Industrial Relations Commission of New South Wales in Court Session CITATION : Inspector Sharpin v Concrete Civil Pty Ltd and Inspector Sharpin v Daryl Smith [2004] NSWIRComm 173 PROSECUTION Inspector John Sharpin PARTIES : FIRST DEFENDANT Concrete Civil Pty Ltd SECOND DEFENDANT Daryl Smith FILE NUMBER: 3074 and 3075 of 2003 CORAM: Marks J CATCHWORDS : Occupational health and safety prosecution - labour hire - guilty plea at earliest possible opportunity - contrition and remorse - co-operation - objective nature of seriousness of offence determined - failure to undertake adequate risk assessment at site - discount applied - principle of parity applied - cost order. LEGISLATION CITED : Occupational Health and Safety Act 1983 Occupational Health and Safety Act 2000 ss 8(2) 26(1) Drake Personnel Ltd v WorkCover Authority of NSW (Inspector Ch'ng) (1999) 90 IR 432 CASES CITED : WorkCover Authority of New South Wales (Inspector Legge) v Coffey Engineering Pty Ltd (No 2) (2001) 110 IR 447 Inspector Sharpin v A Team Concrete (Aust) Pty Ltd & Ors [2004] NSWIRComm 182 HEARING DATES: 06/15/2004 DATE OF JUDGMENT: 08/24/2004 PROSECUTOR Ms A F Backman of counsel Solictor: Ms H A Cameron LEGAL REPRESENTATIVES: WorkCover Authority of New South Wales DEFENDANTS Mr D J Brezniak of counsel JUDGMENT: - 13 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Tuesday 24 August 2004 Matter No IRC 3074 of 2004 INSPECTOR JOHN SHARPIN v CONCRETE CIVIL PTY LTD Prosecution under s.8(2) of the Occupational Health and Safety Act 2000 Matter No IRC 3075 of 2004 INSPECTOR JOHN SHARPIN v DARYL SMITH Application under s.26(1) of the Occupational Health and Safety Act 2000 JUDGMENT ON PENALTY [2004] NSWIRComm 173 1 The Prosecutor, Inspector John Sharpin of the WorkCover Authority New South Wales, has commenced proceedings against the first defendant, Concrete Civil Pty Ltd, and the second defendant, Daryl Smith, alleging breaches of the Occupational Health and Safety Act 2000 ("the Act"). The nature and extent of the charges and the factual background may be gathered from a statement of facts which was tendered by agreement into evidence. The defendants pleaded guilty to the charges and this judgment is concerned with the imposition of penalty only. 2 The statement of facts was in the following terms: 1. At all material times INSPECTOR JOHN SHARPIN of the WorkCover Authority of New South Wales, Level 1, 60-70 Elizabeth Street, Sydney 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 s 106 of the said Act to institute proceedings in the within matter. 2. At all material times CONCRETE CIVIL PTY LTD [CAN 081 571 851], was a corporation whose registered office is situated at Rick Fitzpatrick and Co., Suite 1, 1 Iolanthe Street, Campbelltown in the State of New South Wales ("the First Defendant"). 3. At all material times Daryl Smith of 45 Lakes Street, Thirlmere in the State of New South Wales ("the Second Defendant") was the sole director of the First Defendant. 4. At all material times the First Defendant carried out a labour hire business and contracted with A Team Concrete (Aust) Pty Ltd to provide six labour hire workers, including Joseph Romeo and Peter Psomadelis, for concreting work at 19 Ash Road, Prestons in the State of New South Wales ("the site"). 5. At all material times the First Defendant was an employer. 6. At all material times Joseph Romeo was a sole trader and performed contract labour work for the First Defendant. 7. At all material times A Team Concrete (Aust) Pty Ltd used a concrete boom pump manufactured by Powercrete Australia Pty Ltd, model number T100-177-60 ("the pump") attached to a vehicle with registration number QSV-987 to perform concreting work at the site. 8. At all material times A Team Concrete (Aust) Pty Ltd employed a number of personnel at the site, including: (a) James Gowans, 20 years of age, as a general labourer. (b) Michael Mende, 31 years of age, as a concrete pump operator. (c) Mario Musumeci, 34 years of age, as a leading hand. 9. At all material times Salvatore Cardile was a director of A Team Concrete (Aust) Pty Ltd. 10. On 11 March 2002 at approximately 7.15am, James Gowans, Joseph Romeo, Michael Mende, Mario Musumeci and Salvatore Cardile were performing concreting work at the site and the pump was pouring the first concrete load of ready mixed concrete into the centre of a floor slab at the site. 11. Mr Gowans was working underneath the boom of the pump and Mr Romeo was working close to the boom of the pump using the concrete vibrator when the boom connection failed at the turret of the pump unit and fell to the ground striking them both. 12. A backhoe on site was used to sling and lift the boom off Mr Gowans and Mr Romeo who were then taken by ambulance to Liverpool Hospital. Mr Gowans did not recover from the head injuries he suffered and died at approximately 7.30pm on the same day. Mr Romeo suffered fractures to his neck, shoulder and ribs and remained in hospital for one week. Mr Romeo has not been able to return to work since the accident and does not think he will be able to work around concrete pumps again. 13. Mr Romeo performed work for the First Defendant approximately three to four days per week and would be contacted by the Second Defendant and told where to work. Mr Romeo would then provide a tax invoice to the First Defendant at the end of the week. Mr Romeo performed contract work for the First Defendant for approximately 9 months prior to the accident. 14. At the time of the accident, the pump was set up on one side of the floor slab of the building under construction at the site and the boom was extended to the middle of the slab. A laser-guided screed was used to perform the finishing work for the concrete surface. The boom was 19 metres long, constructed of steel and weighed approximately 1.5 tonnes. A rubber hose attached to the third section of the boom and measured approximately 3 metres in length. The pump was attached to a white UD Truck, with registration plate QSV-987. The truck had four outriggers attached. 15. Mr Cardile was the supervisor of the concrete pour at the site. Mr Cardile was 5 metres away from the end of the concrete boom pump when the incident occurred and was aware that Mr Gowans was working underneath the boom of the pump and Mr Romeo was working close to the boom of the pump. The system of work used by A Team Concrete (Aust) Pty Ltd required persons to work directly beneath the boom of the pump whilst in operation. 16. A supervisor was not nominated out of the six workers that were provided by the First Defendant to the site. 17. Mr Romeo was contacted the night before the incident by the Second Defendant and advised to attend the site for concreting work. 18. On 11 March 2002 Inspector Wayne James attended this site and undertook a factual inspection, a copy of which is annexed and marked with the letter "A". Photographs of the site were also taken by Inspector James and marked with the letter "B". 19. Various tests and calculations were performed on the pump and boom by David Ng, head of the Mechanic Unit, TestSafe Australia, Reza Eftakhar, engineer employed by WorkCover and Michael Cheng, engineer employed by WorkCover. The tests were to address the boom metallurgical material composition, the rotational force movements and other stative and induced stress forces on the boom. Rexroth Pty Ltd conducted tests on the hydraulic components on the boom. 20. An engineering report was prepared by Michael Cheng on 30 April 2002 which concluded that the boom detached from the turret of the pump unit at the main trunnion connection. This was caused by the two trunnion retaining rings fracturing. One ring had approximately 45% fatigue fracture areas and the other ring approximately 20% fatigue fracture areas which had been growing for a considerable period of time prior to the accident. The ring with the 45% fracture front broke first causing an immediate overload failure to the other ring and the collapse of the concrete boom assembly. Mr Cheng also concluded that a proper inspection and maintenance program should have been able to detect the cracks before they grew to critical size. 21. A report was issued by David Ng of TestSafe Australia dated 1 May 2002 which concluded that the hydraulic system and components of the pump were not the cause of the accident. The inspection carried out by Mr Ng indicated that proper maintenance of the hydraulic system may not have been carried out recently. 22. Reza Eftekhar, senior engineer of WorkCover, also prepared a metallurgical engineering investigation report dated 28 April 2002. Mr Eftekhar also concluded that the immediate cause of the accident was the two fatigue fractures in the trunnion retainer rings. Mr Eftekhar believed the fractures had been in place for a long time and could have been detected via inspection by a competent person. 23. Following the accident, documents were obtained from the pump which included the WorkCover NSW Code of Practice for Pumping Concrete and a safety manual issued by Schwing America, a concrete boom manufacturer. A formal log book system was not found other than some loose pages of concrete pipe thickness test results. 24. The safety manual from Schwing America includes directions to: (a) Avoid standing directly under or over the boom or the system pipeline. (b) Have the boom inspected by a certified boom inspector on a regular basis. (c) Ensure proper and timely maintenance of the boom. (d) Inspect the boom for cracks and how to test for cracks in the boom. 25. Inspector Sharpin issued a notice under s 62 of the Occupational Health and Safety Act 2000 to Mr Cardile on 20 March 2002 for all records relating to the maintenance and repair of the pump. The documents produced did not indicate that the boom had ever had a formal inspection or repair. The only work recorded on the boom was for tyre changes and electrical wiring repairs for the chassis only. 26. Mr Romeo had been assigned to work as a concreter for A Team Concrete (Aust) Pty Ltd approximately 10 to 12 times during the 9 month period he was contracted to the First Defendant. 27. [deleted] 28. The First Defendant did not provide any training or instruction for the safe pumping of concrete to Joseph Romeo and Peter Psomadelis and did not warn Mr Romeo and Mr Psomadelis not to work under or close to the boom of a concrete boom pump. 29 The First Defendant did not make enquiries with A Team Concrete (Aust) Pty Ltd about the systems of work adopted by A Team Concrete (Aust) Pty Ltd at the site or the supervision that would be provided to the First Defendant's labour hire workers at the site. 30. The First Defendant also did not make inquiries as to whether A Team Concrete (Aust) Pty Ltd had a documented Corporate Safety Management Plan, a documented Site Safety Management Plan or a documented Safe Work Method Statement for work performed at the site. 31. The First Defendant did not inquire as to how A Team Concrete (Aust) Pty Ltd would ensure safety of persons provided to them on a labour hire basis. 32. [deleted] 33. As the sole director of the First Defendant, the Second Defendant was in a position to influence the conduct of the running of the business and the systems of work adopted by the First Defendant. 34. [deleted] 35. The alleged offence under s 8(2) of the Occupational Health and Safety Act 2000 is as follows: On 11 March 2002, at 19 Ash Road, Prestons in the State of New South Wales, the First Defendant, being an employer, failed to ensure that persons not in its employment, and in particular, Joseph Romeo, were not exposed to risks to their health and safety arising from the conduct of its undertaking, to wit the provision of labour for concreting work, while at its place of work. The particulars of the charge are: (a) At all material times the First Defendant was an employer. (b) At all material times the First Defendant contracted with A Team Concrete (Aust) Pty Ltd to provide labour hire workers, including Joseph Romeo, for concreting work at 19 Ash Road, Prestons in the State of New South Wales ("the site"). (c) The First Defendant failed to provide and maintain a safe system of work for its labour hire contractors who were involved in performing concreting work at the site. (d) The First Defendant failed to warn its labour hire contractors not to work under or close to the boom of a concrete boom pump. (e) The First Defendant failed to provide such adequate training as was necessary, to its labour hire contractors to ensure their health and safety whilst performing concreting work at the site. (f) The First Defendant failed to provide such adequate information as was necessary, to its labour hire contractors to ensure their health and safety whilst performing concreting at the site. (g) The First Defendant failed to provide such adequate instructions as were necessary to its labour hire contractors to ensure their health and safety whilst performing concreting at the site. (h) The First Defendant failed to undertake an adequate risk assessment in relation to the concreting work performed at the site by its labour hire contractors. (i) As a result of said failures, Joseph Romeo was placed at risk of injury. 35. The alleged offence under s 25(1) of the Occupational Health and Safety Act 2000 is as follows: On 11 March 2002, at 19 Ash Road, Prestons in the State of New South Wales, the Second Defendant being a director of Concrete Civil Pty Ltd, a corporation which contravened s 8(2) of the Occupational Health and Safety Act 2000 at that place and date, in that being an employer, it failed to ensure that persons not in its employment and in particular, Joseph Romeo, were not exposed to risks to their health and safety arising from conduct of its undertaking, to wit the provision of labour for concreting work, while at its place of work, is deemed to have contravened the same section pursuant to s 26(1) of the said Act. Particulars of the contravention of the Second Defendant: (a) The Second Defendant was at all material times a director of Concrete Civil Pty Ltd ("the First Defendant"), an incorporated company whose registered office is situated at Rick Fitzpatrick and Co., Suite 1, 1 Iolanthe Street, Campbelltown in the State of New South Wales. (b) On 11 March 2002, at 19 Ash Road, Prestons, in the State of New South Wales, the First Defendant did contravene s 8(2) of the Occupational Health and Safety Act 2000 ("the said Act"). (c) The Second Defendant being a director of the First Defendant is deemed to have contravened s 8(2) of the said Act pursuant to s 26(1) of the said Act. Particulars of the contravention of the First Defendant: (a) At all material times the First Defendant was an employer. (b) At all material times the First Defendant contracted with A Team Concrete (Aust) Pty Ltd to provide labour hire workers, including Joseph Romeo, for concreting work at 19 Ash Road, Prestons in the State of New South Wales ("the site"). (c) The First Defendant failed to provide and maintain a safe system of work for its labour hire contractors who were involved in performing concreting at the site. (d) The First Defendant failed to warn its labour hire contractors not to work under or close to the boom of a concrete boom pump. (e) The First Defendant failed to provide such adequate training as was necessary, to its labour hire contractors to ensure that their health and safety whilst performing concreting work at the site. (f) The First Defendant failed to provide such adequate information as was necessary, to its labour hire contractors to ensure that their health and safety whilst performing concreting work at the site. (g) The First Defendant failed to provide such adequate instructions as were necessary, to its labour hire contractors to ensure that their health and safety whilst performing concreting work at the site. (h) The First Defendant failed to undertake an adequate risk assessment in relation to the concreting work performed at the site by its labour hire contractors. (i) As a result of the said failures, Joseph Romeo was placed at risk of injury. 3 In addition, Mr Smith gave oral evidence. He said that he had ensured that Mr Romeo had undertaken training in the carrying out of concreting work and had obtained a certificate of successful completion of construction and training carried out by the Construction Industry Training Advisory Board (NSW). Mr Smith also said that after the accident had occurred he had changed his hazard evaluation and risk assessment process in order to comply with the requirements of the WorkCover Authority. 4 It was accepted by the parties that Mr Smith had been a self-employed concreter for some 23 years. He had used the first defendant as an entity by which labour had been supplied to third parties for concreting work. However, since the accident the second defendant had not engaged in the supply of any labour to any third party. 5 The nature of the evidence was such that the court can accept that the defendants pleaded guilty at the earliest possible opportunity, that the second defendant expressed contrition for what had happened and that he had fully co-operated with the WorkCover Authority of New South Wales in connection with its inquiries surrounding the accident and in terms of changed work procedures. 6 The controversy in the proceedings revolved around a determination of the objective nature of the seriousness of the offence, which is the starting point in the assessment of penalty. It was the evidence of Mr Smith that he had known the principal of the A-Team Concrete companies, a Mr Salvatore Cardile, over many years and he had always conducted himself professionally. He had never encountered any difficulty in the way in which work had been carried out or in the equipment that had been used. 7 It is obvious that the principal area of culpability of the first defendant lies in the failure to properly instruct and train those persons whose labour was supplied to work on the site in the fact that they should not undertake any work in the vicinity of the boom. So much was readily conceded by Mr Brezniak of counsel who appeared for the defendants, and is an integral part of the agreed statement of facts. However, the prosecutor through his counsel, Ms A F Backman, submitted that on the basis of authority it was necessary for the first defendant to have satisfied itself that the equipment being used and the systems of work being employed by the A-Team Concrete Companies were safe and did not pose any risk to the health and safety of persons placed by it at the site. In order to determine this issue it is necessary to have regard to principles established by this court and in particular by Full Benches of this court and its predecessors. A recent decision in this area is WorkCover Authority of New South Wales (Inspector Legge) v Coffey Engineering Pty Ltd (No 2) (2001) 110 IR 447. Those proceedings involved a consideration of the obligations imposed by the provisions of the former Occupational Health and Safety Act 1983 on labour hire companies. The relevant material in the judgment commences at paragraph 35. It is not necessary that I repeat in any detail what is contained within the Full Bench judgment. The judgment expressly adopts observations of a Full Bench in an earlier decision in Drake Personnel Ltd v WorkCover Authority of NSW (Inspector Ch'ng) (1999) 90 IR 432 at 455-6. The starting point is that "an employer who sends its employees into another workplace over which they exercise limited control is, for that reason, under a particular positive obligation to ensure that those premises, or the work done, do not present a threat to the health, safety or welfare of those employees. Certainly there is no basis to consider that such an employer has a lesser liability or obligation under s 15(1)." (Drake Personnel at 455). The obligation was expressed by the Full Bench in Drake Personnel as one requiring positive steps to be taken "to ensure that the premises to which its employees are sent to work do not present real risks to health and safety." 8 The proceedings in Coffey Engineering involved the placement under a labour hire arrangement of an employee to perform certain work which involved the use of a circular saw to cut timber. The Full Bench held that on the evidence in those proceedings the defendant had "failed to carry out any or any adequate assessment into the hazards associated with work to be performed on the circular saw, it failed to ensure a safe system of work in the operation and use of the circular saw and it failed to ensure that its employee had been adequately trained, provided with relative information and adequately supervised so as to ensure safety while operating the circular saw." (at 466). 9 These observations raise the issue as to the nature and extent of any obligation of the first defendant in these proceedings to have inspected the equipment being used in the concrete pour and, in particular, the boom. It was asserted by Ms Backman that on the basis of the expert evidence referred to in the agreed statement of facts, that a visual inspection may have revealed the potential defect in the retainer rings and the fractures that had occurred. However, in submissions, Ms Backman did not put the first defendant's obligations so highly. She was content to rest on the submission that the first defendant was obliged to make inquiries as to the state of repair, maintenance and safe operation of the equipment, calling for documentary evidence about these matters. Mr Brezniak submitted that this would impose an unfair and inappropriate standard on the first defendant, and one which was not contemplated by the authorities. 10 My understanding of the authorities is that, at the least, the first defendant should have satisfied itself concerning the state of repair and maintenance of the equipment, even by way of a general inquiry from time to time. There may be cases where a labour hire entity is required to go out and inspect third party premises or third party equipment. No such submission was made in the course of these proceedings and, in any event, the factual circumstances do not allow me to express any view about that matter for the purpose of these particular proceedings. 11 The state of the evidence was to the effect that no inquiries were made on behalf of the first defendant of any kind as to the state of the equipment utilised by the A-Team companies. To this extent, and in this way, there is no doubt that the first defendant "failed to undertake an adequate risk assessment in relation to the concreting work performed at the site by its labour hire contractors" as alleged in the relevant charge (see paragraph 35 of the Agreed Statement of Facts). As the defendant has pleaded guilty to the charge, including this matter, it is not necessary that I consider further the precise manner in which the first defendant so failed. It is sufficient to say that on the basis of the authorities to which I referred the first defendant was clearly under an obligation to undertake an adequate risk assessment in relation to that work. 12 Overall I would assess the objective nature of the breach by the first defendant as serious. However, I agree with the assessment made by the prosecutor that even having regard to the need for both general and specific deterrence, the quantum of penalty should be fixed at the low to mid range. The need to consider specific deterrence is minimised by the fact that the first defendant has not engaged in labour hire arrangements since the accident and has professed an intention not to do so in the future. 13 Agreement has been reached between the parties as to a number of subjective factors which the defendants are entitled to have taken into account in their favour in the assessment of penalty. These include the fact that the defendants pleaded guilty at the first available opportunity, that they have expressed contrition for the accident, and that there has been full co-operation with the WorkCover Authority of New South Wales. Furthermore, this is the first offence committed by either defendant. 14 In accordance with well-established principles the defendants are entitled to a discount of 35% as against the penalty which would otherwise be fixed. 15 Finally, it is necessary that I apply the well-known principles of parity in sentencing so as to ensure that there is no undue discrepancy in terms of any penalty imposed when compared with the penalty imposed on other defendants arising out of the same circumstances. In Inspector Sharpin v A Team Concrete (Aust) Pty Ltd & Ors [2004] NSWIRComm 182, Staff J in this court imposed penalties on three defendants. The first was A Team Concrete (Aust) Pty Ltd which performed the concreting work being carried out at the site and which used for the purpose of that operation not only its own employees but persons provided by the first defendant in these proceedings. The second defendant was A Team Concrete Pty Ltd which was the owner of the concrete boom pump and which that company had provided to A Team Concrete (Aust) Pty Ltd for use in the operation. The third defendant was Salavatore Cardile who was a common director of both the first and second defendant. 16 Each of those defendants had pleaded guilty and with respect to the corporate defendants the maximum penalty available was $550,000. The maximum penalty which applied to the third defendant was $55,000. 17 His Honour declined to apply the principle of totality so as to require the three defendants to be treated "as effectively one entity facing offences…" and approached the matter on the basis that there "should be a proper weighing of the respective culpabilities of the defendants and, in this regard, attention should be paid in properly measuring the actual culpability of each defendant in relation to the detriment to safety involved in the accident. When there are overlapping responsibilities, then the Court will ensure that there occurs a proper apportioning of responsibility by the respective defendants." (at para [110]). 18 It is clear from the judgment of Staff J that each of the corporate defendants being considered by his Honour was interrelated. It was clear also that the operation was under the immediate control and supervision of the first defendant. In terms of the ability to assess, comprehend and take action with respect to any danger posed by the boom and the carrying out of work in the vicinity of the boom, it is my opinion that a much greater degree of culpability should be visited upon the first defendant in the proceedings before Staff J than on either defendant in the context of these proceedings, for reasons which I have previously referred to. 19 After taking into account that there was no need to include within any penalty "a significant element for specific deterrence" and after applying a discount of 35% Staff J imposed a penalty on the first defendant of $100,000; on the second defendant of $55,000 and on the third defendant of $10,000. 20 In my opinion, the application of the principle of parity to the circumstances of these particular proceedings would result in a penalty being imposed on the first defendant in the sum of $45,000 after applying the 35% discount. I observe that the maximum penalty applicable to the first defendant is the sum of $550,000. 21 The charge brought against the second defendant arises because he holds the office of Director of the first defendant and is thereby deemed to have contravened the same section of the Act. The evidence was to the effect that the second defendant was the sole director of the first defendant and I shall assume that he was either directly or indirectly the sole or a substantial shareholder in the first defendant. Accordingly, it may be assumed that the second defendant will suffer financially as a result of the penalty imposed on the first defendant either by reason of the reduction in assets of the first defendant or by reason of any need to provide financial assistance to the first defendant. I propose to take this into account when determining an appropriate penalty for the second defendant. 22 The maximum penalty which may be imposed on the second defendant is the sum of $55,000. I would assess an appropriate penalty at $4,000 after applying the 35% discount. 23 The prosecution has sought orders for costs and a moiety. ORDERS I make the following orders 1. Each of the defendants is found guilty and convicted of the charges brought against them. 2. I impose a penalty on the first defendant of $45,000 and on the second defendant of $4,000. 3. The defendants are to pay a moiety of the penalty to the WorkCover Authority of New South Wales. 4. Each of the defendants is to pay one half of the costs of the prosecutor to be assessed by the court in default of 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.