Industrial Relations Commission of New South Wales in Court Session CITATION: Inspector Brett Martin v Encore Tissue Pty Limited [2005] NSWIRComm 271 PROSECUTOR: Inspector Brett Martin PARTIES: DEFENDANT: Encore Tissue Pty Limited ABN 082 932 527 FILE NUMBER(S): IRC 6529 of 2004 CORAM: Schmidt J Occupational Health and Safety - prosecution under section 8(1) of the Occupational Health and Safety Act 2000 - paper recycling plant - guilty plea - serious injury - inadequate supervision and guarding of the machine - prior conviction - aggravating and mitigating factors considered - financial position considered - defendant not trading - defendant found guilty of offence - penalty imposed with a moiety to prosecutor - costs as agreed or assessed CATCHWORDS: Crimes (Sentencing Procedure) Act 1999 Fines Act 1996 LEGISLATION CITED: Occupational Health and Safety Act 2000 Inspector Seneviratne v Caltex Petroleum Distributors Pty Ltd [2005] NSWIRComm 192 Inspector Vosu v Ace-Semi Trailer Sales Pty Ltd [2005] NSWIRComm 222 Inspector Yeung v Howie Herring & Forsyth Pty Limited & Anor [2005] NSWIRComm 266 Manpac Industries Pty Ltd (formerly t/as Pacific Concrete & Quarries Pty Ltd) v WorkCover Authority of New South Wales (Inspector Glass) (2001) 106 IR 435 CASES CITED: Markarian v R (2005) 215 ALR 213 State Rail Authority of New South Wales v WorkCover Authority of New South Wales (Inspector Dubois) (2000) 102 IR 218 R v Thomson, R v Houlton (2000) 49 NSWLR 383 HEARING DATES: 06/06/2005 DATE OF JUDGMENT: 08/02/2005 PROSECUTOR: Mr R Reitano of counsel SOLICITORS: Legal Group WorkCover Authority of NSW LEGAL REPRESENTATIVES: DEFENDANT: Mr DA Priestley of counsel SOLICITORS: Back Schwartz Vaughan JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J 2 August 2005 Matter No IRC 6529 of 2004 INSPECTOR BRETT MARTIN v ENCORE TISSUE PTY LIMITED Prosecution under section 8(1) of the Occupational Health and Safety Act 2000 JUDGMENT [2005] NSWIRComm 271 1 In November 2002, Mr Tad Jones was seriously injured while working to clear a paper blockage from on an electric conveyor system at the defendant's Albury paper recycling plant. Mr Jones sustained severe injuries to his right arm and hand, when they were caught in a nip point on the machine. His arm was later amputated. The defendant pleaded guilty to the charge brought against it under s8 of the Occupational Health and Safety Act 2000 ('the Act'). This judgment concerns the question of penalty and costs. 2 The sentencing hearing was adjourned to permit the parties to file written submissions on the effect of the High Court's judgment in Markarian v R (2005) 215 ALR 213 on these proceedings. The prosecutor later submitted that the ratio of the majority in Markarian appeared at [39], where it was observed: 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 because of the number and complexity of the considerations which had to be weighed by the trial judge. 3 The differing approaches of Justices McHugh and Kirby were noted and it was submitted that : The upshot of the judgement in Markarian is the Commission should take considerable care to avoid as a matter of rigid or steadfast approach the "two-tiered" approach as a general rule. However, in circumstances like this one where the sentence is to be weighed against one or a small number of other important factors the majority of the High Court in Markarian did not prohibit recourse to the arithmetical approach that accompanies the "two-tiered" sentencing process. It is open to Your Honour to adopt that approach. 4 The defendant largely agreed with the prosecutor's submission and submitted that: 5. The questions for this court would seem to be is this case "a simple case", and should the court indulge in a process that is not "absolutely forbidden", according to Markarian . 6. Whilst not a complex matter it is arguably not simpler than the average industrial prosecution. It is respectfully submitted that the prudent approach would be to determine a final and appropriate penalty, noting and taking into account the features in this case that would otherwise by convention have led to mathematically identified discounts. Those features should in this case lead to a significantly reduced penalty, and that should be acknowledged in the sentence judgment. 7. It is noted that in Inspector Vosu v Ace-Semi Trailer Sales Pty Ltd [2005] NSWIRComm 222 , decided 30 June 2005, Boland J considered the impact of Markarian on established sentencing practice in this court and was not satisfied, although this view was tentative, that such practice ought be departed from. 5 I will return to this issue below and now turn to the charge and evidence led at the hearing. 6 The charge was that the defendant: FAILED TO ensure the health, safety and welfare at work of all its employees and in particular, TAD JONES , contrary to Section 8(1) of the Occupational Health and Safety Act 2000. The particulars of the charge are that: a. The defendant failed to provide or maintain a system of work that was safe and without risk to health in that it did not have in place appropriate measures to prevent its employees from being exposed to risk of injury by being caught in the moving parts of a conveyor whilst it was in operation. b. The defendant failed to provide adequate supervision whilst the employees were working on a conveyor. c. The defendant failed to adequately guard the moving parts, and in particularly the moving parts of the roller and belt in and around the nip and entrapment points of a conveyor so as to prevent access by employees to those moving parts of the conveyor when it was under power. d. The defendant failed to adequately train or instruct employees in relation to carrying out maintenance work and/or clearing paper jams from conveyer belts and in particular failed to instruct or train employees to isolate moving parts of conveyors prior to undertaking maintenance work and/or clearing paper jams upon them. e. As a result of the said failures Tad Jones was placed at risk of injury. 7 The agreed statement of facts provided: 1. At all material times, Inspector Brett Martin of the WorkCover Authority of New South Wales, 1st floor, 429 Swift Street, Albury in the State of New South Wales was an Inspector duly appointed under Division 1 of Part 5 of the Occupational Health and Safety Act 2000 and empowered under Section 106 of the said Act to institute proceedings in the within matter. 2. At all material times, the defendant, ENCORE TISSUE PTY LIMITED [ABN 082 932 527] was duly incorporated with its registered office situated at c/- William Buck (Vic) Pty Limited, Level 2, 215 Spring Street, Melbourne, in the State of Victoria ("the defendant"). 3. At all material times the defendant was an employer and undertook the business of paper recycling at 83 Fallon Street, Albury, in the State of New South Wales ("the premises").4. The defendant employed Tad Jones as a stock preparer / utility worker. At the time of the incident on 19 November 2002 he had worked for the defendant for approximately two years. Tad Jones duties included ensuring the smooth working of a conveyor and clearing debris at the base of that conveyor at the moving parts when it was blocked by paper. 5. At all material times the defendant employed Daniel Seymour and Bernie Clark. Daniel Seymour was employed as a shift supervisor and was Tad Jones usual supervisor. Bernie Clark was employed as the production superintendent and was Daniel Seymour's immediate supervisor. 6. The premises comprised, amongst other things, a number of conveyors to move paper to a pulping mill. The waste paper area of the premises contained two electric flat belt conveyors. One conveyor had a flat belt which was parallel with the factory floor ("the floor conveyor") and the other had an inclined flat belt which was used to deliver waste paper to a pulper on a mezzanine level ("the incline conveyor"). 7. On 19 November 2002 maintenance work was being carried at the premises and no waste paper was being processed. There had been a problem with the incline conveyor with the belt tracking over to the left hand side of the conveyor which caused the paper to jam. As at November 2002 the procedure at the Mill was for regular stoppages every two weeks for general maintenance purposes. The plant was not shut down specifically to deal with the incline conveyor. 8. At approximately 11.50am Mr Tad Jones went to the pit area on the eastern side of two flat belt conveyors where the transfer between them is located ("the transfer area). Mr Jones had not been specifically directed or instructed to perform work in this area by his supervisor. However, Mr Jones general duties included working in this area and clearing blockages on conveyors. 9. The transfer area had a steel mesh guard covering the drive mechanism of the floor conveyor and the tail of the incline conveyor. This guard was hinged to the framework of the incline conveyor and had no mechanical or electrical lock or other interlock device. 10. Tad Jones swung open the guard in the transfer area, which exposed the mechanisms of the transfer area. At this time the floor conveyor was running. Tad Jones was unable to recollect whether or not the incline conveyor was also running. He then proceeded to knell down and commenced clearing paper from the belt of the incline conveyor. As he brushed the paper from the belt with his hand, his right arm and hand were dragged into the nip and/or entrapment points of the roller and belt of the incline conveyor and his right arm and hand became trapped. 11. Bruce Ball, an employee of the defendant and Daniel Seymour, went to Mr Tad Jones aid following the incident. Daniel Seymour had heard yelling and Bruce Ball had heard a noise, both went to see where the noise was coming from. They noticed Tad Jones trapped in the machinery. They cut the belt of the incline conveyor to release him. An ambulance and police were called following the incident. 12. As a result of the incident on 19 November 2002 Tad Jones sustained severe injuries to his right arm involving multiple fractures, flesh, muscle, skin and tendon damage. Major surgery including skin grafts, artery and muscle replacements was undertaken on Tad Jones right arm. However, the surgery did not result in the arm being saved and ultimately his right arm was amputated above the elbow. It is not anticipated that Tad Jones will be fit for work for two years from date of the incident. 13. On 19 November 2002 Inspector Brett Martin, attended the defendant's premises and carried out an inspection of the site of the incident. Photographs were taken and a Factual Report prepared. 14. On 19 November 2002 Inspector Martin issues two prohibition notices, numbers 144607 & 144608 and two improvement notices numbers 236270 and 236271 upon the defendant which required the defendant to comply with Australian Standards 1755 and 1657 and carry out a risk assessment of the waste conveyor system. 15. At all material times the conveyors were not properly guarded to prevent access to the nip point by a person's hand whilst the conveyors were operating. The guarding on the conveyor in respect of the drive mechanism and roller assembly was not securely affixed or interlocked with the conveyors control circuitry to prevent access to the entrapment area whilst it was under power. Employees could access the drive mechanism by simply swinging open the guard. 16. At the time of the incident the incline and floor conveyor did not comply with Australian Standard AS 1755 for conveyors, in particular section 3 requirements for guarding, which specifies that all guards shall be secured in position so that they cannot be removed without the use of tools unless an interlocking device is provided to automatically stop the conveyor in the event of the removal of the guard. 17. At all material times the defendant did not have in place any documented procedures or work method statements for the operation, clearing of blockages or maintenance of the waste conveyor system. 18. At all material times no documented records of training or competency could be produced by the defendant to substantiate training and assessment of staff in their tasks including the operation of the waste conveyor system. 19. Tad Jones received general on the job instruction from a fellow employee when he commenced employment with the defendant. He stated that prior to the incident he had not read any documented procedures for the operation of the waste conveyors, had not been shown how to clear the paper blockages during his employment with the defendant, was unsure of the normal procedure for clearing blockages and had not been told to isolate the conveyors. He stated had had previously carried out the task and undertook the task on the day of the incident in the same manner he had previously. 20. At the time of the incident Tad Jones had not received any instructions or information as to task he was carrying out from Bernie Clark or from Daniel Seymour. Daniel Seymour was unaware what task Tad Jones was undertaking at the time of the incident. 21. There is no evidence that prior to the incident that the defendant carried out any risk assessments in respect of the waste conveyor system. 22. Some six months prior to the incident a sensor or cut off switch was removed from the conveyor. 23. Following the incident the defendant ceased the use of the conveyor system until compliance was achieved with Australian Standard of conveyors AS1755. Training of staff and review procedures have also taken place since the accident. Significant guarding was installed which was locked around the moving parts of the conveyor after the incident. 24. On 27 June 2003 the defendant ceased operations at the premises. 25. The following supporting documentation is annexed: a) 20 colour photographs taken by Inspector Martin on 19 November 2002 and two photographs provided to Inspector Martin by Tad Jones. b) Factual Inspection report of Brett Martin. c) Prior convictions certificate 8 Evidence was called from Mr David Holckner, Company Director. His evidence was that the defendant had commenced operations at the mill in 1998 and ceased trading and closed the mill in June 2003. The mill had been updated in 1999, however a decision was later made that a safer and more effective production system could be implemented. To that end, a new mill was located in Italy, purchased by a new corporate entity and relocated to Victoria. The new mill implemented best available practice and minimised potential accidents. 9 The upshot of these arrangements was that the defendant now had no employees and its assets consisted of 'a loan interest' in the new company, in the order of $237,041, although Mr Holckner was unaware as to whether such sums would be available to satisfy any fine imposed by the Court. In cross examination, it was explained that these arrangements had been put in place as the result of banking requirements in relation to the loan needed for acquisition of the new mill. There were no plans to reactivate the defendant for trading purposes. Consideration was being given to winding the defendant up. 10 Mr Holckner explained that the defendant's earlier conviction had resulted from an accident shortly after it had acquired the mill in 1998. Mr Holckner believed that the defendant's approach to safety in terms of training and supervising prior to the accident was good, but accepted that the accident reflected the defendant's failure to ensure Mr Jones' safety in terms of both inadequate supervision and guarding of the machine. The defendant's immediate response to the accident had been to construct a cage around the transfer area to preclude access and to review all procedures immediately. Mr Holckner expressed the defendant's remorse for what had occurred and explained the assistance given to Mr Jones. The parties' cases 11 The prosecutor's case was that the risk to safety, here in question, was foreseeable and that remedial steps were available, given that the risk in question was known and the guard in place inadequate. It was relevant that six months prior to the accident a cut off switch had been removed. The steps taken after the accident demonstrated that the risk had been relatively easy to guard against. These matters pointed to a fairly serious offence, as did the catastrophic consequences for Mr Jones, when the risk materialised. There was no suggestion that a fatality could have resulted in this case. 12 The absence of relevant procedures, instruction, training and risk assessment were relevant to be taken into account, as was the defendant's prior conviction. On the evidence the Court could not be satisfied that specific deterrence ought not to form an element of penalty, together with general deterrence. 13 As to subjective factors, co-operation and a plea entered at the earliest opportunity, were acknowledged as matters relevant to a discount in penalty. As to means to pay, the evidence as to the defendant's financial affairs was limited, given the absence of primary records. Such as it was, the evidence showed a capacity to pay a fine imposed. Even if a different view were available to be taken, this did not necessarily detract from the imposition of a heavy fine, given the circumstances. 14 The defendant's case was that there was little issue between the parties on the facts, the applicable law, or the description of the seriousness of the offence. The defendant accepted responsibility for its failures, although submitting that it was relevant that Mr Jones took a risk, without having been directed to do so. An assumption had been made that an employee would not perform the work in question with the motor running. The accident having occurred, immediate steps were taken by the defendant to ensure the risk revealed was removed entirely, even though the mill was to operate only for another seven or eight months. 15 It was also relevant that there had been immediate and full co-operation with the prosecutor, an immediate plea entered and concern and assistance for Mr Jones. As to the defendant's financial position, it was sufficient for the Court to be satisfied, on the balance of probabilities, that the defendant was not in a position to sustain significant penalties. There was no realistic likelihood of the defendant trading again. Specific deterrence thus had a limited role to play, in the penalty fixed, although it was accepted that general deterrence was of much greater significance, given the unguarded machine here operating in a manufacturing context. 16 The defendant submitted that it was entitled to maximum discount available in all of the circumstances. Consideration 17 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. Aggravating and mitigating factors must also be considered. 18 The evidence well demonstrated why the defendant pleaded guilty to this charge. The offence was a serious one. The agreed facts showed that the risk to safety posed by a person coming into contact with an unguarded nip point during the course of maintenance work on the conveyer belt, was not only foreseeable, but foreseen, given that the nip point was guarded, albeit inadequately and that a cut off switch had earlier been removed from the machine. Most regrettably, the obvious risks to safety present from this conjunction of circumstances materialised, as the defendant accepted. It was agreed that the work had been previously performed by Mr Jones. He had, however, never been trained in how to perform the work safely; he performed the work unsupervised and the defendant had not turned its attention to any assessment of, or instruction in, how the work might be performed safely. 19 The risks which might result from the unsafe work practices adopted were serious, obvious and regrettably materialised in circumstances where Mr Jones finally lost his arm, after unsuccessful attempts at healing his extensive injuries. 20 The defendant's plea of guilty and the submissions advanced at the hearing, accepted the seriousness of the offence and its consequences. The evidence also showed the prompt attention paid to the risk which the accident had so graphically highlighted. I accept that the defendant's contrition and remorse for its failures was demonstrated thereby and by the assistance it provided Mr Jones. The assistance provided to the prosecutor and the early plea of guilty entered, must also be considered. 21 In this case, I take the view that both specific and general deterrence must have a role to play in the penalty imposed. As to specific deterrence, I note that the defendant no longer trades; has no employees and no intention of trading in future. After the accident, a new company was established, which set up a new milling business. Some of the defendant's assets were transferred to that company and it employs some of the defendant's former employees. Nevertheless, the evidence led by the defendant, such as it was, showed that the defendant has not been wound up and could recommence trading, if it wished. Winding up has been investigated, but seemingly has been a step not taken, while accounting investigations into the defendant's position continue. On the evidence, I accept that it is not likely that the defendant will trade again, but am unable to entirely exclude the element of specific deterrence as an element of the penalty to be imposed, given that this still remains a possibility on the evidence as it stands. I do accept in these circumstances, however, that specific deterrence has a much lesser role to play than would have been the case, if the defendant had continued operating the mill business. 22 The defendant accepted the need for general deterrence to operate as an element of the penalty imposed, understandably in the context where the defendant's directors now operate a new milling business in their roles as directors of the new company. 23 This is the defendant's second offence, having earlier been fined $10,000 by the Chief Industrial Magistrate in the context of another offence involving an unguarded machine and an injury to an employee's hand. It is in that context that the defendant faces a maximum penalty of $825,000. The earlier offence is also relevant to an assessment of the penalty in this case, as the defendant accepted. 24 There was some evidence of the defendant's financial circumstances. A document prepared for these proceedings showed that the defendant had assets, in the form of some $237,041 owing to it. Mr Holckner had not prepared the document and was unable to explain its real import. None of the defendant's financial records were tendered. It follows that this material was of relatively limited assistance in establishing the defendant's actual financial position, so that the provision made in s6 of the Fines Act 1996 could be given effect. 25 In any event, as the Full Court observed in Manpac Industries Pty Ltd (formerly t/as Pacific Concrete & Quarries Pty Ltd) v WorkCover Authority of New South Wales (Inspector Glass) (2001) 106 IR 435 at 446 a defendant's financial position needs to be carefully scrutinized and a defendant's financial resources do not necessarily preclude a heavy penalty being imposed. 26 I am satisfied, on all of the evidence, that this offence must result in a significant penalty. This is yet another case where an unguarded nip point has resulted in a serious injury, in circumstances of inadequate training and supervision in obviously dangerous work, given the state of the machinery and the work required to be performed. Mr Jones has suffered a most serious injury. It is not anticipated that he will be able to resume work for two years. The obvious and serious risks here in question, have actually materialised. Those risks were plainly foreseeable and foreseen, yet the defendant failed to take available steps which would have excluded them. There was no suggestion that there was any difficulty in the machine being guarded, as it was after the accident. There was no suggestion that there was anything which precluded proper assessment, training or supervision of the maintenance work being performed at this mill every two weeks, which would also have ensured that the risk was excluded. 27 That those steps were not taken by a defendant already convicted of an earlier offence in relation to a failure to guard machinery, means that the leniency which might otherwise have been available to an employer with no record, is not available. 28 I have concluded that a penalty of $123,750 is the appropriate penalty in all of these circumstances. In coming to this figure, I have taken into account the various mitigating factors which I earlier mentioned, as well as the other matters earlier dealt with, which must be weighed in the sentencing process. In reaching that figure, I took the view that the defendant was entitled to a significant discount for the mitigating matters I discussed, including in relation to the utilitarian savings of the plea entered at the earliest opportunity. 29 Account must be taken of the High Court's approach in Markarian, although, as Boland J observed in Inspector Vosu v Ace-Semi Trailer Sales Pty Ltd [2005] NSWIRComm 222, the decision in R v Thomson, R v Houlton (2000) 49 NSWLR 383, is a guideline judgment of which account must be taken in accordance with s42A of the Crimes (Sentencing) Procedure Act 1999. (See State Rail Authority of New South Wales v WorkCover Authority of New South Wales (Inspector Dubois) (2000) 102 IR 218 at [45].) 30 In this case, I take the view that it is appropriate to indicate that in respect of the utilitarian savings achieved from the entry of the early plea, I approached the determination of penalty by applying a discount of 25% for that factor, to the penalty which I had otherwise determined appropriate having regard to all of the other matters I have dealt with, including matters of aggravation and mitigation. I am satisfied that justice is best served by making this approach clear, given the interests of victims, the parties, appeal courts and the public, in an understanding of how penalties in proceedings such as this are determined, when early pleas of guilty are entered. In my view, this is of significant public interest in the administration of justice in prosecutions brought under the Act. 31 I also observe that Boland J took a similar approach in Inspector Yeung v Howie Herring & Forsyth Pty Limited & Anor [2005] NSWIRComm 266 and Kavanagh J in Inspector Seneviratne v Caltex Petroleum Distributors Pty Ltd [2005] NSWIRComm 192. Orders 32 For all of the reasons given, I find the defendant guilty of the offence charged and enter a conviction accordingly. The defendant is ordered to pay: 1. a penalty of $123,750 with a moiety to the prosecutor; and 2. the prosecutor's costs, as agreed, or assessed by the Court. ------------------------ 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.