Industrial Relations Commission of New South Wales in Court Session CITATION: Inspector Peter Robinson v Lovells Springs and ors. [2005] NSWIRComm 375 PROSECUTOR: Inspector Peter Robinson PARTIES: DEFENDANTS: Lovells Springs Pty Ltd & ors FILE NUMBER(S): IRC 845, 846, 847, 864, 865, 866 AND 893 of 2004 CORAM: Haylen J Occupational Health and Safety Act 2000 - s 8 s11 s13 s 94 s 26- pleas of guilty entered by corporate defendant two director defendants and a manager defendant - crush injury sustained due to unguarded machine operating in spring making industry - recent history of company safety standards declining after many years of operating without breach - numerous notices issued by WorkCover Authority mostly relating to lack of guarding - relevance of shifting corporate control and retirement of longstanding directors - new shareholders reorganise company but safety issues continue to arise - serious breach established - severe injury evidence of nature of risk - variety of subjective factors considered - principles of totality and parity applied - penalty adjusted to represent true criminality of offences - penalties imposed - s 10 application in relation to manager rejected CATCHWORDS: CASES CITED: Haynes v C I & D Manufacturing Pty Ltd and anor (1994) 60 IR 149 HEARING DATES: 10/04/2005; 10/05/2005 DATE OF JUDGMENT: 10/21/2005 PROSECUTOR: Mr B Docking of counsel SOLICITORS: Crown Solicitors DEFENDANTS: Matter Nos IRC 845, 846, 847 & 893 of 2004 Lovells Springs Pty Ltd Mr Higgins of counsel SOLICITORS: LEGAL REPRESENTATIVES: Stephen Wawn & Associates DEFENDANTS: Matter Nos IRC 864 & 865 of 2004 Beverley June Lovell and Robert Arthur Lovell Mr J Nolan of counsel SOLICITORS: Turner Freeman DEFENDANT: Matter No IRC 866 of 2004 Simon Crane SOLICITORS: Stephen Wawn & Associates JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Haylen J 21 October 2005 Matter No IRC 845 of 2004 Inspector Peter Robinson v Lovells Springs Pty Ltd. Prosecution under s 13 of the Occupational Health and Safety Act 2000 Matter No IRC 846 of 2004 Inspector Peter Robinson v Lovells Springs Pty Ltd. Prosecution under s 11 of the Occupational Health and Safety Act 2000 Matter No IRC 847 of 2004 Inspector Peter Robinson v Lovells Springs Pty Ltd. Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 Matter No IRC 864 of 2004 Inspector Peter Robinson v Beverley June Lovell Prosecution under s 26 of the Occupational Health and Safety Act 2000 Matter No IRC 865 of 2004 Inspector Peter Robinson v Robert Arthur Lovell Prosecution under s 26 of the Occupational Health and Safety Act 2000 Matter No IRC 866 of 2004 Inspector Peter Robinson v Simon Crane Prosecution under s 26 of the Occupational Health and Safety Act 2000 Matter No IRC 893 of 2004 Inspector Peter Robinson v Lovells Springs Pty Ltd Prosecution under s 94 of the Occupational Health and Safety Act 2000 JUDGMENT [2005] NSWIRComm 375 1 Lovells Springs Pty Ltd ("Lovells Springs") was a company that had been in the hands of the Lovell family for generations and had largely operated without incident until 22 February 2002. On that day, an employee of the company, Mr Wayne Cheers, while operating the No 1 John Evans Tapering Machine had his left hand crushed between the jaws of a hydraulically operated vice within the machine which was located at the company's Carrington site, New South Wales. As a result of this accident Mr Cheers sustained injuries to his left hand involving the insertions of pins into his ring and middle finger. He suffered two dislocated knuckles and the skin was stripped from two fingers, requiring 17 stitches. Mr Cheers was absent from work as a result of this injury for more than two and a half months before being certified to return to work at the workshop for four hours per day. It was not until about eight months after the accident that he was certified fit to work eight hours per day, five days per week but with a 15 kg lift restriction on the duties he was to perform. Even at this stage Mr Cheers was not performing heavy work and continued to have regular physiotherapy until November 2002 and after that date, performed physiotherapy exercises at home under his own instruction and continued these exercises for approximately another four or five months. Mr Cheers gave details of the continuing disability he suffered with this injury. 2 Following an investigation by Inspector Robinson of the WorkCover Authority, a number of proceedings were commenced in this Court for breaches of the Occupational Health and Safety Act 2000. In relation to the corporate defendant, Lovells Springs Pty Ltd, breaches were alleged arising under s 8(1), s 11, s 13 and s 94 of the 2000 Act. In relation to two directors, Mr Robert Arthur Lovell and his wife Beverley June Lovell, it was alleged that being a director of a company employing Mr Cheers they were liable under s 26 of the 2000 Act because of the corporate defendant's breaches under s 8(1)(a), (b), (c), (d) and s 11(1)(a) and (b) with reference to the piece of machinery known as the No 1 John Evans Tapering Machine. In relation to Simon Crane it was alleged that being a manager of Lovells Springs Pty Ltd, he was liable under s 26 of the 2000 Act by reference to offences of the corporate defendant breaching s 8(1)(a)(b)(c) (d) and s11(1)(b) of the 2000 Act with reference to the No 1 John Evans Tapering Machine. 3 To these various charges or amended charges each defendant submitted a plea of guilty. This judgment deals with the evidence and submissions on sentence. In each case there was an Statement of Agreed Facts. To assist in a fuller understanding of the circumstances surrounding the various charges, the Statement of Agreed Facts in relation to the corporate defendant, Lovells Springs Pty Ltd and the directors Robert Lovell and Beverley Lovell are Annexure "A" to this judgment and in relation to Mr Crane, as a manager of the corporate defendant, the Statement of Agreed Facts is annexure "B" to this judgment. THE CHARGES 4 The charge under s 8(1) of the 2000 Act against Lovells Springs Pty Ltd alleged that the defendant failed to: (a) ensure that any premises controlled by the employer where the employees work was safe and without risk to health; (b) ensure that any plant or substance provided for use by the employees at work was safe and without risk to health when properly used; (c) ensure that systems of work in the working environment of the employees was safe and without risk to health; (d) provide such information, instruction, training and supervision as was necessary to ensure the employees' health and safety at work with reference to the No 1 John Evans Tapering Machine. 5 The particulars provided for this charge alleged that Mr Cheers had not been adequately inducted into the workplace and had been simply shown around the site by Mr Crane for about ten minutes. Mr Cheers did not receive a duty statement or job description when commencing employment and had not been adequately instructed as to the tasks he was carrying out at the time of the accident: he had watched others perform the task and had assumed that he knew what to do from watching them. Mr Cheers had not received any training in making adjustments to the No 1 tapering machine, was not adequately supervised at the time of the accident being left to his own devices even though this was the first time he had attempted to adjust the machine on his own. At the time of the accident there was no safe operating system or procedure in place for the operation of or method of making adjustments to the tapering machine. The Tapering Machine was inadequately guarded with no guards whatsoever to protect persons from the operation of the vice or the centrifugal rollers of the machine. The foot pedal that triggered the vice was also inadequately guarded and the tapering machine was not fitted with an emergency stop button or lockout switch. There was no system for employees to report hazards, incidents or near misses to management. The defendant had been alerted to have these types of machines guarded on numerous occasions with over 38 notices including infringement, prohibition and improvement notices being issued to the defendant, the majority being for unguarded machinery. It was alleged that the directors and management, including Mr Crane, were aware that the tapering machine was being used in an unsafe condition. 6 On 22 February 2002, Inspector Robinson had issued a prohibition notice on the tapering machine to prevent it being operated without a guard. A machine guarding programme was received from the defendant's Quality and Occupational Health and Safety manager with a timeframe to guard all remaining machines but that timeframe was not met. On a subsequent visit in mid-August 2002, Inspector Robinson found the tapering machine being operated with the rear centrifugal roller guard removed being in contravention of the prohibition notice. A guard had been available since March 2002 for this part of the machinery. The Inspector had a number of meetings with management at the defendant's Carrington site and provided advice and attempted to encourage the establishment of an occupational health and safety committee but as at April 2003 this had not been achieved. Despite advising the need to fit an emergency stop button to a conveyor on the powder coating line, by the end of October 2003 the conveyor belt did not have an emergency stop button and Inspector Robinson issued a further prohibition notice. An April 2003 inspection of the Carrington Plant found a number of unsafe conditions requiring a further prohibition notice and three improvement notices to be issued. 7 The charge brought under s 11 against Lovells Springs Pty Ltd alleged: (a) a failure to ensure that the plant was safe and without risk to health when properly used, and (b) a failure to provide or arrange for the provision of, adequate information about the plant to persons to whom it was supplied to ensure its safe use. The particulars supplied in relation to the s 8(1) charge were substantially repeated for this charge. 8 The charge brought under s 13 of the Act against Lovells Springs alleged a failure to ensure the health safety and welfare at work of all the defendant's employees and in particular Mr Cheers in that the defendant failed in its duty as an employer to consult in accordance with the provisions of the 2000 Act with its employees to enable the employees to contribute to the making of decisions affecting their health safety and welfare at work. Again, the particulars of this charge largely repeated what had been particularised in relation to the s 8(1) charge. 9 The charge brought under s 94 of the Act alleged that at or about 19 August 2002 at the Carrington site, the defendant failed to ensure the health safety and welfare at work of all its employees and in particular Mr Cheers in that it failed to comply with prohibition notice No 140678 issued on 22 February 2002. Again, this charge largely repeated the particulars provided in relation to the s 8(1) charge. The prohibition notice No 140678 was issued in relation to the tapering machine with the aim of preventing its operation without guards. On 19 August 2002, that machine was being operated with the rear centrifugal roller guard removed in contravention of the prohibition notice although a guard had been made and was available to be fitted to the rear of the roller since approximately mid-March 2002. 10 In relation to Robert Arthur Lovell, the charge under s 26 related to his position as a director of the defendant corporation and that corporation's breach of s 8(1)(a),(b),(c) (d) and s 11(1)(a) and (b). The particulars supplied were largely the same as the particulars provided in the s 8(1) case against the corporate defendant. The charge brought under s 26 against Beverley June Lovell was particularised in terms identical to that brought against Mr Lovell. 11 The charge brought under s 26 against Simon Crane related to his liability as a manager of the defendant corporation and relied on the corporate defendant's breach of s 8(1)(a), (b), (c) (d) and s 11(1)(a) and (b). There was also a reference to the failure to comply with prohibition notice No 140668 but an Amended Application for Order deleted this reference and the reference to s 94 of the 2000 Act. Again, the particulars largely repeated those supplied in relation to the charge against the corporate defendant in the s 8(1) case. THE EVIDENCE 12 Apart from the Statement of Agreed Facts in each matter, the prosecutor tendered numerous coloured photographs of the tapering machine showing the area in which the vice operated and how the machine had been ultimately guarded. None of the defendants had prior convictions in a relevant sense. The operating instructions for the tapering machine were also tendered together with an assessment of the tapering machine conducted by Mr Kevin John in August 2002, some months after the accident. This document noted the method in which the machine operated, its control measures, the supervisory surveillance, the instructions given to workers as to its operation, the availability of personal protection equipment and the maintenance of the equipment. Reference was also made to assessments of the guarding and interlocking systems and a risk classification made of the equipment. 13 The remaining prosecution evidence consisted of statements or extracts of statements, mostly made by way of Record of Interview with the WorkCover Inspector. Mr John was the quality and occupational health and safety manager who was interviewed in October 2002. In an extract from that interview Mr John said that, at the time of the accident in February 2002, the tapering machine was not securely guarded although he was aware of the guarding requirements of this type of machinery. The hazard area of the machine, including the vice, was accepted to be within easy reach of Mr Cheers while he was performing normal operating procedures. Being aware of this hazard, Mr John spoke to the company foreman about a guarding programme but nothing was done at that stage. When asked why nothing had been done, Mr John said that basically he had been told to continue preparing the machines for commissioning and that was the brief that had been given to him by Mr Simon Crane when Mr John moved to Newcastle. Mr John was not required for cross-examination. 14 Mr Cheers was interviewed in April 2002. He said that he had been working with Lovells Springs as a casual labourer and at the time of the accident had been employed in that capacity for a period of three weeks. He had not been given a statement of duties for the entire three weeks. He was employed on the tapering machine, forging bars except for a few days when he was working other machines. When he started working at Lovells Springs he was shown where "things were" and that took about ten minutes while he was being interviewed for the job. He was taken for a walk around the factory and things were pointed out to him by Mr Simon Crane but he did not regard this as being training. Mr Cheers described how the accident occurred with him stepping back and clipping the edge of the foot pedal causing the vice to close. At the time, he did not realise that by twisting around, his hand had dropped back into the vice. The training he had received was on the job as different functions arose. He stated that while there was an on/off switch there was no emergency stop button on the tapering machine. When the accident occurred the tapering machine was not securely fenced or guarded and that was its condition from the first day he was employed by Lovells Springs. He had observed other people operating the tapering machine. Mr Cheers had also performed work at the rear of the tapering machine and when doing so had turned the machine off at the main power but the machine could not be locked off in that position. If a person was not seen while working on the machine another person could bring it back into operation. Mr Crane had watched Mr Cheers use the machine one day and observed the way in which Mr Cheers operated it. 15 Mr Crane was interviewed in late April 2003. He stated that the directors of Lovells Springs were Mr and Mrs Lovell and at 22 February 2002 he was employed by Lovells Springs although he did not recall having a job title. He had become a shareholder in the company in October 2001 and over the next three months it became clear to him and other shareholders that the company faced difficulties and that he was going to have to build and commission a new factory at Carrington. It also became clear to Mr Crane that the company did not have the funds to employ anyone other than himself to do this work. Initially he was not directly reimbursed by Lovells Springs but supplied raw materials to the company through his own private company and was permitted to make a profit margin through these transactions. Up until 22 February 2002, Mr Crane said his duties were to design all new equipment for construction in the plant, the scheduling of the relocation of existing equipment from the Homebush plant and the commissioning of both types of equipment. He was also involved in the selection of staff as the company was hiring for both engineering and production work. Those responsibilities were conferred upon him by his fellow shareholders and the directors. The other shareholders were Mr John Wayland, Mr Peter Crane, Mr Adrian Kelly as well as Mr and Mrs Lovell. At the time Mr and Mrs Lovell held 75 per cent of the shares, the other four shareholders had 5 per cent of the shares and 5 per cent of the shares were held in trust for certain company employees. 16 Mr Crane said he had no prior experience in spring making but he had two years' experience in the petroleum industry as a mechanical engineer, two years' experience as a consulting engineer in the field of mechanical services, two years' experience as a senior software engineer in process control industries, six years' experience as a chief engineering and plant manager in the semi-fabrication of copper and copper alloys rolled products and nine years' experience in the steel industry. He also had one years' experience in the production of steel making equipment and one years' experience in commissioning steel making equipment in China. He had an honours degree in Mechanical Engineering and a Graduate Diploma in Industrial Automation and Robotics. 17 Mr Crane was aware of the work upon which Mr Cheers was employed by the company and thought he had been employed for approximately two months as a machine operator. Mr Crane stated that before the accident the directors of Lovells Springs and management/shareholders had never met to discuss occupational health and safety issues affecting the Carrington site. Occupational health matters were discussed on a regular basis with the company's occupational health and safety manager, Mr John. Mr Crane was not given a formal safety induction by Mr John or any other person when he commenced work and he was unaware if there was a documented safety policy. By April 2003, there was a formal safety induction and safety policy that was easily accessible to all employees. At the time of the accident, the company did not require occupational health and safety matters to be included on the agenda of all meetings within the organisation: there was no annual budget for occupational health and training and equipment because the company had just emerged from a period of administration and had no operating budgets. In his position, being responsible for commissioning new plant, Mr Crane stated that risk assessments on all newly commissioned items were carried out by others, with the company's occupational health and safety officer being responsible for reviewing and updating risk management strategies. That person was based at the Homebush plant which Mr Crane described as having a "shocking safety record" saying it was obvious to anyone who visited that plant that it was completely non-compliant in many areas. At the time of the accident it was believed that the Carrington plant was the least of the company's problems. 18 The tapering machine came to be at the Carrington premises of the company as a result of Lovells Springs purchasing two companies and inheriting over 100 pieces of spring making equipment prior to going into administration. That equipment had been transported from Queensland to new premises at Carrington. A few items had been installed and were operating prior to the company entering administration but then the building had been locked: in December 2001, Mr Crane and a small team of employees returned to the building and began testing and production in a small way. At that time the tapering machine was able to be operated. At the time of the accident there was no occupational health and safety committee operating at the Carrington site although by April 2003, the committee had been established. 19 As at the time of the accident in February 2002, Mr Crane said that his initial observation was that it seemed that every piece of equipment at Lovells Springs had major safety concerns. As there were over 100 items of plant over two sites he was extremely concerned how the plants could ever be made compliant with reasonable safety standards. He often discussed these deficiencies with the directors of Lovells Springs and it was agreed that a massive programme of upgrading was required. He stated on a number of occasions that the solution was to radically reduce the number of pieces of equipment in operation and to improve the productivity, quality and safety of the remaining plant. It was an impossible task to modernise all of the equipment and so it was best to select the equipment that had potential to be productive, accurate and safe. It was not practical for the company to be closed for a period of up to one year for this work to be undertaken. That course may have effectively bankrupted the company but he could not read the minds of the directors as to why all the equipment to be used was not made safe for operation before being commissioned or used. In answer to the Inspector's question whether a conscious decision had been made to put the future of the company above the safety of its employees, Mr Crane said that was possible. 20 At the time of the accident Mr Crane said that not all parts of the tapering machine were securely guarded but some parts were guarded. He accepted that the vice in the machine was in easy reach of Mr Cheers while he was performing his normal operating duties and that prior to the accident, he was aware of the guarding requirements of this type of machine although not necessarily the finer detail of the relevant standards. He repeated that he had general concerns about the safety of the company's machinery and that it became apparent after the accident that the extent of the shroud over the foot pedals on the tapering machine was inadequate and that was how Mr Cheers was able to operate the press when he did not intend that to occur. Following the accident the guarding was extended so as to completely envelop the equipment and to allow access only when the motor and flywheel had stopped rotating. 21 Mr Crane was asked whether any of the directors of Lovells Springs were aware of the condition of the tapering machine and the fact that it was being operated without guards prior to the accident in February 2002. He replied that it was hard for him to know exactly the level of their knowledge of the equipment in the three plants or the knowledge of modern standards of machine guarding, but they did know and were aware that the tapering machine was either in production or was about to go into production. Mr Crane noted that the directors paid "rare visits to the Carrington plant". He had not particularly raised with the directors the plant at the Carrington factory as being a safety concern but had raised concerns about the state of Homebush equipment and the number of pieces in daily use there. Safety at Carrington was "very minor" compared to his concerns relating to Homebush. His role was to bring about the eventual removal of all plant from Homebush and have it scrapped or reinstalled at Carrington and he was mainly concerned how to make this very old equipment productive and safe and relocated as quickly as possible. He did not think that Mr and Mrs Lovell were fully aware of the safety requirements regarding machine guarding or any other occupational health and safety requirements because previously they had managers whose role it was to look after these matters. 22 As the person responsible for commissioning equipment at Carrington and in light of his concerns for the safety of some of the equipment being operated, Mr Crane said that he did raise concerns with the directors of Lovells Springs but that did not prevent the machines being put into operation at Carrington. He accepted that he was in a position to prevent unsafe equipment from being commissioned. 23 In relation to his case, Mr Crane swore an affidavit and was cross-examined by the prosecutor. In that affidavit he noted that while he had acquired 5 per cent of the shares of the company as at 22 February 2002, by April 2005 he had acquired 82.5 per cent of the shares and had become the sole director and secretary of the company. His involvement with the company had commenced at around 4 October 2001 with his acquisition of a 5 per cent shareholding. The company had been placed into administration towards the end of June 2001 and was released from administration on or about 4 October 2001 when he acquired his shareholding. His shareholding had cost him $100,000 and the other three persons who bought a 5 per cent shareholding at that time (Mr Wayland, Mr Kelly and Peter Crane) also paid $100,000 or cash and consulting services to the same level. 24 Mr Crane said that he was essentially involved at the Carrington, Newcastle, site and had very little to do with the Homebush site of the company. During November and December 2001, he became aware that the company's financial and technical position was worse than he had anticipated. The company had no operational accounting system and no picture of the financial position of the company was available to management: no profit and loss reports were presented to the shareholders during this time. By his own calculations, Mr Crane thought that some $350,000 subscribed by new shareholders was unlikely to be sufficient to sustain the company even if it were profitable. After a brief examination of the Homebush plant, he became pessimistic about the ability of the plant to produce the quantities of product required for profitability and to do so efficiently. Overtime levels were high, the plant was antiquated and breakdowns were continual. Plant would have to be relocated as the Homebush site was to be sold under the terms of the deed of company arrangement.. 25 Mr Crane explained to his fellow shareholders that what was needed was much less equipment, but equipment of a far higher standard of productivity, reliability and safety. Mr Crane had been told by the administrator that the company had made a profit during administration. Mr Crane had relied on that statement and formed the opinion that the company's plant and equipment methods of operation could be made more efficient in which case the company could be profitable in the long term. It was agreed between the directors and the shareholders that Mr Crane would travel to Carrington twice weekly to supervise the partially completed commissioning and upgrading of plant at that site and the relocation of equipment from the Homebush site. It was only in early December 2001 that the company's general manager, Mr Wayland, and the other directors agreed that re-commissioning the Carrington site was the only way for the company to move forward. It was at this time that Mr Crane took up the position as manager of the Carrington site with his primary role being to resolve a problem with the manufacture of springs at that site. A particular problem with the hot coiling and cooling of the springs dominated his attention in the initial stages. Mr Crane said he did not direct attention to any of the machines used in the spring making process prior to the hot coiling process and from what was said to him by the foreman, Mr Hobbs, he was under the impression that all other equipment was "fine" apart from the problem about the hot coiling and cooling of the springs. Mr Crane also understood that the machines used in the process prior to the hot coiling process all worked and had previously been commissioned by the company prior to it being placed into administration. The tapering machine had previously been commissioned prior to December 2001 and it was the machine used in the initial part of the spring making process and was not a machine to which Mr Crane had turned his mind. He understood it to be in working order and he was not aware that it was unsafe in production. 26 A number of other machines were to be commissioned and Mr Crane involved himself in repairing these machines and bringing them to industry standard. He stated that had he realised that the tapering machine was unsafe for production he would not have allowed the machine to be used until it was compliant with the relevant occupational health and safety standards. At this time his responsibilities were to look after the commissioning of all machines that were on the Carrington site, the design of all new equipment for construction in the plant, including the scheduling and relocation of existing equipment from the Homebush plant to the Carrington site. He was also in charge of the selection of staff involved in engineering and production work at the Carrington plant. 27 The equipment at the Carrington site in December 2001 had been transferred to the company in approximately October 2000 following the acquisition of two Queensland based businesses. The equipment so acquired was mostly outdated and in poor repair. From approximately mid-January 2002, the company began moving its operations from Homebush to the Carrington site. Five new employees from the Hunter region as well as four pre-existing employees were engaged in order to make the required modifications to the equipment and to commence trial production. The Carrington site closed over Christmas 2001 and in early January 2002, the factory commenced operation in the manufacture of springs. In January 2002, Mr Crane travelled overseas with his family on holidays and returned to work towards the end of that month. 28 In late January 2002, Mr Cheers commenced work as a casual labourer. Mr Crane stated that he was trained by the foreman, Mr Hobbs, and a leading hand, Mr McInerney. At the time of the accident, Mr Cheers had been employed by the company for approximately four weeks and Mr Crane had conducted the original job interview with him. Mr Crane said there was a discussion of Mr Cheers' work history and an examination of his resume, a plant tour of approximately ten minutes and a discussion of his impression of the plant and his "comfort level" at the prospect of working in a factory environment. He was told he was one of four production employees in what was very early days for the site and that it would be difficult at first but there were high hopes for the site in the future. In Mr Crane's view Mr Cheers was an excellent employee right from the beginning and was very willing to learn and work at a very high level of output. 29 Following Mr Cheers' injuries, he received counselling that was paid for by the company's workers compensation insurer. Mr Cheers was intially certified fit to return to light duties in May 2002 and when certified fit for normal duties was employed in the painting and packing of finished springs. Due to a downturn in orders, the company ultimately had no work for Mr Cheers and a number of other casual labourers. Immediately, after Mr Cheers was injured, the company contacted the WorkCover Authority to advise of the accident. On 22 February 2002, three prohibition notices were issued to the company relating to the tapering machine, and another prohibition notice on the inspection of all machinery on the factory floor. Shortly after the accident, Mr John asked Mr Crane if he was aware that the company had previously received a number of prohibition notices. That was when Mr Crane first became aware of prior notices in relation to machine guarding. Mr Crane stated that, had he known of these notices, he would have been more vigilant in his inspection of the machines at Carrington and at Homebush. He repeated that, as far as he was aware, the tapering machine was working well, was guarded and he was not aware it was unsafe. He now appreciated the gravity of his omission and realised that, as part of his role at Carrington, he should have inspected the machinery prior to it going into production: he sincerely regretted not having done so. 30 Immediately after the accident involving Mr Cheers, Mr Crane directed that the tapering machine was not to be used and for it to be brought up to the appropriate Australian Standard before being used again. To do so involved an expenditure of approximately $5,000 to instal protective guards. When they were available, Inspector Robinson was asked to inspect the machine before it was again used for production. When inspected, the company was advised that an extension guard had to be fitted to the front of the machine over and above what was in place. Also following the accident, Mr Crane assessed all machinery in use at the Carrington site: this involved reviewing machinery in use that was not guarded, and machinery that was guarded to ensure that the guards met the Australian Standard. On his recommendation, the company then devised a programme for guarding all machinery in operation or an upgrade of the guarding on all machinery where necessary. This programme was implemented over the next 10 to 12 weeks. This upgrading programme included the guarding of the tapering machine. The programme is in current use for any new equipment brought into service. 31 Mr Crane said that it did not originally occur to him when he commenced at Carrington to form an occupational health and safety committee, but after the accident involving Mr Cheers and the realisation that the company had received a number of prohibition notices, he became "enthusiastic" about setting up a safety committee. The committee, however, took some time to establish, not because of any lack of enthusiasm amongst the workers or himself but, rather, because, during the 12 months or so following the accident, the majority of the work performed by employees and by Mr Crane was work essentially of an occupational health and safety type task. During this period, the machines on the floor were brought up to appropriate Australian safety standards. There was an introduction of a new employee induction programme and test; a writing of an operational procedure manual for each machine; training in the operation of each machine for all new employees and the testing of all existing employees; having the company's employees attend occupational health and safety courses and the establishment of OH&S committee. By May 2003, the safety committee was established and had met monthly since that date. All committee members, including Mr Crane, were trained in occupational health and safety in accordance with the regulations. Mr Crane explained how the committee operated and how it had resulted in an improvement in employee safety as measured by there being no compensable injuries and rarer incidences experienced since February 2002. 32 Mr Crane recalled that, in April 2002, the Carrington site was again visited by Inspector Robinson and a prohibition notice and two improvement notices were issued. They related to the presence of a spraypainting can and the necessity for a register to be kept for all hazardous substances, improvements required in relation to powder coating, and a readjustment of a lifting technique concerning the fitting of spring coils to a machine. On 19 August 2003, Inspector Robinson attended the Carrington site and found that a section of the guard at the rear of the tapering machine had been removed, and that the machine was being used without the guard being refitted. Mr Crane believed that the guard had been removed on Friday, 16 August by Mr McInerney for the purpose of adjusting the machine for the manufacture of a particular spring, but had not been refitted after the machine had been adjusted. After this incident, Mr Crane oversaw that the whole of the rear of the tapering machine was enclosed in a cage. The gate to the cage was fitted with an electronic lock which would only release the doorlock two minutes after the machine had been isolated and after the machine had stopped. 33 Mr Crane recalled that, on or about 23 October 2003, Inspector Robinson visited the Carrington site and discovered that a conveyor belt was being used without an emergency stop button in place. A prohibition notice was issued. Mr Crane said that, at all material times, the conveyor machine was not being used for production but was being tested to see if it was ready for production. To the best of his recollection, he instructed the company electrician to place a stop button on the machine following the prohibition notice being issued, but he failed to check whether the button was actually installed, but had assumed that it had been installed. It was later discovered that the stop button had not been installed. Mr Crane accepted responsibility for not ensuring that the button had been installed as he had directed. The person directed to carry out this task was shortly thereafter terminated as a result of continued poor work performance. 34 While the company was undertaking a review of all machinery and the guarding in place, Mr John and Mr Crane also prepared operating instructions for all machinery in use at the Carrington site and all machinery as it was commissioned after the accident. Comprehensive operating instructions were developed in relation some 18 pieces of equipment and procedures. Mr Crane also prepared written job descriptions for each employee employed at Carrington. He introduced a formal induction programme for existing and new employees and provided a copy of the company's workplace health and safety induction and examination that was to be undertaken by each new employee. Mr Crane also introduced a formal training programme and testing procedure to ensure that each employee operating a machine had been adequately and properly trained to operate that piece of machinery. The Homebush site was closed in April 2003. However, the transfer to the Carrington site was not completed until approximately September 2004. Mr Crane said that the company had been profitable since that time. Mr Crane explained how the economic future of the company appeared to be bright, gave details of orders received, including international orders, the fact that there were no compensible injuries sustained by any company employee at Carrington since the 2002-3 period until the present time following the accident. Over the last three years, there had been a 70 percent reduction in the level of the company's workers compensation premiums as the result of the elimination of injuries at the plant. The premiums now were at the lowest possible level under the springmaking industry classification. 35 In June 2004, Mr Crane had arranged for an occupational health and safety auditor to conduct an occupational health and safety audit at the site. The audit was to be used to assist ongoing assessments conducted at the site. Mr Crane emphasised that he had never previously been convicted of an occupational health and safety breach nor had the company he owned and operated involved in rolled metals over a period of approximately 8 years. 36 Between January and April 2005, Mr Crane had discussed with Mr and Mrs Lovell the possibility of them leaving the company both as shareholders and directors. The Lovells had advised him that the stress of running the company had taken a great toll on them over the last five years, together with the fact that the company sites were now a considerable distance from their current home and they felt that they could not contribute except in a minor way in the running of the company. Mr Crane made an offer for their shares and, in April 2005, paid $27,500 for those shares. Also in April 2005, Mr and Mrs Lovell resigned as directors and Mr Crane was appointed as sole director and secretary of the company. Mr and Mrs Lovell retired from the company as employees during May 2005, although Mr Lovell had not attended the company since December 2004. The company had continued to make plant improvements, especially in relation to safety and there was some particular emphasis made of improvements to the machine involved in Mr Cheers' injury. In addition, the company had recently committed itself to participating in a Newcastle Trades Hall Council research project on improvement in risk management systems in the workplace. The Council provided hands-on assistance in the workplace in exchange for the company's support of the project as a whole. The company had presented awards to its Carrington employees in recognition of three financial years free of compensible injuries, and the workforce had recommitted to a target of five calendar years incident-free of injuries to be achieved by February 2007. 37 In oral evidence, Mr Crane said that, before he purchased his shareholding in October 2001, he was aware that there had been a previous general manager before the period of administration by the name of Mr Johnson, but he was a person who Mr Crane had not met. At the same time as he purchased his shareholding, Mr Wayland purchased his shareholding and became employed by the company receiving a salary by December 2001 or January 2002, when he became the general manager of the company. Mr Wayland's expertise was as an accountant but, as general manager, he had overall management responsibility for the whole company, which included three factory sites, namely, Homebush, Carrington and smaller sites in Brisbane. Mr Crane said he reported to Mr Wayland as did Mr John after December 2001 in his role as occupational health and safety manager. 38 In December 2001, he had a conversation with Mr Wayland as to the safety status of equipment at Homebush and had a number of such conversations. These conversations were held with the other shareholders being present, including Mr and Mrs Lovell. Mr Crane had advised that the Homebush site was cramped, the equipment was antiquated, look unproductive and looked unsafe and that the Homebush site should be vacated as soon as possible. The shareholders and directors were in agreement with that approach. There was some equipment that could be modernised and used productively. Mr Crane formed the view that there were only a few pieces of equipment at Homebush that could be saved and that every other piece of equipment had either been scrapped or put in storage. 39 Mr Wayland resigned as general manager early in 2003 when, because of financial difficulties, Mr Crane refinanced the company a second time on condition that he would take over as general manager, including the accounting function and that all office staff would be moved to Carrington. Mr Wayland remained as the marketing manager of the company. 40 In cross-examination, Mr Crane said that, during his interview with the inspector in April 2003, he had made an observation in answer to the inspector's question about the company being more concerned with production than safety. Mr Crane clarified that he was not aware of what was going on in the minds of the directors at that time which is why he said the situation put to him was "possible". At the time, the survival of the company was very much an issue. He also noticed that Mr and Mr Lovell, as directors, were "extremely generous in asking the advice and opinions of their fellow shareholders". No-one, shareholders or directors, really contemplated closing the manufacturing operations while all unsafe equipment was made safe. 41 Mr Crane said that Mr Cheers had been employed for a short time and he did not think the company was in operation in the first few weeks of 2002. He left the country in January for a holiday with his family for four weeks and came back at the beginning of February. There were 23 calendar days on which he was present before the accident and he thought that Mr Cheers had operated the tapering machine for most of that time. When he showed Mr Cheers around the site for approximately 10 minutes, the tapering machine was present at the site but he was not introduced to that machine by Mr Crane as he had no idea what role would be given to Mr Cheers. He was aware that this piece of equipment had come from the Queensland factory and it had been operated in Queensland by Mr Hobbs on and off for a year. Mr John and Mr Hobbs had occupational health and training training and Mr Crane relied on their good judgment that the equipment was ready to recommence operation at Carrington. 42 Mr Lovell gave affidavit evidence in which he said that he was qualified as a fitter and machinist after an apprenticeship in 1961 and commenced his working life with the company at Homebush in June 1962. Mr Lovell described the nature of the production at that time and how he learned the trade of springmaking. To his knowledge, there was not a springmaking course available in New South Wales then or now, and it was a skill that could only been taught on the factory floor. In learning this trade, he became able to understand every machine and tool in the plant. Mr Lovell described how he was given a variety of duties over time and how he came to have an understanding of the company's operations. 43 In mid-1975, by arrangement with members of the family, he purchased shares in the company and was appointed as managing director. He continued in this role until he and his wife were forced to put the company into voluntary administration in June 2001. 44 The company had been involved in producing a variety of machines for springmaking and references were made to a number of brochures to demonstrate the advances in safety features and employee protection incorporated in machines made by the company. The company had employed devices such as a shrouded footpedal, emergency stop buttons and heavy metal guarding. The company pursued and secured considerable overseas trade for their product. 45 The tapering machine was not one designed by the company but had been purchased as a result of the acquisition of a Queensland company and had been in operation for only a short period of time before the accident involving Mr Cheers. 46 After a career spanning some 40 years, Mr Lovell went into retirement around April 2001. With his wife, he put down a deposit on a home in Clareville in which they intended to retire. Prior to retirement, he had employed a general manager to oversee the daily operations of the company. Mr Lovell explained how the company became involved in a project that led to the setting up of the manufacturing site at Carrington in the Hunter region of New South Wales. The project ran into difficulties to the extent that it became necessary for him to come out of retirement and, with his wife, as directors of the company, to mortgage the family home and the Homebush factory premises. At this time, the existing general manager had recruited an entirely new management team of some 8 persons and had appointed an engineer responsible for overseeing the transport and installation of plant from the recently acquired Queensland operation. It was in mid-2001 that the general manager advised the Lovells that the company's finances were such that it would have to go into voluntary administration. Mr and Mrs Lovell then decided to put together a proposal requiring them to sell all their major assets, including their home, the home to which they planned to retire, their holiday home and the Homebush factory. Because the financial position of the company was not strong, it was also necessary to reduce the workforce by 12 employees including Mr and Mrs Lovell. By 2004, Mr Crane suggested that he and his wife should retire subject to an arrangement which was agreed to by early 2005. Because the company was not in a financial position to pay out redundancy upon retirement, the Lovells agreed to be paid by instalments. To date, no instalment payments had been received and, since December 2004, Mr Lovell had not received a wage, whilst his wife had not received a wage since April 2005. 47 Mr Lovell stated that he sincerely regretted the injury caused to Mr Cheers while operating the tapering machine. An overhaul of safety procedures had commenced immediately after that accident and comprehensive operating instructions were put in place for each of the machines used in production. Considering the nature of the work and the length of time the company had been involved in the springmaking craft, Mr Lovell stated that he was proud of the company 's overall safety record, but he recognised that, owing to numerous factors, the company's safety standards had lapsed leading up to the injury to Mr Cheers. 48 In oral evidence, Mr Lovell rejected the suggestion that he would place the production of the company above employees' safety. He said he would not have sold three houses and a factory to pay out his employees if that was the way he thought about them. When Mr Wayland was the chief executive officer, considering his particular experience, Mr and Mrs Lovell acted under his instructions at Homebush and he thought it was part of his job to liaise with Mr Wayland - his job was a salesman-type position. He was not required to attend Carrington day in/day out and had no role in the oversight of the production process at Carrington on a daily basis. Those matters would be discussed, however, at board meetings but Mr Lovell had no hands-on management role. He only visited Carrington occasionally but had no role in giving instructions to employees - it was more of a social role. 49 In cross-examination, Mr Lovell agreed that Mr Wayland had been made the general manager after a discussion with the new shareholders and to assist the Lovells in the management of the company as they were in shock as to what had happened to the company. The Lovells did not exercise their majority control but reached consensus with the new shareholders as to way in which the company would operate. Mr Crane had been employed as an engineering manager to schedule the movement of any equipment from Homebush to the Carrington site, to identify the equipment suitable for Carrington and to assess the risks associated with that equipment. During this time, Mr Wayland did not inform Mr Lovell that Mr Crane had expressed concerns about the safety of the equipment at Homebush. At board meetings, one of the subjects discussed was the equipment, but it was mainly discussion about laminating equipment at Carrington. Mr Lovell said that he had not been informed by either Mr Johnson or Mr Wayland that the company had received a number of prohibition notices from the WorkCover Authority. Mr Lovell felt that the chief executive officer, Mr Wayland, preferred that he stay away from the machinery although he had the power and authority as a director to inspect the machinery and give directions about ensuring the safety of such machinery. The issuing of notices by WorkCover, an analysis of workplace injuries or safety analysis had not been discussed at board level, nor were they the subject of report to the board. Mr Lovell noted that the company was 75 years old this year and that this was the first accident ever experienced on this one machine or type of machine. The tapering machine was usually operated by standing well back from it. Mr Lovell noted that the machine was a one-off type of machine and he had never seen it guarded during his working lifetime. 50 Mrs Lovell gave evidence by way of affidavit stating that she was an employee of the company from 1976, when she began work as a casual accounts clerk. She described how she became involved in the Homebush business in accounts administration, then assisted in sales, customer relations, quotations and the purchasing sections of the business. Mrs Lovell had qualifications in stenography and bookkeeping. In 1984, she took up the positions of administration manager and personnel manager, both being held until 2000. In 2000, she decided to cut down her work hours by a day a week and had been employed by the company for 24 years, being a director for 11 years. 51 In July 2000, the company's financial controller was appointed as general manager to oversee the daily operations of the company. Mr and Mrs Lovell had hoped to retire from the company and the business generally. Mr Lovell retired in April 2001 and, in May of that year, withdrew $200,000 from his superannuation savings to place a deposit on their planned retirement home. 52 After Mr Lovell retired, Mrs Lovell became aware of a change in attitude of those administering the company and regarded herself and her husband as being excluded from knowledge of the day-to-day operations of the company. She gave several examples of where and how that had occurred. Mrs Lovell had difficulty receiving information as to the financial status of the company and appeared to be fobbed off in her requests by Mr Johnson, the general manager. Nevertheless, assurances were given by the general manager that the company was operating satisfactorily. 53 Mr and Mr Lovell commenced a promotional tour throughout outback Australia in May 2001 but, in June, were contacted by the general manager and informed that the company was not in good shape. Mr and Mrs Lovell decided to return to Sydney immediately and were informed by the general manager that the company would have to be put into voluntary liquidation and that he could not guarantee that their assets would be safe. The general manager offered to organise to purchase the company in the form of a management buyout and to ensure that the Lovells' house would be safe. Mr and Mrs Lovell became suspicious and sought their own advice as to what should happen with the company. Mr and Mrs Lovell then became aware of certain actions by the general manager that caused them to have grave concerns. They appointed a person, not recommended by the general manager, as the company's administrator. Mrs Lovell gave evidence in a similar vein to that of Mr Lovell as to the sale of family assets to meet the financial circumstances they now faced with the company. Under the new shareholders, Mrs Lovell said their degree of control and involvement in the day-to-day operations of the company was greatly reduced. 54 Mrs Lovell stated that she was not present at the Carrington factory when the accident occurred involving Mr Cheers and that her husband's role was to remain at Homebush, which was still the head office of the company to oversee the tendering for future orders and for the general running of the Homebush factory. Mrs Lovell was in the Homebush office working in administration. She was not aware of prohibition or improvement notices issued to the company in relation to the Homebush plant nor was she shown these documents before May 2004. She had only been aware of WorkCover notices being issued in respect of the Carrington plant after reading the prosecutor's brief of evidence. She had no experience or qualifications in engineering or mechanical matters and her involvement and primary function with the company was in administration. 55 In cross-examination, Mrs Lovell accepted that, as a director, she failed to ensure that there were occupational health and safety reports provided at board meetings. She stated, however, that there was no need for a report on workplace injuries because there had been none. If there had been such injuries, she would have been aware of them. 56 Mrs Lovell accepted that, since the accident involving Mr Cheers, reports on these matters were now brought to the board for its consideration. Mrs Lovell also referred to the role of departmental managers in dealing with safety and potential workplace injuries. In Mrs Lovell's view, whilst she was involved in administration, the person in the company who had responsibility for occupational health and safety was the financial controller and that was Mr Johnson. Before May 2000, Mrs Lovell said that, to a certain degree, with her husband and the managers of the various departments and the foremen, the directors had some responsibility for occupational health and safety. There would be meetings with various supervisors and foremen to ensure that the machinery was protected and that everything was properly dealt with. DELIBERATION 57 In this case, the mix of the corporate entity, directors, a manager and charges under a number of sections of the Act requires an initial consideration of what was happening within this long running family company in assessing the culpability of those who have been charged. It is to be immediately stated that permitting an unguarded machine in an industry such as that of the defendant company is one of the most fundamental breaches of the Occupational Health and Safety Act and had been recognised as an obvious work place danger well before the 1983 Act was introduced. The installation of guarding, emergency stop buttons and later, electronic devices preventing access to machinery until the source of power had been isolated are part and parcel of the most basic safe working systems adopted in industry. The curious aspect of the present offences is the fact that Lovells Springs appeared to be an innovative manufacturer in this specialised industry and something of a leader in manufacturing machinery for spring production. The brochures in evidence depict machinery, not only representing modern engineering innovation but also utilising safety measures that were absent in relation to the tapering machine operating at its Carrington site: fully shrouded pedals and emergency stop buttons were clearly depicted as safety features of this new equipment. This background raises the question of how a company with a 75 year unblemished record could have fallen into such disarray in relation to its occupational health and safety standards? 58 The Court has evidence from a number of perspectives: Mr and Mrs Lovell give their evidence from the perspective of working directors who had spent their lives in this company and how they had handed over to employees its management to allow them to retire; there is the evidence of the new shareholders and the activities of Mr Crane in firstly assessing the company late in 2001 and becoming involved in its management and his efforts to bring about a more productive, efficient and safe operation; there is evidence from those who worked closer to the factory floor as to lack of duty statements, lack of safety plans, old equipment inappropriately guarded or not guarded at all and a sense of a business, once proud and strong, struggling to regain its once enviable reputation. 59 From this evidence, it appears that the company went into sharp decline once Mr and Mrs Lovell distanced themselves from the day to day operation of the company as they prepared for their retirement. The acquisition of the Queensland operations, thereby eliminating a competitor and also providing the company with a range of machinery, seems to be one of the last major acts of Mr Lovell's close involvement with the company. This acquisition may have appeared to have securely placed Lovells Springs in the Australian market and strengthened its capacity to trade overseas. The evidence suggests that from this time those who had been appointed to management level in the company took much greater control and in a way that was acceptable to the Lovells who were preparing for their retirement. I have no doubt that the unexpected news that the company needed to be placed into voluntary administration came as a great shock to Mr and Mrs Lovell. I accept the evidence that they were not fully informed about the financial position of the company and how it got to that position and undoubtedly were not informed about the day to day operations of the company. It is also undoubtedly true that the continuation of the company was a significant part of the Lovells' retirement plans and it was that interest as well as concern for the employees that led them to put together a financial package to rescue the company and also, securing the entitlements of their workers. The arrangements for that financial package came at a high cost for the Lovells and had a serious impact upon their assets. 60 I accept Mr Lovell's description of his role in the post-administration phase of the company as being largely a figurehead and salesman with the day to day management being in the hands of the new shareholders, notwithstanding their minority status. Mr Crane accepted that the Lovells were "generous" in receiving and acting upon the advice of the new shareholders and this seems to reflect the evidence of both Mr and Mrs Lovell as to their largely figurehead role in the revamped company. Mr Crane also stated Mr and Mrs Lovell rarely visited Carrington and were not particularly aware of the guarding requirements for these machines, having previously relied upon managers. Once the decision was made that the future of the company lay in relocating to Carrington with the sale of the Homebush factory and most of its equipment (if not otherwise scrapped or stored), then the day to day involvement of Mr and Mrs Lovell in the operations of the company were, by and large, over. I have little doubt that if Mr Lovell had been aware of the state of the machinery operating at Carrington at the time of the accident involving Mr Cheers, not only would he have been horrified but I believe he would have taken decisive steps to quickly address the issues of safety. Nothing perhaps underlines the removal of Mr and Mrs Lovell from the day to day operation of the company more than the fact that there were some 38 notices issued by the WorkCover Authority, many in relation to inadequate guarding, that had not been reported to the Lovells as directors and had not been raised at board meetings by the management that preceded Mr Crane's share acquisition in October 2001. I accept the submission made by the prosecutor that Mrs Lovell's involvement in the company was largely in relation to its administration and that an assessment of her level of culpability should recognise that reality. 61 The position of Mr Crane is somewhat different. It is emphasised on his behalf that he only became a shareholder in October 2001, was not effectively "employed" until December 2001, had been absent on holidays for four weeks and might be considered to have spent something as little as six weeks being involved in the company prior to Mr Cheers' accident. In my view, the facts tell a different story. Mr Crane was eminently qualified both by tertiary education and working experience to assess the safety of the machinery being used by Lovells Springs. He regarded the Homebush equipment as antiquated, low in productivity and unsafe. His recommendation that this equipment be largely scrapped was accepted by the Board with the view being formed that there should be a concentration on the Carrington site. An essential part of Mr Crane's role was to have the Carrington site up and running efficiently and safely. Undoubtedly, his concentration was focused upon commissioning machinery that was suitable for the type of operation he was trying to create and he may well have assumed, on the basis on what he had been told by foremen and safety officers, that the previously commissioned equipment at Carrington was both appropriate and safe. Nevertheless, he was a position to make an assessment of the existing equipment such as the tapering machine that was involved in the accident while being operated by Mr Cheers: indeed, Mr Crane's evidence was that a small team returned to Carrington in December 2001 and began "testing and production". In oral evidence, he accepted that the machinery from Queensland was mostly outdated and in poor repair. It seems inevitable that if he had taken time to consider this piece of equipment that he would have formed the view that it was unsafe and required guarding, the installation of an emergency stop button and proper and extended shrouding of the operating pedals. While it was understandable that he was focused upon equipment to be brought into Carrington to save the business, it was not acceptable to ignore the existing equipment and he frankly accepted in his evidence that it was his responsibility to consider the overall safety of the machinery in operation at the Carrington site. 62 The preoccupation of the company with commissioning equipment for the new operation was highlighted by the necessity, on at least two further occasions after Mr Cheers' accident, for Inspector Robinson to issue further notices to the company. While there may be some issue as to the significance of the matters covered by those notices (and Mr Crane's evidence in that regard was not seriously challenged), the fact remains that the requirement for those notices to be issued speaks adversely of the company's attention to occupational health and safety. I accept Mr Crane's evidence of the extensive steps ultimately taken by the company to implement effective safe systems of work but the real question is, why did these steps take so long to implement? The evidence may suggest that the task was simply too large for Mr Crane and that economic circumstances did not permit the involvement of other people: that may be a description of what occurred but it is no answer to the obligations imposed by the Act to ensure the safety of employees at their workplace. Looked at from a wider perspective, these were serious breaches of the Act - the particulars pleaded to by each defendant demonstrate and support this conclusion. 63 It was accepted by the various defendants that the principle of general deterrence would be a necessary consideration in setting an appropriate penalty. The facts of this case certainly demonstrate to industry the necessity for diligence when operating heavy machinery and how relatively quickly the high standards of an operation can deteriorate, especially when economic pressures operate to shift the focus of management. The functional depths to which Lovells Springs fell is amply demonstrated by what occurred in Mr Cheers' employment: he was given a brief walk around the factory, the work he was to be allocated was unknown, he was given no induction in the operation of the plant, he was given no duty statement, there was no safe working plan and despite the fact that there was an employee with occupational health and safety responsibilities, there was no occupational health and safety committee, no consultation with the employees about the work and its dangers and pieces of machinery operating without guarding and in the absence of an overall guarding programme. 64 The issue of specific deterrence raises different considerations. In relation to Mr and Mrs Lovell, the evidence shows that they are retired and no longer involved in the company having sold their shares to Mr Crane. In those circumstances, I can see no real operation for specific deterrence in the setting of a penalty in relation to their offences. Mr Crane has increased his ownership and authority within the company but the evidence supports a conclusion that, even if regarded as somewhat belatedly, very significant steps have now been taken to address safety right across the company's operations. Mr Crane's history with his own company prior to being involved in Lovells Springs does not suggest that he had a propensity for ignoring occupational health and safety obligations imposed by the Act: specific deterrence will therefore play a relatively minor role in the setting of an appropriate penalty. It is difficult, on the evidence, to separate the corporate defendant from Mr Crane - in those circumstances the same approach to specific deterrence will be taken in relation to Lovells Springs as applied to Mr Crane. The long history of Lovells Springs operating without breaking occupational health and safety legislation also operates in its favour. 65 There was some little debate about the effect of certain evidence given by Mr John and Mr Crane as to whether or not the directors of the company, or even perhaps on a wider basis, had made a conscious decision to promote the survival of the company over and above the safety of its workers. There are elements of the evidence that raise this prospect but ultimately I am unable to conclude that such a conscious decision was taken by the directions, Mr and Mrs Lovell, or by Mr Crane as a manager. There is a good deal of truth about Mr Lovell's reply to that suggestion, that he would not have returned from retirement and foregone such significant assets to save the business and the entitlements of his employees if he was motivated simply by the well being of the company. Mr Crane frankly admits that his focus was too narrow, being directed to the commissioning of machinery for the Carrington operation, but I seriously doubt that his approach was framed by a lack of concern for safety and a desire for profitability above employee workplace welfare. 66 The s 94 breach requires separate consideration. As earlier indicated, the particulars of this breach are substantially the same for the s 8(1) breach by Lovells Springs. Part of the background is the fact that Lovells Springs had been alerted on numerous occasions of the necessity to have the machines guarded. Following the accident involving Mr Cheers on 22 February 2002, a prohibition notice was issued by the WorkCover Authority in relation to the tapering machine to prevent the machine from being operated without guards. A guarding programme was implemented by the company although the timeframe for that exercise was not met. Just on six months after Mr Cheers was injured an inspection of the Carrington factory in mid-August 2002 revealed that the tapering machine was being operated with the rear centrifugal roller guard removed in contravention of the February prohibition notice. Inspector Robinson had inspected the site in mid-March 2002 and observed that a guard had been made and was available for the rear roller. It appears that in August 2002 an adjustment had been made to this machine that involved the removal of the rear guard but it had not been replaced by the operator. This event suggests that despite the injuries suffered by Mr Cheers there was a laxity on the factory floor regarding safe working practices and a continuing failure at the supervisory level to detect and rectify that laxity. When considered in that context this is a serious breach, although in many respects represents a continuation of the defects in the company's system of work which is covered and particularised in the s 8(1), s 11 and s 13 breaches. 67 In dealing with the objective seriousness of the offence, it was accepted that the following maximum penalties apply. (a) in relation to the s 8(1) breach by Lovells Springs Pty Ltd, the maximum penalty is $550,000. The contravention of s 11 by Lovells Springs Pty Ltd also carries a maximum penalty of $550,000 while the contravention of s 13 by Lovells Springs Pty Ltd carries a maximum penalty of $55,000. The breach of s 94 of the Act by Lovells Springs Pty Ltd carries a maximum penalty of $110,000; (b) in relation to the breaches alleged against Mr and Mrs Lovell and Mr Crane, the maximum penalty in each case is $55,000. 68 Having regard to these matters referred to above, I would impose the following primary penalties, treating each offence as a separate offence: (a) in relation to the company's breach of s 8(1) of the Occupational Health and Safety Act 2000, a fine of $130,000; (b) in relation to the company's breach of s 11 of the Occupational Health and Safety Act 2000, a penalty of $115,000; (c) in relation to the company's breach of s 13 of the Occupational Health and Safety Act 2000 $13,500; (d) in relation to the company's contravention of s 94 of the Occupational Health and Safety Act 2000, a penalty of $27,500. 69 These penalties then have to be considered against the application of the principles of totality and parity. It is trite but nevertheless appropriate to state at this point the necessity to ensure that, overall, the penalties imposed are just and appropriate. The punishment should reflect what the offender has done and should not be affected by the way in which the boundaries of each particular offence are drawn. In the present mix of defendants and charges, this has not been an easy task. In this exercise, it is of significance that the particulars in each case are almost identical and concentrate on what might be described as a course of conduct closely connected with the company's unexpected financial difficulties arising in 2001. The breaches of s 11 and s 13 by the company are also intimately connected with its breach under s 8(1). The s 94 breach stands on its own account although as a matter of sentencing fairness, having regard to the substantially similar background particularised in this offence, there should not be an undue concentration on the August 2002 failure to replace the protective guarding gage. Taking those matters into account, I would assess the total criminality of the company to be appropriately addressed by a fine of $145,000 which I would divide between the several breaches as follows: (a) in relation to the s 8(1) breach, a penalty of $80,00; (b) in relation to the s 11 breach, a penalty of $55,000; (c) in relation to the s 13 offence, a penalty of $10,000 70 In relation to the individual defendants, the principle of parity is also to be considered. While the offences are the same, the circumstances of each of the defendants is quite different. Mr and Mrs Lovell had a longstanding ownership and directorship of the company although, as I have earlier concluded, had been progressively removed from the day to day operation of the company in 2001. Mr Crane became intimately involved in the operations of the company but for a relatively short period. Mrs Lovell had duties largely remote from occupational health and safety and was involved in the administration of the company while Mr Lovell had become something of a figurehead - Mr Cheers had rarely seen him at the Carrington site. I consider that the close relationship between the company, the directors and the manager, at different times, warrants the approach adopted in Haynes v C I & D Manufacturing Pty Ltd and anor (1994) 60 IR 149. In having regard to those matters and in the application of the parity principle and recognising that the personal circumstances of each defendant are quite different, I would impose the following penalties: (a) in relation to Mr Lovell, a penalty of $6,500 (b) in relation to Mrs Lovell, a penalty of $2,500 and, (c) in relation to Mr Crane, a penalty of $11,500. 71 In relation to subjective matters, there are a number of considerations. In relation to Lovells Springs, I have earlier set out my view as to the evidence relating to the long history of the company and how it came to be in financial difficulties and more importantly, in breach of the provisions of the Occupational Health and Safety Act. The major share holder of that company now is Mr Crane who, on the evidence, will apparently bear the responsibility for providing the funds for the payment of the penalty imposed on the company. Well before Mr Crane's involvement, however, Lovells Springs was involved in this industry and in something like 75 years of operation has a clean record in relation to occupational health and safety type legislation. It has been an employer of small but significant numbers of persons. While there has been some evidence as to the financial position of Mr and Mrs Lovell and the financial commitment made by Mr Crane to the business, and to that extent, this material can be considered in accordance with the provisions of the Fines Act, there was no evidence or submission for any defendant that an appropriate fine could not be met or would be crushing in its effect or lead to the closure of the business. 72 In relation to the timing of the plea, the Court record shows that the matters were listed on a number of occasions but that fact is not a true indicator of the true position of the defendants. The matter was somewhat complicated by a change in legal representation whereby, ultimately, Mr Crane and the company were separately represented and Mr and Mrs Lovell arranged their own legal representation. By the second mention, Mr Crane had entered a plea of guilty and by the third mention the Lovell interests indicated that they were in active discussions about an appropriate Statement of Facts that could be agreed between the parties. The hearing of the matter was, in fact, adjourned after it had been listed to hear evidence and submissions on sentence because Mr Crane had gained effective control of the company and wished to consider afresh the company's position. Given that context, I am satisfied that all defendants have entered an early plea and that it would be appropriate in relation to each of them that they receive the benefit of a full discount of 25 per cent on the ultimate penalty. 73 The steps taken to remedy the deficient guarding of the machinery fell substantially to Mr Crane and the new shareholders. I have already noted the largely figurehead role of Mr and Mrs Lovell in the latter stages of their directorships and in their ownership of shares in the company and the evidence supports a conclusion that they were supportive of Mr Cheers, thus demonstrating contrition and were also supportive of measures to upgrade the machinery that was to be used at the Carrington site. Mr Crane gave evidence of his undoubted efforts to make the company efficient, profitable and safe but the steps to actually guard the machines and improve the safe operation of the company took much longer than was reasonable, notwithstanding the fact that the company was literally awash with machinery that had to be assessed for its utility in its re-organised operation. The previous long and good safety record of the company and Mr Crane's own safety record in relation to a separate company are matters that shall be taken into account in mitigating the severity of the penalty. I am, however, unable to accept that the concentration on other safety issues referred to in Mr Crane's evidence should have resulted in the delay in establishing and having operational the occupational heath and safety committee. It is of some significance that it was Mr Crane's suggestion as to culling and retiring much of the antiquated machinery that was taken to the Board and accepted by the Board. In relation to the Lovells, it was accepted by counsel on their behalf, quite frankly, that the offences were objectively serious. It was Mr Lovell that made early contact with Mr Cheers assuring him that the accident was not his fault and telling him that he would have a job to return to. This is clear evidence of contrition on behalf of Mr Lovell and conveyed at a time when he was a director of the company. 74 Counsel for Mr Crane then sought the Court to exercise its discretion to deal with that defendant in accordance with the provisions of s 10 of the Crimes (Sentencing Procedure) Act. It was accepted that under Occupational Health and Safety legislation that special circumstances would have to be established in order for that discretion to be exercised and in Mr Crane's case, this was said to be established by the short period of time he was actually in a position to make decisions about the safety of the company's operation and primarily in relation to the Carrington site. I am not satisfied that this consideration operates other than a mitigating factor and provides a proper ground for the exercise of the Court's discretion. Mr Crane was well qualified to assess the machinery and all of the machinery, not just that which was to be commissioned. He was aware that the old machinery was, amongst other things, unsafe. He was clearly on notice that care had to be taken with the machinery that was to be relied upon in the re-organised phase of the company's operation. Those matters make it inappropriate for the discretion to be exercised in Mr Crane's favour and the application under s 10 of the Sentencing Act is rejected. ORDERS 75 In light of the above considerations and allowing the discounts referred to, the Court makes the following orders: In relation to Matter No IRC 847 of 2004 : (a) the defendant, Lovells Springs Pty Ltd, is found guilty of a breach of s 8(1) of the Occupational Health and Safety Act 2000, to which it has pleaded guilty; (b) the defendant is fined the sum of $52,000 with half the penalty to be paid as a moiety to the prosecutor; (c) the defendant is to pay the costs of the prosecutor as agreed, or in the absence of agreement, as ordered by the Court. In relation to Matter No IRC 846 of 2004: (a) the defendant, Lovells Springs Pty Ltd, is found guilty of a breach of s 11 of the Occupational Health and Safety Act 2000 to which it has pleaded guilty. (b) the defendant is fined the sum of $35,750 with half the penalty to be paid as a moiety to the prosecutor; (c) the defendant is to pay the costs of the prosecutor as agreed, or in the absence of agreement, as ordered by the Court. In relation to Matter No IRC 845 of 2004: (a) the defendant, Lovells Springs Pty Ltd, is found guilty of a breach of s 13 of the Occupational Health and Safety Act 2000 to which it had pleaded guilty. (b) the defendant is fined the sum of $6,500 with half the penalty to be paid as a moiety to the prosecutor; (c) the defendant is to pay the costs of the prosecutor as agreed, or in the absence of agreement, as ordered by the Court. In relation to Matter No IRC 893 of 2004:­ (a) the defendant, Lovells Springs Pty Ltd, is found guilty of a breach of s 94 of the Occupational Health and Safety Act 2000 to which it has pleaded guilty. (b) the defendant is fined the sum of $17,875 with half the penalty to be paid as a moiety to the prosecutor; (c) the defendant is to pay the costs of the prosecutor as agreed, or in the absence of agreement, as ordered by the Court. In relation to Matter No IRC 865 of 2004: (a) the defendant, Robert Arthur Lovell, is found guilty of a breach of s 8(1) and s 11(1) of the Occupational Health and Safety Act 2000 by operation of s 26 of that Act, to which he had pleaded guilty; (b) the defendant is fined the sum of $4,225 with half the penalty to be paid as a moiety to the prosecutor; (c) the defendant is to pay the costs of the prosecutor as agreed, or in the absence of agreement, as ordered by the Court. In relation to Matter No IRC 864 of 2004: (a) the defendant, Beverley June Lovell, is found guilty of a breach of s 8(1) and s 11(1) of the Occupational Health and Safety Act 2000 by operation of s 26 of that Act; (b) the defendant is fined the sum of $1,625 with half the penalty to be paid as a moiety to the prosecutor; (c) the defendant is to pay the costs of the prosecutor as agreed or in the absence of agreement, as ordered by the Court. In relation to Matter No IRC 866 of 2004: (a) the defendant, Simon Crane, is found guilty of a breach of s 8(1) and s 11(1) of the Occupational Health and Safety Act 2000 by operation of s 26 of that Act; (b) the defendant is fined the sum of $7,475 with half the penalty to be paid as a moiety to the prosecutor; (c) the defendant is to pay the costs of the prosecutor as agreed or in the absence of agreement, as ordered by the Court. 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.