Industrial Relations Commission of New South Wales in Court Session CITATION : U-RECT-IT Pty Ltd v WorkCover Authority of New South Wales (Inspector de Silva) [2004] NSWIRComm 266 APPLICANT U-RECT-IT Pty Ltd PARTIES : RESPONDENT WorkCover Authority of New South Wales (Inspector De Silva) FILE NUMBER: 7059 of 2003 CORAM: Wright J President; Walton J Vice-President; Marks J CATCHWORDS : Occupational health and safety prosecution - application for leave to appeal - appeal from penalty imposed by industrial magistrate - magistrate found unsafe system of work allowed to continue - consideration of sentencing principles to be applied in assessment of appropriate penalties - not appropriate for magistrate to offset any discount by reason of objective seriousness of offence - differential maximum penalties considered - magistrate required to have regard to statutory maximum penalty rather than jurisdictional limit - leave to appeal granted - whether penalty manifestly excessive - appeal dismissed - no costs order. Crimes Act s 556A Crimes (Local Courts Appeal and Review) Act 2001 LEGISLATION CITED : Factories and Shops Act Occupational Health and Safety Act [1983] Occupational Health and Safety Act 2000 ss 4 8(1) 12 105(2) Blue Mountains Disability Services Limited v Stinson (1999) 92 IR 246 Drake Personnel Limited v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432 Fernandes Constructions Pty Ltd v WorkCover Authority (Inspector Jones) (2002) 124 IR 148 CASES CITED : Fletcher Construction Australia Limited v WorkCover Authority of New South Wales (Inspector Fisher) (1999) 91 IR 66 Hansford v His Honour Judge Neesham and Ors [1995] VR 233 Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 R v Doan (2000) 50 NSWLR 115 WorkCover Authority of New South Wales v Chen and anor [2004] NSWIRComm 247 HEARING DATES: 08/17/2004 DATE OF JUDGMENT: 09/15/2004 APPLICANT Mr P Newell of counsel Solicitor: Mr B Williamson Workplace Law LEGAL REPRESENTATIVES: RESPONDENT Ms P E McDonald of counsel Solicitor: Mr J Doo Shaw McDonald Pty Ltd, Solicitors JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: WRIGHT J, PRESIDENT WALTON J, VICE PRESIDENT MARKS J Wednesday 15 September 2004 Matter No IRC 7059 of 2003 U-RECT-IT PTY LTD v WORKCOVER AUTHORITY (INSPECTOR DE SILVA) Application by U-Rect-It Pty Ltd for leave to appeal and appeal against a decision of Industrial Magistrate O'Shane given on 20/11/03 in matter no. 20143359/03/2 JUDGMENT [2004] NSWIRComm 266 1 These proceedings involve an application for leave to appeal and an appeal from a penalty imposed by an Industrial Magistrate in a prosecution brought by the WorkCover Authority of New South Wales against the appellant in these proceedings, U-Rect-It Pty Ltd as defendant. The appellant had pleaded guilty to a breach of s 8(1) of the Occupational Health and Safety Act 2000 ("the Act") arising out of an injury sustained by an employee, John Chen, on 2 July 2002. The evidence before the Industrial Magistrate comprised substantially an agreed statement of facts and photographs together with some affidavit material put forward by the appellant. 2 The appellant manufactured shop-fittings, including metal shelving. The metal shelving was made on a production line which shaped pieces of sheet metal into shelves to which a bracket was spot-welded. The production line was enclosed within a perimeter fence 1.8 meters high made of welded mesh and fitted with a number of gates which in turn contained an electrical interlocking system which caused the production line to stop when any gate was opened. 3 There was a procedure that if any shelving became stuck and the machinery jammed a button was to be pressed which permitted entry to the machinery through a gate fitted with an interlock switch. The machine would be restarted manually once any malfunction had been corrected. 4 However, the appellant had allowed employees over a period of time to circumvent this procedure. They climbed up the perimeter fence and, whilst doing so, reached over the top to clear a malfunction. The foreman was aware of this practice and did nothing effective to stop it. In fact, the leading hand employed by the appellant engaged in the practice. The employee Chen was using this "short cut" to clear the line when the machinery commenced to run and the last joint of the index finger of his left hand was caught in a sprocket and amputated. 5 The evidence before the Industrial Magistrate was to the effect that following the incident a piece of wire mesh was welded over a cavity in the fence to prevent it being used by employees to gain access so as to reach over into the equipment. 6 Although there was some evidence advanced by the appellant about general training given to the injured employee, he was given no specific training with respect to the procedure for clearing blockages in the line beyond being requested to read a document attached to the perimeter fence, and he was given no specific training on the use and control of that line. He learned by way of observation and participation in the work of the machinery (which procedure included learning the short cut). There were no documented records of training given to the employee prior to the incident, however after the incident the appellant introduced formal training systems. 7 During the course of submissions her Honour was informed by the prosecutor that the range of penalties was between $5,000 to $10,000 and counsel for the appellant expressed the same opinion. 8 In the course of an extempore judgment her Honour emphasised that the "short cut" method adopted by the employees was dangerous and was known to those responsible for supervising the work. Her Honour also emphasised the fact that this state of affairs had continued for some time and she deduced that this was to ensure that there was no interference with the production line. To this extent her Honour rejected the submissions made on behalf of the appellant that it was "a good corporate citizen". 9 Her Honour accepted that the appellant had entered a plea at the earliest available opportunity and that it expressed "remorse and contrition". However, her Honour said that any discount available to the appellant on the early plea was counter-balanced by the fact that the unsafe system of work had been allowed to continue for some time. Her Honour imposed a fine of $44,000. 10 The maximum penalty that the magistrate could impose was $55,000 (see s 105 of the Act). There can be no doubt that the appellant was entitled to a discount for having pleaded guilty at the earliest possible opportunity. There is no doubt also that the appellant was entitled to some further discount because of an expression of remorse and contrition and because it had modified the fencing and introduced, as her Honour observed, "greater emphasis…on training and supervision and on safe working practices". Her Honour expressed the fine as constituting a 20 per cent discount of the maximum penalty which she could impose. Furthermore, her Honour noted that the appellant had a "number of prior matters which were charged intermittently over a period of 20 years under the Factories and Shops Act, with one recent matter in 1998 charged under the Occupational Health and Safety Act [1983]. That last matter was dismissed under the then s 556A of the Crimes Act. Although the record appears to be rather minor, it is far outweighed by the aspects of this matter which I have emphasised". 11 The sentencing principles to be applied in the assessment of appropriate penalties under the Act have been considered on many occasions by this Court, including Full Bench level, and are well known. We refer by way of example to Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (1999) 90 IR 464 at 474-475 and Fletcher Construction Australia Limited v WorkCover Authority of New South Wales (1999) 91 IR 66 at 77. The starting point is the objective seriousness of the offence and the need to accommodate both general and specific deterrence. The maximum penalty that may be imposed is to be reserved for the most serious offence, that is, the worst possible case. Only after an appropriate penalty has then been formulated are subjective matters to be taken into account, which include factors such as cooperation with the investigation and inquiries of the WorkCover Authority, expressions of remorse and contrition, steps taken to remedy the matters giving rise to the breach and the general approach to occupational health and safety matters and attention to safe working practices by a defendant. This list is not intended to be exhaustive but is indicative of the matters which should be taken into account. Furthermore, a defendant will be entitled to a discount of up to 25 per cent for entering a plea of guilty at the earliest possible opportunity. These subjective factors are then aggregated so that a discount is applied to the penalty assessed by reference to the objective factors, resulting in the penalty to be properly imposed. 12 It is clear that the approach to sentencing taken by her Honour in these proceedings was inconsistent with the application of the sentencing principles summarised above. It is not appropriate to offset any discount for subjective features by reason of the objective seriousness of the offence. 13 The appellant has contended that the leave to appeal is not required in this matter. In this respect, counsel for the appellant sought to distinguish Drake Personnel Limited v WorkCover Authority of New South Wales (1999) 90 IR 432 upon the basis of an amendment to the "underpass legislation" namely the passage of the Crimes (Local Courts Appeal and Review) Act 2001 or alternatively to argue that Drake Personnel was wrongly decided. These contentions were neither supported by comprehensive argument (including reference to the Full Bench decision in Blue Mountains Disability Services Limited v Stinson (1999) 92 IR 246) nor any properly advanced application for leave to re-argue Drake Personnel. We do not consider that the contentions were, therefore, properly advanced and we reject them. Further, this is also not the occasion to consider the effect of the Crimes (Local Courts Appeal and Review) Act 2001 as this is plainly a matter which, in an appropriate case, would attract the grant of leave to appeal. 14 The matter referred to in paragraph [12] above would of itself justify the grant of leave to appeal. However there is one further matter raised by these proceedings which is of such importance in our opinion as to justify the grant of leave to appeal. The respective submissions of the parties focussed attention on the quantification of penalty in matters heard before an Industrial Magistrate having regard to the differential maximum penalties which may be imposed by that Court and by this Court. 15 As we have previously observed, by s 105(2) of the Act, the maximum monetary penalty that may be imposed before a Magistrate is $55,0000 "despite any higher maximum monetary penalty provided in respect of the offence". By s 12 of the Act the maximum penalty that might have been imposed on the appellant by this Court for the same offence was $550,000. It was conceded by the respondent (correctly in our view) that the appellant was not a "previous offender" as defined in s 4 of the Act and the higher penalties for previous offenders did not, therefore, apply: see Fernandes Constructions Pty Ltd v WorkCover Authority (Inspector Jones) (2002) 124 IR 148 at [11]. 16 In submissions originally made to this Court on appeal the appellant had argued that the maximum penalty which would reflect the worst possible case was the sum of $55,000 and that the penalty should have been assessed accordingly. During the course of the hearing of the appeal the appellant agreed that the proper approach to be taken to the assessment of penalty before an Industrial Magistrate was that exemplified by the decision of the New South Wales Court of Criminal Appeal in R v Doan (2000) 50 NSWLR 115. Those proceedings dealt in part with circumstances where proceedings for an offence could be taken before either the District Court or a Local Court with different maximum terms of imprisonment applicable. The judgment of the Court was given by Grove J (Spigelman CJ and Kirby J agreeing). His Honour distinguished between a jurisdictional maximum penalty and a maximum penalty for an offence triable within the jurisdiction. His Honour said at [35]: "In other words, where the maximum applicable penalty is lower because the charge has been prosecuted within the limited summary jurisdiction of the Local Court, that court should impose a penalty reflecting the objective seriousness of the offence, tempered if appropriate by subjective circumstances, taking care only not to exceed the maximum jurisdictional limit". 17 There is a decision of the Appeal Division of the Supreme Court of Victoria in Hansford v His Honour Judge Neesham and Ors [1995] VR 233, which is to similar effect. The judgment in that case was that the maximum penalty prescribed for the offence was to be taken into account by a magistrate in sentencing by reference to the maximum available penalty rather than the limit of jurisdiction imposed on a Local Court. As Hampel J said, succinctly, "the gravity of the offence must be assessed by reference to the statutory penalty provided for it" (at p 241). 18 Accordingly, in assessing penalty by reference to the objective seriousness of the offence on a worst possible case basis an Industrial Magistrate is required to have regard to the maximum penalty fixed under the Act, rather than the jurisdictional limit imposed by s 105. Of course, an Industrial Magistrate may not impose any greater penalty than that provided for by s 105. In this respect we adopt what was said in WorkCover Authority of New South Wales v Chen and anor [2004] NSWIRComm 247. 19 It now becomes necessary to assess whether the penalty fixed by her Honour was appropriate. The appellant submitted that the penalty was manifestly excessive based on the appellant's understanding of the level of penalty customarily applied in the Chief Industrial Magistrates Court for offences of this kind. Much weight was placed upon submissions made to the Industrial Magistrate by the person then representing the WorkCover Authority of New South Wales that an appropriate range was between $5,000 and $10,000. This is a matter which may, however, support the grant of leave to appeal. We should state, however, that there was no evidence properly before us as to the range of penalty normally applied within the Chief Industrial Magistrates Court for offences of this kind. Nor is this Court bound to accept any assessment proffered by any party to proceedings of this kind as to what is an appropriate penalty. Accordingly, it is necessary for us to determine whether, in all the circumstances, the penalty of $44,000 imposed by the Industrial Magistrate should stand. 20 As earlier observed we consider that there was error in the decision of the Industrial Magistrate. However, we do not consider that the appeal should be upheld because in any exercise of re-sentencing we do not consider that the penalty given was excessive. We agree with the observations of the Industrial Magistrate that this was a serious offence. Whilst the appellant sought to emphasise that it had put in place protective systems to adequately guard the machinery being used and to prevent unsafe work practices from arising, the agreed statement of facts placed before the Industrial Magistrate clearly demonstrated a practice known to the foreman which permitted employees to circumvent the safety mechanisms which the appellant had installed. Whilst the appellant sought to attack a finding by the Industrial Magistrate that the appellant was complicit in the adoption of the unsafe system (for profit), it is clear that it acquiesced to the practice by the engagement of its leading hand in it and its failure to take corrective action. In short, the failure was obvious and easily remedied. In the same vein, the appellants sought to emphasise the training programs which it had in place. However, the agreed statement of facts is indicative of the fact that the employee who was injured on this occasion had not received adequate training. 21 We accept the submissions made on behalf of the appellant that it was entitled to a discount of 25 per cent for the early plea of guilty and a further 10 per cent for the other mitigating factors referred to. If the penalty fixed by the Industrial Magistrate of $44,000 was seen as reflecting a discount of 35 per cent, the penalty assessed by reference to the objective seriousness of the offence and having regard also to the necessary deterrent factors would be of the order of $68,000. Having regard to all of the circumstances placed before the Industrial Magistrate and having regard to the maximum statutory penalty of $550,000, it is our opinion that the penalty imposed by the Industrial Magistrate was not excessive and that her Honour could have justifiably imposed a higher penalty. Having regard to all the circumstances, and taking into account the view expressed by the prosecutor before the Industrial Magistrate we conclude that the penalty fixed by her Honour should not be disturbed. 22 This leaves for determination the question of costs. Again, having regard to the attitude taken by the prosecutor before the Industrial Magistrate and bearing in mind the ultimate result, we are of the opinion that a just result in the circumstances would require that each party pay its own costs. 23 ORDERS We make the following orders: 1. Leave to appeal is granted. 2. The appeal is dismissed. 3. There is no order as to costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.