Industrial Relations Commission of New South Wales in Court Session CITATION: Inspector O'Neil v Amway of Australia [2005] NSWIRComm 295 PROSECUTOR Inspector Meaghan O'Neil PARTIES: DEFENDANT Amway of Australia FILE NUMBER(S): IRC 6787 of 2004 CORAM: Staff J CATCHWORDS: Occupational Health & Safety - Prosecution under s 8(1) of Occupational Health & Safety Act 2000 - Bulk warehouse - Incident occurred when order picking forklifts collide in aisle - Employee sustained serious injuries - Foreseeability - Principles - Plea of guilty - Welfare rehabilitation of injured worker - Penalty imposed Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Occupational Health & Safety Act 2000 Capral Aluminium v WorkCover Authority of New South Wales (Inspector Mayo-Ramsey) (2000) 49 NSWLR 610 Corinthian Industries (Sydney) Pty Limited v WorkCover Authority of New South Wales (Inspector Wilson) [2000] NSWIRComm 46 Department of Mineral Resources of NSW (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 Inspector Clampett v Eveready Plumbing and Maintenance Pty Ltd [2005] NSWIRComm 138 Inspector Neil Buggy v Weathertex Pty Limited [2003] NSWIRComm 273 Morrison v Powercoal Pty Ltd & Anor (No 3) [2005] NSWIRComm 61 Sydney County Council v Coulson (1987) 21 IR 477 CASES CITED: Wong v Melinda Group Pty Limited (1998) 82 IR 118 WorkCover Authority of New South Wales (Inspector Farrell) v David Carl Schrader [2002] NSWIRComm 25 WorkCover Authority of New South Wales (Inspector Kelsey) v The University of Sydney (unreported, Matter No CT 1280 of 1995, 2 April 1997) WorkCover Authority of New South Wales (Inspector Lancaster) v Burnshaw Constructions Pty Ltd (2002) 121 IR 119 WorkCover Authority of NSW (Inspector Penfold) v Fernz Construction Materials Ltd (No 2) 100 IR 23 WorkCover Authority of New South Wales (Inspector Tyler) v Abigroup Contractors Pty Ltd (2000) 99 IR 196 HEARING DATES: 07/21/2005 DATE OF JUDGMENT: 08/19/2005 PROSECUTOR Mr R Reitano of counsel Solicitor: Ms F Miller WorkCover Authority of NSW LEGAL REPRESENTATIVES: DEFENDANT Mr I Latham of counsel Solicitor: Mr A Powter Turks Legal JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Staff J 19 August 2005 Matter No IRC 6787 of 2004 INSPECTOR MEAGHAN O'NEIL v AMWAY OF AUSTRALIA Prosecution under s 8(1) of the Occupational Health & Safety Act 2000 JUDGMENT [2005] NSWIRComm 295 1 Amway of Australia ("the defendant") is a direct selling organisation, sourcing product from their parent company in the United States and from local suppliers and selling it to the public through a network of independent business owners contracted to the defendant. The defendant employed James Blair McNevin as a Storeperson - Materials Handling, and Perry Consentino as a Storeperson. 2 Mr McNevin's duties included forklift driving, receiving goods from suppliers, dispatching goods and filing orders. Mr Cosentino's duties included forklift driving, high rise driving, receiving, dispatch, rack filling and unloading containers. 3 On 21 January 2003, Mr McNevin was operating a Crown Order Picking Forklift in aisle 58 at the defendant's bulk warehouse at Castle Hill, New South Wales. Mr Cosentino was operating a Crown Turret Stock Picker which was used to pick stock from the steel storage racking. Mr Cosentino reversed the stock picker into aisle 58, colliding with the order picker, causing it to topple to the ground, with Mr McNevin still inside the operator's cabin. Mr McNevin suffered severe injuries as a consequence of the incident involving fractures to his arms, right leg, jaw, skull and ribs, along with bruising to the brain, a punctured lung, severed ear, puncture to his right thigh, severed tendons in his right knee and multiple cuts and bruises. Mr Cosentino suffered post traumatic shock as a result of the incident. 4 The defendant was charged with an offence under s 8(1) of the Occupational Health & Safety Act 2000 ("the Act"). Section 8(1) provides: 8 Duties of employers (1) Employees An employer must ensure the health, safety and welfare at work of all the employees of the employer. That duty extends (without limitation) to the following: (a) ensuring that any premises controlled by the employer where the employees work (and the means of access to or exit from the premises) are safe and without risks to health, (b) ensuring that any plant or substance provided for use by the employees at work is safe and without risks to health when properly used, (c) ensuring that systems of work and the working environment of the employees are safe and without risks to health, (d) providing such information, instruction, training and supervision as may be necessary to ensure the employees' health and safety at work, (e) providing adequate facilities for the welfare of the employees at work. 5 The charge alleged the defendant failed to: Ensure the health, safety and welfare at work of all its employees, in particular James Blair McNevin and Perry Cosentino contrary to Section 8(1) of the Occupational Health and Safety Act 2000. The particulars of the charge are: a) The defendant failed to devise, provide or maintain an adequate system of work, including a system that warned employees that a vehicle was operating in a particular aisle at a particular time, that would prevent its employees being exposed to the risk of injury as a result of any collision of industrial vehicles being operated in its warehouse. b) The defendant failed to devise or implement adequate procedures or controls for the management of traffic within its warehouse. c) The defendant failed to undertake an adequate risk assessment so as to identify and guard against the risk to employees arising from potential falls from heights associated with work undertaken in its warehouse. d) The defendant failed to provide adequate information, instruction, training and supervision to employees working on and in the vicinity of vehicles in its warehouse. e) As a result of the defendant's failures James Blair McNevin and Perry Cosentino were placed at risk of injury. 6 The defendant pleaded guilty to the charge. 7 An agreed statement of facts was tendered at the outset of the sentencing hearing which relevantly provided: 5. At all material times the defendant employed James Blair McNevin ("McNevin") as a Storeperson - Materials Handling. His duties and responsibilities included forklift driving and driving other machinery, receiving goods from suppliers, dispatching of goods and filing orders. He had been employed by the defendant since 11 January 1990. He held a National Certificate of Competency for the Operation of Order Picking Forklifts which was issued 8 June 1998. 6. At all material times the defendant employed Perry Cosentino ("Consentino") (sic) as a storeperson. His duties involved forklift driving, high rise driving, receiving, dispatch, rack filling and unloading containers. He commenced employment with the defendant on 8 May 1990. He held two Certificates of Competency for a Power Crane Driver, issued on 12 November 1991 and 19 November 1993. 7. At all material times McNevin and Cosentino were working in the Bulk Warehouse area of the defendant's warehouse located at 46 Carrington Road, Castle Hill, New South Wales. The bulk warehouse area contained rows of steel storage racking. The incident on 21 January 2003 occurred in an aisle between 2 rows of racking which was signposted as "58". The racking on either side of this aisle was 7 bays high (approximately 10 metres). The aisle was approximately 49.4 metres long and 1.9 metres wide. 8. At the time of the incident on 21 January 2003 McNevin was operating a Crown Order Picking Forklift with Model No. 30SP42TT270 and Serial No. 3A101522R ("the order picker"). This machine was commonly referred to by Amway employees as Machine "27". Operator controls for the order picker were located within the operator cabin, on the opposite end of the cabin to the pallet platform. The operator faces away from the pallet platform while operating these controls. Controls are operated in a standing position. 9. At the time of the incident on 21 January 2003 Cosentino was operating a Crown Turret Stock Picker with Model No. 30TSP423 and Serial Number 1A121039R ("the stock picker"). This machine was commonly referred to by Amway employees as Machine "32". Operator controls for the stock picker were located within the operator cabin. The operator faces tynes while operating the controls. Controls are operated in seated or standing position. Steering, raise/lower, and tynes extend/reach controls were located at left hand of operator. Throttle and horn controls were located at right hand of operator. Two pedestal foot pedals were positioned in front of the operator, on the front wall of the cabin, at a height of approximately 270mm from the cabin floor, both of which must be depressed to enable certain auxiliary machine functions to operate. These are used in the seated position. The brakes are applied if these pedals are released. Another 2 pedals were situated on the floor directly in front of operator seat, which are used in a standing position. There was a long narrow reversing mirror located to the left of the operator, approximately in line with the left shoulder when in the seated position. 10. The stock picker and the order picker were used to pick stock from the steel storage racking. The order picker was used to pick individual cartons of stock from pallets in the racking onto another pallet on the order picker. The stock picker is used to pick whole pallets from the racking. The location of the stock in the aisle determines whether the stock picker is driven forward or reversed into the aisle. 11. When reversing into an aisle on the stock picker, the operator is required to physically check the rear vision mirror and over their shoulder (around the mast housing) for other vehicles and pedestrians. 12. On 21 January 2003 at approximately 7am, McNevin was operating the order picker in Aisle 58 of the Bulk Warehouse, he was inside the operator cabin of the order picker, at a height of approximately seven metres. Cosentino, reversed the stock picker he was operating into aisle 58 and collided with the order picker, causing it to topple to the ground, with McNevin still inside the operator cabin. Cosentino has advised that he did not see the order picker in the aisle when he checked the rear vision mirror prior to reversing into aisle 58. 13. As a result of the incident on 21 January 2003 McNevin received fractures to his arms, right leg, jaw, skull and ribs, along with bruising to the brain, a punctured lung, severed ear, puncture to right thigh, severed tendons in his right knee and multiple cuts and bruises. Cosentino suffered Post Traumatic Shock as a result of the incident. 14. McNevin was not able to attend work for a period of six months. He recommenced work on suitable duties on 21 July 2003 working in the office for four hours per day / three days per week. He has taken time off since returning to work in order to undergo several surgical procedures, and is expected to undergo more surgery in the future. 15. At the time of the incident on 21 January 2003 the defendant had in place informal systems stipulating how many vehicles were permitted to be in an aisle at any one time, there was no written procedure. There was some confusion from employees as to the number of vehicles permitted in an aisle. McNevin stated two machines were not to be in one aisle at a time, Cosentino stated one vehicle at a time was permitted in an aisle, Eugene Maihi, Warehouse Operations Supervisor, stated two vehicles could be an aisle if they were in direct communication and Peter Swan, Australian Distribution Manager, stated no more then (sic) two vehicles could be in an aisle at a time. 16. Subsequent to the incident on 21 January 2003, Inspector Meaghan O'Neil attended the incident scene and undertook an inspection. Inspector O'Neill (sic) took photographs and from her observations on the day prepared a factual report dated 20 March 2003. In her factual report Inspector O'Neill (sic) states she made the following observations regarding the physical environment of the Bulk Warehouse area on 21 January 2003: a) No physical or electronic barriers to prevent vehicles entering an already occupied aisle. b) No warning devises (sic) or mirrors to alert operators that aisle is already occupied. c) The bulk warehouse area was fenced off from other areas of the warehouse, although gates were not locked and there were no other devices to prevent pedestrian or unauthorised access to the area. d) General lighting appeared adequate for the tasks being performed. e) General housekeeping appeared to be satisfactory. 17. At the time of the incident McNevin was working alone. Engene Maihi (sic) was the supervisor of the Bulk Warehouse, but was not in the vicinity of the incident when it occurred. The system of work at the time of the incident required McNevin to utilise an electronic production system that allocates tasks and orders to different areas within the warehouse. Warehouse employees, including McNevin complete tasks as they appear on the production system. 18. At the time of the incident the defendant, in consultation with its employees, had undertaken documented risk assessments for tasks carried out in the bulk warehouse. However, at the time of the incident these documents were still in draft form and the recommended control measures had not been fully implemented. Risk assessments undertaken had failed to identify "falls from heights" as a hazard associated with tasks in the bulk warehouse. 19. Prior to the time of the incident occupational health and safety training was conducted on the job in an ad-hoc manner. The defendant was unable to demonstrate what specific training their employees had received or when this training had been delivered. 20. Following the incident Inspector Meaghan O'Neil issued the following Notices: a) Section 70 Notice – intention to exercise powers under Section 60 of Occupational Health and Safety Act 2000. b) Section 60 Notice – Requiring that Orderpicker Model: 30SP42TT270 with serial number 3A101522R be removed to TestSafe Australia at Londonderry. c) Section 89 Notice – Non-disturbance of Crown Stockpicker Model 30TSP423 and serial number 1A121039R. d) Improvement Notice 7-18053 – safe system for working at heights. e) Improvement Notice 7-18059 – safe system for traffic management. 21. The order picker was examined by TestSafe Australia subsequent to the incident for mechanical faults and structural stability. The order picker was not found to have any mechanical faults or structural instability which contributed to the incident. 22. Since the incident, the defendant has advised WorkCover they have developed and implemented various control measures to address Occupational Health and Safety issues in the warehouse. These measures consist of: a) Revising, documenting and communicating procedures stating that only one vehicle is permitted in an aisle at any one time. b) Installing sensors at the entrance to each aisle to detect vehicles entering the aisle. These sensors in turn trigger an audible warning devise (sic) on the vehicle that verbally reminds the vehicle's operator to check that the aisle is clear before proceeding. c) Fitting of reflective tape and additional lighting on order picking forklifts. d) Installation of signs at entrances to aisles stating "Stop. No more than one vehicle in any aisle at any time". e) Installation of plastic doors at pedestrian entrances to warehouse areas. f) Re-marked pedestrian walkways within the warehouse. g) Directive that all persons entering or working in the warehouse wear high visibility vests. h) Purchasing of fall arrest systems for order picking forklifts. A procedure for these has been implemented and all relevant employees have been trained. i) Revision, reissue and training for procedures relating to operation of industrial powered trucks in the warehouse. 8 The prosecutor tendered 12 colour photographs showing the stock picker, aisle 58, and an example of picking stock from racks using the stock picker. A factual report of Inspector O'Neil dated 20 March 2003 and the record of interview between Inspector O'Neil and Mr Peter Swan, the Australian Distribution Centre Manager of the defendant were also tendered. 9 The defendant tendered an affidavit of Mr Swan, who relevantly stated: (a) The defendant distributes approximately 2,900 individual product lines ranging from food products to consumer durables in Australia which are sold through Independent Business Owners who sourced the product from the defendant's warehouse and on-sold to their own customer base. (b) To facilitate the distribution of the product in Australia, the defendant employs over 187 direct employees and approximately 40 contractors who work in logistics, administration and marketing functions at the Castle Hill operation. (c) There are two adjoining warehouses located at Castle Hill, New South Wales. Each warehouse is approximately 7,000 square metres. The total warehouse capacity at Castle Hill is approximately 14,000 pallet locations with the pallet racking being seven levels high with the top beam approximately 10.2 metres above the ground. On average, 40 to 50 pallets of orders are shipped in three to four semi-trailers per day representing a total tonnage of between 20 to 25. The warehouse currently operates with 64 full time staff and nine other personnel whose average length of service is 14 years. Upon engagement each individual is inducted into the workplace. (d) The induction programme consists of in-house training that addresses safe working operations generally, including working on warehouse systems, handling of package materials, working from heights (where relevant) and the safe use of plant and equipment. These training sessions are overseen by the team leader, supervisor or appropriately appointed experienced staff member. New employees are paired with an experienced operator and trained on a "hands on basis" as to the system of work. When a new employee is engaged, Human Resources team members will spend approximately five hours completing a new employee's checklist and inducting the employee into the systems of work of the defendant. If the new employee is to work in the warehouse, they receive additional induction and training in the form of on the job training on a one on one basis by an experienced operator. (e) No operator is allowed to drive forklifts, order pickers or turret trucks without the appropriate licence. Training updates through Crown, the manufacturer, takes place at approximately six monthly intervals. This involves Crown providing re-fresher training for forklifts, including safe handling of the forklift and maintenance issues. Supervisors and team leaders oversee the work of the warehouse employees. The defendant has 12 to 15 forklift, order pickers and turret trucks on the Castle Hill site. All machines have compliance plates affixed and are maintained and serviced every two to three months or when required. (f) Visitors to the warehouse are required to wear high visibility vests (Mr Swan conceded in cross-examination this requirement was introduced after the incident). Numerous safety training programmes have been implemented at the Castle Hill operation. The training programme for 2005 was annexed to Mr Swan's affidavit. The occupational health and safety system is subjected to regular reviews and audits by the Human Resources Department of the defendant to ensure the systems are relevant and modern given the operational requirements and systems. (g) Prior to the incident, the defendant had in place policies and procedures that addressed safety, accident/incident and investigation procedures. These policies had been developed and implemented through consultation with the defendant's employees and included "safety rules" that applied to employees, contractors and visitors. (h) Mr McNiven had been employed by the defendant since January 1991 in the warehouse and held National Competency tickets for both forklifts and order picking forklifts. Upon being informed of the incident, Mr Swan went immediately to the scene of the incident and ensured that Mr McNiven was provided with appropriate medical treatment and that an ambulance had been called. Mr Swan stated that he organised for the area to be shut down and implemented measures to ensure that no access to the area occurred. He also ensured that appropriate medical treatment was provided to Mr Cosentino. (i) After the accident area had been secured, Mr Swan and the General Manager Operations, attended Westmead Hospital to talk to Mr McNevin's wife and his parents. The defendant offered any assistance that was required and both remained at the Hospital for two to three hours. In the two to three weeks following the incident, Mr Swan kept in contact with Mr McNevin and his family, visiting him in Hospital to offer any support and to monitor his progress. (j) Upon being released from Hospital, Mr Swan visited Mr McNevin at his home and also kept staff at the Castle Hill site informed of his progress. Mr Swan stated that he was very distressed that Mr McNevin had been involved in an accident at work. During Mr McNevin's rehabilitation, he did not suffer any reduction in pay or employee entitlements. Mr McNevin was advised that the company would ensure there was a role for him upon his return to work. At Mr McNevin's request, the defendant has also provided vocational assistance with the objective for Mr McNevin to move into another career in graphic design. (k) Mr McNevin returned to work for the defendant on 26 July 2003 performing light duties for two days per week and attending at TAFE for the remaining three days. During TAFE holiday periods, Mr McNevin worked five days per week with the defendant. The defendant continues to pay Mr McNevin for a five day week as well as providing financial assistance for his studies. The defendant has arranged for Mr McNevin to engage in extensive graphic design work experience with a graphic design company contracted to the defendant. (l) Mr Swan stated that the company safety system identified both prior to the accident and during revision of the safety plan following the accident, that one of the "Warehouse Rules" was that no more than one vehicle was to be in an aisle at any one time. (m) After the accident, remedial steps to review all procedures associated with the warehouse operation were undertaken. This included a full workplace risk assessment, consultation with employees about possible improvements and the introduction of modifications and reinforcements that traffic management procedures would be followed in the warehouse. (n) Specialist external consultants were engaged. Improvement notices received from WorkCover regarding traffic management and working from heights were immediately acted upon. Preventative and reinforcement measures were taken to ensure a similar accident did not occur in the future. Training procedures were provided to all staff operating stock pickers and turret stock pickers. (o) Safety harnesses were introduced for all employees working at heights, improved signage and the remarking of pedestrian lines together with other systems to help better manage warehouse traffic and overall safety were implemented. 21 new signs were placed on every second aisle stating that only one vehicle is to be in an aisle at a time. Running speeds of all stock pickers and turret pickers were checked by Crown. Reflective tape and additional lighting was also fitted on all machines. (p) A warning system in the form of a buzzing and voice warning has been installed and is activated when a turret stock picker passes a trigger point at the beginning of the aisle. To control pedestrian traffic within the warehouse, the defendant has installed Visy Flex plastic doors to control traffic between the warehouse and the picking line. A photo example of such doors was annexed to the affidavit. (q) Since the accident, the defendant has completely reviewed the safety procedures and there are ongoing reviews as well as safety briefings to warehouse staff that are conducted by relevant trained personnel. 10 During cross-examination, Mr Swan acknowledged that the training provided to new employees in the warehouse was on the job training prior to the accident. Mr Swan conceded that new training programmes had been introduced since the accident including the wearing of high visibility vests. 11 Mr Swan was asked about the defendant's policy in respect of the number of vehicles permitted in an aisle prior the incident. He was taken to his record of interview with Inspector O'Neil, where he stated that no more than two vehicles were permitted in an aisle at any time. Mr Swan could not recall this answer but contended that the rule prior to the accident was that there was to be no more than one vehicle in an aisle at a time. Mr Swan was unable to provide any explanation as to why he had given differing information to Inspector O'Neil. Mr Swan's evidence was that he had made an error in his answer to Inspector O'Neil and that the statement of agreed facts also contained an error where it stated that he believed no more than two vehicles would be in the aisle at a time (see par 15). Submissions of the Prosecutor 12 Mr R Reitano of counsel who appeared for the prosecutor emphasised the most important matter in determining sentence is the objective seriousness of the offence. In this regard, counsel submitted the question of foreseeability, the availability of remedial steps and the likely or potential consequences of the breach are relevant considerations. 13 Mr Reitano further submitted that in terms of the identification of the risk, that it was known, referring to par 15 of the agreed statement of facts, which acknowledged that there was some confusion from employees as to the number of vehicles permitted in an aisle. 14 It was observed by counsel, in any event, that the remedial steps taken after the accident were fairly simple. 15 Mr Reitano submitted that the consequences of the accident coupled with the identification of the risks and the remedial steps taken make this a serious offence. It was not an offence that fell within the low to mid range, as submitted by counsel for the defendant. 16 Mr Reitano acknowledged that as the defendant had no prior convictions, the maximum penalty for the offence was $550,000. Counsel accepted that the plea of guilty was entered early and that there was no issue in respect of cooperation with the WorkCover Authority in respect of its investigation. 17 The prosecutor sought an order for costs and a moiety of the fine. Submissions of the Defendant 18 Mr I Latham of counsel, who appeared for the defendant, provided a written outline of his submissions. Counsel commenced by submitting that the objective features of the offence would result in it being seen as between the low to mid range of the scale of culpability. The objective seriousness of the offence was moderated, so it was submitted, by the fact that the defendant did have in place an elaborate set of systems designed to ensure the safety of its employees in their application to this case. It was conceded that those systems were not sufficiently clear and detailed, particularly in respect of more than one forklift moving within an aisle. Furthermore, it was conceded that although the defendant had a policy in place, it was not enforced. 19 In respect of general deterrence, Mr Latham submitted that it should be low, taking into account the organisational and legal costs to the defendant. In respect of specific performance, it was submitted that the risk of re-offending was unlikely, as a result of the extensive and comprehensive measures taken by the defendant. The defendant had also demonstrated a commitment to safety. These factors would result in any component in the fine in respect of specific deterrence being small. 20 Mr Latham referred the Court to the Crimes (Sentencing Procedure) Act 1999, in particular, the provisions of s 3A which sets out the purposes for which a court may impose a sentence on an offender and s 21A which deals with aggravating, mitigating and other factors that are to be taken into account in sentencing. In respect of mitigating factors, Mr Latham observed that: the offender does not have any record; is a person of good character; is unlikely to re-offend; has good prospects of rehabilitation; has shown remorse for the offence by making reparation for any injury, loss or damage, entered a plea of guilty and co-operated with the authority. 21 Counsel emphasised the defendant's impeccable safety record and that the defendant was a large and long standing company. These matters led counsel to submit that the defendant should be given a penalty at the low end of the range 22 In respect of sentencing principles to be applied in this matter, counsel referred to the summary of those principles in the judgment of this Court in Inspector Clampett v Eveready Plumbing and Maintenance Pty Ltd [2005] NSWIRComm 138 at [26] - [79]. Consideration 23 The principles applicable to the determination of penalty in proceedings brought under the Act are now well settled. 24 The primary factor to be considered in determining the appropriate sentence is the objective seriousness of the offence charged: see Morrison v Powercoal Pty Ltd & Anor (No 3) [2005] NSWIRComm 61 where the full Bench stated at [13]: The principles of sentencing in this Court are now well settled. We do not repeat them here except to note that the sentencing practice established in this Court under the Occupational Health and Safety Act conforms with the requirements of that Act and the Crimes (Sentencing Procedure) Act 1999 (see sections 3A, 21A, 22, 22A and 23). It involves a consideration of both the objective and subjective factors relevant to the offence and the offender. The primary factor is the objective seriousness of the offence, which involves an objective assessment of the nature and quality of the offence: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 474. Subjective factors play a subsidiary role in the determination of penalty. In Lawrenson Diecasting at 475 the Full Bench put it this way: As we have observed, the primary factor to look at in relation to the penalty to be imposed is the objective seriousness of the offence. Particularly in cases involving a serious breach of the OH&S Act, subjective factors, such as a plea of guilty, co-operation with the investigation and subsequent measures taken to improve safety, must play a subsidiary role in the determination of penalty to the gravity of the offence itself. While the Court must keep in mind not only facts which establish the seriousness of the offence, but also those which tend to mitigate that seriousness or exculpate the offender (see Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at p 698 per Kirby P), the presence of the subjective factors referred to should not be permitted to produce a sentence which fails to adequately reflect the seriousness of the offence. 25 The nature and quality of an offence may often be reflected in the steps taken by a defendant to meet the obligations imposed upon it by the Act. It is for this reason that the degree of foreseeability of a risk (the risk being the subject of the offence) is a factor of considerable significance in determining the appropriate penalty: see Capral Aluminium v WorkCover Authority of New South Wales (Inspector Mayo-Ramsey) (2000) 49 NSWLR 610 at [81], (2000) 99 IR 29. 26 Whilst the true nature of the penalty lies in the nature and quality of the offence and not merely the result of the offence, I agree, with respect, with what Hungerford J said in Wong v Melinda Group Pty Limited (1998) 82 IR 118 at 131 where his Honour stated: … However, "the occurrence of death or serious injury manifests the degree of seriousness of the relevant detriment to safety": per Hungerford J in Watson v Southern Asphalters Pty Ltd (unreported, NSW Industrial Court, Hungerford J, CT 95/1260, 21 March 1996) p 19; and "the gravity or otherwise of the potential risk flowing from breach and its foreseeability are clearly relevant as are the measure of gravity of the breach itself and the measure of culpability": per Hill J in Tyler v Sydney Electricity (1993) 47 IR 1 at 5… 27 Hill J in WorkCover Authority of New South Wales (Inspector Kelsey) v The University of Sydney (unreported, Matter No CT 1280 of 1995, 2 April 1997, at 10) dealt with the relevance of the actual consequences of the breach as follows: While the gravity of the breach in a particular case may not necessarily be reflected in its actual consequences, the gravity of the consequences or likely consequences is nevertheless relevant in determining the gravity of the risk. In Hannah v Wonar Pty Limited the Full Court stated: "The primary factor falling for consideration in relation to penalty, is the nature and circumstances of the offence. The result of the circumstances may be relevant in a very limited way, in the sense that it may illustrate the seriousness of the act or omission involved in the breach of statutory duty being assessed. Obviously a breach that was quite unlikely to lead to serious consequences, might be assessed on a different basis to a breach where there was every prospect of serious consequences." (footnotes omitted) 28 The purposes to which the Act are directed are also very relevant to considerations of specific and, in particular, general deterrence: see Capral Aluminium at [71]-[80]. 29 This brief statement of the law has been undertaken to set out those matters considered in the determination of penalty. 30 An offence under s 8(1) of the Act will be regarded as more serious than it otherwise might have been if the risk to safety was obvious or reasonably foreseeable and reasonably practicable steps were available to avoid the risk, but these steps were not taken. In the present case, the defendant conceded that the systems of work were not sufficiently clear and detailed, particularly in respect of more than one forklift moving within an aisle. The risk was that if there was more than one forklift in an aisle inevitably there would be a collision of industrial vehicles being operated in the aisle. The risk was clearly foreseeable. 31 Walton J, Vice-President in Department of Mineral Resources of NSW (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 (at 27) observed: Whilst the reasonable foreseeability of an accident may not be relevant to the question of liability under the Act (see Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng), the degree of foreseeability is a significant factor to be taken into account when assessing the level of culpability of the defendant. The existence of a reasonably foreseeable risk to safety which is likely to result in serious injury or death is a factor which will be relevant to the assessment of the gravity of the offence: see Camilleri's Stock Feeds (at 700); James Moore v Vibro-Pile (Aust) Pty Ltd (unreported, Hungerford J, CT96/1163, 28 May 1997, at 17) and University of Sydney (at 16). The proper test of foreseeability in these circumstances is not whether a lawyer or engineer could conceivably have foreseen the risk which existed but whether or not the ordinary jury person or reasonable observer could have done so: see University of Sydney (at 11). 32 Although the existence of a safe system of work evinces a defendant's concern for safety and militates the seriousness of the offence, it is acknowledged in the agreed statement of facts that at the time of the incident, the defendant had documented risk assessments for tasks carried out in the warehouse. However, these documents were still in draft form and the recommended control measures had not been fully implemented. In WorkCover Authority of NSW (Inspector Penfold) v Fernz Construction Materials Ltd (No 2) 100 IR 23 at [34] - [35] Walton J observed: [34] On the other hand, the seriousness of the offence must be assessed in light of the policies and procedures which the defendant had in place. The existence of settled safety procedures and instructions is a factor which may mitigate the seriousness of an offence under the Act: see Warman International Ltd v WorkCover Authority (NSW) (1998) 80 IR 326 at 342; WorkCover Authority NSW (Insp. Riley) v Broken Hill Proprietary Co Ltd (1998) 83 IR 427 at 429 and Department of Mineral Resources (Insp. McKensey) v Kembla Coal at (25)… [35] However, the occurrence of the accident in this case indicates these procedures were not sufficiently comprehensive or sufficiently communicated to and understood by the employees to ensure their safety. The existence of a system on paper alone is clearly not sufficient to comply with the obligations imposed by the Act. The employer is required to ensure that its "paper systems" are implemented and maintained in its daily operations: see Sydney City Council v Coulson (1987) 21 IR 477 at 480; WorkCover Authority of New South Wales (Inspector Tyler) v Abigroup Contractors Pty Ltd (2000) 99 IR 196 at 214. The Court must have regard not merely to the system as it exists in theory, but as it is implemented in practice. In Inspector Davies v Supercoat Feeds Pty Limited (unreported, CT96/1020, 22 April 1997 at p 4), for example, Fisher P said: "The relevant system of work, however, is the customary method of carrying out the operation in which the employer is engaged - the system of work is that actually utilised and operated at the place of work. 'Paper' systems whose prescriptions are not followed do not represent the actual system of work utilised and are irrelevant." 33 The issue discussed by the Vice-President was confirmed as being an appropriate consideration to take into account by the Full Bench in Morrison v Powercoal (No 3) at [83]. 34 There was some controversy as to whether the defendant's policy limited the number of vehicles to one or two in an aisle at the one time, however, if the policy was only one vehicle at a time in an aisle, it was not enforced. Any more than one industrial vehicle in an aisle at a time, as I have already observed, would have created a risk to the safety and welfare of employees. 35 The occurrence of the accident in this case indicates the procedures were not sufficiently comprehensive or sufficiently communicated to and understood by the employees to ensure their safety. The existence of the system on paper alone (albeit in draft in this case) is clearly not sufficient to comply with the obligations imposed by the Act. The employer is required to ensure that its "paper systems" are implemented and maintained in its daily operations: Sydney County Council v Coulson (1987) 21 IR 477 at 480; WorkCover Authority of New South Wales (Inspector Tyler) v Abigroup Contractors Pty Ltd (2000) 99 IR 196 at 214. 36 Furthermore, the defendant was unable to demonstrate what specific training their employees had received or when this training had been delivered. Mr Swan's evidence was that employees received "on the job" training. In my view, the defendant's submissions that it had in place an elaborate set of systems designed to ensure the safety of its employees significantly overstates the position that existed at the time of the incident. 37 The Full Bench of the Commission recently succinctly reaffirmed the principle that the gravity or otherwise of the potential risk to safety flowing from a breach of the Act is relevant as a measure of the gravity of the breach and the culpability of a defendant. In Inspector Neil Buggy v Weathertex Pty Limited [2003] NSWIRComm 273, the Full Bench said at [62]: … His Honour erred by attaching no significance to the fatality arising from the accident. This was relevant to considering the seriousness of the risk occasioned by the respondent. See for example Wong v Melinda Group Pty Ltd (1998) 82 IR 118 at 131, WorkCover Authority (NSW) (Inspector Kelsey) v University of Sydney (unreported, Matter No. CT 1280 of 1995, 2 April 1997 at 10), Capral at 650 and WorkCover Authority of New South Wales (Inspector Petar Ankucic) v McDonald's Australia Ltd and Another (2000) 95 IR 383 at 428-429. We consider that the fatality in this case was indicative of the risks to safety relevant to the assessment of the gravity of the offence. 38 In respect of this aspect of the matter, the relevant aggravating factors are that the injuries caused by the offence were extremely serious in the case of Mr McNevin. Hence, in my view, the offence was serious and falls at the bottom of the mid range of culpability. 39 As for the questions of deterrence, I accept the contentions of the prosecutor that the issues of both general and specific deterrence are, as a general rule, relevant and important in the assessment of penalty in an offence brought under the Act. The principles surrounding questions of deterrence have been authoritatively reviewed by the Full Bench in Capral Aluminium. 40 The Full Bench said particularly at [73]: Although general deterrence and specific deterrence have differing purposes or aims, the varying aims of deterrence are particularly relevant in occupational health and safety prosecutions in light of the objects and terms of the Act. As Hungerford J in Fisher v Samaras Industries Pty Ltd (1996) 82 IR 384 at 388 said: "the fundamental duty of the Court in this important area of public concern ... [is] to ensure a level of penalty for a breach as will compel attention to occupational health and safety issues so that persons are not exposed to risks to their health and safety at the workplace." 41 In WorkCover Authority of New South Wales (Inspector Farrell) v David Carl Schrader [2002] NSWIRComm 25, Walton J reaffirmed the application of general deterrence in the context of breaches of the Act. His Honour said at [69]: The purpose of the Act is well known and often referred to in judgments of this Court. In my view, it is important, when considering notions of general deterrence, that the Court be cognisant of the fact that the Act is for the benefit of the public generally and particularly employees at work. The goal is the prevention, deterrence and punishment of breaches of health and safety requirements... 42 In my view, the propensity for the defendant to re-offend is not high. The accident has awakened in the defendant an understanding of the need for constant vigilance when it comes to issues of safety in the workplace. It is the defendant's first offence. I note the defendant was established in 1971. The defendant has also implemented significant remedial steps to ensure that a similar incident does not occur. I therefore do not propose to include in the penalty a significant element for specific deterrence. In respect of general deterrence, it is appropriate that an element of general deterrence be included to deter others from committing similar offences. 43 I reject the submission of Mr Latham that the organisational and legal costs incurred by the defendant should play some role in general deterrence considerations. This submission misunderstands the notion and purpose of general deterrence. 44 The defendant is entitled to mitigation in penalty for subjective factors. These include that the defendant pleaded guilty and when the plea was entered: s 22 of the Crimes (Sentencing Procedure) Act. The defendant's guilty plea was presented at the earliest opportunity and in those circumstances I propose to discount any penalty by 25% for the utilitarian value of that plea. 45 In accordance with s 21A(3)(e),(f),(g),(h),(i) and (m) of the Crimes (Sentencing Procedure) Act, mitigating factors to be taken into account in determining the appropriate sentence include: … (e) The offender does not have any record (or any significant record) of previous convictions, (f) The offender was a person of good character, (g) The offender is unlikely to re-offend, (h) The offender has good prospects of rehabilitation, whether by reason of the offender's age or otherwise, (i) The offender has shown remorse for the offence by making reparation for any injury, loss or damage or in any other manner, … (m) Assistance by the offender to law enforcement authorities. 46 The remorse shown by the defendant is demonstrated by the assistance provided to the injured employee. This involved a rehabilitation programme which included the provision of vocational assistance with the objective that Mr McNevin move into another career in graphic design. Mr McNevin is currently participating in a graphic design course at the Nepean Arts & Design Centre ("TAFE") which he attends three days each week. He is paid by the defendant whilst he attends this course. The defendant has also arranged for Mr McMcNevin to engage in extensive graphic design work experience with a graphic design company contracted to Amway. 47 The defendant also took immediate remedial steps to review all procedures associated with the warehouse operation. The defendant introduced the wearing of safety harnesses for all employees working at heights, improved signage, remarking of pedestrian lines and a warning system that alerts drivers of the turret picker and stock picker when entering an aisle to check the aisle is clear before doing so. An electronic beam triggers a buzzing and warning voice at the point of entry to each aisle. 48 In Department of Mineral Resources v Kembla Coal and Coke Pty Ltd at 27 Walton J stated: … Whilst the response by the defendants after the accidents was laudable, the actions taken were such as to reveal in clear terms the decisive steps which may have been taken by the defendant to actually prevent this accident and thereby demonstrate a flaw which existed in the previous system: WorkCover Authority of NSW (Inspector Kelsey) v University of Sydney (at pp 21- 22). 49 This approach has been approved by the Full Bench in WorkCover Authority of New South Wales (Inspector Lancaster) v Burnshaw Constructions Pty Ltd (2002) 121 IR 119. 50 The defendant has been in operation for over 34 years and has no prior convictions. It operates a medium to large undertaking. I therefore find that the defendant has a very good industrial citizenship which is an important matter to be taken into account on sentence: Corinthian Industries (Sydney) Pty Limited v WorkCover Authority of New South Wales (Inspector Wilson) [2000] NSWIRComm 46 where the Full Bench, Wright J President, Walton J Vice-President and Hungerford J said at [16] - [17]: [16] ... Perhaps more significantly, there are quite significant subjective features in this matter which appear to have not been taken into account or sufficiently taken into account. [17] We do not consider that the history of good industrial citizenship of the appellant, having regard to its prior record and the long period of operation of its business, was sufficiently taken into account. We also refer to the careful and compassionate steps taken by the appellant as to the welfare, rehabilitation and continuing employment of the injured worker. The reason we have made specific reference to that latter matter is that it does not seem to have been often referred to in other judgments in this area… 51 In assessing the penalty, I have taken into account the objective seriousness of the offence and the matters raised by the defendant in that regard and the various matters raised in mitigation. I also have had regard to the fact that the maximum penalty is $550,000. Taking account of all the circumstances of the offence and the offender, I consider the penalty should be $110,000. ORDERS The Court makes the following orders: 1. A verdict of guilty is entered. 2. The defendant is convicted of the offence as charged. 3. The defendant is fined an amount of $110,000 with a moiety thereof to the prosecutor. 4. The defendant shall pay the prosecutor's costs of the proceedings in an amount as agreed, or, if agreement cannot be reached, leave is granted to either party to approach the Court for final orders as to costs. 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