Industrial Relations Commission of New South Wales in Court Session CITATION : Inspector Suliman v Favelle Favco Cranes Pty Ltd [2003] NSWIRComm 150 PROSECUTOR: Inspector Yousif Suliman PARTIES : DEFENDANT: Favelle Favco Cranes Pty Ltd FILE NUMBER: IRC No 7324 of 2001 CORAM: Haylen J CATCHWORDS : Occupational Health and Safety Act 1983 - s 15(1) - collapse of crane on test pad - plea of guilty entered to amended summons - heavy industry involving number of employees - objective seriousness of breach established - requirement for both general and specific deterrence - discount allowed for subjective elements - plea entered at an early stage after summons amended - co-operation with prosecuting authority and good corporate citizenship taken into account - financial circumstances of defendant considered -impecuniosity not argued - offence found proved - penalty imposed LEGISLATION CITED : Occupational Health and Safety Act 1983 s 15(1) CASES CITED : Capral Aluminium v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 HEARING DATES: 04/07/2003 DATE OF JUDGMENT: 05/15/2003 PROSECUTOR: Mr M P Cahill of counsel SOLICITORS: Mr N A Correy Moray & Agnew LEGAL REPRESENTATIVES: DEFENDANT: Mr M Scott of counsel SOLICITOR: Mr L Lozina Dibbs Barker Gosling JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: HAYLEN J 15 May 2003 Matter No. IRC 7324 of 2001 INSPECTOR YOUSIF SULIMAN v FAVELLE FAVCO CRANES PTY LTD. PROSECUTION UNDER s 15(1) OF OCCUPATIONAL HEALTH AND SAFETY ACT 1983 JUDGMENT [2003] NSWIRComm 150 1 On 9 November 2001, Inspector Suliman applied for orders under s 4(1) of the Supreme Court (Summary Jurisdiction) Act 1967 alleging several breaches of the Occupational Health and Safety Act 1983 by Favelle Favco Cranes Pty Ltd. Those matters were listed before the Registrar on a number of occasions between February 2002 until 4 July 2002 when a plea of guilty was entered in relation to an amended summons. The amended summons alleged a breach of s 15(1) of the Occupational Health and Safety Act 1983. In acknowledgement of the plea of guilty to the amended summons, the prosecutor indicated that the remaining matters would not be proceeded with and, at the time of dealing with submissions on penalty, the Court would be requested to dismiss those matters. 2 Prior to the hearing of submissions on penalty, the parties were able to file an Agreed Statement of Facts. That document sets out in appropriate detail the nature of the undertaking of the defendant, the circumstances surrounding an accident that took place on 15 November 1999, in which a crane erected for testing had collapsed injuring two employees. The Agreed Statement of Facts also sets out the terms and particulars of the charge. It is therefore convenient for the purposes of this judgment to reproduce the relevant parts of that Agreed Statement of Facts. 3 Omitting the formal matters, the Statement of Facts was in the following form: 4. At all material times, the defendant employed Stuart Evans, Paul Donovan, George Stewart, Ian Hill, Brendan McManus, Dieter Zempel, Dave Smith, Tom Gray and Wally Krasinski. 5. At all material times, the defendant was involved in the manufacture of various types of cranes. 6. The defendant conducted its crane manufacturing business at its premises at 28 Yarrunga Street, Prestons. 7. Within those premises was an area known as the "Test Yard". Cranes manufactured by the defendant were erected in the Test Yard and tested prior to delivery to respective purchasers. 8. The Test Yard was built in or about 1975 and contained two separate "test pads", known as the top test pad and the lower test pad. 9. In order to carry out crane testing on the lower test pads, metal platforms known as test bases were fixed to the concrete surface of the test pad. 10. At all material times, the test base in use on the lower test pad was a rectangular platform measuring approximately 3.5 metres x 3.75 metres. The test base was fixed to the concrete surface of the lower test pad by two bolts at each of the pad's four corners. The bolts passed through the metal at the bottom of the test base down into a T-shaped slot known as a keyhole that was fixed in the concrete surface of the lower test pad. The bolts screwed into and were fixed by nuts that were fitted into the keyholes. 11. The T-shaped keyholes in the concrete surface of the test pad were approximately 460mm in length. The narrower section of the 'T' was approximately 310mm in length and the top flat part of the 'T' was approximately 150mm wide. The width of the narrower section of the 'T' was approximately 80mm and the width of the top flat part was approximately 150mm. The depth of the lip of the keyhole was approximately 55mm thick. The depth of the keyhole below the concrete surface of the test yard was 150mm. Beneath the vertical narrower part of the 'T' there was a cavity wider than the vertical shape of the 'T' below the bottom lip of the concrete, the shape of which enabled the nut to be inserted beneath it. At the time of the inspection of the keyholes by the prosecutor they were substantially filled with water. 12. The water in the keyholes promoted rusting of the nuts. 13. The nuts were square in shape and approximately 140mm from edge to edge and approximately 73mm high and had an inner diameter of approximately 70mm with a fine thread inside the nut. 14. The fixing bolts for the test pad and base were of a dimension compatible with the nuts. 15. The bolts were of hardened steel and the nuts were of mild steel composition and there was a hardness variation between the nuts and bolts of more than 10%. 16. The metal test base was attached by means of the bolt and nut fixings to the keyholes of the test pad at some time prior to 12 November 1999. 17. The defendant did not have in place any system of inspection for the nuts and/or bolts that were used to fix the test base in place prior to or in the course of fixation. 18. Subsequently, the defendant commenced erection of a tower construction crane, identified by the markings SWL 100 tonnes S/N 1007, M1250DX, on the lower test pad in preparation for pre-delivery testing. The erection procedure involved: (a) the mount of the crane being placed onto the test base and fixed to it; (b) the crane deck was then fitted onto the mount of the crane; (c) the power pack was then fitted onto the deck of the crane; and (d) a full complement of counterweights, weighing in excess of 120 tonnes, were then placed onto the deck of the crane. 19. On or about 12 November 1999, a gap between the test base and the surface of the test pad was observed by employees and reported. On examination hairline cracks were observed in the surface of the lower test pad close to the front of the test keyholes. 20. On Saturday, 13 November 1999, it was observed that the gap between the test base and the surface of the lower test pad had widened. 21. No work was done on the crane until Monday 15 Novemeber 1999. 22. On Monday, 15 November 1999, it was observed that the gap between the test base and the surface of the lower test pad had widened yet again. 23. Following upon these observations, attempts were made to tighten the bolts fixing the test base to the test pad. 24. In the course of the day on 15 November 1999, the A-frame mast of the crane was erected and attached on the back of the deck of the crane. The A-frame mast weighed approximately 17 tonnes and its installation placed increased strain on the nuts and bolts holding the test base in place on the lower test pad. 25. Following the installation of the A-frame mast, further efforts were made during the afternoon on 15 November 1999 to tighten the bolts attaching the test base to the test pad. On this occasion employees used a slogging spanner and a sledgehammer. 26. At around 3:00pm on 15 November 1999, a further attempt to tighten the bolts fixing the test base to the lower test pad. Under the direction of the engineers, Brendan McManus and Paul Donovan, the crane operator/driver, Stuart Evans, slewed the crane around in order to transfer the weight of the crane onto the corner of the test pad where the attempt was being made to tighten the bolts. Whilst this process was continuing, the opposite corner of the test base started lifting away from the surface of the lower test pad. As the test base came away from the surface of the lower test pad, the whole crane tipped over backwards. 27. At the time of the incident involving the collapse of the crane Brendan McManus, Paul Donovan and Ian Hill were underneath the crane and Dieter Zempel, Dave Smith and Tom Gray were standing in the test yard in close proximity. 28. At the time of the collapse Stuart Evans had alighted from the driver's cabin and was standing on the deck outside the driver's cabin with Wally Krasinski. Both Stuart Evans and Wally Krasinski were dislodged from the crane deck as it struck the ground and sustained minor physical injuries to several parts of their respective bodies. 29. At all material times prior to the collapse, the crane driver's cabin and deck were situated higher than five metres above the concrete surface of the test yard. 30. At the time the crane collapsed the counterweights, which were sitting on the deck of the crane, slid off and landed in the office area of the electrical workshop where George Stewart had been working a short time prior. Mr Stewart escaped physical injury as he had moved outside the electrical workshop just prior to, or at the time of the collapse. 31. The total weight of the crane, including the counterweights and mast, was in the vicinity of 200 tonnes. 32. The concrete surface of the test pad area was severely damaged by the force of the collapsing crane. 33. Following the collapse of the crane, Stuart Evans required counselling therapy for anxiety and post traumatic stress disorder (PTSD) consequent upon the incident. Paul Donovan and Dave Smith, also required counselling therapy for anxiety consequent upon the incident. 34. Further, Brendan McManus suffered physical injuries which he described as minor. 35. The alleged offence under section 15(1) of the Occupational Health & Safety Act 1983 is that on 15 November 1999 , in its test yard situated within its factory premises at 28 Yarrunga Street, Prestons in the State of New South Wales ('the premises"), the defendant, being an employer, failed to ensure the health, safety and welfare at work of its employees and, in particular, Stuart Evans, Paul Donovan, George Stewart, Ian Hill, Brendan McManus, Dieter Zempel, Dave Smith, Tom Gray and Wally Krasinski who were standing on or in close proximity to a construction tower crane with identification markings SWL 100 tonnes, S/N 1007, M1250DX, which crane had been mounted for pre-delivery testing purposes on the lower test pad in the test yard of the premises when it collapsed from its mounted position and fell to the ground by reason that: (a) The crane, as erected by the defendant, became unstable and collapsed. (b) The defendant failed to provide and maintain plant, to wit, the lower test pad, in a condition that was safe and without risk in that: (i) The test base was mounted and secured to the test pad using bolts that were of hardened steel and the nuts were of mild steel composition and there was a hardness variation between the nuts and bolts of more than 10%; (ii) The nuts were located in keyholes set into the surface of the lower test pad, the keyholes collected water and the prolonged exposure of the nuts to that caused rust and corrosion; (iii) The location of the nuts in keyholes prevented discovery of their actual deteriorated condition; (c) The defendant failed to provide and maintain systems for the conduct of pre-delivery testing work on the said tower crane that was safe and without risk to health in that: (i) At all material times there were no documented procedures for the inspection and maintenance of the test pad, test base and its fixings; (ii) At all material times there were no records kept of previous inspections with respect to the nuts or bolts used in fixing the test base to the test pad; (iii) It failed at all material times to regularly remove the nuts from the keyholes in order to inspect them for soundness and suitability to withstand loading. (iv) It failed to keep records of the dates of and findings from inspections of the said test pad, test base or fixings and make them available at all material times for use by the crane testing employees. (v) At all material times it failed to remove the load from the test base; when there was an indication that its stability was at risk. (vi) At all material times the failure to check the test base and test pad upon which the said crane was standing to confirm that it was capable of withstanding the forces likely to be imposed by the crane was contrary to clause 4.2.1 Australian Standard AS 2550.1-1993 Cranes - Safe Use - General Requirements. (d) The defendant failed to provide such information, instruction, training and supervision in relation to the testing of the said crane using the test base affixed to the lower test pad as a crane standing, as was necessary to ensure health and safety. (e) The defendant failed to take such steps as were necessary to make available in connection with the use of plant, to wit the said test base, test pad and its fixings, adequate information about the use for which such plant was designed and about any conditions necessary to ensure that when put to that use, namely the erection for testing of the said crane, it would be safe and without risk in that the deteriorated state of the test pad and base fixings which rendered them unable to withstand the forces likely to be imposed upon them by erection of the said crane for testing purposes was not revealed at all material times to those carrying out the test work. (f) The deck upon which Stuart Evans and Wally Krasinski were standing came into contact with the concrete surface of the test yard when the crane collapsed causing Stuart Evans and Wally Krasinski to be dislodged from it. (g) The crane was at risk of and did in fact collapse, toppling into the test yard area in and around the lower test pad where the employees, Stuart Evans, Paul Donovan, George Stewart, Ian Hill, Brendan McManus, Dieter Zempel, Dave Smith, Tom Gray and Wally Krasinski, were at work. 4 The evidence for the prosecution consisted of the Inspector's factual report of his visit to the accident site, 18 coloured photographs and a certificate of prior convictions. The defendant company, which commenced operations in 1995, had two previous convictions under s 15(1) of the Occupational Health and Safety Act 1983. Both matters were dealt with during the year 2000: in the first matter, the Chief Industrial Magistrate imposed a fine of $5,000 and in the second matter the Local Court imposed a fine of $12,500. The prosecution provided no further evidence as to the nature of these two prior convictions. 5 For the defendant, three affidavits were read. There was cross-examination in relation to only one of these affidavits and that cross- examination was limited to the financial position of the defendant. 6 Mr Brendan McManus was the engineering manager for the defendant. In his affidavit he outlined his extensive experience from approximately 1964 with various companies involved in the manufacture and design of tower cranes. From mid-1986 to mid-1996, Mr McManus held various positions in a company called Favco Cranes. In 1995, following receivership, a new company carried on the business using the same name. In this company Mr McManus continued the position as engineering manager, a position held with the defendant to the present time. 7 Mr McManus stated that, as a result of his training, study and experience, he possessed specialised knowledge in relation to the engineering of cranes. As the engineering manager of the defendant, he was responsible for providing advice with regard to the safe design and operating standard of cranes. In this position, he had produced an accident report dated 23 November 1999. In making that report, Mr McManus made a number of calculations upon which certain conclusions were based. 8 Mr McManus' conclusion as to the cause of the accident was contained in the following paragraph of his affidavit: It is agreed that the crane collapsed as a result of a failure of the test pad. In my opinion, the design of the test pad was such as to increase the risk of failure in that the design did not allow for a precise and appropriate fit for the nuts and bolts. The test pad was secured by two nuts and bolts in each corner of the pad (ie eight in all). Due to the poor design of the test pad, it could be removed and then replaced in such a way as to place unequal stress on the bolts. In my opinion, when the pad was replaced, in order to test the relevant crane, one of the bolts was not properly fitted in the T slot. As a result only one bolt in one of the corners was carrying the stress usually borne by two bolts. This bolt failed leading to the collapse of the crane. In this context, the differential in hardness between the nuts and bolts contributed to the collapse but was not the predominant cause of the collapse. 9 The following matters are worthy of note from Mr McManus' report: (a) the failed bolts were not tight; the failure was caused by various factors, namely, one of two bolts per corner had not been seated properly in the T slot for over approximately 25 years; the nuts and bolts were not pushed fully into the T slot and were approximately 15mm 'further out' than necessary; measurements of the T slot, bolt length and washer indicated that bottoming of the bolts could happen in the T slot and when this happened the thread could be damaged by tightening; there was intermittent water retention in the T slot over a 25 year period approximately, which would inevitably lead to some corrosion and thus a lack of strength in the thread profile; and the load applied was the largest applied for nine years and wear over that time might have built up; (b) before 1970, recommended practice allowed and bolt manufacturers recommended softer nuts to ensure wearing in of nuts to bolts - this practice has changed in all standards from 1970 and in today's standard, the requirement is for the nuts to be of equal or greater strength than the bolts; (c) over the years, the lower pad had been built to test cranes that were quite large; (d) it was normal procedure in the defendant, before a decision was made to put a crane on the base, for an engineering assessment to be performed to check the structural design. 10 An affidavit sworn by Mr Michael Jellis was also read by counsel for the defendant. Mr Jellis was qualified as a Bachelor of Engineering and was a partner in AML Consultants. He described himself as being employed as a structural engineer who had worked in that capacity for 28 years. He had reviewed the calculations contained in Mr McManus' report and confirmed the accuracy of those calculations. Mr Jellis also agreed with Mr McManus' conclusion that, if only one nut and bolt had been taking the load in one corner, the nut and bolt would fail. 11 Mr Shenandoah Chong was the general manager and director of the defendant. In his affidavit, he said he had been the general manager since 1 January 2003 and had been a director of the defendant since 1 October 2002. He had previous employment with Favelle Favco Cranes (Malaysia) SdnBhd. Mr Chong stated that the defendant had commenced trading in New South Wales on 1 June 1995 and was a subsidiary of the Malaysian company Muhibbah Engineering (M)Bhd. The assets, site and plant located at Prestons had been bought from a company in liquidation in or about June 1995. The site was said to cover some 11 acres. 12 The New South Wales operations of the defendant were presently based at Prestons in New South Wales and the company was Australia's only operational crane manufacturer. The defendant carried on the business of designing and manufacturing tower cranes for building construction and offshore use. The defendant exported approximately 90 per cent of its product to overseas markets. 13 The predecessor company had operated the site and plant, including the test pad which was the subject of the present proceedings, at Prestons since 1967. He had been told that the test pad was designed and built around 1967 and had been used to test cranes including those used to build the World Trade Centre in New York from about 1968. 14 Mr Chong said that the defendant currently employed approximately 70 people in New South Wales to design and manufacture cranes for building construction and offshore use. The machinery used in the manufacture of these products include: electrical and pneumatic hand tools; welding equipment; lathes; horizontal and vertical bores; milling machines; profile cutters, including oxy and plasma cutting equipment and heavy machinery such as overhead cranes etc. 15 Mr Chong said that the defendant's commitment to safety was demonstrated by the following matters: (a) it had a comprehensive plan for addressing its duties and responsibilities under relevant safety legislation in New South Wales. There was a workplace safety policy manual entitled "Safety Management System". The policy was currently under review but replaced a previous and much less detailed policy which was in force until October 1996; (b) it had employed Mr Fahmi Bachmid in January 2003 as the full time occupational health and safety environment coordinator. Mr Bachmid was responsible for reviewing and updating all the defendant's policies and procedures in relation to occupational health and safety as well as updating the Safety Management System manual. Mr Bachmid had attended a four day accredited training course on the Occupational Health and Safety (Committees in Workplaces) Regulation 1984 in May 1999. (c) the Safety Management System manual provided for risk reviews of safety throughout the factory. It is to be reviewed and revised on an ongoing basis in response to identified safety risks and legislative changes. Mr Bachmid had already revised the policy in relation to the use of test pad No 2; (d) as a result of the accident, the old test pad which was involved in the accident leading to these proceedings, was demolished in November 1999 and a new test pad had been erected in its place in August 2000 and was now in use. The new test pad avoided the design flaws inherent in the design of the previous test pad; (e) the defendant had had a safety committee since 1996; and (f) in the 2002 financial year budget, the defendant had allocated a total amount of $169,500 for safety projects including updating and maintaining plant. In the 2003 financial year, this amount had been increased to $188,900. 16 The Safety Management manual included a number of specific safety policies which were identified. The manual also provided for special awards and recognition for staff who ensured compliance with the Safety Management System manual and occupational health and safety legislation. 17 The Safety Committee was elected by employees and included representatives from all sections of the plant. All members of the Safety Committee (excluding a Mr Torres) were trained in accordance with WorkCover guidelines and three of the members were first aid qualified. Mr Torres joined the Safety Committee in November 2002 and was booked to attend appropriate training in April and May 2003. In addition, there were two employees, not members of the Safety Committee, who were first aid qualified. 18 Members of the Safety Committee were identified to all staff by having the words "Safety Committee" stitched on to their uniforms. Those who had first aid qualifications also had "First Aid" stitched on to their uniform. 19 The Safety Committee met on a regular monthly basis and the membership of the Committee was published to the workforce. The Minutes of the Safety Committee meetings were published and distributed in several ways which were identified in the evidence. The Minutes contained an action sheet which was controlled by the Committee, to ensure work and rectification was performed within a nominated time frame. In addition, members of the Safety Committee conducted regular safety audits and risk assessments in conjunction with the occupational health and safety environment officer and the results were recorded and kept in a workplace inspection checklist. 20 Since approximately October 1998, the defendant had engaged the services of Be Safe Pty Ltd. Be Safe Pty Ltd was said to attend the defendant's premises upon request to conduct risk assessments, to advise on occupational health and safety issues and to conduct safety training courses for the workforce. Continuing safety education also included senior management. Mr Chong said that he had been booked to participate in training in occupational health and safety at a WorkCover accredited course for April 2003. Similar training accredited by WorkCover and conducted by Be Safe Pty Ltd had been attended by a number of other managers including Mr Bachmid. 21 An induction programme had been developed for new staff. That programme had a "strong focus" on safety procedures and processes. All new employees and contractors were provided with a copy of the previous safety policy which was now part of the safety management system manual. 22 In relation to work performed by independent contractors, the defendant addressed safety issues through its staff and management resources. All staff, including contractors, were invited to attend safety committee meetings every month. Contractors were provided with the same induction with regard to occupational health and safety as new employees of the defendant. 23 Mr Chong stated that plant and machinery were assessed in accordance with the defendant's risk assessment record form. A safety audit form was completed so that any risk associated with any new equipment or work practice would be identified and eliminated prior to the practice or machinery being intergrated into the everyday working environment of the factory. 24 The staff of the defendant had been shown a number of occupational health and safety videos. In relation to safety breaches by staff, there was a process whereby employees could be disciplined in relation to occupational health and safety policies and procedures. 25 Mr Chong also stated that the defendant's success in seeking to prevent accidents was demonstrated by an improving accident record. Graphs attached to his affidavit plotted days lost and injuries suffered and supported Mr Chong's conclusion. Attention was also paid to injury management and, when an injury occurred, the defendant provided occupational therapeutic assistance to its employees immediately. 26 As an indication of its continuing co-operation with the WorkCover Authority, Mr Chong noted that, after this incident, the defendant had been issued with 18 improvement notices. Considerable work was undertaken to address each of the notices and the work was carried out with the participation and support of the Safety Committee and the management of the defendant. 27 In relation to the financial state of the defendant Mr Chong made the following statement: Favelle has suffered significant losses over the past two financial years due to reduced crane prices and increasing costs of manufacture which threatened the continued existence of the company. The defendant's financial statements for the years ending 31 December 2001 and 31 December 2002 were annexed to Mr Chong's affidavit. Those documents disclosed an operating loss of $2,495,297 for the year ended 31 December 2001, and $1,993,395 for the year ended 31 December 2002. 28 In cross-examination, Mr Chong was asked about the defendant's statement of financial performance and the written down value of non-current assets sold. In 2000, there was a write down of approximately $91,000 and in the year 2001 there was a write down of in excess of $4.3m. Mr Chong accepted that, in the financial year ended 31 December 2001, the defendant had adopted a change in its accounting policies that had the effect of resulting in a large write down in value of non-current assets. It was accepted that, for the first time from 1 January 2001, the company had made a special write down of the value of non current assets sold in the sum of $4.3m. It was also accepted that this special write down and abnormal variation took the company from a profit of $382m to a loss of approximately $2.5m. Mr Chong accepted that it was an unusual accounting change and it was not an entry that would be a recurring event from year to year. 29 The audited accounts for the year ending 31 December 2002 had only just been received in draft form and had been sent to head office for verification: the audited accounts were not presently available. It was further accepted that, without the audited accounts with its detailed notes, it could not be established how the loss in that particular financial year had been generated. SUBMISSIONS FOR THE PROSECUTION 30 It was pointed out by the prosecutor that, in pleading guilty to the offence under s 15(1) of the Act as particularised, all the matters alleged had been admitted by the defendant. As to the objective seriousness of the offence, it was submitted that there was an obvious and foreseeable risk to safety arising from the defendant's operations. At the time of the collapse of the crane, the lower test pad was being used to test a crane that was approaching its "load limit". Further, the defendant had failed to take appropriate measures to ensure that both the lower test pad and the relevant nuts and bolts were safe for use in the testing of this particular crane. It was apparent that the defendant failed to provide and maintain proper inspection and a maintenance programme with respect to this test pad, the test base and the relevant securing mechanisms, namely the nuts and bolts. 31 It was noted that the lower test pad, according to the evidence of Mr McManus, had been used regularly over 25 years with no record of the original nuts and bolts ever being changed. Mr McManus had also identified a number of contributing causes, but it was submitted that the significance of all of those factors identified by Mr McManus was that they were capable of being identified and eliminated by the defendant prior to the erection of the crane for testing by the adoption of a proper system of inspection and preventative maintenance. 32 On the occasion of the collapse of this particular crane, the absence of serious physical injury was due to good fortune rather than good planning and good practice on the part of the defendant. It was noted that, at the time of the collapse, a large number of employees were in the vicinity of the crane and that those workers were exposed to a real risk of significant injury. Mr Evans had suffered significant psychiatric injury as a consequence of this particular incident. 33 It was submitted on behalf of the prosecutor in this case that both general and specific deterrents were matters that should be taken into account in determining the appropriate penalty to be imposed on the defendant. It was noted that, in Capral Aluminium v WorkCover Authority of New South Wales, a Full Bench had recognised that it would be rare that a sentencing court would not impose a sentence that included consideration of general deterrence. 34 The defendant had two previous convictions before the Chief Industrial Magistrate. Although occurring some 18 months apart, they were dealt with in February 2000 and July 2000 with fines of $5,000 and $12,500 being imposed. The maximum penalty available in relation to this matter was therefore $825,000 because this was the third offence under the Act. This maximum penalty reflected the public expression by Parliament of the seriousness of such offences. 35 In relation to subjective factors, the prosecutor submitted that the defendant was entitled to the benefit of those factors that tended to mitigate the objective seriousness of the offence. 36 If it was accepted that the defendant entered its plea of guilty at an early stage, it was entitled to have the full benefit of that plea reflected in the penalty to be imposed. The defendant entered his plea shortly after the amended application and order were filed. It was accepted that a plea of guilty may attract a greater degree of leniency where the court was satisfied that the plea reflected contrition on the part of the defendant. It was also accepted that the defendant was entitled to a discount with respect to its "undoubted co-operation with the WorkCover Authority in the investigation" of the accident. The defendant had made its officers available to be interviewed by the WorkCover Authority and had provided copies of all relevant investigation reports. Nevertheless, having regard to its industrial antecedents, the defendant was not entitled to the leniency that was normally extended to an employer who did not have a record of failing to meet its obligations under the Act. 37 It was submitted that the offence reflected a significant failure on the part of the defendant to meet its obligations under the Act. Having regard to the nature and quality of the offence and a clear policy of the Act in relation to the establishment of safe standards in the protection of the workforce, the Court was urged to impose a significant monetary penalty. 38 The penalty to be imposed by the Court should have regard to the following principles: (a) the penalty to be imposed should reflect the objective seriousness of the offence; and (b) subjective features, such as a plea of guilty, co-operation with the investigation and subsequent measures to improve safety should play a subsidiary role in the determination of the penalty to be imposed. 39 While it was accepted that the Court was obliged to take into account the financial circumstances of the company in making an assessment of the appropriate penalty, there were a number of reservations expressed about the financial matters disclosed in the defendant's evidence. The loss for the financial year ending 31 December 2001 appeared to arise from an unusual entry and a write down which took the accounts of the company from the "black" into the "red". In relation to the financial year ending 31 December 2002, in the absence of detailed accounting records and audited notes, it was not possible to make a detailed assessment of the company's financial position. In those circumstances, little reliance could be placed on this material as a mitigating factor. SUBMISSIONS FOR THE DEFENDANT 40 For the defendant, it was emphasised that the company had been in operation only since 1995 and that this testing equipment had been in constant use, allowing for the ups and downs of normal trading in this industry, since 1967. Thus, the test pad which had failed had been in place at the time of the accident for a minimum period of 33 years. The piece of equipment was described as a large concrete slab which was sunk a significant distance into the earth with bolts embedded into the concrete in a T slot allowing them to be moved so that different sized bases could be attached. This equipment had remained in operation and without incident during this lengthy period. Further, there had been no indication of a failure of the test pad, including the failure which took place in this particular incident. The defendant had the advantage of the services of Mr McManus who had been in the crane industry for nearly 40 years and was described by counsel for the defendant as one of the leading crane engineers in Australia. He had thoroughly investigated the collapse of the crane and had, at all times, provided reports and documents to the WorkCover Authority in relation to the collapse. Mr McManus had gone so far as obtaining a geo-technical report which he had also supplied to the WorkCover Authority. 41 On this particular occasion, during the erection process, it was observed that there was a lifting of a particular bolt, or the connection to a particular bolt, and it had been tightened again. When the bolt was reported as loose, the erection procedure had been stopped and work undertaken to rectify the bolt. Erection continued after tightening was carried out. It was important to understand the evidence of Mr McManus that theoretically the bolts were well within their allowable strength for the purpose of this operation. It appeared from other information available that, when the test pad failed, it was loaded to less than half of its maximum allowable stress load. 42 It was also significant that the very experienced engineer, Mr McManus, could find no single cause for the failure in the test pad which had been regularly used for over 30 years. On a consideration of the original design of the test pad, the defendant undertook the installation of a newly designed test pad. In the circumstances, counsel for the defendant described this as simply a case where there was a latent defect in an existing piece of equipment which evaded detection because of the nature of the defect itself, namely, the placing of the bolts in the T slot restricting greatly the ability to be able to inspect the state of the embedded bolts. 43 Nevertheless, the company had not shied away from the fact that there was an accident which entailed a large and heavy piece of equipment falling. The company had not simply withdrawn into denial but apart from its own investigations and its co-operation with the WorkCover Authority, the evidence disclosed that it had expended significant resources on trying to identify exactly what had happened and why it happened and then set about rectifying the design fault. 44 In relation to foreseeability, clearly a risk was created. Because of the nature of the design fault, the degree of foreseeability of this crane collapse was in serious issue and, hindsight aside, it could properly be concluded that this incident was "barely foreseeable". 45 The collapse of the crane was a very unusual, one off event. Following incident free use over a large number of years, a number of steps were taken by the defendant, including the destruction of the old pad, rather than merely repairing it, investigation and introduction of a new design for the test pad, and the building of that test pad rectifying the design faults which had been exposed. In those circumstances, this was a case where there was little, if any, purpose for specific deterrence to form part of the final penalty to be imposed on the defendant. There were other factors as well. The previous safety policy of the defendant was in evidence, together with the new and comprehensive safety document which had been implemented and described in the evidence. Under the new safety system and procedures, training involved all levels of the workforce including senior management. This was clear evidence of the defendant's concern for occupational health and safety as well as evidence of its good corporate citizenship. 46 In relation to the financial information before the Court, counsel for the defendant made it clear that the defendant was not suggesting that it was impecunious but was simply providing that information so the Court would understand, in a general way, the financial status of the defendant. It also allowed the Court to assess the significance of the amounts of money now being spent in relation to occupational health and safety as a total of the defendant's overall operating costs. 47 Besides the considerable steps taken by the defendant following the accident, and its co-operation on a continuing basis with the WorkCover Authority in trying to ascertain the precise cause for the collapse of the crane, it was also submitted that the defendant had pleaded guilty at the earliest time, being the time when the number of charges were reduced and an amended application and summons tendered in Court. The defendant in those circumstances was entitled to the full extent of the discount available. DELIBERATION 48 I did not understand the submissions for the defendant to suggest that this accident was other than a serious breach of the Act. The emphasis in the defendant's submissions were placed on the issue of foreseeability having regard to the latent design defect which, to a significant degree, prevented close inspection of the embedded bolts. I am satisfied on the evidence presented that this was indeed a serious breach of the Act. At the time of inspection, the T shaped keyholes were substantially filled with water and it was accepted that water promoted a rusting of the nuts. It was also accepted that there was no system of inspection for the nuts or bolts used to fix the test base. On 12 November 2001, a gap was observed between the test base and the surface of the test pad. Hairline cracks were observed in the surface of the lower test pad close to the front of the test keyholes. On 13 November 2001, it was observed that the gap had widened between the test base and the surface of the lower pad. By 15 November 2001 it was observed that this gap had widened again. On 15 November 2001, attempts were made to tighten the bolts on at least three separate occasions. These events were of sufficient significance to put the defendant on notice that something quite out the ordinary was occurring in relation to the lower test pad and that the tightening of the bolts was not being effective. 49 Considering the age of the test pad and the fact that the design was such that it was difficult to closely inspect the embedded bolts, and that the keyholes had been subjected to the effects of water, it is difficult to understand why the very experienced senior staff of the defendant did not take steps to dismantle the test pad and conduct whatever inspections were available and necessary to address the problems that were being exhibited. Further, the evidence discloses that there were two test pads but there is no evidence as to whether or not the second test pad was available or suitable or why it was otherwise inappropriate to relocate the crane being tested to the other test pad. In view of the lack of evidence in relation to the availability and suitability of the second test pad, I have put that possibility aside in reaching my conclusion as to the objective seriousness of the risk to employees demonstrated by this accident. 50 The defendant accepted that the location of the nuts in the keyholes prevented discovery of their actual deteriorated condition. While I accept the defendant's evidence that the test pad had been in operation for more than30 years without incident, that length of use combined with the fact that water could be observed in the keyholes and that commonsense would suggest that the presence of water may compromise the embedded bolts, their threads and the nuts used in the operation to secure the crane being tested, then the degree of foreseeability of the failure of the test pad cannot be so lightly treated as suggested by the defendant's submissions. While I accept that the location of the nuts in the keyholes prevented discovery of their actual deteriorated condition, there appears to be no reason why removal of the nuts for maintenance and inspection purposes could not have been undertaken. The defendant accepted that there were no documented procedures for the inspection and maintenance of the test pad, the test base and its fixings, and that there were no records kept of the previous inspections with respect to the nuts and bolts used in fixing the test base and the test pads. 51 I accept the prosecutor's submission that the fact that there was little physical injury suffered by employees at the site seems to be a matter of good fortune rather than good safety management. The counterweight landed in the workshop office area, which shortly before the incident had been occupied by Mr Stewart. In addition, at the time of the collapse, there were nine employees in the area around the lower test pad. It is this combination of matters which satisfies me as to the objective seriousness of the risk to employees at this particular work site on the day in question. There is no evidence to contradict Mr McManus' view that there was no single failure which led to the collapse of the crane. I accept his expert opinion in this regard. However, Mr McManus' report does not exculpate the defendant, nor does it appear to be designed to achieve that purpose. 52 In relation to general deterrence, the circumstances of this incident further demonstrate the requirement for employers to be alert and proactive in ensuring the safety of employees at the workplace. In this case, there may well have been a degree of complacency induced by the fact that the test pad had long been in operation without incident. There were, nevertheless, sufficient indicators, including the presence of water in an area which was difficult to inspect, which should have alerted the defendant to be more diligent in inspection and maintenance of the test pads. These aspects have relevance for industry in general. The issue of general deterrence therefore has a significant role in assessing an appropriate penalty in this case. 53 I am unable to accept the defendant's submission that, bearing in mind the steps taken since the collapse of the crane and the long history of its use without incident, this is a case where specific deterrence would be of limited significance, if any. The defendant continues to operate in this heavy industry with all its attendant risks. It has undertaken a number of steps to improve safety training, including at senior management level, and has overhauled what appeared to be an inadequate safety manual. While these steps may be of significance in determining the extent of any discount which may be granted because of subjective features, I am of the view that specific deterrence also has a significant role to play in assessing an appropriate penalty in this case. It is to be remembered that this defendant commenced operations in a well established undertaking in 1995. I was informed by the defendant's counsel that, in a period of approximately 18 months, there were two incidents which resulted in breaches of the Act which were dealt with in February 2000 and July 2000 by the Chief Industrial Magistrate. This third breach of the Act, although quite different from the nature of the earlier breaches, confirms in my mind the necessity for specific deterrence to play a significant role in the setting of an appropriate penalty. Bearing these matters in mind, I would fix a penalty of $150,000. 54 This sum takes into account the financial position of the defendant as described in the evidence of Mr Chong. I accept the fact that this evidence was not called to establish the impecuniosity of the defendant but to give an overall and general picture of its financial status and also to place in context the financial resources now being expended on safety measures. 55 In relation to objective considerations, I accept that, at the time the plea of guilty was entered with the prosecutor proceeding on a more limited case, the plea was entered at an early stage. I will allow a discount of 25 per cent for this factor. 56 I accept the defendant's submission (which was supported by the prosecutor) that it fully co-operated with the WorkCover Authority in its investigations and went to some considerable lengths to investigate the cause of the failure of this test pad. The re-design of the test pad and the steps taken after the accident to implement appropriate training and to introduce a comprehensive safety manual all speak well of the defendant, its understanding of its responsibilities under the Act and its recent, if belated, efforts to ensure the safety of its workplace. On the evidence and submissions, I am satisfied that the defendant has demonstrated itself to be a good corporate citizen. In consideration of these matters, I would allow a further discount of 10 per cent of the penalty to be imposed. This brings to 35 per cent the total discount allowed for subjective features. ORDERS 1. The defendant is found guilty of the amended charge under 15(1) of the Occupational Health and Safety Act 1983, to which it has pleaded guilty. 2. The defendant is fined the sum of $97,500 with moiety thereof to the prosecutor. 3. The defendant is to pay the costs of the prosecutor as agreed; in the absence of agreement the defendant will pay the costs of the prosecutor as ordered by the Court. 4. By consent, matter Nos IRC 7322 of 2001 and IRC 7325 of 2001 are dismissed 57 The Court is to be notified within 21 days of the delivery of this judgment if the Court is to be requested to deal with the issue of costs. oo00oo 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.