Industrial Relations Commission of New South Wales in Court Session CITATION: Beacham v Interface Manufacturing Pty Ltd and Another [2005] NSWIRComm 123 Appellant Inspector Peter Beacham First Respondent PARTIES: Interface Manufacturing Pty Ltd [ACN 072 574 139] Second Respondent Interface Aust Pty Ltd [ACN 000 692 026] FILE NUMBER(S): IRC 5918 of 2004 CORAM: Wright J President; Staff J; Backman J Application for leave to appeal and appeal - Occupational health and safety - Concession by respondents that penalties manifestly inadequate - Miscarriage of sentencing discretion at first instance - Insufficient weight given to seriousness of risk to safety - Foreseeability of the risk - Failure to properly consider principle of deterrence - Error in assessing penalties by reference to the jurisdictional limit rather than by reference to the maximum penalty - Disparity between the two penalties not justified - Failure to give complete assessment of respective culpabilities of both respondents - Subjective features - leave to appeal granted - Appeal upheld - Fresh penalties imposed - No order as to costs. CATCHWORDS: Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Industrial Relations Act 1996 Occupational Health and Safety Act 2000 Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432 Glass v Flexible Packaging (Australia) Pty Limited [2005] NSWIRComm 93 Inspector Waterhouse v Stephenson's Cranes Pty Limited [2005] NSWIRComm 103 CASES CITED: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 R v Doan (2000) 50 NSWLR 115 HEARING DATES: 04/18/2005 EXTEMPORE JUDGMENT DATE: 04/18/2005 Appellant: Ms P. Lowson of Counsel Solicitors: Moray & Agnew LEGAL REPRESENTATIVES: Respondent: Mr A Britt of Counsel Solicitors: Dibbs Barker Gosling JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH CORAM: Wright J, President Staff J Backman J Monday 18 April 2005. Matter No IRC 5918 of 2004 INSPECTOR PETER BEACHAM v INTERFACE MANUFACTURING PTY LTD AND ANOTHER Application by Inspector Beacham for leave to appeal and appeal against a decision of Industrial Magistrate Quinn given on 15 September 2004 in Matter No 20244580/04 JUDGMENT OF THE COURT (extempore) [2005] NSWIRComm 123 1 This is an appeal under s197 of the Industrial Relations Act 1996 ("the Act") against sentences of $2,000 and $500, imposed by Industrial Magistrate Quinn on Wednesday 15 September 2004 on the first and second respondents respectively. 2 Leave to appeal is required: Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432. 3 On 2 March, 2005 the Court was advised by the appellant, by letter, that the respondents were intending to concede the appeal. Agreed orders were subsequently filed as part of the appellant's written submissions of 21 March 2005. The respondents in written submissions have confirmed the agreement. The agreed orders are in the following terms:- (i) leave to appeal be granted; (ii) the appeal be upheld; (iii) the orders in the Local Court imposing fines of $2,000 and $500 on the first and second respondents respectively be quashed; (iv) this court impose increased fines on each company that properly reflect the sentencing principles that apply in occupational health and safety proceedings; and (v) there be no order as to costs. Decision at first instance. 4 In the proceedings below, Magistrate Quinn approached the facts for the most part without distinguishing between conduct that may or may not have been separately attributed to each respondent. She referred to "Interface" as displaying safety rules at the premises which were acknowledged by the employees, and a risk assessment that had been performed prior to the offence date, in relation to the particular machine involved in the accident. Her Honour observed that the assessment had identified a low risk to safety which resulted in the injury to the employee. Deficiencies in the machine were then considered by her Honour, including the removable safety guard and the fact that the machine was capable of operating with the guard removed. Her Honour acknowledged that following the accident a new component had been installed in the machine, which in her Honour's words, "... eliminates the risk entirely as I understand it". Her Honour also noted that since the offence another risk assessment had been performed on the machine and that further remedial action had been taken by "the company", such as audits and "revised procedures". Also taken into account by her Honour was the fact that "the company" had been in operation since 1971 without incurring any convictions. 5 The risk to safety posed by the machine was assessed by her Honour as low to medium, although her Honour added in this context, "... more on the low side but certainly a low to medium risk". 6 Her Honour found "some foreseeability" of the risk and indicated that she would "look at parity, and the deterrent issue". 7 In relation to the penalty her Honour said: "the range is a $55,000 range". 8 Her Honour also referred to the plea of guilty entered by both respondents and said: "... the necessary contrition has been placed before the Court". 9 In relation to the first respondent her Honour specifically took into account the fact that the offence before her was a first offence and she expressed agreement with a prosecution submission which she formulated by saying "...it's not what steps were taken or the injury but it's the risk itself in relation to the machine". Her Honour also took into account the evidence that a risk assessment had been performed beforehand by the first respondent which indicated to her that "... they had been proactive in that regard". 10 In relation to the second respondent her Honour commented that "... these matters are serious", adding however that "... it was simply an operating company but in view of that I am simply going to give them a fine of $500". Consideration 11 Having considered the decision of the learned magistrate and having regard to the evidence and submissions which were before her Honour, as well as the agreed orders proposed by the parties in this appeal, we have concluded that her Honour's sentencing discretion miscarried and that leave to appeal should be granted and the appeal should be upheld. In doing so we have decided that it is appropriate to deal with the appeal consistently with the agreement of the parties. 12 The offences arose in circumstances where a machine, used to manufacture tiles by attaching fibreglass backing material to carpet using bitumen, contained a removable guard covering a drive mechanism which was routinely removed prior to the machine commencing operations. Removal of the guard was necessary in order for the machine operator to feed carpet and fibreglass sheets into rollers and attach the fibreglass sheets to the carpet backing. This process entailed removing the guard from the drive mechanism and then reaching through a gap in the chain drive to access the rollers. According to the Statement of Agreed Facts tendered on sentence, the fibreglass backing became detached from time to time which necessitated re-attaching it by reaching through the gap in the chain drive while the rollers were stopped. 13 On 9 September 2003, the day of the offence, an employee of the first respondent, Martin Weller, noticed that the fibreglass sheeting had become detached. While the chain drive was rotating in an anti-clockwise direction, he reached through the gap. His right sleeve came into contact with a running nip point formed by the chain and sprocket drive mechanism and his right arm was dragged towards the nip point. A nearby co-worker pressed an emergency stop button after Mr Weller called for help. Mr Weller received lacerations to his right arm and was unable to return to normal duties for about five days. 14 Her Honour's observation that it was not the injury but the risk itself appeared to acknowledge the sentencing principle that damage or injury as a consequence of a breach of an offence under the occupational health and safety provisions does not, of itself, dictate the seriousness of the offence. Her Honour also found "some foreseeability" in relation to the risk and referred to "the deterrent issue", although she did not expand any further on the significance these issues may have had to the penalties imposed. Her Honour also referred to the existence of safety rules which were on display at the premises and the fact that a risk assessment had been performed on the machine involved in the accident prior to the offence. This latter factor her Honour expressly took into account in the first respondent's favour. 15 The risk to safety was assessed by her Honour as low to medium, although "... more on the low side". We disagree with her Honour that the offence fell within this range. Her Honour gave insufficient weight to the fact that the risk to safety in the circumstances was a risk of serious injury. The risk was also plainly foreseeable as evidenced by the fact that the machine was routinely in operation with an unguarded nip point (the Statement of Agreed Facts referred to the removal of the guard being usual practice during the start up procedure). Further, her Honour failed to properly consider the relevance of general deterrence and did not consider the relevance of specific deterrence at all. Both these sentencing principles enlarge the objective seriousness of the offence and should influence the assessment of penalty: Glass v Flexible Packaging (Australia) Pty Limited [2005] NSWIRComm 93. 16 The first and second respondent corporations were charged respectively with breaches of s 8(1) and s 10(2) of the Occupational Health and Safety Act 2000 ("the 2000 Act"). The maximum penalty for a corporation with no prior convictions was $550,000 even though the jurisdictional limit in the local court was $55,000: R v Doan (2000) 50 NSWLR 115. Her Honour made no reference to this fact and it would appear from the bare reference in the decision to "the range" being $55,000 that her Honour assessed the penalty by reference to the jurisdictional limit rather than by reference to the maximum penalty. This conclusion is reinforced by the imposition of penalties by her Honour which equate more accurately to penalties which might be imposed for trivial offences. 17 There was some discussion during the sentencing proceedings between the magistrate and the prosecutor concerning the imposition of a penalty under s 10 of the Crimes (Sentencing Procedure) Act 1999 against the second respondent. During those discussions her Honour disagreed with the submission of the prosecutor that the section was only available if the offence could be characterised as being of a trivial nature. Her Honour clearly was of the view that the section was available for offences that did not fall into that category. 18 This discussion and the fact that her Honour did not avail herself of the section may suggest that she did not regard the offences as trivial. Certainly her Honour's characterisation of the risk as low to medium, notwithstanding that her Honour appeared to qualify this assessment by the statement that the risk "was more on the low side", would indicate that she did not regard the offences as trivial. 19 We have had difficulty in reconciling the differential in penalties imposed by her Honour on the two respondents. The prosecutor at first instance submitted that the culpabilities of both defendants were, "approximately equal". Her Honour did not regard this to be the case. During the sentencing proceedings her Honour said: It would seem to me that it would be unduly harsh to punish both companies where one was simply the holder of the equipment for the purposes of the books I suppose. 20 It may be discerned from the material tendered on sentence that the first and second respondents were related corporate entities. Both, for example, shared a common address. The first respondent conducted its business of manufacturing carpet products at that address and employed Mr Weller. The second respondent owned the machine involved in the accident. This type of corporate arrangement of business is not unusual, but it does not follow by reason of this division of corporate activities that one related entity is more, or less, culpable than the other. 21 Her Honour made reference in the decision to the principle of parity but did not in her reasons attempt to apportion responsibility between the respondents by weighing their respective culpabilities. The reference in the sentencing proceedings by her Honour to "[it being] unduly harsh to punish both companies where one was simply the holder of the equipment ...", if intended to be a concession to the corporate interrelationship of the two respondents, rather than a recognition of their separate legal status, constitutes an error in our view. 22 There is limited material before us which would enable a complete assessment of the respective culpabilities of each respondent. The only references to the different roles and responsibilities of each respondent is contained in the Statement of Agreed Facts where it is said that the first respondent employed Mr Weller and conducted its business of manufacturing carpet products from its factory premises, and the second respondent owned the machine involved in the accident. There is one further reference in the document to the first respondent having carried out the risk assessment prior to the offence in relation to the guarding of the drive mechanism on the machine. This feature her Honour expressly took into account in the first respondent's favour. That aspect however must be balanced against the consideration that the risk was actually foreseen by the first respondent, it having assessed the risk posed by the unguarded nip point prior to the offence as a low risk. 23 In addition to the above distinguishing features which we have identified, there was much factual material tendered on sentence in the court below which her Honour assessed on an equal basis in relation to both respondents. There were also a number of common subjective factors, for example, both respondents entered pleas of guilty at the same time and both are first offenders. 24 Given all of the above factors we consider that the disparity in the actual penalties imposed by her Honour was not justified, and accordingly we do not consider that on the material before the Court there is any basis to differentiate in the penalties to be imposed on the respondents. 25 It remains to address one submission made by the appellant that her Honour applied an erroneously high discount for the subjective factors. We are unable to agree with that submission. We do not discern that any undue weight was given to the subjective features by her Honour which might suggest those features (as opposed to the objective features) produced sentences which failed to adequately reflect the seriousness of the offence: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 475. 26 Given the manifest inadequacy of both penalties imposed by her Honour and the errors upon which they were based, we have determined that we should set them aside and assess the appropriate sentences to be imposed in both matters. In doing so we take into account the appropriate scale of penalties, the objective seriousness of the offences, and, mitigating factors. We have accepted the submission of the respondents' counsel that, in the circumstances of these matters, specific deterrence should be taken into account only in a limited way. In accordance with the conventional approach to prosecution appeals we adopt a conservative approach and impose penalties on the lower end of the range of available sentences having regard to the principle of double jeopardy. 27 In sentencing both respondents we also adopt the recent comments of the Full Bench in Glass v Flexible Packaging (Australia) Pty Ltd which also dealt with an appeal under s 197 of the Act: There is a clear public interest in ensuring that the penalties imposed by the Magistracy for Occupational Health and Safety offences reflect the important social purposes of the legislation including the related need for adequate sentences. 28 In relation to the early pleas of guilty entered by both respondents in the court below we consider that a discount of 25 per cent together with a discount of 10 per cent for other subjective considerations is appropriate for each penalty to be imposed; we have accepted the substance of the submissions of counsel for the respondents as to those matters. Orders 29 Taking into account all the matters to which we have referred, and the submissions of the parties, and also the respondents' concession that the appeal be upheld, we determine a penalty before any discounts are applied of $20,000. But for the respondents' concession the penalty would have been greater: Inspector Waterhouse v Stephenson's Cranes Pty Limited [2005] NSWIRComm 103. 30 We make the following orders:- (1) Leave to appeal is granted; (2) The appeal is upheld; (3) The penalties at first instance are set aside; (4) The first respondent, Interface Manufacturing Pty Limited is fined the sum of $13,000 with a moiety of the penalty to be paid to the appellant; (5) The second respondent, Interface Aust Pty Limited is fined the sum of $13,000 with a moiety of the penalty to be paid to the appellant; (6) No order as to costs. As the fines imposed at first instance have been paid, the Registrar will need to have regard to that fact when the further amounts are paid in accordance with this judgment. _______________________________ 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.