Industrial Relations Commission of New South Wales in Court Session CITATION : Inspector Bestre v South Sydney Junior Rugby League Club Limited [2004] NSWIRComm 215 PROSECUTOR Inspector Sara Bestre PARTIES : DEFENDANT South Sydney Junior Rugby League Club Limited FILE NUMBER: IRC 7117 of 2003 CORAM: Boland J CATCHWORDS : Occupational Health and Safety - Prosecution under section 8(1) of the Occupational Health & Safety Act 2000 - Club industry - Armed robbery - Workers placed at risk - Offence proven - Penalty imposed Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED : Occupational Health and Safety Act 1983 Occupational Health and Safety Act 2000 Capral Aluminium v WorkCover Authority of New South Wales (2000) 49 NSWLR 610, 99 IR 29 Fletcher Construction Australia Ltd v WorkCover Authority of New South Wales (Inspector Fisher) (1999) 91 IR 66 Geoff Derrick v Australian and New Zealand Banking Group Ltd [2003] NSWIRComm 406 Independent Cargo & Wool Services Pty Limited v Mingare (unreported, Fisher CJ, Glynn and Peterson JJ, CT92/1041, 10 March 1994) Inspector Hannah v Wonar Pty Limited (unreported, Fisher CJ, Glynn and Cullen JJ, CT90/1214, 30 June 1992) Inspector Mauger v P Ward Civil Engineering Pty Limited (unreported, Fisher CJ, CT94/1212, 21 December 1995) CASES CITED : Inspector Neil Buggy v Weathertex Pty Limited [2003] NSWIRComm 273 Inspector Yeung v Thiess Pty Ltd (No 2) [2004] NSWIRComm 96 Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 Manpac Industries Pty Ltd (formerly t/as Pacific Concrete & Quarries Pty Ltd) v WorkCover Authority of New South Wales (Inspector Glass) (2001) 106 IR 435 R v Howland (1999) 104 A Crim R 273 R v Slattery (1996) 90 A Crim R 519 WorkCover Authority of New South Wales (Inspector Hopkins) v Profab Industries Pty Ltd (2000) 49 NSWLR 700 at 712-714, (2000) 100 IR 64 WorkCover Authority of NSW v Waugh (1995) 59 IR 89 HEARING DATES: 07/21/2004 DATE OF JUDGMENT: 07/30/2004 PROSECUTOR Solicitor: Mr P Punch with Ms J Smith Carroll & O'Dea LEGAL REPRESENTATIVES: DEFENDANT Mrs W Thompson of counsel Solicitor: Mr D Vaughan Home Wilkinson Lowry JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: BOLAND J Friday 30 July 2004 Matter No IRC 7117 of 2003 Inspector Sara Bestre v South Sydney Junior Rugby League Club Limited Prosecution under section 8 (1) of the Occupational Health and Safety Act 2000 JUDGMENT [2004] NSWIRComm 215 1 The defendant in these proceedings has pleaded guilty to a breach of s 8(1) of the Occupational Health and Safety Act 2000. This judgment concerns the penalty to be imposed for that breach. 2 South Sydney Junior Rugby League Club Ltd ("the defendant") is located in Anzac Parade, Kingsford. At about 9.00 pm on Tuesday 5 March 2002 a person entered the defendant's premises armed with a knife. The person entered the area known as "Smithy's Bar" and, holding the relief doorman at knifepoint, obtained a quantity of cash totalling an amount of $10,409.00. 3 Inspector Sara Bestre of the WorkCover Authority of New South Wales charged the defendant with an offence under s 8(1) of the Act. That section provides: (1) Employees An employer must ensure the health, safety and welfare at work of all the employees of the employer. 4 The application for order alleged that the defendant failed: to ensure the health, safety and welfare at work of all the Defendant's employees, in particular, Hose Santos, Lillian Tkautz, Julie Colombo and Dawn Ellison. 5 The failures alleged in the particulars of the charge against the defendant were that: (a) it did fail to provide a safe place of work for its employees; (b) it did fail to provide a safe system of work for its employees; (c) it did fail to provide sufficient training and instruction to its employees in relation to security matters; and without limiting the generality of the foregoing, the Defendant did fail: (i) to have in place measures that would deter attempts at armed hold-up, such as operating close circuit television, limitations on cash accumulations in cash handling areas, and the securing of doors to the premises that are likely to attract armed hold up; (ii) it failed to train its doorman on the use of emergency security measures such as the duress alarm; (iii) it failed to ensure that the doorman had the ability to control access to the premises from the street; (iv) it failed to have a duress alarm/emergency button installed in the cash handling area; (v) it failed to train all staff in the need to implement and maintain and always to be aware of the importance of security measures being in place. As noted, the defendant pleaded guilty to the charge. Evidence 6 An agreed statement of facts was tendered. The statement contained the following information: 4 On 5 March 2002 ("the Incident Date") the Defendant conducted at the said premises a gaming lounge which was known by the name "Smithy's". 5 In the said gaming lounge ("the Lounge") members and guests of the Club were provided with the opportunity to play a variety of amusement devices, particularly poker machines, and employees of the Defendant (including Lillian Tkautz, Dawn Ellison and Julie Colombo) worked as cash handlers in the money change area of the Lounge. 6 On the incident date, the only security arrangements in place at or in the vicinity of the Lounge were as follows: (a) An employee of the Defendant (Jose Santos) was stationed at a desk adjacent to the entry point of the Lounge looking out at the glass sliding door which allowed access to the premises from the street outside; (b) There was a red distress alarm or emergency button underneath the desk close by where the doorman would normally be seated; and (c) There was an internal telephone located in the cash handling area of the Lounge for use by the staff working there; (d) There was a safe in the change handling area although time delay locks were not installed. 7 On the Incident Date there were a number of significant deficiencies in security in and around the Lounge area, the main ones being as follows: (a) The employee working as the security doorman on the desk facing the glass doors to the street, Mr Jose Santos, was employed by the Defendant as a barman and had not received any specific training as a doorman (including training on the availability of the red emergency button underneath the desk where he would normally be seated whilst performing his duty as a doorman); (b) The glass doors allowing access to persons from the street operated automatically upon the approach of a person from the street, so the person acting as security doorman had no control over the entry of persons to the premises; (c) There was no close circuit television system in effective operation; (d) The doors to the cash handling area of the Lounge were, in accordance with common practice at the time, left open; (e) There was no emergency button or duress alarm available to employees in the cash handling area of the Lounge; (f) The cash handling area operated in such a way as to result in sums of cash being located in that area on a regular basis. 8 At about 8.15pm on the Incident Date, a person unknown clad in a balaclava and brandishing a knife entered through the glass doors of the premises from Anzac Parade, took Mr Santos hostage, moved with him into the cash handling area of the Lounge, there obtained from employees in that area (Mesdames Ellison, Tkautz and Colombo) the sum of $10,409.00 in cash, and then fled the premises. 9 The events on the Incident Date were reported to the WorkCover Authority on 6 March 2002 by way of a verbal notification from a Union member employed by the Defendant. An official Accident Report Form was submitted by the Defendant to the WorkCover Authority on 7 March 2002. 10 While no employee of the Defendant suffered physical injury as a result of the events on the Incident Date, the employees who were exposed to risk to their health and safety in the course of the events on that day (namely Mr Santos and Mesdames Tkautz and Colombo) all required time off work due to the trauma to which they were exposed. 11 The events on the Incident Date, and the circumstances relating to security at the premises immediately prior thereto, were investigated by the Prosecutor over a number of months after the Incident Date. Also during this period the Defendant engaged a firm of security consultants to advise it on necessary upgrading in relation to security matters. 12. The security consultants engaged by the Defendant after the Incident Date (the Barrington Group) and on the recommendation of the Inspector undertook an audit of the Defendant's security measures at the premises and identified numerous security deficiencies that included: (a) inadequate closed circuit television monitoring; (b) inadequate written work procedures; (c) inadequate security for clearance monies; (d) inadequate security in relation to general access to the Club. 13 Since the Incident Date, security measures have been substantially upgraded by the Defendant at the premises, including: (a) the external glass doors allowing access from the street are now operated by remote control by the security doorman; (b) training of relevant staff on security issues has been upgraded and made more rigorous; (c) duress alarms have been made available for managers, doorman and persons in areas where cash is to be handled; (d) cash handling procedures have been modified by the introduction of an internal air shute (sic - chute), reducing the risk of large sums of cash being accumulated in the cash handling area; (e) the door to the cash handling area is now required at all times to be closed, except in circumstances of access or egress by a staff member; (f) closed circuit television has been instituted throughout all affected areas of the premises; (g) Time delay locks have been installed on the safes in the change handling areas. 14 [alleged failures referred to earlier] 15 Prior to the Incident Date, at least two other robberies had occurred at the Club. After the robbery in the Cash Room on the first floor of the Club on 13 July 2001, the NSW Police had recommended an upgrade of the security cameras at the Club which had not taken place as at the Incident Date. The issue of the safety of the doorman had been raised at an OHS Committee Meeting in December 2000. The recommendations of the OHS Committee had not been implemented as at the Incident Date. 7 Also tendered in the proceedings by the prosecutor was: A record of prior convictions that indicated in 1994 the defendant was convicted in the Chief Industrial Magistrate's Court for an offence under s 15(1) of the Occupational Health and Safety Act 1983 and fined $1500.00; a factual inspection report by Inspector Bestre; and, a bundle of 12 colour photographs showing various aspects of the Club's interior including the Smithy's Bar area and the money change area from where the cash was stolen. 8 Geoffrey Douglas Knight, the General Manager of the defendant, gave evidence. Mr Knight's evidence was both in affidavit form and oral. 9 Relevant parts of Mr Knight's affidavit evidence may be summarised as follows: (a) The Club has traded at these premises since approximately 1958 or 1959. It has undergone several renovations and additions since that time. (b) The Club employs approximately 350 staff that varies from time to time. Of this number approximately 127 are permanent and the balance are casual. The Club has approximately 50,000 Members. (c) At the time of the incident there was approximately 30 staff within the Club premises including security staff which patrolled those areas of the Club that were open at that time. Most of the Club premises would have been open, other than the administrative and office areas at 9.00pm on a Tuesday evening. (d) The Club has an Occupational Health and Safety Committee ("OHS Committee") that meets monthly to consider safety issues, reports from staff and the representatives and consider identified safety risks. (e) Prior to the Incident Date, and the renovations commenced in this area, the Smithy's Bar area was separate and apart from other late night areas of the Club that remained open. A risk to the safety of staff had been identified in this area due to intoxicated patrons becoming argumentative and sometimes violent. As a result of this identified risk, a security guard had been employed in the Smithy/'s Bar from midnight onwards each night. (f) Smithy's Bar area is located at the Western part of the Club and easily accessible by the Western entrance door in which the armed robber entered. In fact, during its operation, various risks had been identified by the Club in the number of bars and different cash handling areas within the Club premises. In response to these identified risks, the Club had embarked upon a detailed and expensive renovation program, not only including the additional extensions referred to above, but modifying and renovating the bars on the ground floor. (g) This included consolidating the bar areas so it was a more open plan development so as to remove the isolation of the Smithy's Bar and allowing easier access to patrol the area with security personnel and security cameras. On the incident date, hoardings were in place in the Smithy's Bar area to facilitate these works. At that time the hoarding concealed the security camera that otherwise was directed towards the change handling area. This hoarding was moved on an almost daily or weekly basis to facilitate the renovation works. As part of this renovation works, the security camera system was to be overhauled and replaced. (h) It was also a policy of the Club to multi-skill the staff. That is to say it was the intention of management to train existing staff in as many skills as possible to assist them in relation to additional shifts that they might undertake. On this particular incident the doorman, Jose Santos, was actually a barman doing relief work whilst the regular doorman, who has a security licence, was on his dinner break. (i) The Club has undertaken a security risk assessment conducted in April 2002. The investigations conducted by the person who undertook this assessment occurred the day after restricted trading was enforced on 1 April 2002. The Club has implemented the recommendations of this report and security measures are in place. In addition the renovations are now concluded and the security camera system and cash transit handling and change handling areas are much more secure. The safes in the cash handling areas are now locked with time delay locks and no immediate access is available. (j) Prior to the Incident Date the Club had been the victim of other armed hold-ups, on two prior occasions. Neither of these prior robberies was in similar circumstances to that in relation to this incident. (k) At the time of the incident there were approximately 30 security cameras within the Club. There are 70 now in existence. The cameras in existence at that time were of an older technology and as part of the upgrading of the premises and the renovation works being undertaken, the technology of the cameras were gradually being changed and the number of cameras increased over time. The new cameras has a greater film quality and they are digital in nature. It was the security camera system in operation at the time, as it is now, that the cameras have monitors at the reception desk at the main entrance to the Club. The reception desk is manned at all times that the Club is opened with usually two people being in attendance. There is also a monitor in the Manager's Office where a manager can choose to monitor the security cameras although there is no person assigned specifically for the task of reviewing this monitor in the Manager's Office. The program of upgrading the security camera system within the Club over a period of time was largely as a result of the cost but also to the ever-changing technology available. (l) In response to the robbery in transit, security has now been upgraded to include the air tubes and security guards that accompany all staff where cash is moved throughout the Club at any time, whether the Club is open or not. Similarly, as a direct response to the robbery in the soft count room, the security has been improved. The security system has been rewritten. (n) As at the Incident Date the Club spent approximately $2,000.00 a week on security arrangements and security guards. That amount has now escalated to approximately $10,000.00 per week on security contractors alone, let alone the additional costs associated with managing the security system including the security cameras, internal staff and door staff and their security duties as well as the infrastructure and capital cost of the air tube system, additional security cameras and other security equipment. Additional expenses include over $6,600.00 per week on door staff alone directly employed by the Club. (o) There were four members of staff of the Club who were injured as a result of the incident on the Incident Date. They were Jose Santos, Dawn Ellison, Julie Colombo and Lillian Tkautz. Each has received counselling and rehabilitation treatment. Each employee returned to work. (p) The Management and Directors of the Club regret this incident and the effect that it has had on the four staff members and staff generally. Whilst it is, as set out above, that the works being undertaken in the Smithy's Bar area and the Club generally was with a view to increase security and efficiency, it is regrettable that the incident occurred at a time when the Club was most vulnerable in the process of conducting these works. The Club has done all in its power to rehabilitate the four members of staff that were injured in relation to this incident and is thankful that no staff member or member of the Club were more seriously injured. Since this incident the Club has taken every available step, given financial controls and budgetary requirements to implement a security system which is constantly monitored and reviewed such that incidents such as this cannot recur. 10 Mr Knight's oral evidence went to: (a) Security arrangements that were in place at the Club prior to 5 March 2002. (b) Steps that were taken to improve security arrangements following two earlier robberies. (c) Steps taken after 5 March 2002 to improve security arrangements. (d) The purpose of the Club and the contribution it makes to junior rugby league, which included fielding some 250 teams comprising 4,000 players. (e) Statutory contributions made by the Club to various charities totalling $270,000 in the last financial year. (f) The Club's profit last financial year on an unaudited basis of between $400,000 and $500,000, which is ploughed back into the Club. Consideration 11 In assessing the gravity of an offence under s 8(1) the Occupational Health and Safety Act the primary consideration is the objective seriousness of the offence: Independent Cargo & Wool Services Pty Limited v Mingare (unreported, Fisher CJ, Glynn and Peterson JJ, CT92/1041, 10 March 1994) at 4; Inspector Hannah v Wonar Pty Limited (unreported, Fisher CJ, Glynn and Cullen JJ, CT90/1214, 30 June 1992) at 9; Inspector Mauger v P Ward Civil Engineering Pty Limited (unreported, Fisher CJ, CT94/1212, 21 December 1995) at 8-9; WorkCover Authority of NSW v Waugh (1995) 59 IR 89 at 96; Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 472-476; Fletcher Construction Australia Ltd v WorkCover Authority of New South Wales (Inspector Fisher) (1999) 91 IR 66 at 77-81; Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at 636, (2000) 99 IR 29 at 51; WorkCover Authority of New South Wales (Inspector Hopkins) v Profab Industries Pty Ltd (2000) 49 NSWLR 700 at 712-714, (2000) 100 IR 64 at 75-76;; Manpac Industries Pty Ltd (formerly t/as Pacific Concrete & Quarries Pty Ltd) v WorkCover Authority of New South Wales (Inspector Glass) (2001) 106 IR 435 at [70]; Inspector Neil Buggy v Weathertex Pty Limited [2003] NSWIRComm 273 at [56]-[57]. 12 In Lawrenson Diecasting the Full Bench at 475 observed: As we have observed, the primary factor to look at in relation to the penalty to be imposed is the objective seriousness of the offence. Particularly in cases involving a serious breach of the OH&S Act, subjective factors, such as a plea of guilty, co-operation with the investigation and subsequent measures taken to improve safety, must play a subsidiary role in the determination of penalty to the gravity of the offence itself. While the Court must keep in mind not only facts which establish the seriousness of the offence, but also those which tend to mitigate that seriousness or exculpate the offender (see Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at p 698 per Kirby P), the presence of the subjective factors referred to should not be permitted to produce a sentence which fails to adequately reflect the seriousness of the offence. Sections 3A and 21A of the Crimes (Sentencing Procedure) Act 1999 are also relevant in the sentencing process. 13 As I observed in Inspector Yeung v Thiess Pty Ltd (No 2) [2004] NSWIRComm 96 at [10]: Thus, it is the objective and subjective factual circumstances relating to an offence, including any of the prescribed aggravating and mitigating factors that are relevant and known to the court, which provide the basis for assessing the seriousness of the offence and the consequent penalty. 14 The risk to safety in this case was that of employees being confronted by an armed offender whose intention was to rob the premises of money. The facts reveal that: (a) Access to the club premises was via glass doors that automatically opened as a person approached and the doorman had no control over persons entering from the street; (b) The robber was armed with a knife and no measures were in place to protect Mr Santos from being taken hostage by the offender; (c) The doorman at the time of the incident had not received any relevant training in that role including operation of an emergency button underneath the desk where he would normally be seated; (d) There was no close circuit television system in effective operation; (e) The doors to the cash handling area of the Lounge were, in accordance with common practice at the time, left open; (f) There was no emergency button or duress alarm available to employees in the cash handling area of the Lounge; (g) The cash handling area operated in such a way as to result in sums of cash being located in that area on a regular basis; (h) The security arrangements that were in place were woefully inadequate. 15 The circumstances at the Club on 5 March 2002 presented themselves almost as an invitation for the premises to be robbed and, in the process, for employees to be placed at serious risk of harm. That a robbery might occur and that employees might be placed at risk was obvious, in my opinion. 16 Moreover, the steps taken following the incident as described in the agreed statement of facts and in Mr Knight's evidence, show that whilst the provision of security is an expensive exercise there was nothing impractical or difficult about having in place adequate security measures to avoid any risk to the health and safety of employees. 17 I note that this is the defendant's second offence. Accordingly, the maximum penalty is $825,000: s 12 of the Occupational Health and Safety Act; s 17 of the Crimes (Sentencing Procedure) Act 1999. The size of the penalty prescribed reflects the legislative and community expectation that offences under the Act will be treated seriously (see R v Howland (1998) 104 A Crim R 273; R v Slattery (1996) 90 A Crim R 519 at 524). 18 In Capral Aluminium v WorkCover Authority of New South Wales (2000) 49 NSWLR 610; 99 IR 29 at [74] the Full Bench observed that both general and specific deterrence are matters "which should normally be given weight of some substance in the sentencing process". In relation to general deterrence the Full Bench added at [75] that "The need for general deterrence in relation to serious offences under the Act is undeniable." 19 In Geoff Derrick v Australian and New Zealand Banking Group Ltd [2003] NSWIRComm 406 I observed at [28]: Armed hold-ups represent a serious threat to employees not only in banks but also in all manner of places where goods and cash are kept including service stations, retail outlets and warehouses. The duty on employers is to make certain employees are not exposed to risks to their health, safety and welfare whilst at work and that responsibility extends to circumstances where an armed offender might confront employees. It is necessary in this case that I give appropriate weight to the need for general deterrence. 20 As to specific deterrence, it is evident that the defendant has taken extensive and appropriate steps to avoid any further risk arising from armed robberies. These steps are detailed in Mr Knight's evidence. The defendant's propensity to re-offend must be regarded as low. I do not propose to give much weight at all to the need for specific deterrence in fixing penalty. 21 There are a number of relevant subjective factors to be taken into account. Firstly, the defendant pleaded guilty at the earliest reasonable opportunity and I propose to discount the penalty by 25 per cent for the utilitarian value of that plea. Secondly, the defendant has introduced significant new measures to improve security at the premises and has demonstrated a commitment to proper occupational health and safety principles and standards. Thirdly, the defendant provided its full cooperation with the WorkCover Authority and has expressed regret for exposing employees to risks from armed robbery. Fourthly, the defendant was proactive in assisting the relevant employees with counselling and rehabilitation. Fifthly, the defendant referred to the good work it does in promoting and fostering junior rugby league and I accept this to be the case. It is, therefore, a matter I have taken into account in sentencing. Sixthly, although the defendant has a prior conviction it did not involve a serious breach and apart from this most recent offence the defendant's record over many years of operation may be described as good. Subjective factors, however, are matters of secondary importance to the objective considerations. 22 I consider that an appropriate penalty in this case, having regard to the relevant objective factors, is $300,000. This is to be reduced by 25 per cent for the utilitarian value of the guilty plea and a further 10 per cent for other subjective factors. This results in a fine of $195,000. Orders 23 The Court makes the following orders: 1 The offence is proven and a verdict of guilty is entered. 2 The defendant is convicted of the offence as charged. 3 The defendant is fined an amount of $195,000 with a moiety thereof to the informant. 4 The defendant shall pay the informant's cost of the proceedings in an amount as agreed or, if agreement cannot be reached, leave is granted to either party to approach the Court for final orders as to costs. _________________________ 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.