Industrial Relations Commission of New South Wales in Court Session CITATION : WorkCover Authority of NSW (Insp Reynolds) v. CSR Ltd T/as PGH Bricks [2000] NSWIRComm 51 PROSECUTOR: PARTIES : WorkCover Authority of NSW (Inspector Reynolds) DEFENDANT: CSR Ltd T/as PGH Bricks FILE NUMBER: IRC1830 & IRC1857 of 1999 CORAM: Peterson J CATCHWORDS : Occupational Health and Safety - s15(1) - Prosecution for offence - Pleas of guilty - Failure to maintain a safe place of work - penalty - nature and quality of offence - objective and subjective features - principle of totality LEGISLATION CITED : Occupational Health and Safety Act 1983 s15(1) Tyler v Sydney Electricity (1997 47 IR 1 at 5), Warman Limited v WorkCover Authority of New South Wales (1998 80 IR 326 at 339) CASES CITED : WorkCover Authority of New South Wales (Inspector Mayo-Ramsay) v Allen Taylor & Co Ltd (unreported, 21 May 1999 - IRC98/4007) Cullen v SRA (1989 31 IR 207 at 209-10, 217) Dawson v SRA (1990 37 IR at 123-4) Independent Cargo & Wool Services Pty Ltd v Inspector Mingare (unreported 10 March 1994 - CT92/1041) HEARING DATES: 02/07/2000 DATE OF JUDGMENT: 04/07/2000 PROSECUTOR Mr Shume of counsel SOLICITOR White Barnes SYDNEY LEGAL REPRESENTATIVES: DEFENDANT Mr Dixon of counsel SOLICITOR Minter Ellison SYDNEY JUDGMENT: - 13 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: PETERSON J DATE: 7 APRIL 2000 Matter No. IRC1830 of 1999 WORKCOVER AUTHORITY OF NSW (INSPECTOR REYNOLDS) v CSR LTD T/AS PGH BRICKS Prosecution under s.15(1) of the Occupational Health and Safety Act 1983. Matter No. IRC1857 of 1999 WORKCOVER AUTHORITY OF NSW (INSPECTOR REYNOLDS) v CSR LTD T/AS PGH BRICKS Prosecution under s.15(1) of the Occupational Health and Safety Act 1983. JUDGMENT 1 These are prosecutions, brought on behalf of the WorkCover Authority of New South Wales, of CSR Limited, trading as PGH Bricks, in relation to offences against s.15(1) of the Occupational Health and Safety Act, 1983 ('the Act'). Both were heard together, with guilty pleas being entered. Initially six prosecutions were taken out in relation to two incidents at the defendant's brick manufacturing plant at East Maitland. In the end, only these two matters proceeded, leave being granted, by consent, to discontinue the remaining matters. 2 Both incidents concern the roof of a pre-heater oven ('the oven') over which access was necessary for maintenance work and operational functions. The facts now summarised are taken from evidence in the proceedings, being an agreed statement of facts, Inspector Reynolds' Report of Inspection , photographs of the scene and the evidence of Lee Annett, the National Materials Manager of PGH Bricks, whose affidavit was in evidence and upon which he was cross-examined by Mr. Shume of counsel for the prosecutor. 3 The oven was 35 to 40 metres long and 5 to 6 metres wide. The walls were of brick and the roof was of brittle corrugated asbestos sheeting, traversed by a steel mesh walkway, access to which was gained by a stairway at one end of the oven. 4 The first incident occurred on 22 April 1997 when an employee, Robert Mitchell, was required to perform maintenance work upon two electric motors. This required access via the steel mesh catwalk supported by the roof of the oven. Mr Mitchell's weight on the catwalk caused a section of the supporting roof beneath it to crack and fall in. He was not injured but reported the unsafe condition of the roof to his supervisor, Kevin Enright. 5 That incident followed another on 14 April 1997, which is not the subject of a charge, in which Mark Smith was required to perform maintenance work on top of the oven. In the course of this he stepped upon the roof of the oven, which gave way under his weight causing him to fall partially through it. He was able to take hold of the catwalk thereby saving himself from falling completely through the roof. This was reported to Mr Enright on the date of its occurrence. Prior to this he had instructed employees that at all times they should stay on the catwalk. 6 After Mr Mitchell reported, on 23 April 1997, that there was a problem on the roof, Mr Enright immediately thereafter informed employees that no-one was to access the area until further notice. 7 On 28 April 1997 an incident which is the subject of the second charge occurred. Allan Stout was required to assist Kevin Enright to instal a plank as a temporary walkway over the damaged section of the oven. This was to provide access to a fan which needed to be reconnected. After placing the plank in position on the roof, Mr Stout proceeded to leave the roof area via the catwalk. Whilst walking on the said catwalk, behind Mr Enright, Mr Stout felt his right leg go from under him with the result that he fell off the catwalk and through the roof into the oven, a distance of approximately 2.5 metres. He suffered fractures to his twelfth thoracic vertebrae and his first lumbar vertebrae. 8 The brittle asbestos cement sheeting which made up the roof was installed over steel mesh which appeared to have been affected by corrosion. Immediately following the incident of 28 April the defendant cordoned off access to the oven roof pending a commercial decision of the future of the business and in particular the manufacturing operations involving the oven. 9 On 29 April 1997 WorkCover issued a prohibition notice prohibiting access to the roof until details were provided to WorkCover by the defendant of the proposed safe system of work. 10 The offence in relation to the incident of 22 April 1997 is said to be a breach of s15(1) of the Act in that the defendant failed to maintain a place of work under its control in a condition that was safe and without risks to health. 11 In relation to the charge concerning the incident on 28 April 1997 involving Mr Stout's falling through the roof it is said to involve a breach of s15(1) of the Act by failing to maintain a place of work under its control in a condition that was safe and without risks to health. 12 Mr. Annett's evidence dealt with the structure of CSR and its formation into business units, each with its own management team. Building Materials is one such unit and PGH Bricks is a sub-unit thereof. There is within Building Materials' management, a National SHE (Safety, Health and Environment) and Quality Manager, who is responsible for coordination of the implementation and audit of safety systems. PGH Bricks has, at each site including East Maitland, a Works Manager to whom team leaders report and employees reporting to team leaders. There is also an occupational health and safety committee established on site. 13 CSR as a whole employed approximately 12,718 employees at the time of the incidents the subject of these proceedings, approximately 4,500 of which were in New South Wales. PHG Bricks at that time employed approximately 617 employees nationally, 357 of whom were in New South Wales and 43 employees at East Maitland site. That site number remains the same although the other figures have reduced marginally in the interim. 14 Mr Annett gave extensive evidence of CSR's safety policy and the pre-existing safety policy which had operated at East Maitland when the site was part of the Monier PGH business prior to its acquisition by CSR. Mr Annett was employed as the Works Manager at the site in mid-February 1997 and part of his responsibility was to implement a new CSR Safety, Health and Environment Management System ('SHEM System'). The SHEM System was intended to improve the safety standards of all CSR business units and sub-business units, and to create consistency of safety standards across them. This System has, from January 1999, been known as the Safety, Health and Environment System ('SHE System'). The extensive evidence in relation to the standards adopted within the Systems suggest that, as a matter of policy, CSR and its business units have adopted a serious approach to the obligation to maintain a safe working environment and train employees in relation to their responsibilities in that regard. 15 On 23 April 1997 Mr Annett became aware of the incident involving Robert Mitchell. On that day he assessed the oven roof with Kevin Enright, the then Maintenance Engineer. Mr Enright was to temporarily cover the hole in the oven roof and issue instructions to employees that they were not to access the roof of the oven without prior permission from him. 16 Simultaneously, a major restructure of the site was under consideration. Mr Annett had recommended that the processes should alter in a way which would no longer require use of the oven. The restructure was to be announced to relevant unions on 28 April and to the employees on 29 April 1997. The oven was not expected to be used after 28 April. Subsequent to the accident involving Mr Stout on 28 April the prohibition notice was given effect and access to the roof of the oven was prohibited. Subsequently, it was determined that the oven would be virtually demolished and rebuilt. This was done. 17 The evidence dealt with the support extended to Mr Stout's rehabilitation. He was unfit for work for four months, returned on suitable duties gradually increasing his hours until May 1998 when he resumed full-time work. He is now the Maintenance Supervisor, performing maintenance and administrative duties. Apart from the rehabilitation programme which involved the assistance of Independent Rehabilitation Services and a Back Care Rehabilitation Programme, Mr Stout was also provided by PGH Bricks with a specifically designed ergonomic chair, a new bed, hydrotherapy treatment and gym memberships to assist his rehabilitation. 18 The East Maitland site has an impressive safety record including the achievement of safety awards as follows: (a) 1 Year Free of Lost Time Injury Safety Award dated 29 April 1992; (b) 100,000 Hours Without Loss Time Injury dated 7 April 1999; and (c) 2 Years Free of Lost Time Injury Safety Award dated 29 June 1996. PGH Bricks does not have any prior convictions for breaches of the Act. CSR and PGH expressed through Mr Annett deep regret that the incidents occurred and the belief that any risk to further injury in relation to the oven roof has been effectively removed. They also expressed the desire to commit fully to complying with all of their OHS obligations and to always strive the minimise the potential for injury to their employees through training and continuous efforts to improve policies, procedures and practice. 19 Mr Annett said in cross-examination that the demolition of the oven, which was occasioned not by its condition but rather the product, involved the retention of the brickwalls of the former oven with the roof structure being rebuilt, the walkways installed on top of the oven comply with Australian Standards, they have handrails which will assist in ensuring employees utilising the roof will remain on the catwalk. 20 Apart from submissions on the law to which I will make reference in my conclusions, Mr Shume submitted that in each offence, the subject of the charges have the capacity to be either a very serious injury or possibly death. Reference was made to the judgment of Hill J in Tyler v. Sydney Electricity (1993 47 IR 1 at 5) where his Honour said: The gravity of the damage or injury actually resulting from breach does not, of itself, dictate the amount of penalty. However, the gravity or otherwise of the potential risk flowing from breach and its foreseeability are clearly relevant as are the measure of gravity of the breach itself and the measure of culpability. 21 It was submitted that PGH Bricks was aware of a perceived danger which was left unchecked and in place. The remedial action was only taken after the incident on 28 April and it was submitted that the issuing of a prohibition notice was instrumental in that reaction. 22 In relation to the company's antecedents Mr Shume said: One of the things that your Honour will look at is the past record of the company and in our submission your Honour will see that there are a number of matters that this company has been before the court for over a period of time but your Honour will also see that this is a large company that has diverse interests in employment and some of those interests are involved in areas where there can be great risk to its employees . . . . it is not what your Honour would refer to as the worst record . . . 23 Mr Shume fairly submitted that the prosecutor recognised the compliance by the defendant with the prohibition notice; that co-operation was provided by the defendant; that assistance was provided to Mr Stout in a number of ways and that guilty pleas had been entered. It was submitted that it was appropriate that the court take these matters into account. 24 Mr Dixon of counsel for the defendant in dealing with the nature of the offences submitted that they were essentially the same, arising from the particular place of work, namely the roof of the oven. It was submitted that the principal of totality was appropriate to apply in those circumstances (Warman International Limited v WorkCover Authority of New South Wales (1998 80 IR 326 at 339). 25 Mr Dixon referred to the mitigating factors of the plea of guilty and the substantial discount that should be afforded therefor, the expression by CSR of contrition and the serious manner in which that was expressed. Counsel disputed Mr Shume's submission that the prohibition notice was the reason why the oven was not used after 28 April prior to its demolition, but it seems to me nothing, particularly to the defendant's advantage, really turns on this. Extensive reference was made to the nature of the operations of CSR and the independent business unit approach which is adopted. The point of this was clearly to seek to establish that viewed as an independent unit, the PGH Bricks operation was, in effect, a first offender. However, Mr Dixon indicated that the defendant accepted that it was not permissible to concentrate solely on the particular division. Reference was made to the judgment of the Full Bench in WorkCover Authority of New South Wales (Inspector Mayo-Ramsay) v Allen Taylor & Co. Ltd (unreported decision 21 May 1999 IRC98/4007). However, it was submitted that a number of factors may be paid regard in assessing the culpability of CSR which is a large organisation with separate divisions. Those breaches which have been recorded have been in other divisions, all cases involving different types of injuries and different uses of equipment. For example, the 1991 penalty of $2,000 was in a sugar refinery and then no other penalty until a 1998 forklift incident, then a cement mixer accident and then an incident in the wood panel division. These disparate types of offences show that this is not a case of a particular issue having arisen and having been ignored. It was submitted that there is no evidence to suggest that in the organisation as a whole a similar problem has arisen in the past which has been ignored for which there has been a conviction and which now requires a second offence penalty. The court was asked to take into account what inevitably must flow from such a large organisation with a large management structure. 26 With respect to the last matter, there is a difficulty in so viewing an employer's structure. The nature of the obligation imposed by the Act on an employer is such that the complexities of the structure must respond to the duty; it would be to reverse that statutory requirement if any allowance were to be afforded based on large management structures. Nevertheless the Court is, in my opinion, able to respond to failure of an otherwise safe system, either of work or of an approach to it exemplified in safety training and procedures, in the context of a particular case. An example is the approach taken by Fisher P in Cullen v State Rail Authority (NSW) (1989) 31 IR 207 at 209-10), and see majority contra at 217). The judgment of Fisher P, which was subsequently adopted and applied by Hill and Hungerford JJ in State Rail Authority of New South Wales v. Dawson (1990) 37 IR 110 at 23-4), held that a casual failure by an employee, even of supervisory level, in an otherwise safe system of work, would not necessarily render an employer criminally liable for a breach of s.17 of the OHS Act. This does not appear to me to be such a case, nor did Mr. Dixon argue it was; nevertheless, it has always been the position in assessing penalty that the particular features of the case are to be taken into account, whether they increase or reduce the seriousness of the offence. 27 There do not appear to be any aspects of this case which aggravate the matter, although there are features already mentioned which operate in mitigation of penalty. I discount, in terms of aggravation and as having any effect on penalty detrimental to the defendant, the occurrence of two incidents on the roof of the oven within a short space of time. The second accident occurred as a result of attempting to deal with the roof having been broken during the event the subject of the first charge. Further, the agreed facts leave open the construction, which I consider I must take as favourable to the defendant, that the second accident and the resulting injuries occurred as a result of Mr. Stout's ankle giving away under him as he walked along the catwalk. There is no evidence that the catwalk itself, or its supporting structure, gave way thereby causing Mr. Stout to fall. In that respect the absence of a handrail may have caused Mr. Stout to suffer to a greater degree than might have resulted had he had additional support. However, in such circumstances it is not appropriate to view the second incident as one more aggravated than the first; for example, in no sense can it be suggested the defendant knowingly failed to remedy an unsafe aspect of the workplace, leaving an employee exposed to a known risk. 28 As I have said, the accident the basis of the second charge occurred in the course of attempting to deal with the problem caused by the first accident. I consider, for the purposes of assessment of penalty, that both incidents should be treated as arising from the same set of circumstances and should be dealt with under the totality principle, as indeed Work Cover submitted. 29 Mr. Shume put that the maximum penalty applicable at the time of the offences was $500,000 and, taking into account the increase of $250,000 for a second-tier offence, the combination of the penalties and the totality principle was that both matters should be dealt with as having a maximum penalty of $750,000. I will so act. 30 It is also necessary to consider the defendant's antecedents. The proper approach in this case conforms with the view expressed by Schmidt J, and adopted by the Full Bench (per majority Hungerford and Peterson JJ) in WorkCover Authority of NSW (Inspector Mayo-Ramsay) v Allen Taylor & Co. Limited (unreported 21 May 1999, IRC4007 of 1998) as follows: In WorkCover Authority of NSW (Inspector Piggott) v Capral Aluminium Ltd (1988) 82 IR 468, Schmidt J in dealing with not dissimilar circumstances, namely, a substantial corporation employing some thousands of persons in different places but which had a significantly different history of prior convictions, said: The defendant's record is also to be taken into account. As to this point I accept that the proper approach to be adopted to a consideration of antecedents is that described by the Court of Criminal Appeal in Boney . I take the view however that the defendant's antecedents in this case are relevant in determining the leniency to be afforded to the defendant, given the fact that the offences all involved injuries received at work by employees to whom the defendant owed the identical duty under the Act as that which the defendant has admitted breaching in this instance. While the circumstances of each of the other accidents is different to that which arises for consideration in this case, it seems to me that the differences are not of such a kind that I should properly conclude that the antecedents should not be taken into account at all in the relevant way. We consider that that approach is the correct one in relation to an employer operating in a number of places but through one legal entity. (ibid at 479) 31 In the present matters, while the offences arise from a duty identical to that owed by the corporate defendant in relation to offences leading to penalties in earlier cases, the disparate nature of those industries and the actual offences leads me to the view that, on this occasion, the weight to be afforded to those prior convictions should be substantially reduced. 32 The defendant is entitled to a substantial discount in relation to its plea of guilty. It is also entitled to recognition for its cooperation with WorkCover and its assistance to Mr. Stout, and to credit for its methodical and serious approach to instilling in its staff a culture of awareness and response to occupational health and safety. 33 While the accident to Mr. Stout was serious and affected him for quite a long time, that is neither the measure of the offence nor an indication of penalty. The primary question, in terms of penalty, is the 'nature and quality of the offence' (per the Full Industrial Court in Independent Cargo & Wool Services Pty. Ltd. v Inspector Mingare; unreported, CT92/1041, 10 March, 1994). Overall, I consider the circumstances in this case to be in the low to middle range of offences. Taking that view, and after bringing to account the matters I have mentioned in reduction and mitigation, I assess penalty at $120,000. The defendant is convicted of both charges and fined in respect thereof the sum of $120,000, with a moiety and costs as agreed or assessed to WorkCover. 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. 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