WorkCover Authority of New South Wales (Inspector Katf) v Skilled Warehousing

CATCHWORDS: Occupational health and safety - pleas of guilty - general principles - nature and extent of the obligations of labour hire companies - objective seriousness of the offences - foreseeability - general and specific deterrence - co-defendants with common factual matrix - principle of parity considered - no prior convictions for either defendant - subjective features taken into consideration - penalties imposed - orders as to penalty and costs.

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

Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 Drake Personnel Limited t/as Drake Industrial v WorkCover Authority of NSW (Inspector Ch'ng) (1999) 90 IR 432 Ferguson v Nelmac Pty Limited (1999) 92 IR 188 Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 Lowe v The Queen (1984) 154 CLR 606 CASES CITED: Markarian v The Queen [2005] HCA 25: 18 May 2005 Postiglione v The Queen (1997) 189 CLR 295 R v Gallagher (1991) 23 NSWLR 220 R v Thompson, R v Houlton (2000) 49 NSWLR 383 R v Way [2004] NSWCCA 131 Thorneloe v Filipowski (2001) 52 NSWLR 60

PROSECUTOR: Ms K Nomchong of counsel SOLICITORS: Moray & Agnew

FIRST DEFENDANT: Skilled Warehousing (NSW) Pty Ltd LEGAL REPRESENTATIVES: Mr B Hodgkinson SC SOLICITORS: Piper Alderman

SECOND DEFENDANT: APC Socotherm Pty Ltd Mr P Skinner of counsel SOLICITORS: N J Papallo & Co

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

Matter No IRC 3397 of 2004 WorkCover Authority of New South Wales (Inspector Katf) v Skilled Warehousing (NSW) Pty Ltd Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 Matter No IRC 3398 of 2004 WorkCover Authority of New South Wales (Inspector Katf) v APC Socotherm Pty Ltd Prosecution under s 8(2) of the Occupational Health and Safety Act 2000

JUDGMENT [2005] NSWIRComm 296 1 The first defendant, Skilled Warehousing (NSW) Pty Ltd (Skilled), is an industrial labour hire company that operates as part of the Skilled Group of companies. The second defendant, APC Socotherm Pty Ltd (APC), provides specialised pipe coating services to the oil, gas and water pipeline industries. 2 On 17 January 2003, Mr Paul Nyamweya Osero was an employee of the first defendant. Mr Osero first commenced employment with Skilled in or about August/September 2002. 3 Immediately after commencing employment with Skilled and pursuant to a labour hire agreement between Skilled and APC, Mr Osero was sent to work for a number of weeks at the second defendant's premises at Lot 562 Reddalls Road, Kembla Grange (the premises). After that initial period of secondment, Mr Osero was allocated by Skilled to another employer until he was once again sent to work at APC in early January 2003. 4 At APC, Mr Osero's duties involved, inter alia, cleaning the paint nozzle of an electrically driven paint station used in the internal paint coating of pipes which were being prepared for use in an underground gas pipeline. The operation of the paint station was controlled by an operator from a platform positioned adjacent to and somewhat above the actual paint cabin. The electronically driven paint cabin travelled on rails from one end of the workshop to the other, spray painting via a paint boom as it went. 5 On 17 January 2003, Mr Osero, along with fourteen other employees of Skilled, were working at the premises of APC. As part of his duties, Mr Osero was required to clean the spray nozzle of the paint boom. In doing that, he was leaning into the spray booth of the paint station. While he was undertaking that task, the electrically driven spray booth was activated. The spray nozzle caught Mr Osero under the right breast and trapped him by pushing him against one of the 18 metre pipes waiting to be painted. As a result, Mr Osero sustained bruising and minor lacerations. 6 As a result of that incident, both Skilled and APC were charged with an offence arising pursuant to s 8(1) and 8(2) of the Occupational Health and Safety Act 2000 (the Act) respectively. In relation to Skilled, it was alleged that it: Did fail contrary to s 8(1) of the Occupational Health & Safety Act 2000 to ensure the health, safety and welfare at work of its employees including Paul Nyamweya Osero (the worker) when the worker was engaged by APC Socotherm Pty Ltd (the host employer) pursuant to an agreement between the defendant and the host employer in carrying out work involving the cleaning of the paint nozzle of an electrically driven paint station (the machine) when the machine was activated and the worker was temporarily caught between a stationary pipe and the paint nozzle of the machine, by reason that the defendant failed to ensure that the system of work in relation to the operation of the machine was safe and without risk to health. 7 In particular, the first defendant's failures were identified as: (i) It had failed to properly assess the risk of harm to the health or safety of the worker from risks associated with a foreseeable hazard, namely the operation of the machine whilst a person such as the worker was within the confines of its area of operation; (ii) It failed to eliminate or control such risk to safety arising from the operation of the machine in all circumstances;

(iii) The safety of the worker in conducting such work in the area of operation of the machine was reliant upon the oral and visual communications between the operator and the worker and was inherently unsafe. 8 In relation to the charge brought against APC pursuant to s 8(2) of the Act, the prosecutor alleged that it: Did fail contrary to s8(2) of the Occupational Health & Safety Act 2000 to ensure that persons not being employees and including Paul Nyamweya Osero (the worker) were not exposed to risks to their health or safety arising from the conduct of its undertaking, namely the internal paint coating of pipes while persons not employees were at its place of work in that the worker sustained injuries, being bruising and minor lacerations whilst he was cleaning a paint nozzle in the paint station when the paint station was activated and the worker was temporarily caught between a stationery pipe and the paint nozzle. 9 The particulars of that offence were identified as follows: (i) There was no interlock device to prevent the operation of the electrically driven paint cabin whilst the worker was within the area of its operation; (ii) There was no emergency stop device within reach of or accessible to the worker at all times whilst he was in the area of operation of the paint cabin and at risk from it; (iii) The system of work which relied only upon the oral and visual communication between the operator and the worker in all the circumstances, was unsafe;

(iv) The activation of the paint cabin by the operator when he had not received an oral or visual clearance from the worker, was unsafe;

(v) The defendant failed to fully assess the risk of harm to the health or safety of the worker from the risks associated with a foreseeable hazard, namely the operation of the paint cabin whilst a person such as the worker was within the confines of its area of operation;

(vi) The defendant failed to fully eliminate or control such risk to safety arising from the operation of the paint cabin in all circumstances. 10 A plea of guilty has been entered by both defendants. 11 The prosecutor has filed an agreed statement of facts with respect to each offence. As both charges arise from the same factual matrix, there is a degree of overlap between the agree facts tendered with respect to Skilled, and the agreed facts tendered with respect to APC. However, because the facts with respect to each matter have been expressed differently, it is necessary to set out the agreed facts with respect to each matter independently of the other. 12 With respect to the charge brought against Skilled, the following facts are agreed: [1] At all material times the defendant was an employer.

[2] At all material times the defendant employed Paul Nyamweya Osero (the worker).

[3] The worker, along with approximately 14 other employees of the defendant, pursuant to a labour hire agreement with APC Socothern Pty Ltd [ACN 083 944 843] (APC) were let on hire by the defendant to APC to work at APC's internal pipe coating plant at Lot 562, Reddalls Road, Kembla Grange in the state of New South Wales (the premises).

[4] At all material times APC's operations involved the internal paint coating of pipes which pipes were being prepared for an undersea gas pipeline.

[5] The internal pipe coating plant had been in operation only since it had finally been installed around the end of November 2002. The design for the internal pipe coating plant and the machines which operated within it had been determined by APC's Italian parent company, Socotherm SPA. The pipe coating plant and the machines within the plant had been manufactured by B & L Bauhuis of Holland. [6] At an inspection of the premises conducted by Inspector Gabriele Belley on 28 March 2003, the inspection revealed the following:

(a) A workshop in an east-west direction built of colour bond walls and roof, with a concrete floor.

(b) A passageway between two spray painting areas with the operator's platform at the eastern end of the passageway.

(c) Spray painting areas were fenced off with weld mesh fencing approximately 1100mm high.

(d) A number of 18 metre long pipes were stored on a chain conveyor system at the eastern end of the building ready for painting. The pipes came into the workshop from an opening on the north-eastern side of the building.

(e) On the southern side of the workshop was a steel cabinet on wheels known as a paint cabin, which was electrically driven and traveled on rails from the western to the eastern end of the workshop.

(f) The paint cabin was 2500mm long by 2600mm high by 2100mm wide. The cabin was 550mm from ground level. There was an exhaust duct at the top of the cabin which went into a filtering machine. The cabin had a rectangular opening at the back to enable access of the paint boom carrier. At the front of the cabin facing east was a large round opening almost the width of the cabin covered in black plastic. There was a solid section of steel wall measuring 420mm high at the front bottom end of the cabin.

(g) A smaller round opening measuring approximately 480mm in diameter had been cut into the plastic.

(h) Located inside the cabin was a pipe with an elbow at the end and a nozzle approximately 25mm in diameter. The pipe and nozzle was attached to a carriage on a ram known as the paint boom carrier which when activated revolved through the pipe spraying paint evenly around the internal length of the pipe.

(i) When the 18 metre pipe is in front of the paint cabin an operator drives the cabin to a position covering the opening to the pipe - the distance is approximately 1500mm. The cabin stays in this position whilst the paint boom carrier travels through the internal length of the pipe.

(j) The controls are situated on the operator's platform located on the northern side of the paint cabin and behind the front of the cabin. Access to the operator's platform is by a nine tread metal staircase.

(k) From the operator's platform there was no direct vision of the front of the paint cabin. There is a closed circuit television monitor adjacent to and above the control panel. On the TV screen at the time of inspection the front of the paint cabin and the pipe waiting to be painted could be observed.

(l) The control panel faced the eastern end of the building. There were two identical panels side by side for the two corresponding paint lines.

(m) At the bottom left of the panel was a joystick with the operations labelled around it. The operation for pushing the joystick forward was: Paint Boom Carrier Start Rotation . The operation for pulling the joystick down was: Paint Boom Carrier Stop Rotation . The operation for pushing the joystick to the right was: Paint Boom Carrier Reverse . The operation for pushing the joystick to the left was: Paint Boom Carrier Forwards .

(n) To the left of the joystick were two toggle switches. The one closest to the joystick was labeled Front Paint Cabin Forwards/Reverse . The other toggle switch was labeled Rear Paint Cabin Forwards/Reverse .

(o) Immediately above the joystick from the left were two knobs labelled Open Paint Valve and Paint Head Cleaning ; a green button labelled Start Cycle Paint Line ; a green and red button without labels.

(p) Above this row of knobs and buttons were from the left, another knob labelled TV Off/On and blue press button labelled Reset E/Stop Faults .

(q) At the top of the panel and above the blue button was a red light button labelled Failure Paint Supply and to the right of this was an emergency stop button.

(r) At the top left of the panel were two rectangular switches that were green for On at the top and red for Off at the bottom, labelled from the left Outgoing Rails and Automatic Operation .

(s) Below these switches were two knobs from the left Spare and Man/0/Auto .

(t) Beyond the operator's platform and at the end of the passageway facing east, was a weld mesh gate with a gate latch. This gate latch could be lifted to disengage the latch and open the gate. There was no locking mechanism.

(u) The gate gave access to the pipe storage area and the paint cabin.

(v) On the north-eastern side of the paint cabin adjacent to the gate was a switchbox with a green press button push/pull emergency stop switch labelled Pull To Start, Push To Stop . This switch appeared to be new. [7] The worker had commenced working as a labourer for the defendant in approximately September 2002 and had been allocated to work for a few weeks with APC at the premises at that time. He had undergone an induction training program in September 2002 at the time he commenced work at the premises but at that time the internal pipe coating plant was not open. [8] The worker had been allocated to another company for a period until he was returned to APC after Christmas 2002. He had been working at APC's premises for about two weeks prior to being involved in an incident on 17 January 2003. [9] Prior to 17 January 2003 the worker had not been subjected to a further induction training program with particular reference to the new internal pipe coating plant, in addition to that which he had undergone in September 2002. [10] The worker's duties at APC's premises involved taping up parts of pipes which were not to be spray painted and cleaning the nozzle of the paint boom after about every three pipes. [11] At all material times the worker's duties involved him carrying out work within the area of operation of the paint spraying machine.

[12] At approximately 12.30pm on 17 January 2003 the worker was in the spray booth of the paint station on the southern side of the plant and was cleaning the spray nozzle. At the same time he was leaning into the booth when it started moving. The spray nozzle caught the worker under the right breast and trapped him by pushing him against one of the 18 metre pipes which was to be painted. When this occurred the worker screamed for help and two other co-workers who witnessed what had occurred, signalled to the operator to stop the machine. [13] At all material times on and prior to 17 January 2003 the system of work in place for determining whether it was safe to operate the spray painting plant was dependent upon visual or oral communication. [14] At all material times on and prior to 17 January 2003 the gate which provided access to the worker to the areas of operation of the paint station machine, was not interlocked to the operation of the machine to prevent it being activated whilst he was exposed to risk from it and consequently it did not satisfy the requirements of AS4024.1, 1996 - Safeguarding of Machinery, Part 1, General Principles. [15] Following the accident of 17 January 2003, remedial measures were taken by APC with the installation of an emergency stop switch being installed at the side of the spray booth cabin. [16] On 14 April 2003 the prosecutor, issued an Improvement Notice No. 7-24224, to APC requiring further remedial measures to ensure compliance with AS4024.1, 1996 - Safeguarding of Machinery, Part 1, General Principles. In response to this notice APC installed an interlock switch onto the gate entry to prevent access into the machinery area. [17] The defendant on 27 November 2002 had conducted a risk assessment of APC's premises. This risk assessment noted, inter alia , the following:-

(e) Sufficiently guarded plant, machinery and pedestrian walkways to prevent injury to employees and others?

[18] On and prior to 17 January 2003, in spite of the risk assessment noting the inadequacy of machine guarding at the premises, the defendant took no proper steps to ensure APC carried out timely modifications to plant and machinery to satisfy guarding issues. 13 In relation to the offence relating to APC, the following facts are agreed:

[1] At all material times the defendant was an employer. [2] At all material times the defendant had engaged the services of Paul Nyamweya Osero ('the worker') through a contract of hire with Skilled Warehousing (NSW) Pty Ltd [ACN 095 444 670].

[3] Skilled Warehousing (NSW) Pty Limited is charged pursuant to s 8(1) of the Occupational Health and Safety Act 2000 and has pleaded guilty to that offence. [4] The worker, along with some 14 other employees of Skilled Warehousing (NSW) Pty Ltd, who were subject to the same hire agreement with the defendant, were engaged by the defendant to work at its internal pipe coating plant at Lot 562, Reddalls Road, Kembla Grange in the state of New South Wales ('the premises'). [5] At all material times the defendant's operations involved the internal paint coating of pipes which pipes were being prepared for an underground gas pipeline. [6] The internal pipe coating plant had been in operation only since it had finally been installed around the end of November 2002. The design for the internal pipe coating plant and the machines which operated within it had been determined by the defendant's Italian parent company, Socotherm SPA. The pipe coating plant and the machines within the plant had been manufactured by B & L Bauhuis of Holland. [7] At an inspection of the premises conducted by Inspector Gabriele Belley on 28 March 2003, the inspection revealed the following:

(a) A workshop in an east-west direction built of colour bond walls and roof, with a concrete floor.

(b) A passageway between two spray painting areas with the operator's platform at the eastern end of the passageway.

(c) Spray painting areas were fenced off with weld mesh fencing approximately 1100mm high.

(d) A number of 18 metre long pipes were stored on a chain conveyor system at the eastern end of the building ready for painting. The pipes came into the workshop from an opening on the north-eastern side of the building.

(e) On the southern side of the workshop was a steel cabinet on wheels known as a paint cabin, which was electrically driven and travelled on rails from the western to the eastern end of the workshop.

(f) The paint cabin was 2500mm long by 2600mm high by 2100mm wide. The cabin was 550mm from ground level. There was an exhaust duct at the top of the cabin which went into a filtering machine. The cabin had a rectangular opening at the back to enable access of the paint boom carrier. At the front of the cabin facing east was a large round opening almost the width of the cabin covered in black plastic. There was a solid section of steel wall measuring 420mm high at the front bottom end of the cabin.

(g) A smaller round opening measuring approximately 480mm in diameter had been cut into the plastic.

(h) Located inside the cabin was a pipe with an elbow at the end and a nozzle approximately 25mm in diameter. The pipe and nozzle was attached to a carriage on a ram known as the paint boom carrier which when activated revolved through the pipe spraying paint evenly around the internal length of the pipe.

(i) When the 18 metre pipe is in front of the paint cabin an operator drives the cabin to a position covering the opening to the pipe - the distance is approximately 1500mm. The cabin stays in this position whilst the paint boom carrier travels through the internal length of the pipe.

(j) The controls are situated on the operator's platform located on the northern side of the paint cabin and behind the front of the cabin. Access to the operator's platform is by a nine tread metal staircase.

(k) From the operator's platform there was no direct vision of the front of the paint cabin. There is a closed circuit television monitor adjacent to and above the control panel. On the TV screen at the time of inspection the front of the paint cabin and the pipe waiting to be painted could be observed.

(l) The control panel faced the eastern end of the building. There were two identical panels side by side for the two corresponding paint lines.

(m) At the bottom left of the panel was a joystick with the operations labelled around it. The operation for pushing the joystick forward was: Paint Boom Carrier Start Rotation . The operation for pulling the joystick down was: Paint Boom Carrier Stop Rotation . The operation for pushing the joystick to the right was: Paint Boom Carrier Reverse . The operation for pushing the joystick to the left was: Paint Boom Carrier Forwards .

(n) To the left of the joystick were two toggle switches. The one closest to the joystick was labelled Front Paint Cabin Forwards/Reverse . The other toggle switch was labelled Rear Paint Cabin Forwards/Reverse .

(o) Immediately above the joystick from the left were two knobs labelled Open Paint Valve and Paint Head Cleaning ; a green button labelled Start Cycle Paint Line ; a green and red button without labels.

(p) Above this row of knobs and buttons were from the left, another knob labelled TV Off/On and blue press button labelled Reset E/Stop Faults .

(q) At the top of the panel and above the blue button was a red light button labelled Failure Paint Supply and to the right of this was an emergency stop button.

(r) At the top left of the panel were two rectangular switches that were green for On at the top and red for Off at the bottom, labelled from the left Outgoing Rails and Automatic Operation .

(s) Below these switches were two knobs from the left Spare and Man/0/Auto .

(t) Beyond the operator's platform and at the end of the passageway facing east, was a weld mesh gate with a gate latch. This gate latch could be lifted to disengage the latch and open the gate. There was no locking mechanism.

(u) The gate gave access to the pipe storage area and the paint cabin.

(v) On the north-eastern side of the paint cabin adjacent to the gate was a switchbox with a green press button push/pull emergency stop switch labelled Pull to Start, Push to Stop . This switch appeared to be new.

[8] Although at the time of the incident the injured worker may have been partly obscured from the vision of the operator at the control panel, when the injured worker was at the front of the paint cabin he was able to be visually monitored by the operator by way of the close circuit television monitor. [9] The worker had first commenced with Skilled Warehousing (NSW) Pty Ltd in approximately September 2002 at which time he had been allocated to work for a few weeks for the defendant at the premises at that time. [10] The worker had then been allocated by his employer to another company for a period until he returned to the defendant after Christmas 2002. He had been working at the defendant's premises for about two weeks prior to being involved in an incident on 17 January 2003. [11] Prior to 17 January 2003 the worker had not been subjected to a further induction training program with particular reference to the new internal pipe coating plant, in addition to that which he had undergone in September 2002. [12] The worker's duties at the defendant's premises involved taping up parts of pipes which were not to be spray painted and cleaning the nozzle of the paint boom after about every three pipes.

[13] At all material times the worker's duties involved him carrying out work within the area of operation of the paint spraying machine. [14] At approximately 12.30 pm on 17 January 2003 the worker was leaning into the spray booth of the paint station on the southern side of the plant and was cleaning the spray nozzle. The operator of the paint line, Mr. Lawrie Cairney, omitted to either directly check the position of the injured worker or check his position on the close circuit television monitor. He did call out a warning but apparently the injured worker did not hear the warning. [15] The booth started moving. The spray nozzle caught the worker under the right breast and trapped him by pushing him against one of the 18 metre pipes which was to be painted. When this occurred the worker screamed for help and two other co-workers who witnessed what had occurred, signalled to the operator to stop the machine. [16] At all material times on and prior to 17 January 2003 the system of work in place for determining whether it was safe to operate the spray painting plant was dependent upon visual and oral communication.

[17] At all material times on and prior to 17 January 2003 the gate which provided access to the worker to the areas of operation of the paint station machine, was not interlocked to the operation of the machine to prevent it being activated whilst he was exposed to risk from it and consequently it did not meet the standards of AS4024.1, 1996 - Safeguarding of Machinery, Part 1, General Principles. [18] Following the accident of 17 January 2003, remedial measures were taken by the defendant with the installation of an emergency stop switch being installed at the side of the spray booth cabin. [19] On 14 April 2003 an Improvement Notice No. 7-24224, was issued on the defendant requiring further remedial measures to ensure compliance with AS4024.1, 1996 - Safeguarding of Machinery, Part 1, General Principles. In response to this notice the defendant installed an interlock switch onto the gate entry to prevent access into the machinery area, which was satisfactory compliance with the Improvement Notice. 14 In addition to the agreed statement of facts, the prosecutor tendered a single bundle of documents identified as 'Prosecutor's tender documents' which was marked as a single exhibit, and which was relied upon in both matters. That bundle included, amongst other material, the following: · A Record of Prior Convictions with respect to both defendants. Those records disclosed no prior convictions for either Skilled or APC. · A factual report prepared by Inspector Gabrielle Belley dated 2 April 2003. · An extract from Australian Standard AS 4024.1 - 1996: Safe Guarding of Machinery. · A statement given by Mr Osero dated 8 April 2003. Mr Osero is the employee of Skilled who was injured in the accident giving rise to the offences. · A witness statement given by Mr Anthony John McGregor dated 14 April 2003. Mr McGregor was employed by APC as a pipe coating operator on the day of Mr Osero's accident. He was in the vicinity of the accident and went to Mr Osero's assistance. · A witness statement given by Mr Benjamin Frederick Morley dated 14 April 2003. Mr Morley was employed by Skilled as a labourer and was also working at APC's plant on the day of Mr Osero's accident. With Mr McGregor, he went to Mr Osero's assistance. · A Supervisor's statement given by Mr Lawrence Alexander Cairney dated 29 April 2003. Mr Cairney was the operator of the electrically driven paint station on the day of the accident involving Mr Osero. · A Supervisor's statement given by Mr Michael John Pollett dated 7 May 2003. Mr Pollett is employed by Skilled as an Area Supervisor. He attended the APC site when informed of Mr Osero's accident on 17 January 2003. · A Manager's statement given by Mr Michael Miladinovski dated 26 June 2003. Mr Miladinovski is employed by ACP as a QA/QC Manager. One of his main tasks is responsibility for occupational health and safety compliance by APC. · A statement given by Mr Michael Anthony Olsen dated 7 August 2003. Mr Olsen is the General Manager NSW for Skilled Engineering. · A statement given by Mr Paul Ashley Hepburn Wilson dated 13 August 2003. Mr Wilson is the Project Director with APC. 15 The prosecution also tendered a number of photographs. Those photographs have assisted me in understanding the nature and layout of the site at which the accident occurred, as well as the precise nature of the machinery involved in the incident. 16 On behalf of the first defendant, an affidavit of Mr Kevin John Bassett sworn 27 April 2005 was tendered. Mr Bassett is the Group Occupational Health and Safety Manager for Skilled Group Limited, of which the first defendant is a part. He has held that position since October 2002. As Group Occupational Health and Safety Manager, Mr Bassett is responsible for monitoring the implementation of the first defendant's occupational health and safety policy. In his affidavit, Mr Bassett set out, inter alia, the various occupational health and safety policies and procedures put in place by the first defendant, either standing alone or as part of the Skilled Group, prior to and after the incident of 17 January 2003. 17 The second defendant relied on an affidavit of Mr Paul Wilson sworn on 28 April 2005. Mr Wilson is the Project Director and Deputy Managing Director of APC, and has held that position since April 2000. As one of the three permanent managerial staff members engaged by the second defendant, Mr Wilson is responsible for the overall operation of the APC business. In his affidavit, Mr Wilson detailed the nature of the APC business, the occupational health and safety policies of the second defendant, as well as it's current financial position. Relevant principles

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

19 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.' 20 The starting point for considerations as to penalty is the objective seriousness of the offence charged. 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 as follows: ... it is important to reiterate that the primary factor to be considered when a judicial officer is determining the appropriate sentence to impose is the objective seriousness of the offence charged. In case of prosecutions under the OH&S Act, this proposition has often been expressed by saying that the 'true measure of penalty lies in the nature and quality of the offence'... 21 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. 22 On the issue of foreseeability, the Full Bench in Capral stated: The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However, the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J, President, in Ferguson v Nelmac Pty Ltd (at 209-210) in these terms: ... reliance on 'hindsight' must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s 15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy. So much is clear from the structure and language of the section which is premised on the requirement to 'ensure ... health, safety and welfare at work' and the decided cases which make plain the nature of the obligation. 23 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) 24 The principles of general and specific deterrence are also relevant in sentencing considerations. The approach to be taken on that issue has also been dealt with in some detail in Capral at 643-645. Without detailing all that the Full Bench had to say on those issues I believe the approach to deterrence in the sentencing process is encapsulated in the following passage from the Full Bench in Capral at 644 as follows: ... both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Page v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39 at [40]-[43] we would expect such cases to be very rare, and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted. 25 In the context of the above well established sentencing principles it will also be necessary to have regard to those general matters going to aggravation, mitigation and other factors identified in s 21A (1) of the CSPA relevant to the defendant. As was said in R v Way at [56]: ... it is not to be overlooked that there is a well established body of principles that have been developed by the courts over a long period of time. By providing guidance in the form of a list of aggravating and mitigating factors in s 21A, the Parliament did not intend to overrule or disturb those principles or restrict their application. In so far as those principles refer to factors, whether objective or subjective, that affect the 'relative seriousness' of the offence, they are expressly preserved by s 21A(1)(c). 26 Ultimately, all of the above factors must be considered as part of 'a complex of inter-related considerations' (See R v Gallagher (1991) 23 NSWLR 220.) Having said that, as was said by Spigelman CJ in Thorneloe v Filipowski (2001) 52 NSWLR 60 at 69, it still remains for the sentencing judge to ensure: ... that a sentence should be proportionate to the objective gravity of the offence. This necessarily requires a sentencing judge to consider, at some stage in the reasoning process, the sentence that is appropriate for the particular circumstances of the crime without reference to the subjective case of the particular offender. 27 In submissions, reference was made by counsel for the prosecutor to the decision of the High Court in Markarian v The Queen [2005] HCA 25: 18 May 2005. That decision dealt with the approach to sentencing, distinguishing between the instinctive synthesis approach and the sequential or two tier approach. It is not necessary in this judgment to embark on a lengthy exposition of the two approaches. Suffice to say, having regard to the circumstances of the matter on appeal, the High Court, by majority ( Kirby J dissenting) generally disavowed the sequential or two tiered approach to sentencing. In doing so, their Honours did not entirely reject the proposition that, in some circumstances, 'an arithmetical process' would be appropriate. As they said at [39]: Following the decision of this Court in Wong it cannot now be doubted that sentencing courts may not add and subtract item by item from some apparently subliminally derived figure, passages of time in order to fix the time which an offender must serve in prison. That is not to say that in a simple case, in which, for example, the circumstances of the crime have to be weighed against one or a small number of other important matters, indulgence in arithmetical deduction by the sentencing judges should be absolutely forbidden. An invitation to a sentencing judge to engage in a process of "instinctive synthesis", as useful as shorthand terminology may on occasions be, is not desirable if no more is said or understood about what that means. The expression "instinctive synthesis" may then be understood to suggest an arcane process into the mysteries of which only judges can be initiated. The law strongly favours transparency. Accessible reasoning is necessary in the interests of victims, of the parties, appeal courts, and the public. There may be occasions when some indulgence in an arithmetical process will better serve these ends . This case was not however one of them ... (emphasis added) 28 In their considerations, the High Court emphasised the discretionary nature of the sentencing process. As was stated at [27]: Express legislative provisions apart, neither principle, nor any of the grounds of appellate review, dictates the particular path that a sentencer, passing sentence in a case where the penalty is not fixed by statute, must follow in reasoning to the conclusion that the sentence to be imposed should be fixed as it is. The judgment is a discretionary judgment and, as the bases for appellate review reveal, what is required is that the sentencer must take into account all relevant considerations (and only relevant considerations) in forming the conclusion reached. As has now been pointed out more than once, there is no single correct sentence. And judges at first instance are to be allowed as much flexibility in sentencing as is consonant with consistency of approach and as accords with the statutory regime that applies. 29 In supporting the instinctive synthesis approach to sentencing, McHugh J also acknowledged the need, where appropriate, for the awarding of a nominated discount for 'some factor'. As he said at [74]: Nor is the instinctive synthesis approach inconsistent with awarding a discount for some factor, provided that discount relates to a purpose distinct from a sentencing purpose. The distinction between permissible and impermissible quantification of "discounts" on a sentence will usually be found in whether the quantification relates to a sentencing purpose rather than some other purpose. So, the quantification of the discount commonly applied for an early plea of guilty or assistance to authorities is offered as an incentive for specific outcomes in the administration of criminal justice and is not related to sentencing purposes. The non-sentencing purpose of the discount for an early guilty plea or assistance is demonstrated by the fact that offenders are ordinarily entitled to additional mitigation for any remorse or contrition demonstrated with the plea or assistance, aside from the discount for willingness to facilitate the course of justice... 30 Overall, I observe nothing in Markarian that precludes me, properly in my view, from identifying a discount for the entry of an early plea of guilty. Additionally, to the extent that there are subjective and mitigating features relevant to the defendant, they are matters which also should be considered in accordance with the provisions of the Crimes (Sentencing Procedure) Act 1999, in particular s 21A earlier referred to. 31 As between the two defendants, APC is the principal employer and operator of the premises at which Mr Osero was injured. Skilled is a labour hire company who provided and continues to provide labour to APC at its premises at Kembla Grange. Mr Osero was employed by Skilled. 32 The nature and extent of the obligations of labour hire companies under the Occupational Health and Safety Act 2000 is well settled. As was said by the Full Bench in Drake Personnel Limited t/as Drake Industrial v WorkCover Authority of NSW (Inspector Ch'ng) (1999) 90 IR 432 at 455: ... A labour hire agency does not employ people to work for itself but to work for a client, it does not directly on a day to day basis supervise the tasks carried out by the employee and it is usually not in control of the workplace where the work is done. However, these circumstances do not obviate, or diminish, the obligation of the employer under s 15(1) of the OH&S Act to 'ensure the health, safety and welfare at work of all the employer's employees'. Indeed, in our view, an employer who sends its employees into another workplace over which they exercise limited control is, for that reason, under a particular positive obligation to ensure that those premises, or the work done, do not present a threat to the health, safety or welfare of those employees. Certainly, there is no basis to consider that such an employer has a lesser liability or obligation under s 15(1). Considerations 33 Neither defendant has any prior convictions. Accordingly, the maximum penalty for each offence is $550,000.

34 Having considered the factual circumstances giving rise to the offences before me, I am satisfied the respective offences of both defendants are objectively in the mid range of seriousness. I come to that view notwithstanding that the injuries occasioned to Mr Osero were not serious. By Mr Osero's own account, he sustained a haematoma to his back with bruising on his right breast and pelvis. He was in hospital for two days and off work for a relatively short period before returning to light duties.

35 That Mr Osero did not suffer more serious injuries was indeed fortunate. As the facts disclose, Mr Osero was trapped by the moving paint cabin and pinned against a pipe when the operator wrongly activated the electrically driven paint cabin. Mr Osero's attempts for help while trying to attract the operator's attention to stop the machine were heard by two workers standing nearby. It was they who called the alarm and helped free Mr Osero. One of those employees was Mr Ben Morley. He agreed with Inspector Katf that if he and his co-worker had not been standing where they were at the time of the incident involving Mr Osero 'the machine would have continued to crush' him (Mr Osero). On any view, Mr Osero may well have suffered more serious injuries than he did.

36 By entering their pleas of guilty, both defendants have acknowledged the causal link between the failures as pleaded and the risks to the health and safety of its employees, Mr Osero in particular, as a result of the failures particularised.

37 On the part of APC, it clearly failed to adequately risk assess the operation of the paint station, particularly the need to ensure there was a fail safe system in place designed to ensure the machine would not operate while an employee such as Mr Osero was in the immediate vicinity of the machine undertaking necessary cleaning of the spray nozzle. It was known that such a task was required to be done. As Mr Cairney explained, the nozzle required cleaning because 'it gets a build up of paint which drips'.

38 Knowing that, it was imperative that APC have in place a system of work that ensured that access to the paint station was limited to times when it was not operating and it was not able to be operated independently of verification by the relevant employee that the cleaning process had been completed and he had exited the vicinity of the paint cabin. It was entirely foreseeable that a failure to ensure such a system was in place would result in the type of accident as that involving Mr Osero.

39 The system in place at the time of Mr Osero's accident was fraught with risks to safety. To start with, while there was a fence and gate restricting access to the immediate work area of the paint cabin, there was no interlock system on the gate that, if utilised correctly, would have prevented the machine operating while an employee was cleaning the paint nozzle. There was a closed circuit television monitor that was meant to allow the paint cabin operator on his raised platform to notice if there was anybody in the vicinity of the paint cabin before operating the machine. On the day of the accident involving Mr Osero, the operator of the machine, Mr Cairney, explained his actions thus:

Q38: Did you review the video monitor screen prior to moving the Paint Cabin on 17 January 2003?

A: Yes, but he was leaning inside and I couldn't see (but) his but (sic) and legs.

Q39: In your opinion, why was Paul Osero trapped between the pipe and the cabin?

A: There are a couple of reasons. I didn't look properly and Paul didn't hear the warning. Also, if there was lock off button this would have never happened. 40 Despite the submissions to the contrary by counsel for APC, I am satisfied that what Mr Cairney explained was that, on the day, he could not see Mr Osero's 'butt and legs' because he, Mr Osero, was leaning inside the paint cabin. That begs the question of the adequacy of the closed circuit monitoring undertaken by Mr Cairney when combined with the rather rudimentary requirement that he was required to call out a warning prior to starting the machine. Given the understandable background noise in a workplace such as the second defendant's, that was always something of a hit and miss proposition as far as ensuring a safe system of work. 41 Fundamental to ensuring Mr Osero's safety should have been a system incorporating a cut off switch that he would have been able to activate at the time he entered the paint cabin to clean the nozzle. Once the cleaning process was completed and he had exited the area, the switch would then be deactivated, allowing the operator to turn the machine on. 42 Following the accident, APC undertook the following: (i) Installed an emergency stop switch. (ii) Installed perimeter fencing around the pipe area and visual isolation indicators on the control panel. (iii) Installed an interlock system to prevent personnel accessing the machinery while in motion. (iv) Installed lock out switches on the entry point as well as sensor mats which could act as a double insurance to the gate isolation switch. 43 The above are and were easily available remediation steps available to be undertaken by APC prior to the accident. 44 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. 45 On behalf of Skilled, Mr Bassett identified the following steps undertaken following the accident to Mr Osero: (i) Tool box meetings were held with their employees at the APC premises to emphasise the importance of site safety; (ii) The Occupational Health and Safety Manager for Skilled coordinated a review of APC's operations at its premises. The subsequent report made a number of recommendations relevant to the safe operation of the paint cabin; (iii) A comprehensive audit and systems overview of Skilled's occupational health and safety system incorporating significant improvements was introduced in or about September 2003. 46 In addition to the above, Mr Bassett deposed that: ... In April 2003, Skilled became the first and remains the only labour hire company in New South Wales to receive national accreditation from NATA Certification Services International Limited for operating a safety management system which complies with the requirements of Australian standards/New Zealand standards 4801:2001. 47 In relation to Skilled, its failures are somewhat analogous to those of APC, revolving primarily around its failure to properly risk assess the work to be undertaken in the safe operation of the paint station and the attendant cleaning of the paint nozzle of the machine. Those activities required the employee concerned to be in close proximity to the interior of the paint cabin which is an integral part of the operation of the machine. 48 It must be noted that Skilled had not sent Mr Osero to work at the APC plant without any regard for its occupational health and safety obligations. On behalf of Skilled, Mr Bassett deposed to the steps taken by the first defendant relevant to the premises of APC before the accident involving Mr Osero. They included: (i) Workplace assessments at APC's premises to assess its (APC's) occupational health and safety policy and procedures in relation to hazard management, job training and induction as well as rehabilitation for injured workers. (ii) Tool box meetings were held by Skilled for its employees at the APC premises in 2001. There is no evidence of any such meetings in 2002 but Mr Osero did participate in a tool box meeting on 10 January 2003, some seven days before his accident. (iii) Mr Osero undertook Skilled's induction programme including hazard management and general safety requirements in 2002. He was subsequently tested as to his knowledge of the issues raised. (iv) Mr Osero underwent APC's induction programme at its Kembla Grange premises in August 2002 that addressed wide ranging safety matters. That programme was overseen by Mr Michael Pollett, Mr Osero's Area Supervisor at Skilled. 49 On that point, it has to be remembered that Mr Osero worked at the APC plant for a few weeks in August 2002. He then left and worked elsewhere until he returned in January 2003. Apart from the APC induction programme, which he undertook in August 2002, there was no further reorientation programme to the APC premises provided to him on his return in January 2003. 50 Relevantly, on 27 November 2002, some six weeks before Mr Osero's accident, Mr Pollett, on behalf of Skilled, conducted a workplace assessment of the APC premises at Kembla Grange. In that assessment, Mr Pollett was required to assess and answer the following question: Has the client sufficiently guarded plant machinery and pedestrian walkways to prevent injury to employees and others? 51 Mr Pollett answered the question in the negative. It has to be said, however, that reference to that particular workplace assessment form reveals nothing to indicate what aspect of APC's workplace or particular machinery was being referred to when Mr Pollett ticked 'no' to the question. 52 Australian Standard AS4024.1 describes the general principle of an interlocking guard as: An interlocking guard is a physical barrier which is interconnected with the power or control system of the machine. Interlocking guards provide an effective safeguard where access to the point of operation is required between each cycle of the machine or where regular access is needed. They are frequently used in combination with stationary guards to provide a total physical barrier safeguarding system.

An interlocking guard shall be so connected to the machine controls that: (a) until the guard is closed the interlock prevents the machinery from operating; and

(b) either the guard remains locked closed until the risk of injury from the hazard has passed or opening the guard causes the hazard to be eliminated before access is possible.

The interlocking system may be either mechanical, electrical, hydraulic, pneumatic or any combination of these. The type and mode of operation of the interlock shall be considered in relation to the process to which it is applied (see Section 10). The interlocking system shall be designed to fail to safety and shall not be defeatable. 53 Notwithstanding Mr Pollett's assessment in November 2002 and the general principles referred to above, nothing was done by Skilled or APC or seen as necessary to be done to address the need for an interlocking guard system between the control platform of the paint cabin and the immediate surrounds of the paint cabin when accessing that area to clean the paint nozzle. Clearly, it should have been addressed given the obvious need to ensure that the paint machine could not operate while the paint nozzle was being cleaned. There was an emergency stop button on the outside of the paint cabin but it was of no assistance to Mr Osero as it was totally inaccessible by him when the machine started to operate. 54 It would appear, on the evidence before me, Mr Pollett did not undertake any follow-up of his assessment with APC. If he did, nobody on behalf of APC appears to have acted on what was clearly a negative assessment in relation to what was, at the very least, directed to the important safety issue of guarding generally. In any event, even if APC had not had their attention drawn to Mr Pollett's hazard assessment, their own obligation to risk assess the safe operation of the plant machine would have invariably highlighted the need for a failsafe guarding mechanism between the paint cabin and the control platform. All of that was not done until after Mr Osero's accident. 55 The decision of the Full Bench in Capral clearly indicates that general and specific deterrence are factors that should be given weight in all but exceptional circumstances. The Full Bench said at 643-644 that: We consider that the extract from the judgment of Hungerford J in Fisher v Samaras Industries Pty Limited accurately states the approach that members of this Court should take in relation to the question of deterrence, both general and personal or specific, when sentencing an offender in relation to a serious breach of the legislation. It follows that those aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process. 56 I believe considerations going to both elements are relevant to both defendants. In relation to specific deterrence, both defendants continue to operate in an industry which, by it's very nature, presents real and potential risks to safety. In saying that, I accept that, with respect to both defendants, the weight to be attached to specific deterrence should be modified given the steps taken by both defendants to reduce the risk of re-offending in the future. 57 On behalf of the second defendant APC, Mr Wilson has raised the defendant's capacity to pay a substantial fine. As he deposed: [1] I have been employed by APC Socotherm Pty Limited ('APCS') since April 2000 as its Project Director and Deputy Managing Director. As such, I am fully responsible for the management and operations of the company.

[2] APCS provides specialised pipe coating services to the oil, gas and water pipeline industries and is one of only two companies in Australia providing such services. Steel pipelines are constructed for the safe conveyance of energy mediums (such as oil and gas) and must be protected against corrosion for the design life of the underground pipeline structure by the application of coating systems to the external and internal steel surfaces.

[3] APCS was established in 1998. The company was founded to end a 30 year monopoly of the pipe coating business in Australia and to provide the industry with updated coating technology and systems, flexibility and value where the customer has traditionally received a poor deal due to lack of competition.

[4] APCS commenced erection of the pipe coating facility at Kembla Grange in early 1999 and this was completed just prior to APCS securing its first pipe coating contract in November 1999. [5] Despite the fact that APCS operates a relatively large facility, the cyclical nature of the oil and gas pipeline industry means that we must engage a flexible and small workforce. Consequently, the defendant currently employs three permanent management staff, including myself, who are responsible for the overall operational, financial and sales aspects of the company's business. We also employ seven permanent hourly-paid workers who are responsible for the day to day operations of the factory including maintenance staff, a leading hand, an electrician, a forklift driver and labourers.

[15] As detailed above, the Australian pipeline coating industry was monopolised for 30 years prior to the arrival of APCS. Competition from the established producer has been fierce. As expected, prices for all pipeline coatings fell substantially and are currently well below international market levels. In fact, coating prices in recent times have fallen below the rates being offered by other pipeline coating contractors in Asia and China which certainly does not allow for any profitability with Australian costs being substantially higher than those overseas.

[16] Unfortunately, APCS has been a loss making enterprise since its inception and a large amount of money will need to be recouped in the next two financial years to achieve a break even position. Regrettably, market forecasts do not predict a particularly active market for the next 12 months although years 2007 and 2008 may see increased activity in the water pipeline industry and in the gas sector with the potential of pipeline being constructed from Papua New Guinea to Queensland.

[17] In view of the above, it is my opinion that the company has limited resources to pay a large fine. Certainly, a large fine will exacerbate the company's efforts to achieve a sustainable financial position and could have a negative impact on the overall viability of the company. 58 Annexed to Mr Wilson's affidavit, inter alia, are the financial records of APC for the period 1999 to date. 59 Mr Wilson was not required for cross examination. I have no reason to reject the general assertions he makes as to the defendant's current financial position. Future projections and what impact a 'large fine ... could have' on the defendant's future viability is another matter and much more speculative. 60 Reference to the financial records of the defendant for the period referred to, particularly the Balance Sheet, reflect a corporate defendant who can best be described as 'asset rich and cash poor'. For example, the Statement of Financial Position as at 31 December 2004 reflects a net asset base of $13,927,779.14. That figure can be favourably compared with the net asset base of $2,563,483 as at 31 December 1999 given that the defendant was only established and started trading in 1998. True it is, the trading profit and loss statements for the defendant for the years ending 31 December 1999 to 2004 inclusive reflects successive trading losses. They do so, however, against a background of generally rising sales. For example, in the 1999 year, sales were recorded as $85,909. In 2003, total sales were $5,960,563.47 falling to $2,225,781 in the 2004 year. The financial position for the 2004 year reflects a very modest profit. 61 Overall, APC is a company that, without more, would appear to be fundamentally financially sound. I am not persuaded that the defendant's financial position is so finely balanced that it could not properly meet the impost a financial penalty would bring without causing it significant financial difficulties going forward. 62 In considering all of the financial material and without any additional oral evidence, expert or otherwise, the approach I propose to adopt to the imposition of penalty with respect to the defendant 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. To which I would simply add that the ultimate penalty should reflect all factors and considerations relevant to the sentencing process. 63 The principle of parity in the sentencing process becomes relevant in these proceedings when comparing the respective roles of APC and Skilled in the context of the factual circumstances of the respective offences and the failures particularised. 64 The approach to be considered in parity in sentencing is well settled. It is a matter to be determined having regard to the circumstances of the offences, the role of the co-offenders and their respective degrees of culpability: see Lowe v The Queen (1984) 154 CLR 606 and Postiglione v The Queen (1997) 189 CLR 295. 65 Ultimately, in my view, the liability of APC is somewhat greater than that of Skilled. Both defendants failed the fundamental steps underpinning their respective offences. That is, they failed by way of proper risk assessment to ensure a proper interlocking guard system and an accessible emergency stop switch between the operator controlled paint cabin and the paint booth incorporating the paint nozzle. Skilled knew there were deficiencies in APC's guarding systems before the accident involving Mr Osero but would appear to have done nothing to pursue the issue with APC. 66 More fundamental, however, is the role of APC as the direct operator of the machine in question. According to the agreed facts, the pipe coating plant had only been in operation since November 2002. It had been manufactured in Holland. In installing the new plant and machinery, APC had an obligation to ensure its operation was risk assessed to fully eliminate or control risks to safety arising from the operation of the machine. As the particularised failures in the offence pleaded succinctly identify, the defendant failed in a number of ways that clearly created risks to safety. This would have been particularly exacerbated in the case of Mr Osero who underwent induction at APC in August 2002. He left shortly after for a number of months and returned only some two weeks before the accident on 17 January 2003. In the intervening period, APC installed and commenced to operate the new pipe coating plant. Mr Osero was given no reorientation to the APC worksite or induction to the safe operation of the pipe coating machine when he returned. Clearly, he should have been and it was APC's ultimate responsibility to ensure that was done. 67 As well, APC failed to follow through with it's obligation to properly assess and act upon the obvious and foreseeable risk to safety that the machine presented by not ensuring that the paint machine could not operate while an employee was within the immediate confines of the operating components of the machine. 68 The defendants are entitled to have taken into account the respective pleas of guilty entered. In assessing that, the Court is guided by the decision of R v Thompson; R v Houlton (2000) 49 NSWLR 383, the principles of which are well settled and need no elaboration. I assess that discount at twenty five per cent with respect to each defendant. 69 Both defendants have no prior convictions. That is a matter that assists both defendants. Admittedly, APC has a relatively limited corporate history, having been established only in 1998. As Mr Wilson deposes, it has only a 'small and flexible staff' of some ten people in all, otherwise relying on labour hire companies such as Skilled, as demand requires. 70 Notwithstanding the relatively short corporate history of APC, the information and annexured material contained in Mr Wilson's affidavit, none of which was challenged, satisfies me that APC was approached and does approach it's occupational health and safety responsibilities as part of a structured and ongoing process with generally commendable results. On the evidence and documentary support material of Mr Bassett, the same conclusion can be drawn in relation to Skilled. Certainly, on the evidence before me, the audit and review activities undertaken by Skilled since the accident involving Mr Osero are impressive. Both defendants are entitled to be given credit as employers who are both proactive and properly committed to their workplace safety responsibilities. 71 Skilled is a large company by comparison with APC. As Mr Bassett stated: Skilled operates a National Labour Hire Business which provides staff to work at its client's premises throughout New South Wales. Currently there are approximately 14,000 employees of Skilled at approximately 6,000 client premises throughout Australia. Across New South Wales, Skilled engages an average of 2,000 to 2,500 workers per day. On an annual basis, the workers are engaged for approximately 700 different clients throughout New South Wales. 72 As was explained by counsel for Skilled, reference to Skilled in Mr Bassett's affidavit is reference to those corporate entities who make up the Skilled Group, of which the defendant before me is but one. In relation to the defendant Skilled Warehousing (NSW) Pty Limited, I was advised that it employs approximately one thousand employees per day. 73 Again by way of clarification, it should be stated that while the Skilled Group has been in operation for some forty years, Skilled Warehousing (NSW) Pty Limited has been incorporated only since 2000. 74 I understand the first defendant Skilled continues to provide labour to APC and, by all accounts, both companies cooperated well with WorkCover in the investigations into Mr Osero's accident. 75 On behalf of APC, Mr Wilson stated: [18] By pleading guilty to this case, APCS acknowledges its failures in regard to actions which may have been taken to prevent this unfortunate accident in the first place. Further, I am instructed by the Board to express the sincere regret of the company for this accident, and that every effort has been made and will be made in the future to rehabilitate the injured worker, who came back to work with the defendant by 27 March 2003, and to prevent any further occurrence of such an incident or similar incident. 76 On behalf of Skilled, Mr Pollett visited Mr Osero at home after the accident and took him to see the company's doctor in Warrawong. Mr Osero was returned to the APC site, initially on light duties for about two weeks. 77 I am satisfied both defendants are entitled to further favourable consideration by way of mitigation for the subjective features I have identified. 78 In relation to the respective defendants and their related offences and taking account of all relevant considerations, including those identified by ss21A and 22 of the Crimes (Sentencing Procedure) Act 1999, I determine penalty as follows: (i) Matter No IRC 3397 of 2004: WorkCover Authority of New South Wales (Inspector Katf) v Skilled Warehousing (NSW) Pty Limited: Offence pursuant to s8(1) of the Occupational Health and Safety Act 2000. I determine a penalty of $71,500. Accordingly, I order as follows: (i) I impose a penalty in this matter of $71,500. (ii) I allocate a moiety to the prosecution on the usual terms. (ii) Matter No IRC 3398 of 2004: WorkCover Authority of New South Wales (Inspector Katf) v APC Socotherm Pty Limited: Offence pursuant to s8(2) of the Occupational Health and Safety Act 2000. I determine a penalty of $84,500. Accordingly, I order as follows: (i) I impose a penalty in this matter of $84,500. (ii) I allocate a moiety to the prosecution on the usual terms. 79 On the question of costs, some considerations arise. As was acknowledged on behalf of the prosecutor: This prosecution was attended by a number of procedural difficulties. This involved a number of amendments to the application for orders and the erroneous filing of material not associated with this prosecution. The prosecutor accepts that the costs associated with these issues ought not be borne by the defendants. 80 The procedural issues referred to are those matters associated with the proceedings before me on 6 May 2005. The parties are well aware of those matters. Given that the difficulties that arose lay with the prosecutor, I agree that the defendants should not have to bear the prosecutor's costs of those proceedings or issues related thereto. 81 APC has sought costs from the prosecutor for the proceedings of 6 May 2005. I am not minded to make such an order. Ultimately, it was the prosecutor who bore the brunt of the procedural difficulties of its own making. 82 Apart from the costs associated with the procedural difficulties as understood between the parties, in which each party will bear its own costs, I order as follows: (i) The defendants are to pay the prosecutor's costs equally between them as agreed or, failing agreement within 28 days, the matter may be referred to the Registrar for assessment. (ii) If agreement is reached as to costs, the parties are to prepare and file draft orders to reflect the decisions I have made in order to record convictions and specific costs. 83 In relation to the costs order sought by APC in Matter No IRC 3399 of 2004, which was not before me at any time, I refer the parties to the position that issue was left in when it was before Haylen J on 3 December 2004 when his Honour said: What I will do is reserve the question of costs. I direct the parties to confer on that matter. If there is an agreement, I will make the orders in Chambers without requiring the parties to attend. If there needs to be some argument, the parties have liberty to apply to have the matter re-listed. 84 Failing agreement, I commend that course upon the parties involved.

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