Industrial Relations Commission of New South Wales in Court Session CITATION: Inspector Ruth Buggy v Lyco Industries Pty Limited [2005] NSWIRComm 423 PROSECUTOR: Inspector Ruth Buggy PARTIES: DEFENDANT: Lyco Industries Pty Limited [ACN 006 797 575] FILE NUMBER(S): IRC 5078 and IRC 5079 of 2004 CORAM: Schmidt J Occupational Health and Safety - prosecutions under section 18(1)(a) and (b) of the Occupational Health and Safety Act 1983 - fatality - defendant a manufacturer and supplier - no prior convictions - question of sentence - general and specific deterrence - parity - principle of totality to be applied - penalty imposed - reduction - costs as agreed or assessed CATCHWORDS: Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Occupational Health and Safety Act 1983 Camillieri's Stock Feeds Pty Ltd v Environment Protection Authority, (1993) 32 NSWLR 683 CASES CITED: Inspector Ruth Buggy v Lyco Industries Pty Limited [2005] NSWIRComm 298 R v O'Neill [1979] 2 NSWLR 582 HEARING DATES: 10/12/2005 DATE OF JUDGMENT: 11/24/2005 PROSECUTOR: Mr R Reitano of counsel SOLICITORS: WorkCover Authority of New South Wales Legal Group LEGAL REPRESENTATIVES: DEFENDANT: Mr J Phillips SC SOLICITORS: McCulloch & Buggy JUDGMENT: - 15 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J 24 November 2005 Matter No IRC 5078 of 2004 INSPECTOR RUTH BUGGY v LYCO INDUSTRIES PTY LIMITED Prosecution under s.18(1)(a) of the Occupational Health and Safety Act 1983 Matter No IRC 5079 of 2004 INSPECTOR RUTH BUGGY v LYCO INDUSTRIES PTY LIMITED Prosecution under s.18(1)(b) of the Occupational Health and Safety Act 1983 JUDGMENT [2005] NSWIRComm 423 1 Judgment was given in this matter on 25 August 2005 (Inspector Ruth Buggy v Lyco Industries Pty Limited [2005] NSWIRComm 298). It was there noted at [1] that: The defendant, Lyco Industries Pty Limited ('Lyco') was the manufacturer of a hydraulically powered post driving machine. A Mr William Munton purchased one of its machines from a supplier of agricultural equipment, Kentan Pty Limited ('Kentan'). In May 2001, a Mr Caine Hayward, one of Mr Munton's employees, was killed while operating the machine. The defendant pleaded not guilty to two charges brought under s 18 of the Occupational Health and Safety Act 1983 ('the Act'). 2 This judgment deals with the penalty to be imposed on the defendant. It has no prior convictions. The maximum penalties provided for each offence accordingly are $550,000. 3 The two charges in question are: Matter Number IRC 5078 of 2004 LYCO INDUSTRIES PTY LIMITED whose registered office is located at 15 Wiltshire Lane, Ballarat in the State of Victoria, from 24 February 1999 to 8 March 1999 at 338 Pacific Highway, Hexham, in the State of New South Wales, did supply to Kentan Pty Limited for use by persons at work plant being a hydraulically powered post driving machine which it failed to ensure was safe and without risks to health when properly used contrary to Section 18(1)(a) of the Occupational Health and Safety Act 1983.The particulars of the charge are: 1. The defendant, at all material times, was a supplier of plant; 2. The defendant, at all material times, supplied a hydraulically powered post driving machine ('the machine") to Kentan Pty Limited for use by persons at work; 3. The machine was not safe and without risks to health when properly used. 4. The machine could be operated whilst a person's limbs or head were below the hammer so that the hammer could come into contact with that person's limbs or head causing fatal injuries. Matter Number IRC 5079 of 2004 LYCO INDUSTRIES PTY LIMITED whose registered office is located at 15 Wiltshire Lane, Ballarat in the State of Victoria, from 24 February 1999 to 8 March 1999 at 338 Pacific Highway, Hexham, in the State of New South Wales, did supply to Kentan Pty Limited for use by persons at work plant being a hydraulically powered post driving machine and fail to provide, or arrange for the provision of, adequate information about the plant to the person to whom it was supplied to ensure its safe use contrary to Section 18(1)(b) of the Occupational Health and Safety Act 1983.The particulars of the charge are: 1. The defendant, at all material times, was a supplier of plant; 2. The defendant, at all material times, supplied a hydraulically powered post driving machine ('the machine") to Kentan Pty Limited for use by persons at work; 3. The defendant, at all material times, failed to provide, or arrange for the provision, to Kentan Pty Limited of adequate information regarding the operation of the machine to ensure the machine's safe use. 4. The machine could be operated whilst a person's limbs or head were below the hammer so that the hammer could come into contact with that person's limbs or head causing fatal injuries. 4 Section 18 of the Occupational Health and Safety Act 1983 ('the Act') provides: Designers, manufacturers and suppliers to ensure health and safety as regards plant and substances for use at work (1) A person who designs, manufactures or supplies any plant or substance for use by persons at work must: (a) ensure that the plant or substance is safe and without risks to health when properly used, and (b) provide, or arrange for the provision of, adequate information about the plant or substance to the persons to whom it is supplied to ensure its safe use. (2) The obligations under this section: (a) apply only if the plant or substance is designed, manufactured or supplied in the course of a trade, business or other undertaking (whether for profit or not), and (b) apply whether or not the plant or substance is exclusively designed, manufactured or supplied for use by persons at work, and (c) extend to the design, manufacture or supply of components for, or accessories to, any plant for use by persons at work, and (d) extend to the supply of the plant or substance by way of sale, transfer, lease or hire and whether as principal or agent, and (e) extend to the supply of the plant or substance to a person for the purpose of supply to others, and (f) do not apply to a person merely because the person supplies the plant or substance in the course of a business of financing the acquisition of the plant or substance by a customer from another person. (3) In this section, manufacture plant includes assemble, install or erect plant. Maximum penalty: 5,000 penalty units in the case of a corporation or 500 penalty units in any other case. 5 Evidence was called by the defendant from Mr Lyons, the defendant's joint Managing Director and Mr Harbour, its Manager-Hydraulic Sales. They were not required for cross examination. 6 Mr Lyons' evidence went to explain the circumstances in which the defendant was founded in 1970 by his father, although the business had operated since the 1950s. It designs and manufacturers a wide range of agricultural products for domestic and overseas markets; employs some 100 people, including 77 factory and 33 sales and administrative staff. 7 Mr Lyons has worked throughout the defendant's operations, commencing with an apprenticeship in 1974. He is joint managing director with his brother. The defendant has annual revenue of some $15 million. Last year it suffered a loss of some $5 million, but hoped this year to break even. 8 From an initial focus on the wool industry, the defendant diversified its business in the late 1980s and 1990s, after a recession. These steps have been successful, although at considerable cost and effort. Last year operations were consolidated in one new facility, involving the necessity for heavy borrowings to be taken on. The defendant has also been affected by a downturn on the local property market. 9 Mr Lyons described the defendant's approach to its safety obligations. It operates in an industry where competitors do not have a similar approach. Over the years it has been involved with the Department of Labour in Victoria, the Occupational Health and Safety Commission in that State and the WorkCover Authority of Victoria, in promoting safety in its industry. It won an award in 1991 for the safety features it designed for a fully guarded wool press. It has also had recognition for the safety aspects of the design of other of its products. 10 Mr Lyons also described the changes made to the machine here in question, as the result of the accident involving Mr Hayward. The guarding was altered, the manual revised and a video provided with each machine supplied, as well as safety glasses and ear plugs. After the May judgment, a further risk assessment was carried out on the machine and a decision made to revert to the complete guarding of the hammer, as the model prior to this one featured. Contact is being made with customers, to advise them of the desirability of complete guarding for the earlier model of the machine. 11 Mr Lyons' evidence was that the defendant had always had a safety conscious approach, having sacrificed profit to ensure safety of its machines, in a market where competitors did not adopt a similar approach. The defendant had also campaigned within the industry, for the adoption of increased safety regulations. 12 Mr Harbour's evidence went to the defendant's response to the risks to which Mr Hayward's death had drawn attention and the improvement notice issued by the WorkCover Authority. This included the conduct of a risk assessment, which identified the error in the operation manual for the post driver. The manual was amended and was provided to the WorkCover Authority, which in 2002 issued a warning on hydraulically operated post drivers. The defendant arranged for this warning to be forwarded to the Tractor Machinery Association, so that it could be printed in its fortnightly bulletin. It was also published in the Australasian Farmers and Dealers Journal, as the result of the defendant's efforts. The parties' respective cases 13 The case advanced by Mr Reitano of counsel was that the parties were agreed as to the principles to be applied to the determination of penalty in this case. The offences were submitted to have been serious, given the evidence as to the state of the guard and the information provided. The machine was obviously dangerous, as was the risk it posed. Any encounter with a falling 600 lb hammer could have catastrophic, if not fatal consequences. The evidence showed the simple steps available to guard against the risk in question. The instruction manual and information on the machine ought to have warned of the danger in clear and unambiguous terms, including for persons other than the operator. The case was one where specific and general deterrence must feature in penalty. The focus was not upon the accident in question, but the risks. 14 The submission that Mr Munton had more culpability than this defendant for what occurred was submitted not to be available. He was but an end user of dangerous equipment for which inadequate information was supplied. 15 It was also accepted that the principle of totality applied, although the overlap in the two charges was not complete, given that one was concerned with the machine and the other with the information supplied about its operation. It was not, however, accepted that the information charge was not a serious one. 16 The case advanced for the defendant by Mr Phillips of counsel was that the Court must give the defendant the benefit of the doubt, so far as the cause of the accident was concerned, given the competing expert opinions. (See Camelleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698-9.) 17 The parity principle also arose for consideration. There should be no marked disparity in sentence, which might give rise to a justifiable sense of grievance. The penalty imposed on Mr Munton was relevant in this respect, as was the penalty to be imposed upon the supplier, Kentan Pty Ltd. It was argued that Mr Munton's level of culpability was greater than that of this defendant. It was also relevant that he had not, in any event, read the instruction manual. 18 It was argued that there were no aggravating factors which could here lead to a high penalty and that there were many mitigating factors to take into account in reducing the penalty otherwise to be imposed, particularly given the defendant's long history of safe operation and its general approach to its obligations under the Act, both before and after these events. The record of the company was a very significant matter to be taken into account, as were the steps taken after this incident and after the earlier judgment, to deal with the risk which had been revealed. It followed that general and specific deterrence did not have a great role to play in the penalty imposed. 19 The information offence was submitted to be at the lower end of seriousness, especially given that Mr Munton had not read the manual. He was the direct employer and had control and serious obligations to the inexperienced workers he engaged. He failed to provide a copy of the manual to them. If he had read the manual he would have realised the guard should have been extended to operate the machine in a certain way. A question to be considered was whether the manual could have informed the reader that the guard had to be opened in a certain way, if it was read. It was submitted that the charge should be approached as a follow up charge. If the machine had been completely guarded, as the previous model had been, the manual would not have been misleading. In any event, there was no accident caused because someone misread the instructions. 20 It was also relevant that the defendant had a system in place to ensure that the guard was in good working order when it left the factory. Kentan had fitters whose role was to check its condition before the machine was supplied. Mr Munton's evidence was that he had received the machine in the state in which it was operated, with the guard wedged in the incorrect opposition. This was not the defendants responsibility, given the system in place at its factory. 21 As to instructions it was complained that the August judgment referred to an absence of instruction on the machine, but there was in evidence photographs which showed that there were such warnings. In any event, what was relevant was the charge, which did not, for instance, particularise a failure to warn. In any event, it was not necessary to warn of obvious dangers, such as not to place a body part under a falling 600 lb hammer. Some element of personal responsibility was necessary to be taken into account in assessing penalty. 22 It was also submitted that this was a case where subjective factors would be taken into account in a significant way in order to decrease the penalty which would otherwise be imposed. They included this defendant's approach and record in relations safety matters and its response to the risks here revealed, including in relation to its efforts to disseminate the earlier judgment in industry. This would also go to reduce specific deterrence as an element of penalty. Account would also be taken of the unchallenged evidence that other manufacturers selling such machines without any guarding at all had not been the subject of any prosecutions. Consideration 23 Consistently with the Crimes (Sentencing Procedure) Act 1999, the determination of sentence in a case such as this, must be approached from a consideration of the nature and seriousness of the offence in question, together with aggravating and mitigating factors. 24 As I observed in the August judgment, on the evidence there can be no doubt that these two offences were committed and that the charges were made out, to the necessary standard. The design of the machine did not preclude the possibility that a person could come in contact with the falling hammer. The information provided was not written in a way which could easily be understood by users. The instruction manual, written with the safety of operators in mind, contained confusing information and did not ensure the safety of others, who might come within proximity of the falling hammer. 25 Mr Phillips argued, and I accept, that on the evidence, it was not possible to come to a conclusion as to precisely how Mr Hayward had been killed. The experts who gave evidence disagreed as to the likely cause - operator error in relation to the lowering of the three point linkage, or problems in the design of the machine, which permitted the operator to inadvertently operate the wrong control while in proximity of the hammer. As observed by Justice Kirby in Camillieri's Stock Feeds Pty Ltd, where a relevant fact is the subject of conflicting evidence, and where that evidence is of like probability, the Court should resolve the conflict in favour of the offender. (See also R v O'Neill [1979] 2 NSWLR 582 at [588].) 26 In a case such as this, however, it is not necessary to come to any conclusions as to how the accident which befell Mr Hayward occurred. These proceedings are concerned with the risk to safety the subject of the charges, which flowed from the design of the machine and the information provided, as the charges alleged. The experts agreed in their evidence that the design of the machine could have led to the accident. More importantly however, the evidence showed that the design of the machine did not protect others apart from an operator, from risk of injury by the hammer. This flowed from the way in which the falling hammer was guarded. Nor did the information provided draw any attention to this possibility. The consequences of that risk were undoubtedly of the most serious kind - death. 27 In those circumstances, it must be concluded that the risks to safety here in question, were most serious. On the evidence, the risks were obviously foreseeable. The level of the defendant's culpability for those risks, must also be considered, however, in the context that it had previously marketed a machine, which completely guarded the hammer, so that a person could have no contact with the falling hammer. The manual had been written with that guard in mind. The evidence was that the defendant had moved away from that design, because it discovered that its customers found that the guarding made the machine more difficult to use; its competitors marketed machines without guarding and its customers removed the guarding from its machines, when operating them in the field. 28 In those circumstances, the decision was made to provide a guard which would still protect operators, but would improve the efficiency of the operation of the machine, so that customers would not be tempted to remove the guarding. Overall, this was thought to improve safe operation of the machine in a practical sense, when operated in the field. 29 As I observed in the August judgment, while there must be sympathy for the adoption of such an approach, in all the circumstances confronting the defendant the changed guard, designed as it was to improve safety in practice, was not one which ensured safety in the way in which the legislation requires of manufacturers such as the defendant. Nevertheless, I also accept that these matters are relevant to an assessment of the defendant's culpability for the offences found proven. Plainly, that would have been higher, had the machine been sold entirely unguarded, as apparently other hammers available for purchase in the marketplace are, and as some operators of such machines modify them to be, after purchasing them with a guard. 30 The defendant accepted that general and specific deterrence have a role to play in here determining penalty, although arguing that specific deterrence has a smaller role in this case, given the defendant's general approach to its obligations and in response to the accident. 31 I am satisfied that both elements must feature in the penalty here imposed. General deterrence is plainly important, given the evidence of the unsatisfactory approach adopted by other manufacturers of such equipment and specific deterrence, given that the defendant moved from a wholly guarded design, to one which could not ensure safety in the necessary way and in doing so, did not provide adequate instructions in relation to the machine supplied. I accept, however, that the evidence as to the defendant's general approach to its safety obligations and the steps taken in response to the risks which the accident revealed, should have the result that specific deterrence has a lesser role to play in determining sentence, than would have been the case in the absence of such steps. 32 I cannot, however, conclude that specific deterrence could properly be excluded entirely in this case, particularly given the inadequate nature of the information provided with the machine. As to this offence, I am not satisfied that the fact that Mr Munton failed to read the safety manual can have any impact upon the seriousness of this offence. Nor, in my view, is it open to conclude on the evidence that the breach was but a technical one, as submitted. Had Mr Munton read the instruction manual, he would have found it a confusing document, containing errors as the defendant acknowledged and which it has taken steps to rectify. Those steps showed that proper adherence to this obligation was a relatively simple matter in the circumstances. 33 I do accept, nevertheless, that the evidence established that this was the less serious of the two offences. I also accept the defendant's submission that there was a warning on the machine alerting operators to safety risks in its operation. The observation in [24] in the August judgment was directed to the absence of information in relation to the risk to safety for persons other than the operator, dealt with in [25]. The evidence showed, for example, that after the accident, prominent signs were placed on the front of the machine warning that it was a 'crush zone'. The defendant complained that it had not understood that the absence of adequate instruction on the machine itself, was a part of the charge made against it. The matter was the subject of evidence and competing submissions at the trial. The evidence led as to these matters was plainly relevant to the information charge, given the particulars expressed as they were in broad terms. The information provided was in various forms, including that provided by the sign placed on the machine, which could, for instance, have overcome deficiencies in the instruction manual. The steps later taken to improve that information by the addition of the warning in relation to the crush zone, is not only relevant to the charge, but by way of mitigation, when the risks to safety were highlighted by Mr Hayward's death. I have so approached that evidence. 34 Both parties accepted that the parity principle must here be applied, which I also accept. I am unable to conclude, as invited by the defendant, that the employer of Mr Hayward, Mr Munton, was the most culpable for the risks here in question. True it was that he was the employer of Mr Hayward, with his own obligations for safety imposed by the Act. Nevertheless, the machine in question was inherently unsafe and the information provided inadequate - obviously so, as was accepted for the defendant. It is true that the employees Mr Munton had working the machine were inexperienced. That, of course, is always a possibility where such a machine is sold in the marketplace by a manufacturer such as the defendant. In any event, the charge is concerned with the risks to safety in question, namely that relating to the machine itself and the information supplied with it, not what in fact happened to Mr Hayward. 35 Otherwise, so far as parity is concerned, account must be taken of the differing charges laid against the other defendants and the circumstances in which they came to be dealt with by the Court. Mr Munton pleaded guilty and the charge against Kentan proceeded ex-parte. The judgments dealing with these defendants indicate the differing facts and other matters which accordingly arose for consideration in their cases, which do not arise here. I have taken account of these various matters in determining penalty. 36 I also accept, as the prosecutor invited and the defendant accepted, that the principle of totality must be applied here. There is some element of overlap in the charges, although not complete overlap by any means, which must be taken into account. 37 As the prosecutor accepted, there are also some relevant subjective matters here to be taken into account in assessing penalty, although the charges were defended, rather than a plea being entered. These include the fact that these are the first offences with which the defendant has been charged, after a very long history of manufacture of farming machinery. The evidence of the defendant's general approach to safety, no doubt, helps explain this situation and must also be taken into account, as earlier noted. It also suggests that this is not a defendant with a propensity to re-offend, as does the response adopted to the accident and the August judgment. Some evidence was led as to the defendant's means, although it was not submitted that the defendant would have any difficulty paying a penalty. 38 Having taken all of these matters into account, I have concluded that the appropriate penalty to be imposed is in relation to the charge in IRC 5078 of 2004 is $130,000 and in IRC 5079 of 2004 is $50,000, a total penalty of $180,000. I have concluded that the penalties should be reduced to: Matter Number IRC 5078 of 2004 - $90,000 and Matter Number IRC 5079 of 2004 - $40,000; a total penalty of $130,000. 39 Finally, before making orders, I take the opportunity to observe that the evidence in this case was troubling in one particular respect. The defendant's unchallenged evidence was that other manufacturers do not adopt the same approach to safety as this defendant. They manufacture and sell hammers which do not have even the guarding available on this machine, inadequate as it was on the evidence, at the time of the accident. This puts the defendant at a competitive disadvantage. There is no basis upon which that evidence could be doubted. This evidence suggests, that other manufacturers are committing offences more serious than that here before the Court. That the WorkCover Authority has not taken steps to deal with such continuing and serious risks to safety, since Mr Hayward's death in May 2001, is worrying and warrants the Authority's further urgent attention. Given the devastating consequences which can flow from operation of such unguarded equipment, as the evidence here so graphically highlighted, a failure to deal with such offences suggests that people's lives are unnecessarily being put at risk, by operation of such unguarded machinery. Prosecution for such offences, after all, lies in WorkCover's hands. Orders For all of the reasons given, I make the following orders: (1) The defendant is found guilty of the offences charged and is to pay the following penalties, with a moiety to the prosecutor. (i) Matter Number IRC 5078 of 2004 - $90,000 (ii) Matter Number IRC 5079 of 2004 - $40,000 (2) The defendant is also to bear the prosecutor's costs, as agreed or assessed by the Court, failing agreement. 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.