Industrial Relations Commission of New South Wales in Court Session CITATION : WorkCover Authority of New South Wales (Inspector Robinson) v Milltech Pty Ltd [2001] NSWIRComm 192 PROSECUTOR WorkCover Authority of New South Wales (Inspector Robinson) PARTIES : DEFENDANT Milltech Pty Ltd FILE NUMBER: IRC 82 of 2000 CORAM: Marks J CATCHWORDS : Occupational Health and Safety Act prosecution - Sentence - Held s 51A does not apply to prior convictions for an offence which occurred after the offence for which the penalty is being considered - Held that prior conviction for an offence which post-dated the offence under consideration could be taken into account in assessing penalty - Consideration of s 6 of the Fines Act in connection with ability to pay a fine, penalty reduced accordingly. Occupational Health and Safety Act 1983 s15 s51A LEGISLATION CITED : Crimes (Sentencing Procedure) Act 1999 s19(1) Fines Act 1996 s3 s6 WorkCover Authority of NSW (Insp Campbell) v Nelmac Pty Ltd (2000) NSWIRComm 228 Capral Aluminium v WorkCover Authority of NSW (2000) 49 NSWLR 610 at 630 Veen v The Queen (No 2) (1988) 164CLR 465 at 477 CASES CITED : WorkCover Authority of NSW (Insp Piggott) v Capral Aluminium Ltd (1998) 83 IR 211 at 233 WorkCover Authority of NSW (Insp McMartin) v Milltech Pty Ltd (2000) NSW IRComm 246 Ferguson v Nelmac (1999) 92 IR 188 at 209 Sgroi (1989) 40 A Crim R 197 Rahme (1989) 43 A Crim R 81 HEARING DATES: 06/28/2001; 08/13/2001 DATE OF JUDGMENT: 08/28/2001 PROSECUTOR Ms P E McDonald of counsel SOLICITORS Ebsworth & Ebsworth LEGAL REPRESENTATIVES: DEFENDANT Mr G W McGrath of counsel SOLICITORS Arnold Lawyers JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Tuesday 28 August 2001 Matter No IRC 82 of 2000 WORKCOVER AUTHORITY OF NEW SOUTH WALES (INSPECTOR ROBINSON) v MILLTECH PTY LTD Prosecution under s 15 (1) of the Occupational Health and Safety Act 1983 JUDGMENT RE PENALTY 1 In judgment given on 29 March 2001 the defendant was found guilty of a breach of s 15 of the Occupational Health and Safety Act 1983 ("the Act"). The particulars of and surrounding the charge are described in that judgment. It is now necessary to consider the assessment of an appropriate penalty. 2 During the course of submissions a number of contentious issues arose, with which it is necessary to deal before considering the appropriate quantum of the penalty. 3 The first issue concerned the maximum penalty. The offence occurred on 12 January 1998. The maximum penalty was $550,000. 4 However, the prosecution alleged and the defendant denied that s 51A of the Act applied so that the maximum penalty became $825,000. This is because the defendant had been previously convicted of an offence under the Act. 5 Section 51A is in the following terms: 51A Additional penalty for further offence against the Act (1) A Court that convicts a person of an offence (the current offence ) against this Act may, if the person has previously been convicted of an offence against this Act (whether the same offence or another), impose as additional penalty in respect of the current offence not exceeding the following penalties: (a) if the current offence is an offence against section 15, 16, 17 or 18 of this Act—2,500 penalty units in the case of a corporation or 250 penalty units or 2 years imprisonment, or both, in any other case, or (b) if the current offence is any other offence against this Act—50% of the maximum penalty for the offence (that is, 50% of the maximum penalty that would apply but for this section). (2) For the purposes of section 47 (Summary procedure for offences), the maximum penalty provided in respect of an offence is, in the case of an offence to which this section applies, taken to include any additional penalty that may be imposed under this section. (3) This section applies even if the previous offence concerned was committed before the commencement of this section. 6 The defendant pleaded guilty and was convicted on 8 December 2000 by Kavanagh J of an offence under s 15 of the Act. The offence occurred on 16 February 1998. 7 The question for determination is whether in these circumstances s 51A applies. 8 In the submissions of Ms McDonald of counsel who appeared for the prosecutor the language of s 51A(1) is clear and all that is referred to is a previous conviction for an offence. The defendant through its counsel Mr G W McGrath contended that s 51A when construed as a whole was intended to apply to previous offences rather than to previous convictions. In doing so he relied on a judgment which I had given in WorkCover Authority of New South Wales (Inspector Campbell) v Nelmac Pty Ltd (2000) NSWIRComm 228. In that judgment I relied on the provisions of s 51A(3) in support for concluding that s 51A applied to offences committed prior in time to the offence under consideration rather to convictions previously recorded. 9 In submitting that my decision in Nelmac was wrong Ms McDonald said that the analysis which I had undertaken did not take into account that s 51A(3) was implemented to overcome the effect of s 19(1) of the Crimes (Sentencing Procedure) Act 1999 to the effect that "if an Act or statutory rule increases the penalty for an offence, the increased penalty applies only to offences committed after the commencement of the provision of the Act or the statutory rules increasing the penalty." Mr McGrath took issue with this submission. He said that the purpose of s 51A(3) is not to overcome the effect of s 19(1) of the Crimes (Sentencing Procedure) Act 1999 and that it did not have that effect. He submitted that the new penalties "do not apply to offences committed before the commencement of the current s 51A. Offences committed before the commencement of the current s 51A (which began in its present form on 1 February 1996) are governed by the provisions of the former s 51A. See transitional clause 15 in schedule 8 of the Act." 10 Ms McDonald relied on a decision of a Full Bench of this Court in Capral Aluminium v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at 630 where it was held that the principle of statutory construction that a statute creating an offence must be construed strictly and in favour of an accused does not apply to s 51A because that section does not create any offence. 11 Ms McDonald also relied on the manner in which the previous s 51A(1) had been framed. 12 Nothing which has been put by Ms McDonald by way of submissions in these proceedings has convinced me that I should alter the conclusions which I came to in construing s 51A in Nelmac and the reasoning applied in that decision. In my view s 51A has to be construed as a whole including the provisions of sub s (3). Recourse to the Second Reading Speech when the relevant amending legislation was introduced into Parliament, as referred to in Nelmac supports this approach to construction. The particular focus of the section in determining the circumstances in which a significantly higher penalty may be imposed upon a defendant enables, in my respectful opinion, the Court to take into account the fact that the Act is, overall, a penal statute and accordingly should be construed strictly. The maximum relevant penalty is therefore the sum of $550,000. 13 The next question is whether or not the conviction on 8 December 2000 for an offence which post-dates the offence the subject of these proceedings can be taken into account in determining sentence. Both parties submitted that the prior conviction and penalty imposed by Kavanagh J could be taken into account. It is not necessary to discuss this issue in any detail. I should state that counsel relied on the joint judgment of Mason CJ, Brennan, Dawson and Toohey JJ in the High Court of Australia in Veen v The Queen (No 2) (1988) 164CLR 465 at 477, the judgment of the NSW Court of Appeal in Charara v DPP (2001) NSWCA 140 at para 38 and the judgment of Hill J in this Court in WorkCover Authority of New South Wales (Inspector Piggott) v Capral Aluminium Ltd (1998) 83 IR 211 at 233. 14 It is convenient at this stage to refer to the offence considered by Kavanagh J (WorkCover Authority of NSW (Insp McMartin) v Milltech Pty Ltd (2000) NSW IRComm 246. It arose out of the operation of a bar straightening machine used in the heat treatment and processing of alloy bars. An employee was operating the machine when his gloved left hand was caught by a rotating bar which was being processed. He sustained injuries which resulted in the amputation of his left arm below the elbow. The accident arose out of the failure of the defendant to securely guard all moving parts of the machine. The defendant pleaded guilty. The maximum penalty was $550,000. After taking into account the objective seriousness of the offence, the fact that the defendant then had no prior convictions, the early plea of guilty and measures taken by the defendant to remedy the situation as well as other mitigating factors her Honour fixed a monetary penalty of $60,000. I should add that her Honour was given certain information as to the financial circumstances of the defendant and accepted that the defendant's financial resources and income should be taken into account "in the context of the appropriate level of penalty for the gravity of the offence." 15 The starting point for the consideration of penalty in these proceedings is the objective seriousness of the offence. The relevant facts are set out in my judgment of 29 March 2001. The offence of which the defendant was found guilty was the failure to carry out a risk assessment of the task in hand and to put in place any system of work about how the task was to be carried out. As a consequence, the employees concerned were not given any training or instruction about how they should carry out the task. In terms of obligations imposed upon all employers under the Act, this is a serious breach. There is a continuing absolute obligation on all employers to carry out a risk assessment of all work which the employer undertakes. 16 In making these comments I am mindful of the industry in which the defendant is engaged which exposes employees to the risk of injury through use of machinery and has a significant manual labour component. 17 An affidavit sworn by Manfred Reis the Managing Director of the defendant was admitted into evidence for the purpose of the hearing on penalty. The Company has been in operation for ten years, the sole shareholders being Mr Reis and his wife. It employs fourteen people. 18 Training appears to predominantly be given "on the job" using a buddy system. In addition there are monthly safety meetings and mandatory attendance at a three-hour safety induction course together with yearly updates. Safety instructions are continually given both orally and in writing. Many of the employees including the deceased employee Mr Black were experienced and held appropriate qualifications. 19 Mr Reis expressed regret in terms of the accident, the subject of these proceedings. He knew the deceased well and knew his family also. He has remained on good terms with family members. 20 Mr Reis said that he had cooperated fully with WorkCover in its investigations of the accident and provided WorkCover representatives with full access to the premises and staff. Instructions have been given to avoid a repetition of this type of accident. A copy of the minutes of a safety meeting held after Mr Black's death was produced in evidence. This demonstrates a significant reaction to what occurred. 21 Mr Reis dealt also at some length with the financial position of the defendant company and the effect that a financial penalty will have on its operations. 22 The shareholders consist of Mr Reis and his wife. The capital of the company was contributed substantially from superannuation moneys paid to Mr Reis on his retirement from employment with BHP. Currently the company is indebted to its bankers through a number of facilities to a total of $1.2 million. Its monthly loan, leasing and debt repayment exceeds $13,000. Mr Reis and his wife draw modest salaries and, in reality, nothing by way of dividends. 23 The defendant has encountered increasing competition both by way of imports of product from overseas and from two local manufacturers who have commenced to produce the same products in competition. One of the competitors is a multi-national and the other is a publicly listed company. Some of the defendant's export market has also been lost. 24 Added to this, the defendant has experienced deteriorating trading conditions generally, some of which have been caused by the factors already mentioned. This situation has put the defendant in a precarious financial position. This has been exacerbated further by the need to move from its present premises as a result of the closure of the BHP operation in Newcastle. The defendant had leased premises from BHP and the closure necessitated a forced relocation. The cost of relocation is estimated at between $290,000 to $390,000 all of which has to be funded from cash flow. Furthermore, the cost associated with new premises will be higher. 25 Mr Reis concluded his affidavit by stating that the costs of the move to alternative premises had "exhausted my family's pension and superannuation fund and it puts Milltech in a very stretched position so far as loan repayments and lease payments are concerned - there is no room for any financial problems to occur or the company will find it very difficult to survive." 26 None of the above facts was disputed by the prosecution. Mr McGrath submitted that I should have regard to the provisions of s 6 of the Fines Act 1996. Section 6 is in the following terms: In the exercise by a court of discretion to fix the amount of any fine, the court is required to consider: (a) such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and (b) such other matters as, in the opinion of the court, are relevant to the fixing of that amount." 27 I should add that by s 3, a court is defined to include this Court. 28 A search of the relevant computer data base reveals that of the eight decided cases in which s 6 of the Fines Act has been mentioned, seven are decisions of this Court. Not unnaturally, all of the decisions in which this section has been considered are to similar effect. I cite by way of example the judgment of the President of this Court in Ferguson v Nelmac (1999) 92 IR 188 at 209. His Honour took into account the financial circumstances of the defendant, but approached the matter on the basis that such consideration would not necessarily result in the Court not imposing a heavy penalty. 29 Some guidance of the appropriate in-principle approach can be gained from the decision of the Court of Criminal Appeal, Western Australia in Sgroi (1989) 40 A Crim R 197. In the course of a judgment with which Rowland J agreed Malcolm CJ said: The purpose of a fine is primarily to punish the offender. Consequently, the amount of the fine must be such as will constitute an appropriate punishment having regard to the offender's capacity to pay. Thus, the amount and method of payment of the fine will need to take into account, as far as practicable, the financial resources and income of the offender and the nature of the burden that its payment will impose. The approach to be adopted in the case of a fine has been considered by this Court in Cobby (unreported, Court of Criminal Appeal, WA, Wickham, Wallace and Pidgeon JJ, No 19 of 1983, 19 April 1983). Wickham, Wallace and Pidgeon JJ said: "There can be a number of difficulties associated with a fine; for example: courts should avoid giving the impression that a rich person can purchase absolution from a crime for cash or that a poor person can do so by instalments. It is also the case that a fine may be effectively a greater punishment upon a poor person than upon a rich person. Further in the case of joint offences it would not seem right to fine a rich person more than a poor person when the circumstances are much the same and neither would it seem right to fine a rich person less simply because the poor person could not pay more. There is also the danger that an offender may be tempted to commit another offence in order to raise the money to pay the fine. These are only some of the difficulties which might arise. We mention them merely to indicate that the opinion which we have expressed must necessarily be tempered to the circumstances of the particular case. Where the fine is appropriate it should not be used merely as a soft option but should have some real sting in it from the point of view of the offender and be sufficiently punitive to act as a general deterrent." This statement was approved in Loughman (unreported, Court of Criminal Appeal, WA, No 37 of 1983, 23 June 1983) and followed in Middleton (unreported, Court of Criminal Appeal, WA, No 1 of 1989, 21 March 1989). The question whether the amount of a fine is within the range of a sound discretionary judgment is to be determined in the same manner as the same question when asked with respect to a sentence of imprisonment, save that in the case of a fine considerations of the offender's financial means of capacity are relevant in determining the amount of a fine which will constitute a punishment proportionate to the gravity of the offence in the light of the circumstances under which it was committed, the antecedents of the offender and, where appropriate the objective of general deterrence. (at 200-201) 30 In the NSW Court of Criminal Appeal in Rahme (1989) 43 A Crim R 81 Finlay J (Studdert J agreeing) said: The imposition of a large fine does involve a number of considerations. It is trite to say that a court generally should not impose a fine which the offender does not have the means to pay, even though these days failure to pay a fine does not lead to imprisonment but to a civil execution for its non-payment." (at 86). 31 It is now necessary to reach some conclusion as to what should be the appropriate penalty to be imposed in the circumstances of these proceedings. I take into account all of the matters to which I have referred, including the need for both general and specific deterrents. In ordinary circumstances I would have imposed a fine of $75,000. However, taking into account the compelling and uncontested evidence as to the defendant's financial position I propose imposing a fine of $50,000. In the absence of a detailed balance sheet and of some projected cash flow analysis, it is impossible for the Court to determine whether the imposition of such a fine, or indeed any other monetary amount, might be the catalyst for the collapse of the defendant's business operations. It is to be hoped that this will not be the case, given the commitment which Mr Reis has obviously made both personally and financially to the defendant's business and the fact that the employment of fourteen persons in the Newcastle area might be put at risk. Nevertheless the matter needs to be approached on the basis that there are already existing circumstances which have caused severe financial strain to the defendant unrelated to the breach of the Act which gave rise to these proceedings. ORDERS 32 I make the following orders: 1. The defendant is convicted of the charge contained in the summons. 2. The defendant is fined the sum of $50,000 with a moiety to the WorkCover Authority of New South Wales. 3. The defendant is to pay the costs of the prosecutor in the proceedings, to be fixed by the Court in default of agreement. Liberty to apply is granted with respect to costs. ____________________ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.