Industrial Relations Commission of New South Wales CITATION : WorkCover Authority of NSW (Inspector McColl) v Dowdon Contracting Pty Limited and ors [2003] NSWIRComm 477 revised - 19/12/2003 PROSECUTOR: Inspector William McColl PARTIES : DEFENDANTS: Dowdon Contracting Pty Limited; John Watson Building Services Pty Limited; John Michael Watson. FILE NUMBER: 4321; 4322; 4320 of 2002 CORAM: Staunton J CATCHWORDS : Occupational health and safety - plea of guilty - objective seriousness of the offences - obvious and foreseeable risks to safety - remediation obvious - relative culpability of defendants - prior conviction of one of the defendants - general and specific deterrence - financial circumstances of the respective defendants - remediation measures undertaken - subjective features taken into account - provisions of s10 of Crimes (Sentencng Procedure) Act apply to personal defendant - conditional bond imposed - penalties imposed on corporate defendants. Occupational Health and Safety Act 1983 LEGISLATION CITED : Fines Act 1996 Crimes (Sentencing Procedure) Act 1999 CASES CITED : WorkCover Authority of New South Wales (Inspector Ch'ng) v Lawrenson Diecasting Pty Limited (1999) 90 IR 464 WorkCover Authority of NSW v Capral Aluminium (2000) 1999 IR 29 HEARING DATES: 12/19/2003 EXTEMPORE JUDGMENT DATE : 12/19/2003 PROSECUTOR: Mr P Strickland of counsel SOLICITORS: Ms N Rouillon Moray and Agnew Solicitors DEFENDANT: Dowden Contracting Pty Limited Mr R Warren of counsel SOLICITORS: Mr B Rauf Price Waterhouse Coopers Legal DEFENDANT: LEGAL REPRESENTATIVES: John Watson Building Services Pty Limited Mr R Reitano of counsel SOLICITORS: Ms B Fisher Carroll & O'Dea DEFENDANT: John Michael Watson Mr R Reitano of counsel SOLICITORS: Mr Gerard Phillips Carroll & O'Dea JUDGMENT: - 27 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM : Staunton J DATE: 19/12/03 Matter No IRC 4321/02 WorkCover Authority of NSW (Inspector McColl) v Dowdon Contracting Pty Limited Prosecution pursuant to s16(1) of the Occupational Health and Safety Act 1983 Matter No IRC 4322/02 WorkCover Authority of NSW (Inspector McColl) v John Watson Building Services Pty Limited Prosecution pursuant to s15(1) of the Occupational Health and Safety Act 1983 Matter No IRC 4320/02 WorkCover Authority of NSW (Inspector McColl) v John Michael Watson Prosecution pursuant to s50 of the Occupational Health and Safety Act 1983 Extempore Judgment NSWIRComm 477 1 In May 2001 the defendant, Dowdon Contracting Pty Limited (Dowdon) had been engaged by the Department of Public Works and Services to undertake certain demolition work at Blacktown TAFE College. 2 In turn, Dowdon sub-contracted with the defendant John Watson Building Services Pty Limited (JWBS) to remove a non asbestos based material known as vermiculite and glue residue from the ceiling of the welding school in Block D of the TAFE College. Mr John Watson was and is a director of JWBS. At the time he was actively involved in generally overseeing the work being done by the employees of JWBS at Blacktown TAFE in consultation with his site supervisor, Mr Bill Pope. 3 The area where the work was being undertaken had been secured by plastic sheeting in order to isolate it and was referred to as 'the bubble.' 4 In the process of undertaking the work to be done, JWBS used a petrol driven high pressure water blaster to facilitate the removal of the vermiculite and glue residue. 5 When the high pressure water blaster was being used by employees of JWBS it was located inside the confined area of the 'bubble.' The air in the confined area became contaminated and the workmen were overcome by carbon monoxide fumes. As a result, two of the workmen were rendered unconscious as a result and the others became dizzy and nauseated. 6 As a result of the above accident, the three defendants were charged with the offences now before me. 7 Dowdon has been charged with an offence arising under s16(1) of the Act, John Watson Building Services with an offence under s15(1) of the Act and Mr John Watson's charge arises under s50(1) of the Act. 8 The particulars of the three offences are: (i) IRC Matter No 4321/02 re Dowdon Contracting Pty Limited Dowdon Contracting Pty Limited [ACN 003 413 983] did fail contrary to section 16(1) of the Occupational Health and Safety Act, 1983 to ensure that persons not in its employment and in particular, Bill Pope, Hing In, Piseth Soun, Leang Heng and Ly Bun Hout ('the workers'), were not exposed to risks to their health and safety arising from the conduct of its undertaking, namely the demolition and removal of material from the site, in that, part of the work in the performance of its undertaking was sub-contracted to John Watson Building Services Pty Limited [ACN 054 214 783] pursuant to which sub-contract, works involving the removal of a non asbestos based material known as vermiculite and glue residue from the ceiling of the welding school Block D room D-G-13 was carried out in a confined area and the removal of a glue residue was partly carried out with the use of a petrol driven high pressure water blaster by the workers who, while doing so, were overcome by fumes from the said water blaster by reason that: (i) It failed to ensure that the sub-contractor, John Watson Building Services Pty Limited [ACN 054 214 783], carried out its work at the site in accordance within the terms of the work method statement provided pursuant to its contract with Dowdon Contracting Pty Limited. (ii) It failed to ensure that the person engaged by its sub-contractor, John Watson Building Services Pty Limited, to act as a supervisor of the work being performed, was appropriately licensed or qualified to act in that capacity at all material times. (iii) It failed to properly supervise the works being conducted by its sub-contractor so as to ensure that the petrol driven water blaster was not set up in a confined area. (ii) IRC Matter No 4322/02 re John Watson Building Services Pty Limited John Watson Building Services Pty Limited did fail to ensure the health, safety and welfare at work of its employees and in particular, Bill Pope, Hing In, Piseth Soun, Leang Heng and Ly Bun Hout ('the workers'), contrary to section 15(1) of the Occupational Health and Safety Act, 1983 in that the workers were engaged at the site in the removal of vermiculite and glue residue from the ceiling of the welding school of Block D room D-G-13 at the site using a petrol driven high pressure water blasting machine in a confined space when they were overcome by fumes emanating from the water blaster by reason that: (a) John Watson Building Services Pty Limited failed to provide and maintain a system of work that was safe and without risk to health in that: (i) the manner in which the work was being carried out was outside the scope of the agreed work method statement in respect of the job; (ii) the competent person named in the WorkCover Permit was not present and supervising the performance of the work at the time of the incident; (iii) the person engaged to supervise the work being carried out at the time of the incident was not appropriately licensed to enable him to act as the competent person; (iv) the use of a petrol driven water blaster to conduct the work within a confined area was unsafe. (b) John Watson Building Services Pty Limited failed to maintain a place of work under its control in a condition that was safe and without risk to health in that the workers performed work in a confined area when there were exhaust fumes present from a petrol driven water blaster being used to carry out the work. (c) John Watson Building Services Pty Limited failed to provide such information, training, instruction and supervision in relation to the work as was necessary to ensure health and safety in that: (i) having arranged for the petrol driven water blaster to be delivered to the site, did not provide proper instructions to the workers in relation to it; (ii) having arranged for the petrol driven water blaster to be delivered to the site, did not provide proper supervision of the workers in relation to the use of the water blaster; (iii) did not provide any information to the workers in relation to the risks associated with the use of a petrol driven water blaster within a confined area; (iv) provided no specific training in relation to the use of the petrol driven water blaster in relation to the work being carried out. (iii) IRC Matter No 4320/02 re John Michael Watson John Michael Watson being a director of John Watson Building Services Pty Limited [ACN 054 214 783] and a person concerned with the management of the company, which company on 30 May 2001 failed to ensure the health, safety and welfare at work of its employees and in particular, Bill Pope, Hing In, Piseth Soun, Leang Heng and Ly Bun Hout ('the workers'), at Blacktown TAFE, Hereward Highway, Blacktown, in the state of New South Wales ('the site') in that the workers were engaged at the site in the removal of vermiculite and glue residue from the ceiling of the welding school, Block D, room D-G-13 at the site using a petrol driven high pressure water blasting machine in a confined space when they were overcome by fumes emanating from the water blaster by reason that: (a) The company failed to provide and maintain a system of work that was safe and without risk to health in that: (i) the manner in which the work was being carried out was outside the scope of the agreed work method statement in respect of the job; (ii) the competent person named in the WorkCover Permit was not present and supervising the performance of the work at the time of the incident; (iii) the person engaged to supervise the work being carried out at the time of the incident was not appropriately licensed to enable him to act as the competent person. (iv) the use of a petrol driven water blaster to conduct the work within a confined area was unsafe. (b) The company failed to maintain a place of work under its control in a condition that was safe and without risk to health in that the workers performed work in a confined area when there were exhaust fumes present from a petrol driven water blaster being used to carry out the work. (c) The company failed to provide such information, training, instruction and supervision in relation to the work as was necessary to ensure health and safety in that: (i) having provided for the petrol driven water blaster to be delivered to the site, did not provide proper instructions to the workers in relation to it; (ii) having arranged for the petrol driven water blaster to be delivered to the site, did not provide proper supervision of the workers in relation to the use of the water blaster; (iii) did not provide any information to the workers in relation to the risks associated with the use of a petrol driven water blaster within a confined area; (iv) provided no specific training in relation to the use of the petrol driven water blaster in relation to the work being carried out. And John Michael Watson is deemed to have contravened the same section by operation of section 50(1) of the Occupational Health and Safety Act, 1983 . 9 On 6 February 2003 Dowdon entered a plea of guilty to the offence as particularised above. On 24 April 2003, following the filing of amended summonses by the prosecution a plea of guilty was entered on behalf of the other two defendants before me. 10 An agreed statement of facts has been tendered in respect of all defendants. While there are some specific background details that differ as between Dowdon and the other two defendants in relation to their respective roles in the offences before me, there is no difference between them as to the precise facts giving rise to the offences. In order to avoid duplication, I set out the statement of facts in relation to Dowdon and add only those specifically pertinent to the other two defendants in relation to the documentation filed. Those facts read as follows: [1] At all material times Dowden Contracting Pty Limited had been engaged by the Department of Public Works & Services to conduct demolition works and removal of contaminated material from Blacktown TAFE situated at Hereward Highway, Blacktown in the state of New South Wales ('the site'). [2] The terms of the contractual arrangements between Dowden Contracting Pty Limited and the Department of Public Works & Services were contained in document known as 'Tender Document for Blacktown TAFE, Block D, Demolition and Removal of Contaminated Material - Contract No: 0100728 - April 2001,' as well as other correspondence between Dowden Contracting Pty Limited and the Department of Public Works & Services. [3] Dowden Contracting Pty Limited had been engaged to conduct demolition works and the removal of contaminated material from the site and engaged a sub-contractor, John Watson Building Services Pty Limited [ACN 054 214 783] to perform work involving the removal of contaminated materials from the site, on the basis that John Watson Building Services Pty Limited was a licensed asbestos removal business operation. Dowden Contracting Pty Limited did not check to see that Mr Pope had an asbestos removal licence on the basis of the understanding that Mr Pope was introduced as an asbestos removal supervisor and that John Watson Building Services Pty Limited was a licensed asbestos removal business operation. [4] At all material times Dowden Contracting Pty Limited was an employer and engaged the following four employees to perform demolition work, including the removal of bonded asbestos, at the site on 30 May 2001, Maurice O'Connor, Adam Dowling, Brian Kingi and Wharewhiti Taunor. [5] At all material times John Watson Building Services Pty Limited engaged by Dowden Contracting Pty Limited had the following employees to perform work relating to the removal of contaminated materials, including friable asbestos, at the site: Bill Pope, Hing In, Piseth Soun, Leang Heng and Ly Bun Hout ('the workers'). [6] At all material times Dowden Contracting Pty Limited was responsible to the Department of Public Works and Services for the performance of the demolition and removal of contaminated material works on the site, including the removal of vermiculite from the ceiling of the welding school Block D on the ground floor at the site. [7] At all material times the workers were engaged on the site in the removal of vermiculite from the ceiling of the welding school Block D on the ground floor at the site. It was thought that the vermiculite contained asbestos. Subsequent examination of the material removed from the plaster underlay showed that the vermiculite did not contain asbestos. [8] At all material times the area in which John Watson Building Services Pty Limited was required, pursuant to its contract, to conduct the removal work, was contained entirely within the walls of the ground floor in Block D. [9] In order to carry out the removal work a containment area had to be set up by securing plastic sheeting in order to isolate it, which area was known as 'the bubble.' Contained within this bubble was the workroom, a decontamination unit and showers. [10] At all material times there were two exhaust fans which operated inside the workroom. [11] The work method statement agreed between John Watson Building Services Pty Limited and Dowden Contracting Pty Limited involved John Watson Building Services Pty Limited conducting the removal works in the following manner: · The insulation applied to the ceiling to be thoroughly saturated with water and allowed sufficient time for the insulation to absorb the water. · The insulation was then to be scraped from the concrete surface of the ceiling using air tools with air supplied from a compressor. · The waste material was then to be put into bags and sealed and removed via the decontamination unit, washed and transported to a plastic lined skip. [12] The workers conducted the removal process on and prior to 30 May 2001 in accordance with the requirements of the work method statement. [13] During the course of the works the workers wore protective equipment including masks, overalls, gumboots, gloves and helmets. [14] At all material times, Bill Pope, an employee of John Watson Building Services Pty Limited, was appointed as a foreman by John Watson Building Services Pty Limited for the works relating to the removal of contaminated materials on the site. It was agreed between Dowden Contracting Pty Limited and John Watson Building Services Pty Limited that Bill Pope, as the foreman, would be responsible for the welfare of the men within the bubble and the execution of safe work procedures. This was particularly since Dowden Contracting Pty Limited was not in a position to supervise the performance of works within the bubble as John Watson Building Services Pty Limited was licensed to carry out the removal of contaminated materials within the area of the bubble. The supervisors of Dowden Contracting Pty Limited had the responsibility to supervise the work being performed by John Watson Building Services Pty Limited at the site, in particular so as to ensure the petrol driven water blaster was not set up in a confined area [15] Following completion of the removal of vermiculite from the ceiling of the welding school Block D on the ground floor of the site, the workers were in the process of removing the remaining glue residue. At this stage, it was suggested by Bill Pope that the workers use a high speed water blaster to remove the glue residue to quicken the process. [16] On or prior to 30 May 2001, John Watson, the managing director of John Watson Building Services Pty Limited, made a decision to use a high pressure water blaster to assist in the removal of the vermiculite and glue residue from the ceiling of Block D. [17] John Watson ordered the high pressure water blaster from Active Hire Group Pty Limited and it was delivered to the site at approximately 9.00 a.m. on 30 May 2001. At approximately 10.30am, on 30 May 2001, John Watson was instructed by Mr Robert Gordon, director of Dowden Contracting Pty Limited at all material times, to not use the water blaster on the site, although Dowden Contracting Pty Limited did not adequately enforce and ensure that the instruction that John Watson Building Services Pty Limited not use the water blaster on the site. John Watson subsequently advised Mr Robert Gordon that he had instructed Bill Pope not to use the water blaster in the bubble. [18] The high pressure water blaster, which was delivered to the site on 30 May 2001, was inspected at the site on 31 May 2001 by WorkCover Inspector Alan Jones and the following features were noted by him: (a) A pressure cleaner unit consisting of a petrol operated engine black and white in colour and a compressor unit silver in colour. (b) The petrol engine and compressor unit was mounted on a carriage frame that was black in colour. (c) The carriage frame was mounted on 4 red coloured wheels and black coloured tyres. (d) A black horizontal metal place was mounted above the compressor unit. (e) A yellow sign with the words (ACTIVE HIRE) written in blue was attached to the black metal place. (f) The number (G 153) and the words (ACTIVE HIRE) and been inscribed on the black metal plate. (g) The black vertical metal plate was attached to the end of the carriage adjacent to the compressor unit. (h) A white sign with the work (STEAMASTER) written in black was attached to the black metal plate. [19] Prior to commencement of works pursuant to its sub-contract, John Watson Building Services Pty Limited had obtained from the WorkCover Authority a permit applicable to the works involving the removal of asbestos from the site, being permit number 200149AS1082. [20] It was a term of the permit that all work carried out in respect of the works by John Watson Building Services Pty Limited must be supervised by a WorkCover assessed, competent person, who was an employee of John Watson Building Services Pty Limited. [21] At all material times the nominated competent person in respect of the permit so issued to John Watson Building Services Pty Limited, was the managing director, John Watson. [22] At all material times on 30 May 2001 works involving the removal of vermiculite were conducted by the workers at the site in the absence of John Watson although John Watson did attend the site from time to time. [23] At all material times the work method statement in respect of the works as submitted by John Watson Building Services Pty Limited to Dowden Contracting Pty Limited, did not specify the use of a high pressure water blaster. [24] John Watson Building Services Pty Limited attempted to use the water blaster with it placed outside the work area using a hose connected to it, which was pushed through into the bubble. The hose however was too short and the water blaster was not capable of being used effectively and a decision was made by the foreman of John Watson Building Services Pty Limited to bring the water blaster inside the bubble without Dowden Contracting Pty Limited's permission. [25] At about 12.30 p.m. on 30 May 2001 the workers carried the water blaster inside the bubble and commenced to carry out further works involving the removal of the glue residue using the water blaster. [26] The use of the petrol driven water blaster inside the bubble involved contamination of the bubble area with petrol fumes. [27] The workers continued to use the water blaster for more than one hour inside the bubble until all of the workers became affected by the contamination of the air within the bubble from carbon monoxide emanating from the petrol driven engine of the water blaster. [28] Two of the workers were rendered unconscious and had to be carried out of the bubble by employees of Dowden Contracting Pty Limited, and they each regained consciousness soon after being removed from it. The other three workers were rendered dizzy and nauseated but were able to make their own way out of the bubble. This occurred as a result of carbon monoxide emanating from the petrol driven engine of the water blaster and contaminating the air within the bubble. [29] All of the workers were subsequently treated at hospital for carbon monoxide poisoning but none were seriously injured as a consequence of the incident. All workers were able to return to work the following day. 11 Additional agreed facts that are not included in the statement of facts above and pertinent to the defendants John Watson Building Services Pty Limited and Mr John Michael Watson have been amended to read relevantly as follows: [1] At all material times John Watson Building Services Pty Limited was an employer. [2] At all material times John Watson Building Services Pty Limited was engaged in the business of asbestos removal, internal strip outs and industrial cleaning. [3] At all material times John Watson Building Services Pty Limited employed Bill Pope, Hing In, Piseth Soun, Leang Heng and Ly Bun Hout ("the workers") and Mr Day as leading hand/site manager. All these persons were accredited holders of certificates in the removal of asbestos. [4] Mr John Michael Watson of 22 Boyle Street, Balgowlah, 2093 in the state of New South Wales, is a director of John Watson Building Services Pty Limited (ACN 054 214 783). [5] Mr John Michael Watson was at all material times the competent person named in the WorkCover Permit involved in the works being conducted by the company at Blacktown TAFE, Hereward Highway, Blacktown, in the state of New South Wales ('the site') and a person in a position to influence the conduct of the company in respect of such works. [6] On or about 15 May 2001, John Watson Building Services Pty Limited entered into a contract with Dowdon to remove contaminated materials from the site. [7] At all material times Dowdon retained responsibility for supervision of works at the site being performed by itself and its sub-contractor, John Watson Building Services Pty Limited. Each of the workers and Mr Pope completed information, induction and training sessions with Dowdon before commencing the work. [8] Mr Pope had been employed by John Watson Building Services Pty Limited for four (4) years and was a very experienced, competent and skilled operator within the asbestos removal industry for 23 years as a leading hand/site manager for a number of years. Mr Pope contacted Mr John Michael Watson and it was agreed to use the water blaster on the works. [9] It was a term of the permit that all work carried out in respect of the works by John Watson Building Services Pty Limited must be supervised by a WorkCover assessed, competent person, who was an employee of John Watson Building Services Pty Limited. Mr Watson perceived that Mr Pope, whilst acting in the leading hand role and having experience in asbestos work was a competent foreman and capable of carrying out instructions in his absence. [10] It was Mr Watson's usual practice to attend regularly at the site to discuss all aspects of the works and assist Mr Pope with any difficulties. On the day of the incident Mr Watson was not in attendance. [11] At all material times the work method statement in respect of the works as submitted by John Watson Building Services Pty Limited to Dowdon, did not specify the use of a high pressure water blaster. The terms of the contract between Dowdon and the Department of Public Works was that vehicle and plant exhaust emissions were to be minimised and no vehicle or plant producing exhaust emissions would be used. 12 In addition to the agreed facts, the following documentary material was tendered without objection: (i) By the prosecution: (a) 14 photographs of the relevant worksite. (b) Two factual inspection reports of Senior Inspector Alan Jones dated 30 May 2001 and 31 May 2001 respectively. (ii) On behalf of Dowdon Contracting: (a) Affidavit of Mr Robert Gordon. Mr Gordon is a former Director of Dowdon Contracting Pty Limited. He was a Director of Dowdon at the time of the accident in May 2001. He was actively involved in negotiating with JWBS in relation to the work at Blacktown TAFE and generally administered the work being undertaken by Dowdon at the site in consultation with Dowdon's site supervisor at the time, Mr Maurice O'Connor. (b) Affidavit of Mr Maurice O'Connor with annexures. Mr O'Connor is a current Director of Dowdon Contracting Pty Limited. He was the site foreman for Dowdon at Blacktown TAFE and, in that capacity, liaised with Mr Bill Pope, the site supervisor for JWBS in relation to the work being undertaken and the use of the water blaster. (iii) On behalf of JWBS Pty Limited and John Watson: (a) Two affidavits of Mr John Michael Watson with annexures dated 5 September and 15 September 2003 respectively. 13 The affidavit material filed on behalf of the respective defendants is unchallenged and no oral evidence was elicited or required from any of the deponents. 14 In considering all that is contained in that material, it discloses that at the relevant times, Mr O'Connor was the foreman of the site on behalf of Dowdon. As well, Mr Gordon was a director of Dowdon at that time and, as he deposes, that role included - '...responsibility for and overseeing the operations and works performed by Dowdon Contracting. This included liaising with clients to obtain work, reviewing and preparing tender documents, inspecting job sites and preparing Work Method Statements, conducting risk assessments at job sites and ensuring that the employees of Dowdon Contracting were properly trained, qualified and informed of the work that was required to be performed at any particular job site. I was also responsible for conducting the administrative affairs of Dowdon Contracting such as maintaining all records and information relating to the works performed by Dowdon Contracting. 15 In short, Mr Gordon was a very hands on Director and, in relation to the matters before me, he played an active role in requesting Mr John Watson as Director of JWBS to remove the offending water blaster from the worksite on the day in question. 16 I note also that in August 2001, Mr Gordon ceased to be a Director of Dowdon and sold his shares along with the other Director, Mr Roy Dowling, to Mr O'Connor and Ms Marilyn Neary. Part of that agreement relating to the transfer of the share capital in Dowdon included a provision that Mr Gordon and Mr Dowling indemnify Mr O'Connor with respect to any claims or consequences which may arise as a result of the incident which occurred at a job at the Blacktown TAFE College on 30 May 2001. Accordingly, it will be necessary for Mr Dowling and Mr Gordon to indemnify Dowdon Contracting for any legal costs incurred by the Company and any fines imposed on the Company in relation to these proceedings. 17 It is clear that in sub-contracting JWBS to remove the vermiculite insulation from the rooms at Blacktown TAFE, Dowdon had done so because of prior work undertaken by JWBS in removing bonded asbestos material as part of general demolition work generally undertaken by JWBS. While there was a belief that asbestos was or may be present in the material to be removed, it should be said that tests performed after the incident on 30 May 2001 disclosed no evidence of asbestos. 18 In any event, JWBS undertook the work to be performed observing proper precautions in relation to the safe removal of asbestos. That is, they set up a contamination area by securing plastic sheeting to isolate an area which was known as the 'bubble.' Contained within the 'bubble' was a work room, decontamination unit and showers. The employees of JWBS conducted the asbestos removal work at all times under the supervision of Mr Pope. Mr Pope was the site supervisor for JWBS and Mr Gordon believed him to be qualified in the safe removal of asbestos, particularly as JWBS was a licensed asbestos removal business. 19 As the agreed facts disclose JWBS had, prior to commencing work, obtained a permit from the WorkCover Authority relevant to the removal of asbestos from the site. It was a requirement of the contract that the person so nominated and authorised by WorkCover would supervise the work being undertaken by the JWBS employees. Mr Watson was the nominated person so authorised by WorkCover. On 30 May 2001 Mr Watson was not present at the worksite when the water blaster was being used although he did attend the site from time to time. It was Mr Watson who was contacted by Mr O'Connor on 30 May 2001 asking him to remove the water blaster from the site. 20 It was agreed as between Dowdon Contracting and JWBS that Mr Pope would be responsible for the employees of JWBS and the execution of safe work procedures within the 'bubble' for the reason that neither Mr O'Connor nor Mr Gordon would be able to supervise the performance of any work within the 'bubble.' The usual practice with respect to supervising the works conducted by JWBS was for Mr O'Connor to communicate with Mr Pope outside of the 'bubble' and discuss the work that was being performed. Other than this, Mr O'Connor was not able to check or supervise the works being performed within the area of the 'bubble.' 21 The circumstances leading to the accident giving rise to the offences before me occurred when a decision was made to bring a petrol driven water blaster to the worksite allegedly to 'remove the residue in the clean area.' The decision to introduce the water blaster was made by Mr John Watson, the defendant before me and a director of JWBS. When he became aware of it, that decision was met with opposition from Mr Gordon who, in turn, instructed Mr O'Connor to advise Mr Watson to remove it. Its use was not included in the safe work method statement as between Dowdon and JWBS and further, it was creating a water problem in the lower floors of the building where the work was being performed. 22 According to Mr Gordon and Mr O'Connor's affidavit, when asked, Mr Watson gave assurances that he would instruct Mr Pope to remove the water blaster from the worksite and subsequently confirmed that he had done so. It is clear that Mr Pope did not do as directed. That much was confirmed in the letter sent by JWBS to Mr Gordon on 29 June 2001 in the following terms: With regard to a revised safety programme as a result of the recent accident, the only amendment we see necessary is to make a firm commitment not to reintroduce a similar piece of equipment to site and we are aware that any equipment other than hand tools are to be logged on the daily sheet for the information of the DPWS supervisor. We emphasise that the water blaster in question was never introduced to be used for asbestos removal, but to remove the plaster underlay which was analysed by HLA and found to be asbestos free. Mr Alan Jones of WorkCover has a copy of this analysis. We further point out that the water blaster was delivered to the contractors compound which appears to be a public area given the number of members of the public who use it as a thoroughfare, however, it was not delivered to the site as such being the confines of Block D ground floor. The movement of the plant from the compound to site was the result of our supervisor's blatant disregard of my instructions and to proceed with a mischievous and covert act. This man was removed from site as a consequence. (emphasis added) 23 Not being content with ignoring Mr Watson's request to remove the water blaster from the worksite, Mr Pope went even further and moved it inside the sealed off area of the 'bubble.' It is hard to comprehend a more foolhardy and dangerous action. That is, putting a petrol driven piece of machinery into such a confined working space with little, if any, provision for proper ventilation. What happened was eminently predictable. That is, the employees of JWBS working within the confined space of the 'bubble' were overcome by carbon monoxide fumes. At least two became unconscious. On any view, they are all lucky to be alive. 24 The actions of JWBS and its site supervisor were in all respects in breach of their obligation to ensure that the worksite was safe and without risks to safety for its employees. JWBS and Mr Watson overrode the safe work method statement by introducing a piece of machinery not mentioned or contemplated in the work to be undertaken. On behalf of JWBS, Mr Pope then compounded that breach by permitting the machinery, the petrol driven water blaster, to be located and used in the confined workplace of the 'bubble.' In doing so, he created a risk to safety that would, on any objective view, have been foreseen and was foreseeable. Further, remediation was obvious - the offending piece of machinery should never have been in the 'bubble' in the first instance. 25 It was submitted by the prosecution and I concur that, on the evidence, it is reasonable to assume that if Mr Watson had been on the site at the time, the water blaster would have been removed. 26 The failures of the defendant JWBS as particularised go to every aspect of the system of work in place at the time. In accordance with the principles enunciated in WorkCover Authority of New South Wales (Inspector Ch'ng) v Lawrenson Diecasting Pty Limited (1999) 90 IR 464 and particularly at 476, the factual circumstances giving rise to the risks to safety constitute, on any view, an objectively serious offence. Indeed, the nature and quality of the offence and the cumulative nature of the defendant's failures as particularised render this offence, as far as JWBS is concerned, very serious. Mr Watson's primary failure was his absence from the worksite at critical times. He had a responsibility, as the person approved by WorkCover in relation to the removal of asbestos, to be present at the worksite at all relevant times. While it was established after the accident that there was no asbestos present, that fact was not known at the time. According to the provisions of the permit granted to JWBS, Mr Watson, as the approved person, should have been present. 27 In considering the objective seriousness of the offence in relation to Dowdon, my conclusion is not so damning as to the culpability of Dowdon when assessed against that of JWBS and Mr Watson. Mr O'Connor, on behalf of Dowdon, did request the removal of the water blaster from the worksite. Having done that, Dowdon failed in its overall responsibility to properly supervise the worksite by ensuring that the plant was indeed removed. According to Mr O'Connor's affidavit and as corroborated by Mr Gordon, the request to remove the water blaster from the site was made to Mr Watson in the first instance at or about 10:30am on 30 May 2001. That that request was conveyed to Mr Pope, the site supervisor for JWBS, was confirmed by Mr Watson at or about 11:00am and Mr Gordon left the site at approximately 11:30am. It was only a little over some two hours later that Mr O'Connor came across the employees of JWBS stumbling out of the 'bubble,' clearly very distressed from the effects of the carbon monoxide fumes. It was indeed very fortuitous that he did because if he had not heard the cry for help that he did, there is every likelihood the two unconscious employees still inside the 'bubble' would not have survived. 28 On the evidence before me, I have no way of knowing what occupied Mr O'Connor for two hours or more such that he did not notice or hear the petrol driven water blaster. Given the insistence by Dowdon that it be removed from the site, it smacks of tardiness on Mr O'Connor's part as site foreman for Dowdon that he did not follow through that request and ensure the plant in question was removed. It is clear from the photos before me that from passing external observance, Mr O'Connor would not have been able to readily see the water blaster in the 'bubble.' 29 The failure to follow through with that supervisory role ultimately exposed the employees of JWBS to the risks to safety as identified, although I accept that Dowdon and Mr O'Connor would not have envisaged that Mr Pope would move the water blaster inside the 'bubble' in the way that he did. Indeed, when discussions did take place between Mr O'Connor and Mr Pope about the use of the water blaster, it was on the basis that the plant itself would remain outside the immediate work area. 30 Relevant to its other failure as pleaded in relation to its offence, Dowdon believed that the site supervisor for JWBS was a WorkCover assessed and competent person in relation to all aspects of the work to be performed. Mr O'Connor deposes as to this issue: [16] On or about 21 May 2001, following the commencement of work on the Site, Mr Watson introduced Mr Bill Pope to me as the asbestos removal site supervisor for the Sub-Contractor for works relating to the removal of asbestos. In this regard, I understood Mr Pope to be an adequately qualified site supervisor on the basis that the Sub-Contractor was a licensed asbestos removal business operation and as such was aware of any other requirements and qualifications necessary before the employees of the Sub-Contractor could properly supervise and perform the work relating to the removal of asbestos from the Site. 31 It was Mr Watson that had been licensed by WorkCover in relation to asbestos removal. Further, it is clear that Mr Watson was not on site at all times and certainly was not when the water blaster was located and used in the way that it was. 32 I am of the view that, overall, the culpability of Dowdon vis-a-vis that of JWBS and Mr Watson, relevant to the factual circumstances of the offences before me, is of a lesser degree and I propose to take that into account in relation to the penalties that I impose. 33 The defendant Dowdon has one prior conviction and accordingly the maximum penalty is $825,000. The earlier conviction in relation to Dowdon relates to an offence under s15(1) of the Act that was dealt with before the Chief Industrial Magistrate in 1994. A penalty of $1000 was imposed. 34 On the basis of the brief information given to me, the circumstances of that offence are not relevant to considerations as to the nature and quality of the offence before me except that it raises the maximum penalty provisions. 35 The defendants JWBS and Mr Michael Watson have no prior convictions. Accordingly, the maximum penalty is $550,000 and $55,000 respectively. 36 In imposing a penalty in these matters regard must be had to general and specific deterrence. That much is evident from the decision of the Full Bench of the Court in WorkCover Authority of NSW v Capral Aluminium (2000) 1999 IR 29 particularly paras [74] to [77]. 37 I do not propose to repeat those paragraphs at this point. I would imagine they are well known to the parties before me. Para [74] makes it clear that if I am to exclude either general or specific deterrence I must state with precision the basis on which I exclude such considerations. I do not exclude such considerations in this matter before me for the reasons that Capral makes abundantly clear. 38 Counsel have raised the financial circumstances of the respective defendants in relation to their ability to pay any fine imposed. Both corporate defendants are relatively small companies and, as he states in his affidavit, Mr Watson's income of approximately $80,000 per annum, which is shared jointly with his wife, is derived from JWBS. 39 Clearly I am obliged to pay regard to those matters in determining the penalty I impose. Section 6 of the Fines Act 1996 makes that abundantly clear. At the same time, in weighing that consideration, as is well settled, the Court must also ensure that the penalty imposed is commensurate with and properly reflects the gravity of the offence. 40 Included with the affidavit material of Mr Robert Gordon on behalf of Dowdon are financial statements for Dowdon for the years ending 30 June 2000 and 30 June 2002. There are some inconsistencies at first glance as between some entries in the Profit and Loss Statements provided for the year ending 30 June 2002. That has been satisfactorily explained by counsel for Dowdon as reflecting the financial year in which the sale of the defendant to Mr O'Connor and Ms Neary was concluded. Overall, the financial statements would suggest a relatively small company trading at a very modest profit for the year ending 30 June 2002 of $1609, having a gross annual income on sales of almost $2 million dollars. As advised, Dowdon continues to operate in the building construction industry with some fifteen employees. 41 In relation to JWBS and Mr Michael Watson, I have noted the information set out in Mr Watson's affidavit and the accompanying financial information. That accompanying information is scant to say the least, referring to a company mortgage account on behalf of JWBS with Citibank showing a closing balance in August 2003 of some $78,000 with a credit limit of $133,000. That mortgage is secured over the family home of Mr Michael Watson and his wife at Narrabeen in Sydney. Mr Watson gives the value of that home as approximately $850,000. JWBS also continues to operate in the building demolition business with 29 employees. 42 In relation to the current financial position of JWBS, Mr Watson deposes as follows at paras [26] to [29] of his affidavit of 5 September last. Over the last three (3) years JWBS has had an average annual turnover of $350,000. My wife and I receive a combined salary from JWBS of $80,000.00. Further financial details of JWBS are as follows: (a) Current business loan - $128,000.00. Annexed and marked with the letter 'H' is a copy of the Mortgage Account Statement for JWBS for the period 1 January 2001 to 31 March 2001. (b) Current overdraft - $77,000.00. Annexed and marked with the letter 'I' is a copy of the Mortgage Power Account for JWBS for the period 1 August 2003 to 31 August 2003. (c) Outstanding payment from Dowdon Contracting - $107,000.00. An audit of JWBS is currently being undertaken by my Accountant. Audited records will be provided to the Commission. 43 There were no audited records made available to the Commission. It was clarified that the average annual turnover figure of $350,000 as stated by Mr Watson is a net figure. 44 Overall, it is clear that JWBS is a small company and while, on one view, trading reasonably profitably, does not have a significant asset base. If anything, it would appear that the most significant asset of JWBS is the family home of Mr and Mrs Watson. 45 I have taken note of the submissions received from counsel on behalf of the respective defendants. 46 The pleas of guilty in relation to the offences before me have been entered at the earliest opportunity and the defendants are entitled to a discount on that basis. I assess that discount with respect to each defendant at 25%. 47 There are additional subjective features that I consider I may properly take into account relevant to any additional discount on penalty. 48 In relation to Dowdon, Mr O'Connor as a Director is now in the 'box seat,' so to speak, as far as ensuring Dowdon's compliance with its occupational health and safety obligations. His affidavit attests to his concern as to the circumstances of the accident in May 2001 and his role in that on behalf of Dowdon. 49 Mr O'Connor's affidavit and additional annexured material identifies in some detail the steps taken by him at the time of the accident and since to tighten up the occupational health and safety policies and procedures of the defendant Dowdon. They were and are, on any view, considered and extensive. 50 I am satisfied that, as a Director of Dowdon, Mr O'Connor understands the defendant's obligations in relation to occupational health and safety and has taken ongoing action to address them in a positive manner. 51 The affidavit material filed on behalf of JWBS and Mr Watson throw no light on the role of the two defendants in relation to the offences before me except in the briefest of terms in paras [37] to [39] of Mr Watson's affidavit of 5 September last where he states: JWBS is a safety conscious company. JWBS has endeavoured to cooperate with the WorkCover Authority throughout the investigation of the incident and subsequently. I regret that this incident occurred. 52 There is no evidence before me to suggest that either of those three brief statements are incorrect - as far as they go. In his affidavit of 15 September 2003, Mr Watson details with relevant appendices the steps taken by the corporate defendant JWBS to address what is referred to as Current Occupational Health and Safety Management Procedures. They are all matters, as best as I can determine, that have taken place since the accident on 30 May 2001. If nothing else, they attest to the corporate defendant's increasing awareness of its occupational health and safety obligations and the steps taken to address them. 53 There is also an amount of positive testamentary material filed on behalf of JWBS, all relevant to jobs undertaken by it during 1992 and 1993. I have noted it. 54 In the affidavit material of Mr Gordon and Mr O'Connor there is unchallenged evidence, not disputed by the prosecution, that Mr Watson did instruct Mr Pope to remove the offending water blaster from the site - and that he believed he (Mr Pope) had done so. That Mr Pope did not was clearly an act done in defiance of express instructions from Mr Watson that Mr Watson was unaware of. That fact weighs heavily as a factor in mitigation in considerations as to penalty in relation to Mr Watson. On that point the prosecution have submitted, properly in my view, that the features of the offence relevant to Mr Watson as a defendant are such that he could properly be dealt with in accordance with the provisions of s10 of the Crimes (Sentencing Procedure) Act 1999. I agree subject only to the condition that he enter into a bond to be of good behaviour for a period of two years. 55 Taking all of the above into account on behalf of all three defendants, I determine a further discount on penalty with respect to the defendants of 10%. 56 Taking all matters into account, I determine as follows: Matter No IRC 4321/02 WorkCover Authority of NSW (Inspector McColl) v Dowdon Contracting Pty Limited 57 I determine a notional penalty in this matter of $32,000. In applying the discounts assessed, I determine a final penalty of $20,800. 58 Accordingly, I make the following orders: (i) The defendant is convicted of the offence before me. (ii) I impose a penalty in this matter of $20,800. (iii) I allocate a moiety to the prosecution on the usual terms. (iv) Costs to the prosecution in the sum of $12,000. Matter No IRC 4322/02 WorkCover Authority of NSW (Inspector McColl) v John Watson Building Services Pty Limited 59 I determine a notional penalty in this matter of $45,000. In applying the discounts assessed, I determine a final penalty of $29,250. 60 Accordingly, I make the following orders: (i) The defendant is convicted of the offence before me. (ii) I impose a penalty in this matter of $29,250. (iii) I allocate a moiety to the prosecution on the usual terms. (iv) Costs to the prosecution in the sum of $12,000. Matter No IRC 4320/02 WorkCover Authority of NSW (Inspector McColl) v John Michael Watson (i) The defendant is discharged without conviction and penalty in accordance with s10 of the Crimes (Sentencing Procedure) Act 1999 . The condition of that discharge is that the defendant is to enter into bond for a period of two years. The condition of that bond is that the defendant is to be of good behaviour and commit no offences during that time. Should he do so, he is to be formally called before the Court for considerations as to conviction and penalty in relation to the offence for which he has just been discharged. (ii) As agreed, no order as to costs. 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.