Industrial Relations Commission of New South Wales in Court Session CITATION : Inspector Mansell v Eleven Lighting Pty Ltd [2002] NSWIRComm 339 PROSECUTOR Inspector Paul Mansell PARTIES : DEFENDANT Eleven Lighting Pty Ltd FILE NUMBER: IRC 4406 of 2001 CORAM: Marks J CATCHWORDS : Occupational health and safety prosecution - Plea of guilty - Defendant submitted that its means to pay a fine should be considered - Application of s 6 Fines Act to corporate defendants - Onus and evidence required - Application rejected - Fine imposed. LEGISLATION CITED : Occupational Health and Safety Act 1983 s 15(1) Fines Act 1996 s 6 Haynes v C I & D Manufacturing (1995) 60 IR 455 Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 Smith v The Queen (1991) 25 NSWLR 1 Cheshire (1994) 76 A CrimR 261 Queen v Belcher (1981) 27 SASR 46 WorkCover Authority of NSW v Taylor (2002) NSWIRComm 9 CASES CITED : WorkCover Authority of NSW v Newstart 150 Pty Ltd (2002) NSWIRComm 64 WorkCover Authority of NSW v Milltech Pty Ltd (2001) NSWIRComm 192 WorkCover Authority of NSW v Yass Shire Council (2000) NSWIRComm 57 Manpac Industries Pty Ltd v WorkCover Authority of NSW (2001) NSWIRComm 190 WorkCover Authority of NSW v Converquip (2001) NSWIRComm 85 R v Olbrich (1999) 199 CLR 270 Kaye v Bagg (No 2) (1984) 11 ACrim 127 HEARING DATES: 02/20/2002; 06/26/2002 DATE OF JUDGMENT: 12/12/2002 PROSECUTOR Ms J Fredman of counsel SOLICITORS Pricewaterhouse Coopers LEGAL REPRESENTATIVES: DEFENDANT Mr R M Goot AM SC SOLICITORS Minter Ellison JUDGMENT: - 1 - INDUSTRIAL RELATIONS OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Thursday 12 December 2002 Matter No IRC 4406 of 2001 INSPECTOR PAUL MANSELL v ELEVEN LIGHTING PTY LTD Prosecution pursuant to s 15(1) of the Occupational Health and Safety Act 1983 JUDGMENT 1 The defendant Eleven Lighting Pty Ltd is charged with a breach of s 15(1) of the Occupational Health and Safety Act 1983, and has pleaded guilty to the charge. This judgment deals with the question of penalty. 2 An agreed statement of facts was tendered in the proceedings which sets out not only the relevant factual material but also the particulars of the charge. I set out below relevant parts of the statement of facts. "4. At all material times Eleven Lighting Pty Ltd was an incorporated company with its registered office located at 454-456 Pacific Highway St Leonards in the state of New South Wales (the "Defendant"). 5. At all material times the Defendant: (i) carried on the business of production of lighting products which were stored in a warehouse ("warehouse") situated at premises located at 48 Percy Street, Auburn in the state of New South Wales ("premises"); (ii) employed Ping (Connie) Wu ("Wu") as a production supervisor/coordinator in the premises; (iii) leased a Crown Heavy Duty Walkie Stacker Model 30WTF 174 Serial No. SVH2496 pedestrian operated electric forklift ("forklift") from Crown Equipment Pty Ltd; (iv) employed Hui (Ben) Min Kang ("Kang") who was Wu's husband as a supervisor and Jon Garton ("Garton") as a general manager at the premises; and (v) stored lighting products ("stock") in a system of storage racks consisting of steel and timber shelving ("shelves") in the warehouse. 6. On 5 July 1999, Wu sustained serious injuries to her spine resulting in paraplegia when she fell from a pallet on which she was standing which was elevated on the tynes of the forklift. 7. Wu had been asked to locate and retrieve a carton containing a diffuser exit sign ("Exit sign") located on the shelves. The box containing the Exit Sign weighed approximately 488 grams. 8. Part of the area in front of the shelves was obstructed by a bundle of aluminium sections wrapped in brown paper and tied with wire and timber pieces. The bundle of aluminium sections was approximately 6.5m long, 400mm wide and 350mm high. On the ground in front of the aluminium sections was a pallet. The aluminium sections and the pallet obstructed the area in front of the shelves and effectively prevented a ladder being used by Wu to locate and retrieve the carton containing the Exit sign. 9. Wu sought the assistance of Kang who brought the forklift and positioned it at an angle facing towards the shelves as he could not position it directly in front of the shelves because f the obstructed access. 10. Wu then stood on the pallet located on the forklift tynes and Kang raised the pallet to enable Wu to access the third shelf which was approximately 1.5m from the ground. The pallet was not directly in front of the third shelf and was at an angle due to the angled position of the forklift. 11. As Wu was lifted to the third shelf she located the Exit sign. Wu then lifted up the carton containing the Exit sign, turned around, leaned down and placed the Exit sign on the pallet. Wu then stood up but in doing so lost her balance, fell from the pallet and landed across the pallet with the boxes awaiting shipping on the ground referred to in para 8. Wu struck her back and head on the edge of the pallet. 12. The forklift was being operated by Kang. The Company had not shown Kang how to operate the forklift. 13. The Defendant did not have a safe system of work for the retrieval of stock located on the shelves. 14. The Defendant's employees, and in particular Wu and Kang, were not instructed that accessing stock located on the shelves by a person standing on a pallet raised by a forklift was prohibited. 15. The Defendant did not provide adequate instruction, training and supervision to Wu and Kang concerning safe working procedures for the retrieval of stock on shelves. 16. On 22 October 1999, the Prosecutor attended the premises and observed as follows: a) A building divided into a manufacturing section and a warehouse, the dimensions being approximately 29m long x 22m wide by 8m high. The concrete floor was of a steel trowelled finish. b) The shelves were located within the warehouse. The shelves were approximately 9m long by 840mm wide by 6m high. The distance between the shelves on the southern end of the warehouse was approximately 3m. c) Where the accident occurred the following shelf dimensions were recorded: (i) Floor to first shelf - 380mm (ii) Floor to second shelf - 885mm (iii) Floor to third shelf - 1.5m (iv) Floor to fourth shelf - 2m d) The area was illuminated with 5 mercury vapour flood lights and 2 fluorescent lights. e) The forklift was standing within the warehouse. The forklift had a maximum lift height of 4.420m with a capacity of 1,360 kilos, truck weight of 1,340 kilos with tynes being 1.080m in length. f) Attached to the mast assembly of the forklift was a sticker with a symbol warning not to ride on the tynes. 17. Prior to the accident, the forklift had been regularly used to raise people to access the shelves. 18. The Prosecutor alleges that the Defendant, Eleven Lighting Pty Ltd, an employer, breached s 15(1) of the Occupational Health and Safety Act 1983 on 5 July 1999 at its premises in that it failed to ensure the health, safety and welfare at work of its employees, in particular Ping (Connie) Wu, in that it failed to provide a system of work that was safe and without risks to health for the retrieval of stock located in a system of shelves in a warehouse. In particular a) The Defendant's employees, and in particular Wu and Kang, were not instructed that accessing stock located on the shelves by raising a person on a pallet by medium of a forklift was prohibited. b) The Defendant did not provide adequate instruction, training and supervision to Wu and Kang concerning safe working procedures for the retrieval of stock on shelves. c) The Defendant failed to ensure aisles between the shelves were free of obstructions. d) The Defendant had no written procedures in place for the retrieval of stock located on the shelves. e) The Defendant failed to provide adequate information, instruction, and supervision to Kang concerning the safe use and operation of the forklift. f) The Defendant's failure to provide a system of work that was safe and without risks to health for the retrieval of stock located in shelves caused Wu to fall and suffer injuries which resulted in her becoming a paraplegic." 3 Evidence tendered in the proceedings on behalf of the defendant indicated that it commenced business in about 1995. At the time of the accident the defendant employed approximately 11 employees. It has since moved premises and now employs approximately 26 employees. 4 The injured worker Connie Wu commenced full time employment with the defendant as a production supervisor/coordinator on 22 July 1997. She was said to hold a degree in electrical engineering gained in China. 5 There can be no doubt that this was a serious offence viewed objectively. The manoeuvre being undertaken at the time that Ms Wu sustained injuries was inherently dangerous and in breach of good commonsense. It was foreseeable that a person falling from the pallet positioned on the top of the forklift tynes when extended might suffer serious injury. 6 The defendant relies on a number of matters by way of mitigation. It pleaded guilty at the first available opportunity, it has no prior convictions and the extensive steps taken after the incident were said to minimise the need for any specific deterrent to be built into any penalty. Of course, there remains the question of general deterrence which permeates the sentencing process. 7 Following the accident the defendant took steps to assist the injured worker and her family. It also took extensive steps to enhance and improve the defendant's commitment to occupational health and safety matters. I am satisfied that the defendant now has a comprehensive commitment to its occupational health and safety responsibilities and has put in place a comprehensive programme to address those responsibilities. Of course, the implementation of such a programme and the evidence of a commitment since the incident occurred is demonstrative of the failings in general terms of the defendant in these areas prior to the incident which gave rise to these proceedings. The defendant now operates from different premises and utilises a palletised storage system. 8 The defendant was said to have expressed contrition not only with respect to the unfortunate and serious injuries sustained by Ms Wu but also generally by reference to its commitment to compliance with its obligations towards the health and safety of its employees 9 The defendant also points to its capacity to pay and relies on a series of cases in this Court and its predecessor which it says justifies the mitigation of the penalty. 10 There can be no doubt that this Court is obliged to take into account the means of the defendant to pay any penalty. So much is clear from the provisions of s 6 of the Fines Act 1996, to which I shall return later, and from observations made, for example, by a Full Court of the Industrial Court of New South Wales in Haynes v C I & D Manufacturing (1995) 60 IR 455. At 457 the Full Bench said: "An issue to which the Court was taken obliquely was the manner in which we should deal with pleas of impecuniosity when considered the fine to be levied. The penalty which the legislature has made applicable to breaches of the OHS Act is a fine, and, as was pointed out by Cullen J in Gordon v MIJO (NSW) Pty Ltd (unreported, Cullen J, 2 December 1993, Matter No CT1002 of 1993), the legislature itself introduced a differentiation of penalty by providing that there should be a different penalty for corporate defendants from that for personal defendants. In a number of cases decided under the OHS Act where the corporate structure of the defendant has been shown to be little more than the means of distribution of earnings arising from personal exertion, or where, as a matter of corporate structure, the burden of any fine levied would fall on one person or one family group ownership, the Court has seen it appropriate to impose a fine substantially less than if the corporation was functioning as a company with assets of a substantial kind. (see Gordon v MIJO (NSW) Pty Ltd; Ford v Warrah Ridge Pastoral Company Pty Ltd (unreported Bauer J, 23 September 1994, Matter No CT1109 of 1993); Robins v C T Plumbing Pty td (unreported, Fisher P, 16 December 1991, Matter No 522 of 1991) and Mauger v Kremar Engineering Pty Ltd (1993) 47 IR 359). We consider that as precedent has developed there are two strands to the consideration of fines under the OHS Act. The first comes into play when the defendant is an individual and there is no corporate structure. Where the defendant is a company with the structure as above considered, the principles and approach adopted in the cases above cited are to be applied." 11 However, the observations of the Full Bench in Haynes are to be taken as being limited to the circumstances referred to, namely the two specific strands identified. Those observations will not apply to a substantial organisation whether it is in reality owned by an individual or funded by an individual or his or her family. (See, for example, the observations of Wright J, President in Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 at 209). 12 Nevertheless, as I have indicated, it is mandatory to have regard to the provisions of s 6 of the Fines Act which is in the following terms: "Consideration of accused's means to pay. In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider: (a) such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and (b) such other matters as, in the opinion of the court, are relevant to the fixing of that amount." 13 The defendant relied substantially on an affidavit sworn by Edward Andrew Delahunt an accountant retained by the defendant which became evidence in the proceedings. Mr Delahunt qualified as an accountant in 1978, although his precise qualifications were not revealed. He has been retained as the accountant for the defendant since 1 August 2000. Mr Delahunt prepared an audited financial report for the defendant for the period 1 July 2000 to 30 June 2001 which was annexed to his affidavit. He also annexed copies of the balance sheet for the period 1 July 2001 to 28 February 2002, and the profit and loss account for the same period. He said that he was not involved in the preparation of these latter documents, which had been prepared internally, and had not verified them. However, based on his knowledge of the financial affairs of the defendant he said that the information contained in these later reports "appears to be consistent with the trend" revealed by the audited financial report which he had prepared. 14 Before dealing with the factual material and the provisions of s 6 of the Fines Act it is first necessary to have regard to some matters of general principle. It should first be observed that the imposition of a fine on a corporation may, in the criminal context, have different ramifications than the imposition of a fine on an individual. Often, a fine may be imposed on an individual as an alternative to imprisonment or some similar form of sanction. That alternative is not available in the case of a corporation where, in large measure, the imposition of a fine is the only sanction available to a court. A contemporary discussion of this matter is contained within Issues Paper 20 published by the New South Wales Law Reform Commission "Sentencing: Corporate Offenders" (Nov 2001). 15 It has long been established as a matter of general principle that it is impermissible to impose a fine on a defendant which the defendant is clearly incapable of paying. Kirby P (as his Honour then was) traced the genesis of such a principle to provisions within the Bill Of Rights which remains in force in New South Wales and within the common law generally in his Honour's dissenting judgment in the New South Wales Court of Appeal in Smith v The Queen (1991) 25 NSWLR 1 at 13 et seq. His Honour's discussion, however, proceeds in the context of offences where no maximum penalty is fixed although it is conceded that the same policy considerations would arguably apply even in circumstances where a maximum fine was imposed by Statute. 16 On one view of it, s 6 of the Fines Act merely requires a court to "consider" certain information which I shall assume means that the court must have regard to that information. There is no necessity to deal with that information in a particular way, nor does the section state for what purpose the information is to be considered. I assume the purpose is to be gleaned by reference to the general law principles which have been developed by the courts when considering the proper approach to the imposition of a fine. The "policy" behind provisions of this kind was aptly summarised in the Court of Criminal Appeal, Victoria in Cheshire (1994) 76 A CrimR 261. At 269 the Full Bench said, in reference to a similar statutory provision in Victoria: "Obviously the section is designed in the case of offenders possessed of widely disparate wealth to prevent as far as possible the accusation that in the case of a monetary penalty there is 'one law and another for the poor'. Also monetary penalties that can only be seen to be empty orders ought not to be made: in Reader (1988) 10 Cr App R(S) 210 at 214." There are many judicial observations which have the effect of imposing a caveat on the imposition of a fine which is beyond the capacity of the defendant to pay. Some of these are conveniently collected in the judgment of the Full Bench of the Federal Court of Australia in Fraser (1985) 20 A CrimR 4. It is suggested that the principle is self-evident and does not therefore require further discussion per se. However, it should be observed, that in some instances the discussion has proceeded against the background of a fine being imposed in circumstances where a failure to pay would result in imprisonment, and in other cases in circumstances where a fine has been imposed on an individual in addition to a period of imprisonment. To some extent the circumstances differ where the sole consideration is the imposition of a fine, without any power to imprison. 17 In some cases, also, fines have been imposed in part to deprive a defendant from the ill-gotten gains of criminal activity. Often such a consideration will arise in conjunction with other matters which may need to be taken into account. Some flavour of the discussion of these matters may be gained from the judgment of King CJ in the decision of the Full Bench of the Supreme Court of South Australia in the Queen v Belcher (1981) 27 SASR 46. White and Legoe JJ agreed in his Honour's reasons for judgment. At 49 his Honour said: "It is stated in D A Thomas, Principles of Sentencing, 2nd ed. at p 323, that 'the usual reason for imposing a fine where the offender is sentenced to custody is to ensure that he does not enjoy any profit from the offence.' No doubt this is true, but it is not the only reason for adopting that course. The sentencing judge may, by imposing a fine on an offender who is able to pay, feel able to reduce the sentence of imprisonment which would otherwise be imposed. He may feel that this is desirable in the particular case and such an order best achieves the purposes of punishment in that case. It is clear, however, that the English courts have come to regard it as wrong in principle to impose a fine in addition to imprisonment upon an offender who is likely to be unable to pay the fine and who will therefore have to serve, at the expiration of the term of imprisonment imposed upon him, a further term of imprisonment in default of payment of the fine…." (at 49). 18 Without traversing in detail many of the authorities which were cited in the lengthy and helpful submissions of the parties, it is clear that the thrust of the general law is that a fine should not be imposed which is beyond the capacity of a defendant to pay. There are, however, exceptions. One such exception is to be found in the approach of the majority of the New South Wales Court of Appeal in Smith v The Queen (1991) 25 NSWLR 1. The defendant Arthur Stanley Smith was serving a life sentence for a number of offences. He was required to give evidence in criminal proceedings brought against another person. Mr Smith declined in the trial of that other person to give any evidence. He was cited for contempt and convicted. The judge at first instance imposed a fine of $60,000 which was beyond the capacity of Mr Smith to pay. Nevertheless, that fine was upheld by a majority on appeal. Mahoney JA noted that imposing a further sentence of imprisonment would have no "great effect" on Smith because he was then presently incarcerated for life. If imprisonment was thereby rendered inappropriate then in his Honour's opinion the fine remained the appropriate punishment to be imposed, albeit that enforcement might not be possible. His Honour said: "A fine should not, of course, be excessive. That needs no argument: it is the common law, and in my respectful opinion, commonsense. But to say that is to state the problem, not to solve it. The question is: what is excessive and why. This was a case of murder, and if the facts proposed be true, a brutal murder. The costs wasted on the trial and the proposed retrial will be significant. If what was done by Mr Smith is to be marked appropriately in the eyes of those concerned, I would not see $60,000 as excessive." (at 24). Meagher JA thought that in all the circumstances a fine of $60,000 was imposed "with some benevolence." His Honour concluded, "If we had power to do so, I think we should increase the fine. But he has appealed against the amount of the fine alleging it to be excessive - on no better ground than he has had an excess of impecuniosity. If he was rich enough to commit a calculated contempt of court, he is rich enough to bear the consequences." (at 24). 19 The discussion in the decided cases concerning the undesirability of imposing a fine which is beyond the capacity of a defendant to pay has been conducted in the context of a defendant being a natural person, and where failure to pay the fine creates a real possibility of imprisonment. Arguably, different considerations apply in the case of a corporate defendant where the probable sanction which would apply in the case of an inability to pay the fine, even by instalments, would constitute liquidation. Whilst this might be seen to be an ultimate potential sanction, a corporate defendant which was carrying on a business might be severely curtailed in the conduct of its business operations if compelled to pay a significant fine the imposition of which might not have been contemplated as a forward budget item. 20 The extensive research which has been undertaken by both the prosecution and the defendant has not revealed any authority which has discussed whether or not it is desirable or, indeed, permissible to impose a fine on a corporation which arguably might be beyond the capacity of the corporation to pay either at once, or by instalments. There may be cases where a corporate defendant has been found guilty of a crime so heinous that a court would be justified in imposing a fine that would have the effect of putting the corporate defendant out of business. There may be cases where the quantum of a fine which might otherwise be imposed should be severely reduced in order to accommodate the capacity of the defendant to pay. 21 The tension between capacity to pay and the quantum of the fine has been considered by this Court in the context of occupational health and safety prosecutions against corporate defendants. 22 In a slightly different context the Full Court of the former Industrial Court of New South Wales in Haynes v C I & D Manufacturing Pty Ltd (No2) (1995) 60 IR 455 said (at 457): "An issue to which the Court was taken obliquely was the manner in which we should deal with pleas of impecuniosity when considering the fine to be levied. The penalty which the legislature has made applicable to breaches of the OHS Act is a fine, and, as was pointed out by Cullen J in Gordon v MIJO (NSW) Pty Ltd (unreported, Cullen J, 2 December 1993, Matter No CT1002 of 1993), the legislature itself introduced a differentiation of penalty by providing that there should be a different penalty for corporate defendants from that for personal defendants. In a number of cases decided under the OHS Act where the corporate structure of the defendant has been shown to be little more than the means of distribution of earnings arising from personal exertion, or where, as a matter of corporate structure, the burden of any fine levied would fall on one person or one family group ownership, the Court has seen it appropriate to impose a fine substantially less than if the corporation was functioning as a company with assets of a substantial kind. (See Gordon v MIJO (NSW) Pty Ltd; Ford v Warrah Ridge Pastoral Company Pty Ltd (unreported, Bauer J, 23 September 1994, Matter No CT1109 of 1993); Robins v C T Plumbing Pty Ltd (unreported, Fisher P, 16 December 1991, Matter No 522 of 1991) and Mauger v Kremar Engineering Pty Ltd (1993) 47 IR 359). We consider that as precedent has developed there are two strands to the consideration of fines under the OHS Act. The first comes into play when the defendant is an individual and there is no corporate structure. Where the defendant is a company with the structure as above considered, the principles and approach adopted in the cases above cited are to be applied." 23 In those proceedings the Full Court took into account the means of the defendant stating that "the financial position of the company group indicated that the imposition of heavy fines would be a burden on the financial resources." 24 In Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 Wright J, President of this Court took into account the financial position and the means of the defendant to pay the monetary penalty. His Honour commented: "Whilst I accept the imposition of heavy fines would be a burden on the defendant and its financial resources and that consideration should be given appropriate weight on the question of penalty, it does not necessarily result in the Court not imposing a heavy penalty. …. I indicate that I do not consider that the penalties imposed are beyond the means of the defendant." (at 209). 25 There are a number of other decisions of this Court which have taken into account the financial position of corporate defendants and allegations of impecuniosity and inability to pay a fine. These include WorkCover Authority of New South Wales v Taylor (2002) NSWIRComm 9, WorkCover Authority of New South Wales v Newstart 150 Pty Ltd (2002) NSWIRComm 64, WorkCover Authority of New South Wales v Mil ltech Pty Ltd (2001) NSWIRComm 192, WorkCover Authority of New South Wales v Yass Shire Council (2000) NSWIRComm 57, Manpac Industries Pty Ltd v WorkCover Authority of New South Wales (2001) NSWIRComm 190, and WorkCover Authority of New South Wales v Converquip (2001) NSWIRComm 85. 26 In each of these cases the Court has, to varying degrees, taken into account the means and financial capacity of the defendant to pay the fine. 27 Before considering the particular circumstances of these proceedings it is necessary to have regard to questions of onus and standard of proof. These questions have recently been the subject of consideration by a Full Bench of the High Court of Australia in R v Olbrich (1999) 199 CLR 270. At 280 the majority members of the Court (Gleeson CJ, Gaudron, Hayne and Callinan JJ) said: "Courts of Criminal Appeal in Australia have considered the subject of fact finding for sentencing many times in the last 30 years….. Not all of the questions that have been examined in those decisions must be considered now. For present purposes, it is enough to say that we reject the contention that a judge who is not satisfied of some matter urged in a plea on behalf of an offender must, nevertheless, sentence the offender on a basis that accepts the accuracy of that contention unless the prosecution proves the contrary beyond reasonable doubt. The incongruities that would result if this submission were accepted are well illustrated by the present case. The respondent swore that he was a courier but the judge disbelieved him. To require the judge to sentence the respondent on the basis that he was a courier is incongruous. Much of the discussion of fact finding for the purposes of sentencing addresses questions of onus and standard of proof….. References to onus of proof in the context of sentencing would mislead if they were understood as suggesting that some general issue is joined between prosecution and offender in sentencing proceedings; there is no such joinder of issue. Nonetheless, it may be accepted that if the prosecution seeks to have the sentencing judge take a matter into account in passing sentence it will be for the prosecution to bring that matter to the attention of the judge and, if necessary, call evidence about it. Similarly, it will be for the offender who seeks to bring a matter to the attention of the judge to do so and, again, if necessary, call evidence about it. (We say "if necessary" because the calling of evidence would be required only if the asserted fact was controverted or if the judge was not prepared to act on the assertion.) …. As to the standard of proof that should be applied, we would adopt what was said by the majority in R v Storey ([1998] 1 VR 359 at 369 per Winneke P, Brooking and Hayne JJA and Southwell A-JA) - that a sentencing judge 'may not take facts into account in a way that is adverse to the interests of the accused unless those facts have been established beyond reasonable doubt. On the other hand, if there are circumstances which the judge proposes to take into account in favour of the accused, it is enough if those circumstances are proved on the balance of probabilities.' As we have said, the primary judge did not take facts into account in a way that was adverse to the accused (other than those established by the plea and the Statement of Facts). He was not persuaded of circumstances which the respondent contends should have been taken into account in his favour." 28 In the particular context of consideration as to the means and capacity to pay of a defendant, Legoe J in the Full Bench of the Supreme Court of South Australia in The Queen v Belcher said: "One final matter, which I mentioned in argument to counsel for the Crown, is the difficult position which the sentencing Judge is placed in when questions such as the imposition of a fine in addition to a sentence of imprisonment arise, and where funds are apparently in the possession of the prisoner not being the subject of a confiscation order. This is a practical consideration concerning the relevant duties of counsel both for the prisoner and for the Crown, and the investigating authorities. In most cases of offences under the Narcotic and Psychotropic Drugs Act, there is some material contained in the investigating officer's evidence relating to the moneys held by the prisoner. In my opinion, it is clearly relevant for the court, when it comes to sentence the prisoner, to be fully acquainted with the source of these funds so far as that is possible to ascertain. When the time comes for submissions to be made in mitigation of penalty, clearly the onus is upon the prisoner himself to disclose, and fully disclose, the funds in his possession and the source of those funds. The Crown should check this information in order to assist the court in determining the propriety of imposing a fine in the circumstances and the amount thereof. Furthermore, the prisoner should inform the court of his financial circumstances so as the court can be satisfied as to his ability to pay a fine. This, of course, would be particularly so where submissions in mitigation pressed for the imposition of a fine, either as an alternative to a term of imprisonment, or in mitigation, or reduction of the actual term of imprisonment. The court cannot be inquisitorial in relation to these matters, and prisoners who decline to assist the court in this regard cannot expect Courts of Appeal to place much weight on the argument that the imposition of a fine in addition to imprisonment is wrong, when funds are apparently in the prisoner's possession at the time of the investigation and indicate an ability to pay the fine." (at 43-54). 29 In similar vein it should be stressed that the courts have allowed unto themselves some degree of latitude and some discretion as to the manner in which evidence as to means and capacity to pay has been dealt with. For example in Kaye v Bagg (No 2) (1984) 11 ACrim 127 Cox J in the Supreme Court of Tasmania took into account that whilst the defendant's income was "undoubtedly meagre" and the defendant had commitments in respect of a car and a personal loan there was no evidence as to the duration of those commitments or as to whether the defendant was able to arrange his affairs in order to reduce his ongoing financial commitments. His Honour added: "….It appears that the applicant was a single man without dependants, having some skills in the lubrication of motor vehicles and wheel alignment, and who has until recently been in employment. True he had in the period prior to his last job been unemployed for several months, but it by no means followed that the magistrate ought to have concluded that he had no prospects of employment in the foreseeable future, and that the penalty he imposed was beyond the applicant's reasonable capacity to pay within the time allowed. ….I think it ought to be remembered that it does not automatically follow that a failure to pay the fine and costs leads to actual imprisonment …." (at 129). 30 In Fraser the Full Bench of the Federal Court of Australia cited with approval the following extract from the text Judicial Discretion in Sentencing of Judges and Magistrates (1982) by Hines (the title is presumably not intended to refer to sentences imposed on judges and magistrates): "An offender should not be fined a sum which he has no means of paying …. and that principle makes it wrong to impose such a fine on the footing that some other person will pay ….The [Court of Criminal Appeal] in Lewis [1965] Crim LR 121 made it clear, however, that 'the court should not be misled into thinking that present incapacity to pay is conclusive. There may be many cases where a man at the moment may only be able to reveal overdrafts and debts, whereas somewhere at his beck and call are to be found resources with which he can meet the penalty'; moreover, future earning capacity is obviously relevant, provided that regard is had to current local work prospects. When a court is considering the possibility of imposing a fine in addition to an immediate prison sentence of appreciable length, the question of means is particularly relevant, because the offender will be deprived for a substantial time of the ability to earn income, will be faced with the problems involved in re-establishing himself in society on his release, and may in practice simply undergo a longer period of custody for want of means to pay. Moreover, if the substantial punishment is imprisonment, it would seem wrong to add a fine save on some specific and logically justifiable ground. In general, the principle upon which such a course has been adopted has been that of depriving an offender of benefits received by him from his crime, so far as his capacity to pay will allow." (at pars 9.24 and 9.25) 31 I turn now to such material that was put before the Court concerning the means of the defendant, being the material which I have referred to in para 13 above. The audited financial report showed that for the financial year ended 30 June 2001 the defendant turned over by way of sales in excess of $2.5 million. This exceeded the sales for the previous financial year by about $400,000. The report showed trade debtors for the 2001 financial year exceeding $490,000 less a provision for doubtful debts of $42,000. In the previous year trade debtors had exceeded $560,000. The report also showed stock on hand for the 2001 year of $343,000 as opposed to $250,000 for the previous year. Furthermore there was a substantial asset shown as "advance" of almost $327,000, and an amount of $17,500 shown as shares in unlisted companies. Net assets were shown as almost $1.3 million. As against these assets the defendant had bank overdraft facilities of approximately $400,000 and trade creditors of the same amount. Furthermore there were loans at call exceeding $500,000 which, I was informed, represented loans from one of the directors a Mr J Kahlbetzer. There was a deficiency in shareholders funds of about $170,000. There was shown to be an operating loss before tax of about $13,000. There does not appear to be any amount shown by way of interest on borrowings in the financial report for that year. 32 The unaudited profit and loss statement for the period 1 July 2001 to 28 February 2002 showed total income exceeding $1.5 million and a gross profit of $444,000 prior to expenses. Those expenses again do not appear to make provision for interest on borrowings. 33 In the course of the written submissions the defendant acknowledged that it bore the onus of demonstrating incapacity to pay a fine but submitted that it had discharged that onus because of the nature of the evidence. In particular the submissions relied on the fact that the prosecutor had not tested the defendant's evidence in this regard and had not sought to cross-examine Mr Delahunt. In particular the defendant submitted that it was "in a precarious financial position which is relevant to its capacity to pay a fine." The defendant relied on evidence which it said could be drawn from the financial reports namely that its asset base was declining, its liabilities were significant, it had an excess of liabilities over assets which excess had been increasing since 30 June 2000, its revenue and gross operating profit had declined substantially since 30 June 2001, its expenses or resources used were significant and it was operating at a loss which was increasing. 34 The prosecutor pointed to an increase in the defendant's assets in the 2001 year when compared to the previous year, an increase in revenue from ordinary activities, the fact that the defendant had an annual turnover of over $2.5 million and paid substantial wages exceeding $800,000 per annum. The prosecutor said in written submissions: "There is nothing to suggest that the defendant company is on the verge of collapse, or indeed is under severe financial strain. Its asset base is substantial. ….There is no reason to believe that it will not be able to meet a fine and incorporate a fine into its overall liabilities." 35 I should add that the prosecutor's submissions state that there is a loan from the defendant to a director, Mr Kahlbetzer of $503,415. The financial report for the year ended 30 June 2001 shows a loan at call of that amount as moneys owing by the company. Accordingly, there is, in fact, a loan to the company from, presumably, Mr Kahlbetzer. 36 It is impossible to reconcile the net assets of the defendant, said to be a deficiency of $359,000 shown in the unaudited balance sheet as February 2002 with the relevant figures shown in the audited financial reports for the two earlier complete financial years. This is because the description of the assets and liabilities contained in the MYOB/Excel printout as at February 2002 does not correspond exactly with the description of the assets and liabilities contained in the audited financial reports. 37 It is a trite observation that business entities fund their operations in a number of ways. This may include capital contributions and borrowings or a mixture of both. The shareholding reflected in the financial reports indicates a paid up capital of $2. Accordingly, the shareholders have chosen to fund the defendant by way of bank loans and, presumably, either director's or shareholder's loans. The financial position of the defendant is therefore dependent upon the continued support of both the source of external borrowings and the support of directors and shareholders. There is no evidence to indicate whether and to what extent that support is likely to continue. In his affidavit Mr Kahlbetzer states that he is one of two non-executive directors and shareholders of the defendant and has been so since the company was registered on or about 15 August 1995. I assume that Mr Kahlbetzer has supported the defendant since that date. Information contained within the February 2002 figures indicates that the defendant has invested by way of loan $300,000 in a business established in the USA. Mr Kahlbetzer said in his affidavit that the other non-executive director of the defendant is James Fisher who resides in the USA. 38 In the absence of any evidence from those capable of giving it as to whether or not there is likely to be ongoing financial support for the defendant, is a court entitled to assume that the defendant is in a precarious position and make allowance accordingly in fixing the amount of any penalty or can it be assumed that the defendant will continue to be supported financially by those who have supported it to date and that the defendant's capacity to pay should be assessed accordingly? In considering these matters I take into account the fact that the means of the defendant are peculiarly within the knowledge of the defendant and that it is for the defendant to establish that its means should be taken into account when fixing the amount of the penalty. Whilst, on the one hand, the defendant is under-capitalised and its trading position is relatively poor, this appears to be a state of affairs which has subsisted for some time and the defendant appears to conduct a substantial business operation. If I am compelled to deal with the state of the evidence on an inferential basis, it seems to me more appropriate to approach the matter on the basis that Mr Kahlbetzer is likely to continue to fund the defendant as he apparently has for some time, and that this is the means adopted by the shareholders to ensure the continuity of the defendant's operations. No evidence was called by or concerning Mr Kahlbetzer, his circumstances and his intentions with respect to the defendant. In these circumstances I decline to take into account the means of the defendant in determining the appropriate penalty. 39 In terms of the fixing of penalty, I have already noted that the offence, viewed objectively is a serious one. However the defendant is entitled to have taken into account the fact that it has no prior convictions, that it cooperated with the WorkCover Authority, that it has expressed contrition for what occurred and endeavoured to assist the injured employee and her family, that it took proactive steps to introduce improved systems and procedures relating to occupational health and safety matters and that this appears to have involved a change of management personnel. In addition the defendant is entitled to a discount for having entered an early plea of guilty, which I assess at 25 percent. 40 Having regard to the maximum fine which can be imposed ($510,000) and all of the matters to which I have referred, including, obviously, the general and specific deterrent effects of sentence I determine that an appropriate fine in all the circumstances is $70,000 to which the discount of 25 percent should be applied leaving a net fine of $52,500. 41 In addition the prosecutor should have an order for its costs and a moiety of the penalty. 42 Finally, I should make reference to the date upon which this judgment was delivered in terms of the date upon which the hearing took place. The relevant dates are shown on the cover sheet to each judgment of this Court generated in conjunction with the publication of the judgment on the Internet. The matter was originally set down for hearing on 20 February 2002 on which to deal with the defendant's plea of guilty and to assess penalty. The hearing on that occasion was adjourned to allow the defendant to adduce evidence concerning its financial position. There was a further hearing on 26 June 2002 when the defendant's affidavit material was tendered and submissions on penalty were made. The matter was then adjourned to allow the parties to make further written submissions. The prosecutor's written submissions were received on 19 August 2002. However, the defendant's written submissions in response were not received until 11 November 2002, notwithstanding a number of requests from my Associate to the defendant's solicitors. The delay in furnishing written submissions has created a corresponding delay in the preparation of this judgment. It has also involved a re-reading of the transcript and evidentiary material. It is because the Attorney-General's Department's computer system is unable to indicate on the cover sheet the dates when written submissions were received that I have felt compelled to tender this explanation for the apparent delay between the last hearing date, namely 26 June 2002 and the date of delivery of this judgment. ORDERS 43 I make the following orders: 1. I find the defendant guilty of the offence charged and the defendant is convicted accordingly. 2. The defendant is fined the sum of $52,500 with a moiety to the WorkCover Authority of New South Wales. 3. The defendant is to pay the costs of the prosecutor 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.