fine, or if so then only in a nominal amount, on the defendant because of its approach to occupational health and safety in the workplace, its demonstrated record in that respect and, most importantly, its nature as a non-profit labour co-operative in the Newcastle area concerned as a community based organisation with the training of workers and their placement in jobs. On that basis, as I understood Mr Macken's submission, it was suggested this was an appropriate case to exclude consideration of general deterrence in the assessment of any fine to be awarded.

22 The fundamental duty of the Court in the sentencing process has repeatedly been said "to ensure a level of penalty for a breach as will compel attention to occupational health and safety issues so that persons are not exposed to risks to their health and safety at the workplace" but with "a corresponding duty ... not to impose such a penalty as would be oppressively high": see Fisher v Samaras Industries Pty Ltd (1996) 82 IR 384 at p 388 as approved by the Full Bench in Capral Aluminium Ltd v WorkCover Authority of New South Wales (Inspector Mayo-Ramsay) (2000) 49 NSWLR 610 at p 643; (2000) 99 IR 29 at p 60 in pars [73]-[74]. In satisfying that duty, the established principle, as I understand it, is to the effect that the penalty must reflect the nature and quality of the particular offence in an objective sense with proper weight to subjective considerations in tempering any penalty but where such subjective considerations are necessarily subsidiary to the main considerations that determine the appropriate amount of punishment: see Warman International Ltd v WorkCover Authority of New South Wales (1998) 80 IR 326 at p 339; Dowling v Overtop Pty Ltd (1998) 86 IR 319 at p 333; and Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at p 475. In light of those principles, and particularly having in mind the submission of Mr Macken that any penalty imposed in this case should not include a component for general deterrence, it is pertinent to repeat what Street CJ said in R v Rushby [1977] 1 NSWLR 594 at pp 597-598 as to the sentencing process, as follows : The law upon the matter of sentencing is well stated in the judgment of the Court of Appeal in New Zealand in R v Radich [1954] NZLR 86 at p 87, a passage which has been cited in other judgments on numerous subsequent occasions: "... one of the main purposes of punishment, ... is to protect the public from the commission of such crimes by making it clear to the offender and to other persons with similar impulses that, if they yield to them, they will meet with severe punishment. In all civilised countries, in all ages, that has been the main purpose of punishment, and it still continues so. The fact that punishment does not entirely prevent all similar crimes should not obscure the cogent fact that the fear of severe punishment does, and will, present the commission of many that would have been committed if it was thought that the offender could escape without punishment, or with only a light punishment. If a Court is weakly merciful, and does not impose a sentence commensurate with the seriousness of the crime, it fails in its duty to see that the sentences are such as to operate as a powerful factor to prevent the commission of such offences. On the other hand, justice and humanity both require that the previous character and conduct, and probable future life and conduct of the individual offender, and the effect of the sentence on these, should also be given the most careful consideration, although this factor is necessarily subsidiary to the main considerations that determine that appropriate amount of punishment." That passage was cited with approval by a Full Bench of the Court in Capral Aluminium (49 NSWLR at p 643; 99 IR at p 59 in par [72]). Therefore, Mr Macken's submission on this aspect of deterrence cannot be accepted as it would lead to a failure by the Court in its duty to impose an appropriate fine consistent with principle. Of course, that is not to exclude consideration of the factors subjective to the defendant as identified by Mr Macken and which were, it may be emphasised, conceded as relevant by Mr Skinner.

23 The essential failure by the defendant here was its complete lack of attention to the instruction, training and supervisory needs of Ms Lister in being sent to the Raymond Terrace plant of CSR Timber Products to perform work in the operation of heavy machinery in the Boardmaking Area. The evidence made it plain, in my view, that the defendant was content to merely satisfy the call by CSR Timber Products for a labourer and, apart from providing induction to occupational health and safety measures in a general sense, left it entirely to CSR Timber Products to train and supervise Ms Lister in the performance of work which CSR Timber Products required to be done from time-to-time. In my view, that approach by the defendant was contrary to its responsibility for the workplace safety of its employee, Ms Lister, and represented a failure to meet its special responsibility as a labour hire company. As was observed in Drake Industrial (90 IR at p 456) by the majority of the Court, "... a labour hire company is required by the OH&S Act to take positive steps to ensure that the premises to which its employees are sent to work do not present risks to health and safety. ... to ensure that its employees are not instructed to, and do not, carry out work in a manner which is unsafe". That was the qualitative nature of the failure by the defendant in the present case.

24 Before finalising an assessment of the objective quality of the present offence, reference should be made to the case before Kavanagh J concerning the prosecution of CSR Timber Products as noted by Mr Skinner. As it happened, her Honour gave judgment therein on 23 November 2001 in Robins v CSR Ltd t/as CSR Timber Products [2001] NSWIRComm 296 and imposed a fine of $150,000 after allowing a discount of 15 per cent for subjective features, including the utilitarian value of the guilty plea. Of course, in considering that outcome it is important to bear in mind that the maximum penalty there was $825,000, by reason of CSR Timber Products having had prior convictions and where her Honour found that "CSR held full responsibility for the design of this work method and the machine's safety features". Importantly, however, for present purposes, her Honour concluded (in par [34]) : Although the defendant involved the labour hire firm in its training programme for site safety as a large organisation it must accept it cannot pass over its obligations for site safety to such as the labour hire firm. Each organisation must meet its own obligations whether it be as the employer or as the contractor. I think that last-mentioned comment is directly applicable to the task before me. In the result, her Honour held (in par [20]) that taking into account the objective features of the offence committed by CSR Timber Products it "was a serious offence sufficient to attract penalty in the middle range" and, after allowing for the various subjective factors in mitigation, a penalty was fixed accordingly. The relevance of her Honours' approach, as I say as was noted by Mr Skinner, arises from the comments of the Full Bench of the Court in Warman in considering consistency in sentencing as between a labour hire company and its client for respective breaches of the Occupational Health and Safety Act under s 15 and s 16. Their Honours said (80 IR at p 341) : While the offences with which we are dealing under the OH&S Act do not involve the notion of co-offenders, the fact is that the same circumstances have given rise to prosecutions for offences under ss 15 and 16 of the OH&S Act of the direct employer, Drake Personnel Ltd t/as Drake Industrial which supplied the labour involved, and the defendant here who utilised that labour in relevant circumstances. While those defendants have been found guilty of different offences, nevertheless the factual circumstances giving rise to the charges justify an approach to sentencing which shows consistency and not disparity in punishment in the same way as discussed by Mason J in Lowe v The Queen (1984) 154 CLR 606 at pp 610-611.

We take all of these factors into account in determining penalties for the six charges, ... That approach was followed by Walton J, Vice-President in WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd (2000) 95 IR 383 at pp 435-436 and was cited with approval by the Full Bench in Capral Aluminium (49 NSWLR at p 640; 99 IR at p 56 in par [62]). I will, therefore, have in mind the conclusions of Kavanagh J in assessing an appropriate penalty against the defendant here.

25 The objective qualities of the present offence, as described by me above, have about them, in my view, such a degree of seriousness as would call for a sizeable penalty. The maximum penalty prescribed for the offence at the time it was committed, and where the defendant has no prior convictions, is $550,000. In all the circumstances, I would assess an appropriate fine as being towards the top of the lower quartile of the range of seriousness in the amount of $100,000. The issue then arises as to whether any, and if so, how much reduction in that penalty should be allowed for the factors subjective to the defendant.

26 I accept Mr Macken's submission as to the nature of the business in which the defendant is engaged and its established philosophy as a non-profit organisation in the supply of labour to industry in the Newcastle area but based very much on community considerations in endeavouring to place persons in work. Paramount also in this consideration must be its most satisfactory industrial safety record as demonstrated by the lack of prior convictions and the regular consultation it has with inspectors of the WorkCover Authority as to appropriate safety practices. Indeed, Mr Skinner acknowledged as much. I have in mind too the substantial reduction in the defendant's workers' compensation premiums over the last four years following the appointment of the Risk Manager and, as GIO as its insurer commented, where the premiums were reduced "due to the implementation of good Risk Management and Safety Procedures". The defendant's concern for the welfare of Ms Lister after her injuries weighs also in its favour. I propose to allow a discount of 10 per cent to the penalty otherwise considered appropriate in recognition of those subjective features. In the result, I assess an appropriate fine against the defendant for the present offence to be an amount of $90,000. The prosecutor is to have a moiety of the fine.

27 Mr Skinner sought costs and, in the interests of containing further costs having in mind the position of the defendant as a non-profit organisation, quantified such costs on a party-party basis in the sum of $20,000. Mr Macken opposed any order as to costs but, as he very fairly acknowledged, "costs follow the event and the event has been decided. ... would assume that the ordinary rule of law would apply ...". I see no reason in this case to depart from the ordinary rule as to costs, particularly where the charge was staunchly resisted by the defendant in a hearing over two days on major issues involving the status of the defendant as the employer of Ms Lister and of its causal connection with what occurred on 1 July 1998 in the subject incident; a further day's hearing was required on the issue of sentence. On balance, I think an appropriate result would be for the prosecutor to have his costs which I would assess in the sum of $10,000.

28 I make the following orders - 1. The defendant is found guilty of the offence as charged and a conviction against it is entered accordingly. 2. The defendant is fined an amount of $90,000, with a moiety to the prosecutor. 3. The defendant is to pay the prosecutor's costs of the proceedings assessed in the sum of $10,000. __________________

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