And also (at 476):
In the case of an offence under s 15(1) of the OH & S Act, there are a number of factors which may tend to establish the existence of an objectively serious offence. It will be a serious offence where there is an obvious or foreseeable risk to safety against which appropriate measures were not taken, even though such measures were available and feasible: see Inspector Hannah v Wonar Pty Ltd (unreported, Fisher CJ, CT90/1214, 30 June 1992) at 9. The gravity of the consequences of an accident does not, of itself, dictate the seriousness of the offence. However, the gravity or otherwise of the potential risk to safety flowing from a breach is relevant as a measure of the gravity of the breach and the culpability of the defendant; see Tyler v Sydney Electricity (1993) 47 IR 1 at 5. In Inspector Hannah v Wonar Pty Ltd , the Full Bench indicated (at 9), properly in our view that 'a breach that was quite unlikely to lead to serious consequences, might be assessed on a different basis to a breach where there was every prospect of serious consequences.'
4 Mr Caslick had his left gloved hand caught by a rotating bar being processed by the machine. The agreed facts reveal that a worker, Mr Grunsel who was working with Mr Caslick had removed the unsecured mesh guard above the charge pinch roller unit after the employees had had difficulty in feeding 24 millimetre diameter bars into the charge pinch roller unit. The evidence revealed the mesh guard was not only not adequately secured to the reeler machine but it was able to be lifted off without any difficulty. Having lifted the guard the workers proceeded with the task at hand feeding the 24 millimetre diameter bars into the machine. While performing this task, Mr Caslick's gloved left hand became caught by a rotating bar between the charge pinch roller unit and the bar straightening unit and was dragged into the machine. Mr Caslick's injuries resulted in the amputation of his left arm below the elbow.
5 The operation of the reeler machine is a one man operation. However, for the last three and a half years it has been a two man operation because the employer acknowledged the difficulties of the task. Mr Reis, the managing director of the defendant company, in his evidence swears:
The guarding of the reeler machine and the prohibition on hand feeding small bars into the reeler were regularly discussed in my conversations with employees and in the monthly safety meetings.
. . .
I gave safe working instructions to Terry Caslick, Jason Grunsel and other employees when working on the reeler machine. One particular thing I told them was you never touch the rotating bars or one that is about to rotate because a BHP employee had lost his arm some years earlier."
6 Evidence revealed it was common practice amongst workers to remove the guards from the in-feed area of the machine. Mr Caslick said in an interview with the WorkCover Authority:
Yes it was common practice. It was the only way we could feed the bars in because they wouldn't fix the pinch rolls properly to take the small bars.
Q. Were the supervisors or management aware the machine was operated with the guards off?
A. Yes, everyone, the safety officer and anyone that had anything to do with it.
7 It was in late 1997 Mr Reis had been made aware of the practice of operators removing the guard and also using their hands rather than a hook to feed the machine and he specifically addressed this issue at staff meetings with the words "No guard means no operation." He swears:
I was aware of some difficulties in feeding small bars into the machine which is why I issued those instructions.
8 The essence of the offence pleaded against the defendant is that it failed to adequately guard dangerous machinery. While there was a guard for the machine or a dangerous part thereon, it is clear the defendant knew the employees removed the guard. The guards were not locked on. The defendant issued warnings in safety meetings that the guards should not be removed however this circumstance is not sufficient to comply with the proactive obligations placed on an employer by the Act. Mr Reis reveals he was aware of the possible consequences in that he referred to the injuries suffered in the past by a BHP employee whilst using the machine.
9 The Industrial Relations Act 1996 places an onus of strict liability on an employer to provide a safe workplace. That strict liability is acknowledged by the defendant's plea of guilty to the charge.
10 Any assessment of the objective seriousness of this offence, has to take into account that the defendant was aware of the practice by the employees of taking off the guards and although it warned them against this practice, it took little proactive action to ensure that the practice could not occur. The offence thereby takes on an element of forseeability. As Walton J, Vice President, in Department of Mineral Resources of New South Wales (Chief Insp B. R. McKensey) v Kembla Coal and Coke Pty Ltd (unreported, IRC142 of 1998, 16 August 1999) said (at 37):
Whilst the reasonable foreseeability of an accident may not be relevant to the question of liability under the Act (see Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector James Swee Ch'ng, Matter No. IRC 3064 of 1997, 12 August 1999 at 39), the degree of foreseeability is a significant factor to be taken into account when assessing the level of culpability of the defendant. The existence of a reasonably foreseeable risk to safety which is likely to result in serious injury or death is a factor which will be relevant to the assessment of the gravity of the offence: see Camilleri's Stock Feeds (at 700); James Moore v Vibro-Pile (Aust.) Pty Ltd (unreported, Hungerford J, CT96/1163, 28 May 1997, at p17) and The University of Sydney (at 16).
11 Some subjective features have also been placed before the court in consideration of penalty. The maximum penalty prescribed by the Parliament for this offence was $550,000. That statutory maximum represented an increase from $250,000 for offences committed after 1 February 1996. The strict nature of the duty of care imposed on an employer by the Act coupled with the increase in penalties by the legislature reveals the importance placed on a safe working environment in New South Wales.
12 The defendant has no prior convictions. The defendant had clearly in place a significant site safety operation. Further, the defendant took steps immediately following the accident to ensure no similar incidents could occur. They engaged consultant engineers who implemented immediately a system of enclosure where the whole of the feed side of the rollers has been enclosed in a two metre high steel mesh fence. The bars are now passed on to the feed rack by an overhead crane; openings are in the enclosure for the manipulation of feed bars by means of tools designed for this purpose. Entry to the enclosure is by means of a locked gate. There is a further internal entry bar across the straightening machine preventing an operator contacting feed bars or moving parts. The removal of the side guard requires the opening of a lock. There are now power controls on the operation of the machine where supply immediately shuts off if the guard is removed and/or the enclosure unlocked.
13 There is a significant induction and training system implemented for all staff. New employees work under the supervision of experienced employees until they are assessed as capable. There are also various levels of competency on which employees are graded and paid in accordance with the enterprise agreement. Mr Caslick had been considered a most proficient operator.
14 From an analysis of all the steps the defendant has since taken to ensure this machine is safe in its operation, it is clear that the corporation has had to spend significant moneys to ensure site safety. It is a great pity that such expenditure had to be invested after what was well within their knowledge as a foreseeable risk of injury if the machine was misused. The words of Maidment J in WorkCover Authority of NSW (Inspector Callaghan) v Saunders Constructions Pty Ltd (unreported, CT93/1062, 26 November 1993) seem apposite in the circumstances:
Commendable though it is to introduce appropriate occupational health and safety measures after the event it needs to be remembered that the legislation is not directed at ex post facto measures, it requires positive preventative steps being taken to ensure that workers are afforded safe working environments irrespective of their own laxities.
15 There is some history to this matter. The prosecution was first mentioned in the Registry on 14 February 2000. On 27 March 2000 following the filing of an amended summons as to the details of the charge, the defendant entered a plea of guilty. The matter was then set down for hearing on 4 August 2000 by this court at a mention on 13 April 2000. However, some issues as to the validity of the summons were raised on 4 August 2000 when the defendant filed a Notice of Motion seeking relief including an order that the amended summons in the proceedings be struck out or stayed permanently.
16 The question as to the validity of the summons then became an issue as did the validity of the plea of guilty which had been entered. The hearing on all issues began on 4 August 2000 and various applications by both the prosecutor represented by Ms P.E. McDonald of counsel, and Mr J.S. Coombs QC for the defendant were heard.
17 The matter was further stood over part heard to 30 October 2000. On that day Mr Coombs noted formally his objection as to the defects in the summons. He conceded that if this court were to follow the authority of the Full Bench in Ridge Consolidated Pty Limited v WorkCover Authority of NSW (Inspector Mauger) [2000] NSWIRComm 151 then his Notice of Motion would fail. The court made clear it intended to follow the Full Bench authority of Ridge. To protect the defendant's interest in the event the Full Bench decision of Ridge was overturned, the defendant's objection as to the defects in the summons were noted and stay on the record for the purpose of any appeal by the defendant should the authority of Ridge be overturned. The defendant otherwise confirmed its earlier plea of guilty. There was no objection from the prosecutor as to this course of events to be entered on the record.
18 In R v Thompson; R v Houlton [2000] NSWCCA309, the Court of Criminal Appeal introduced guidelines for the utilitarian value of an early plea of guilty in the consideration by a court as to penalty. An application has been made by Mr Coombs for the defendant company for a reduction in penalty in this matter given, as he submits in a true analysis of the history of the prosecution, there was entered an early plea of guilty.
19 In the circumstances the prosecutor did not then cavil with the defendant's submission that there had been an early plea of guilty entered notwithstanding the history of litigation that has ensued. I accept there was an early plea of guilty under the circumstances. The plea however does not appear to the court to be entered at the earliest possible date as the record clearly shows some short negotiations ensued leading to an amended summons being filed. Nevertheless I intend to allow for the utilitarian value for the plea a 20% discount as to penalty.
20 One further consideration as to mitigation of penalty was submitted by the defendant for the court's consideration. The defendant submitted the company should be viewed as an "individual" attracting a much less onerous penalty or at least be considered as the financial operation of an individual. Mr Reis is the managing director of the company. Profits are shared between Mr Reis and his wife. The defendant relies upon the view of Fisher CJ in Mauger v Krcmar Engineering Pty Limited (47 IR 359 at point 7):
The Commission has on several occasions held that it was appropriate to look at the nature of the Company to ascertain whether in fact it was truly a corporation within the meaning of that description in the Occupational Health and Safety Act 1993 or whether its true nature, even though there was some incorporation was that of an individually run business incorporated purely for the convenience of book-keeping and perhaps making appropriate tax arrangements.
21 In consideration of the subjective features of the breach, Mr Coombs submitted the court should also consider a penalty not "onerous" in the circumstances.
22 The corporation has a turnover well over $1,000,000 per year. From the facts the company debt is approximately $500,000 met through various loans. Mr Reis himself invested $150,000 of the capital. He and his wife take out two modest salaries of $36,400 and $21,840 respectively. They each hold a company car. Clearly all profits are retained to fund increasing stock levels and the purchase of equipment. Very recently the company has been given notice to quit their site by BHP, and they have been advised to remove the operation to another site will cost a further $300,000. The asset position of the company is also valued at over $1 million but is mostly in its stock of steel.
23 In the circumstances, with 11 employees and a significant financial turnover I find the company cannot be perceived as the operation of an individual. The court rejects this application. However, the implementation of penalty must not be so oppressive in the circumstances as to force the business to close.
24 It seems apposite in the circumstances to consider the facts as did Hungerford J in John Fisher v Samaras Industries Pty Limited (unreported, 21 March 1996, No CT1230 of 1995) where his Honour states (at 12):
I . . . would only echo what I see to be the fundamental duty of the Court in this important area of public concern, that is, 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. At the same time, the Court has a corresponding duty insofar as a defendant is concerned not to impose such a penalty as would be oppressively high. Again, I echo Cullen J in WorkCover Authority of NSW (Insp Gordon) v Walco Elevators Pty Ltd (CT93/1117, 13.3.96) in referring to what was observed by Smithers J in Trade Practices Commission v Stihl Chainsaws (Australia) Pty Limited (1978) ATPR 40-091 at 17,896 as adopted by Forster J in (Trade Practices Commission v Lois (Australia) Pty Limited (1986) ATPR at 47,225.
25 This issue as to the consideration of the financial status of a defendant was also addressed in Department of Mineral Resources of NSW v AM Hoipo & Sons Pty Ltd [2000] NSWIRComm16 where Walton J, Vice President said (at 48-50):
. . . it was submitted that as a matter of discretion the Court should take into account the financial circumstances of the defendant and the fact that its corporate structure was in reality a vehicle for Mr Hoipo's personal activities. In this regard, I note the judgment in Inspector Gordon v MIJO (NSW) Pty Limited (unreported, Cullen J, CT1002 of 1993, 2 December 1993), in which his Honour commented (at 5):
The Court does not have a discretion to consider the maximum penalty at some level other than that provided by the Statute. Where a corporation is involved, the appropriate maximum penalty is that applicable to a corporation and not to an individual regardless of how or why the corporation was established. The three judgments of the Chief Judge in Inspector Robins v CT Plumbing Pty Limited (unreported, Fisher CJ, No 522 of 1991, 16 December 1991), Mauger v Krcmar Engineering Pty Limited (1993) 47 IR 359 and Inspector Young v Hidane Pty Limited (unreported, Fisher CJ, CT 1113 of 1993, 30 September 1993), do not support this submission. Individual factors going to capacity to pay are not relevant in the determination of penalty. They may be relevant at a later time in terms of any application the defendant may make as to consideration of payment, but they are not relevant as to the determination of penalty.
49 I respectfully agree that the Court has no discretion to apply a maximum penalty other than that prescribed by the legislation: see also WorkCover Authority of New South Wales (Inspector Ankucic) v Lyndhurst Trading Co Pty Limited (unreported, Walton J, Vice-President, Matter No. IRC1072 of 1998, 4 February 2000) at 23 - 24.