Industrial Relations Commission of New South Wales in Court Session CITATION: Inspector John Mulder v Michelle Pontone and another [2005] NSWIRComm 432 Prosecutor: Inspector John Mulder First defendant: PARTIES: Michelle Pontone Second defendant: Klondu Engineering Pty Ltd FILE NUMBER(S): 1404 and 1405 of 2004 CORAM: Backman J CATCHWORDS: Occupational Health and Safety - sentencing of corporate defendant under s 8(2) and natural defendant under s 26 and s 8(2) of the Occupational Health and Safety Act 2000 - pleas of guilty entered by both defendants - maximum penalties - systems of work - reasonable foreseeability of the risk - whether there are degrees of reasonable foreseeability - effect of unexpected departure from a standard practice - general and specific deterrence - consequences of the breach - respective culpabilities - absence of prior convictions - early pleas of guilty - contrition and remorse - cooperation - good industrial record - post accident measures - respective capacities to pay a fine - orders - penalties - costs. Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Occupational Health and Safety Act 2000 Capral Aluminium Ltd v WorkCover Authority of New South Wales (Inspector Mayo-Ramsay) (2000) 49 NSWLR 610 Department of Mineral Resources (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 Inspector Jorgenson v Daoud (2005) 143 IR 170 Inspector Yeung v Howie Herring & Forsyth Pty Limited & Anor [2005] NSWIRComm 266 Maddaford v CSR Limited and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337 Manpac Industries Pty Ltd (formerly t/as Pacific Concrete & Quarries Pty Ltd) v WorkCover Authority of New South Wales (Inspector Glass) (2001) 106 IR 435 CASES CITED: Markarian v Regina (2005) 215 ALR 213 R v Thompson, R v Houlton (2000) 49 NSWLR 383, 115 A Crim R 104 Winchester (1992) 50 A Crim R 345 WorkCover Authority of NSW (Inspector Buggy) v Weathertex Pty Ltd (2003) 127 IR 60 WorkCover Authority (NSW) (Inspector Farrell) v Morrison (No 1) NSWIRComm 325 WorkCover Authority of New South Wales (Inspector Farrell) v Morrison (No 2) (2002) 112 IR 312 WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284 HEARING DATES: 03/21/2005 DATE OF JUDGMENT: 11/18/2005 Prosecutor: Mr P. Newall, of counsel Solicitors: Phillips Fox Lawyers First defendant: LEGAL REPRESENTATIVES: Mr D. Chin, of counsel Solicitors: Lough Wells Duncan Lawyers Second defendant: Mr M. Cahill, of counsel Solicitors: Sparke Helmore Lawyers JUDGMENT: - 21 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Backman J Friday, 18 November 2005 Matter No IRC 1404 and 1405 of 2004 Inspector John Mulder v Michelle Pontone and another Prosecutions under s 26(1) and s 8(2); and, s 8(2) of the Occupational Health and Safety Act 2000. JUDGMENT [2005] NSWIRComm 432 1 Michelle Pontone, the first defendant, was the sole director of Pontone Engineering Pty Ltd and a qualified boilermaker. Pontone Engineering was contracted by Pro Industrial Services Pty Ltd, a labour hire company, to provide the first defendant's services to premises at 238 Berkeley Road Unanderra. At the same time FD Hales Pty Ltd was contracted by Pro Industrial Services to provide the services of Richard Hales to the premises as a metal worker. 2 Klondu Engineering Pty Limited, the second defendant, occupied the premises, owned the equipment, and was engaged in the business of providing metal and fabrication services at those premises. The second defendant employed Cesare Cignarella as a manager whose duties included supervision of the work which was carried out in Workshop B at the premises. The second defendant incorporated Pro Industrial Services for the purpose of having direct dealings with contract labourers including the payment of wages. 3 The first defendant and Mr Hales had a long and close working relationship which spanned some ten years. During this time they formed what may be described as an informal partnership. The first defendant was primarily engaged in fabrication work and Mr Hales was primarily engaged in welding. When they were sub contracted to work for the second defendant, they developed a particular work method whereby they would first discuss their respective roles. The first defendant would then undertake the fabrication work up to a certain point at which time Mr Hales would then complete the work. 4 On Monday, 25 March 2002 Mr Hales was welding a discharge hood at the second defendant's premises. The hood had been fabricated by the first defendant some 3 to 4 days earlier. It weighed about 718 kilogrammes. At about 2.30pm Mr Hales had lifted the hood by wrapping lifting chains around bracing which had been tack-welded onto the side of the hood by the first defendant. When the hood was about one metre above the ground the bracing gave way and the hood fell onto Mr Hales' feet. Mr Hales was transported to Wollongong hospital where he underwent surgery to repair his left foot. His right leg was amputated below the knee about 10 days later. Plea of guilty by first defendant 5 The first defendant has pleaded guilty to an amended application for order which alleges that an offence was committed under s 26 of the Occupational Health and Safety Act 2000 (the Act). It should be immediately emphasised in these sentencing remarks that s 26 of itself does not create an offence. An examination of the amended application filed against the first defendant records however that the essential elements of an offence under ss 8(2) and 26 of the Act have been properly set out, that is, the application alleges in its terms that the first defendant being a director of Pontone Engineering has breached s 26 in that Pontone Engineering in contravention of s 8(2) failed to ensure persons not in its employment, in particular Rick Hales were not exposed to risks to their health and safety arising from Pontone Engineering's undertaking while at its place of work. 6 As the essential elements of the offence are expressly set out in the amended application, that application is not therefore invalidated by the misdescription of the section under which the offence arises. The correct form of the charge should have contained an express allegation of a breach of s 8(2) of the Act by virtue of s 26 of that Act: Inspector Jorgenson v Daoud (2005) 143 IR 170 at 180, 181, 185; see also Manpac Industries Pty Ltd (formerly t/as Pacific Concrete & Quarries Pty Ltd) v WorkCover Authority of New South Wales (Inspector Glass) (2001) 106 IR 435 at 455. 7 The failure of Pontone Engineering to ensure non employees were not exposed to risks to safety is particularised in the amended application as arising from two specific omissions which are: (i) the failure to ensure a safe method was used to lift the fabricated metal discharge; (ii) failure to provide adequate information and instruction in relation to safely lifting the hood in order to weld it. 8 Based on this particularisation the breach may be shortly described as involving the lack of a safe procedure for lifting the hood. This in turn exposed Mr Hales to a risk of injury in the event the hood became unstable and fell. Plea of guilty by second defendant 9 The second defendant has pleaded guilty to an offence under s 8(2) of the Act. The offence concerns the same set of facts as for the offence against the first defendant. The particularisation of the offence against the second defendant has been characterised in the application for order as follows: Failure to ensure a system of work that was safe and without risks to health for lifting and welding of a fabricated metal discharge hood; Failure to provide adequate warning that bracing that is not fully welded should not be used for the purpose of lifting a fabricated metal discharge hood; Failure to provide adequate information, instruction and training in relation to the safe method of lifting a fabricated metal discharge hood for welding purposes; Failure to provide adequate supervision of persons not in the employ of Klondu Engineering Pty Limited in the lifting and welding of a fabricated metal discharge hood. The prosecutor's evidence 10 The prosecutor represented by Mr Newall of counsel tendered separate bundles of documents against each defendant which were separately marked as exhibits. The subject matter of each tender bundle is however largely identical and therefore I consider it both convenient and appropriate to examine the prosecutor's evidence against both defendants together. 11 In addition to the facts already recited earlier in these sentencing remarks, the agreed statement of facts records that the hood was fabricated by the first defendant over a period of 3 to 4 days before the accident. The fabrication process included tack-welding 50mm x 50mm RHS bracing onto the side of the hood as a temporary measure to prevent distortion during welding. Prior to the commencement of the fabrication of the hood Mr Cignarella issued both the first defendant and Mr Hales with drawings which provided instruction on the fabrication and welding of the hood. During the period when the work was being performed by both the first defendant and Mr Hales in Workshop B, Mr Cignarella conducted regular inspections and supervised the work being conducted at the workshop. The first defendant used a wall crane and overhead crane to turn the hood around 2-3 times during the fabrication process. The first defendant knew that when Mr Hales completed the welding on the hood that he would also need to turn the hood. The first defendant instructed Mr Hales on the size of the welds and where to weld but he did not inform or instruct Mr Hales on a safe method for lifting the hood. 12 Mr Hales knew that tack-welded bracing was used to prevent distortion in the welding process and he admitted that he should have checked before he used the bracing to lift the hood. It was common practice for Mr Hales to use bracing as a means of slinging objects lifted by a crane. Mr Hales was also standing in front of the hood as he lifted it whereas he usually stood at the side. 13 The second defendant did not ensure that Mr Hales received adequate information, instruction, training and supervision in relation to safely lifting objects by crane or where to stand during the lifting process. The second defendant was not supervising Mr Hales at the time of the accident. Mr Hales had received instructions from the second defendant about how to use the wall jib crane to turn the hood but no adequate information, instruction or training about how to sling the hood when it was ready to be turned for welding. 14 The Court was informed by the prosecutor that neither defendant had any prior convictions. First defendant's evidence 15 The first defendant relied on an affidavit sworn by him on 15 March 2005. In the affidavit the first defendant explains that because he and Mr Hales were in the second defendant's premises and under the direction and control of the manager that both he and Mr Hales were simply supplying their labour and that the second defendant was responsible for matters of workplace safety. He says that Mr Cignarella gave directions to him and also Mr Hales in relation to the various jobs to which they were assigned and that this was not something he or Mr Hales had control of or input into. 16 In relation to the circumstances immediately prior to the accident Mr Pontone says he told Mr Hales that the hood was braced and tack-welded to hold the hood in place. What he did not specifically tell Mr Hales was that the bracing was only tack-welded and not fully welded. This was because he assumed Mr Hales would know since he was responsible for welding in accordance with their informal partnership and because they had had a long work association. Having bracing on the hood means it is only tack-welded. The purpose of this is to stop movement and distortion and to keep the hood in place. It was common practice according to the first defendant for him to install bracing on heavy metal objects and for Mr Hales to work on them. When the first defendant was fabricating the hood he turned it around using the overhead and wall crane. He had no idea that Mr Hales would move the hood using the temporary brackets or bracing. 17 The first defendant says he now realises that it was not good enough to assume that Mr Hales would know not to turn the hood using the tack-welded bracing. Had he seen Mr Hales chain the hood by the bracing he would have intervened and suggested alternatives. 18 The first defendant was a witness to the accident. He was about one foot away from the hood when the sling broke. The bracing had fallen off and the hood fell to the ground directly onto Mr Hales' legs. 19 In relation to occupational health and safety issues the first defendant describes himself as a safety focussed person who continuously stressed the importance of safety to representatives and contractors of the second defendant. Notwithstanding this the first defendant says all his work was performed under the close supervision of Mr Cignarella. He did not feel he had the power to make decisions about safety for the whole factory, but he did feel he had power over safety issues around his work station. Second defendant's evidence 20 Mr Cahill for the second defendant read into evidence without objection an affidavit of Fiona Rossit sworn on 3 March 2005 together with a number of annexures. 21 At the time of swearing the affidavit Ms Rossit was the second defendant's office manager. She deposes that the second defendant commenced operations in 1989 providing metal and fabrication services. The directors of the second defendant are Mr Cignarella and Louis Mifsud. The second defendant no longer has employees. 22 The affidavit provides details of a number of matters including Mr Hales' work experience which according to Ms Rossit was for some 21 years working in the metal industry, during which time Mr Hales was regarded by the second defendant as an "extremely valuable asset" and a good worker, well-trained and extremely competent in all aspects of boilermaking. 23 At the time of the offence, according to Ms Rossit the second defendant had a number of safety procedures including machinery and equipment training, inductions and tool-box talks. In addition personal protection equipment (PPE) was required to be worn, standard safety and warning signs were prominently displayed in relation to the use of PPE, and an induction safety manual was in existence for sub-contractors and a procedures manual existed which included various instructions on operating procedures and risk identification. 24 Mr Hales when turning the hood on the day of the offence carried out a number of different procedures. The procedures followed by Mr Hales required for example that items of substantial weight should be turned with an overhead crane not a wall crane. 25 According to Ms Rossit sub contractors received verbal work instructions and drawings from Mr Cignarella. Mr Hales, for example was a recipient of such instruction and drawings on the day of the offence. Because Mr Hales had a longstanding working relationship with the second defendant he was considered to have the relevant experience and skills to do the work that he was contracted to do. 26 Mr Hales also received supervision from the workshop supervisor who was on the workshop floor on the day of the offence. This supervisor reported to Mr Cignarella. Daily job sheets were allocated to each worker. Mr Cignarella also frequented the workshop floor and visually inspected work being done. 27 The second defendant did not and does not have a fixed budget for safety because it is a small company. Safety issues however are rectified as soon as possible. A system of reporting and ongoing consultation existed at the time of the offence to address safety requirements. Also, at the time of the offence tool box talks took place and each meeting was documented. Consideration Proper approach to sentencing 28 Following the decision of Markarian v Regina (2005) 215 ALR 213 and the analysis of that decision by his Honour Justice Boland in Inspector Yeung v Howie Herring & Forsyth Pty Limited & Anor [2005] NSWIRComm 266, I propose to adopt the approach to sentencing in this matter as set out by his Honour in Howie Herring & Forsyth. In that latter decision his Honour concluded (at [39] - [40]): In the absence, however, of any clear indication in Markarian that a sentencing court may not use a two-stage approach to sentencing and may not give separate consideration to the objective circumstances of the crime (in fact at [38] in the joint judgment it appears to be said that this may be justified) and given that the implications of Markarian for the approach required by Lawrenson Diecasting [ Pty Ltd v WorkCover Authority of New South Wales (Inspector James Swee Ch'ing [1999] 90 IR 464] were not fully debated before me, especially as to the statutory context in which sentencing occurs in this jurisdiction, I am disinclined to depart from the approach required by Lawrenson Diecasting . The approach I have taken, therefore, is that required by Lawrenson Diecasting. The guideline judgment in R v Thomson [ R v Houlton (2000) 49 NSWLR 383] continues to be one this Court is required to take into account and it is appropriate that I indicate a discount at least for the utilitarian value of the guilty plea. In the light of Markarian it is necessary that I take into account all relevant considerations in sentencing (which has always been part of the jurisprudence) and "make a value judgment as to what is the appropriate sentence given all the factors of the case" subject to the approach required by Lawrenson Diecasting . Amongst the objective and subjective factors I am required to take into account are those in ss 21A, 22 and 23 of the Crimes (Sentencing Procedure) Act . I do not consider it is any longer appropriate to take the approach of determining an amount of penalty based on the relevant objective considerations and deducting from that amount allowances for the individual subjective factors. Maximum penalties 29 The Court was informed by the prosecutor during the sentencing proceedings that neither defendant had prior convictions. The maximum penalty therefore applicable to the second defendant, being a corporation at the time of the offence, is $550,000. The maximum penalty applicable to the first defendant is $55,000. Systems of work: first defendant 30 The system of work employed by the first defendant at the time of the offence involved close cooperation with Mr Hales. As earlier described, the two men worked together in an informal partnership at the second defendant's premises with the first defendant fabricating and constructing metal objects and with Mr Hales doing the welding. According to the first defendant his work, and the work of Mr Hales, was closely supervised by the second defendant. Because of this close supervision, the first defendant was of the view that the second defendant was responsible for worksite safety. Nevertheless the first defendant felt that he had control over safety issues around his workstation. 31 In relation to the fabrication of hoods the first defendant had a standard practice of tack-welding bracing onto the hood to prevent distortion. He did not tell Mr Hales that the bracing was not fully welded because he assumed Mr Hales would know this. He also assumed that Mr Hales would not turn the hood using the tack-welded bracing. The first defendant's practice when turning the hood during fabrication was to use the overhead wall crane. 32 Notwithstanding the first defendant's view that the second defendant was responsible for worksite safety, the first defendant had described himself as a "safety focussed person" and someone who often discussed safety issues with Mr Mifsud. 33 It does not appear from this brief summary of the first defendant's work practices that he had in place any system of safety procedures at the second defendant's premises. The fact that the first defendant was of the mistaken belief that safety and the development of systems at the premises was the responsibility of the second defendant does not absolve him of his obligations under the OH&S legislation. A similar submission made in the context of the statutory defences was rejected by his Honour Walton J, Vice President in WorkCover Authority (NSW) (Inspector Farrell) v Morrison (No 1) [2001] NSWIRComm 325 at [64] [65]. 34 Similarly, in the present circumstances the first defendant had the ability and the capacity to provide a procedure, by way of, for example, a work method or instruction or information, to ensure Mr Hales underwent the task of lifting and turning the hood safely. Informing Mr Hales that the braces were only tack-welded and should not be used for lifting was within the first defendant's capacity. The first defendant conceded in any event in his affidavit that he had "some power" over safety issues around his work station. Systems of work: second defendant 35 At the time of the offence the second defendant had a number of safety procedures in place including machinery and equipment, training, inductions and tool box talks. According to the second defendant Mr Hales received verbal work instructions and drawings from Mr Cignarella on the day of the offence, and, he received supervision from the workshop supervisor. Mr Rossit states in her affidavit that Mr Hales, when he began working for the second defendant, was informed of the procedures contained in the procedures manual, a copy of which was kept in the crib room. 36 There is no further elucidation in the affidavit concerning the extent of the information imparted to Mr Hales contained in the procedures manual or the method by which such information was imparted. Nor is it disclosed in the evidence precisely when the information was made available to Mr Hales. Ms Rossit states that Mr Hales had worked for the second defendant at various times over a period of fifteen years. 37 Nevertheless, it is clear that the second defendant had safety systems in place which had been implemented at the time of the offence. The existence of such systems and the implementation of those systems is a factor which mitigates against the seriousness of the offence: Department of Mineral Resources (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 at 25 per Walton J, Vice President. Reasonable foreseeability of the risk: first defendant 38 Mr Chin, of counsel, who appeared for the first defendant submitted that the risk (which Mr Chin said arose from the risk of using the tack-welded bracing) had a "low degree of foreseeability". This proposition was advanced on a number of bases which were: (i) the fact that the bracing was tack-welded is not the subject of criticism; (ii) Mr Hales departed from his standard practice of standing to the side and stood in front of the hood at the time of the accident; (iii) Mr Hales and the first defendant worked together in excess of eight years, the last two years exclusively for the second defendant; (iv) Mr Hales had adopted safe methods of lifting in the past. The first defendant had never observed Mr Hales using bracing as a means of lifting when welding hoods. 39 I would observe first in relation to this submission that the concept of reasonable foreseeability does not admit of varying levels of degrees of foreseeability. A risk to safety is either objectively reasonably foreseeable or it is not. The obviousness of the risk, however, or, whether the risk is readily avoidable may be measured by invoking some scale by which the nature and extent of the risk may be weighed. 40 Nor, in my view is the risk as narrow as has been characterised by Mr Chin. Rather the risk to safety more accurately arises on the evidence from the actions of lifting and turning the hood in the circumstances of the first defendant's admitted failures under ss 26 and 8(2) of the Act. 41 It seems that Mr Hales unexpectedly departed from his usual practice of standing to the side when lifting the hood and instead stood in front. According to Mr Chin, had Mr Hales not been standing in front then the injury, "would not have occurred in the manner that it did". 42 It does not necessarily follow from this submission that had Mr Hales followed his practice of standing to the side that he nevertheless would not have been exposed to a risk to his safety in the event that the hood fell or otherwise became unstable. The absence of any further explanation on the point precludes me from making a positive finding about this. Nevertheless, Mr Hales was a longstanding and highly respected worker who unexpectedly departed from a standard practice. These factors also mitigate the objective seriousness of the offence. However, the benefit flowing to the first defendant from this is qualified by the following comments of the Full Bench in WorkCover Authority of NSW (Inspector Buggy) v Weathertex Pty Ltd (2003) 127 IR 60 at [61]: The fact that Mr Barry may have been experienced and may have departed from usual practices, procedures and even instructions is a factor that will mitigate the objective seriousness of the offence but does not exonerate the respondent in any substantial way as seems to be suggested by the sentencing judge when his Honour commented that "the defendant was entitled to assume that Mr Barry was able to carry out the unloading operation safely and without any supervision or assistance of any kind". As was stated in Riley v Australian Grader Hire at [15]: The magistrate appears to have reached her conclusion as to the objective seriousness of the offence, having regard to the lack of common sense of the injured worker. It is reasonably clear from her decision that it was concluded that the conduct of the injured worker effectively removed or minimised the liability of the respondent in relation to the lack of training or instruction afforded the employee. This was wrong in principle. Section 15 of the Occupational Health and Safety Act requires employers to be diligent and proactive to ensure the safety of employees. Those obligations are not diminished because of the error or negligence of an employee, although such matters may reflect on the degree of culpability of the employer for the purposes of sentencing. We note the following observations of Bauer J in WorkCover Authority (NSW) v Maine Lighting Pty Ltd (1995) 100 IR 248 at 257: Much of what was urged by Mr King was directed to showing that the worker who was killed knew of, and therefore ought to have avoided the exposed electrical connections. In one sense such a submission militated against the position of the defendant; the very purpose of the Act was to introduce safe working practices so that accidents are prevented. The Act was designed to protect against human errors including inadvertence, inattention, haste and even foolish disregard of personal safety as well as the foreseeable technical risks in industry. . . . . . 43 The prosecutor submitted that the risk to safety was foreseeable in circumstances where a hood weighing some 718 kilogrammes is lifted by bracing which is only tack-welded, and a person is or persons are standing near enough to the hood to be at risk of injury in the event the hood should fall. I agree. It was observed by the Full Bench in Capral Aluminium Ltd v WorkCover Authority of New South Wales (Inspector Mayo-Ramsay) (2000) 49 NSWLR 610 at [81 - 82] that foreseeability is relevant to the assessment of the seriousness of an offence and the existence of a foreseeable risk to safety will necessarily result in an offence being more serious in nature. Reasonable foreseeability of the risk: second defendant 44 Mr Cahill, of counsel, for the second defendant, acknowledged in written submissions that the subject risk was identifiable in advance and should have been addressed in the second defendant's written procedures. I adopt for the purpose of the sentence proceedings against the second defendant, my earlier comments in these sentencing remarks made as to the foreseeability of the risk in relation to the first defendant's circumstances. This means that the existence of a reasonably foreseeable risk to safety in relation to the second defendant's circumstances renders the offence objectively serious: Capral Aluminium at [81 - 82]. General and specific deterrence: first and second defendants. 45 The principle of general deterrence is clearly applicable to the circumstances of this matter. The first and second defendants were operating in a dangerous work environment at the second defendant's premises. The first defendant had been operating there for some 15 years. The fabricated hood weighed 718 kilogrammes. 46 The prosecutor urged the Court not to disregard the issue of general deterrence. The accident occurred in an environment where heavy machinery was being used and a contractor-workforce was undertaking the task of manoeuvring a heavy piece of equipment. 47 In my view general deterrence is relevant in this matter in order to draw attention to the occupational health and safety obligations of employers operating in large industrial undertakings, utilising heavy pieces of machinery and equipment, and, contracting personnel to supplement its workforce. 48 The significance of general deterrence in the context of occupational, health and safety obligations was dealt with by Walton J, Vice President, in WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284 at [69]-[70]: The purpose of the Act is well known and often referred to in judgments of this Court. In my view, it is important, when considering notions of general deterrence, that the Court be cognisant of the fact that the Act is for the benefit of the public generally and particularly employees at work. The goal is the prevention, deterrence and punishment of breaches of health and safety requirements. The notion of general deterrence is well understood. However, in my view, and in accordance with what was stated by the Full Court in Capral Aluminium (at pars 72-74), in cases such as this, it should be reiterated that "one of the main purposes of punishment, ... is to protect the public from the commission of such crimes by making it clear to the offender and to other persons with similar impulses that, if they yield to them, they will meet with severe punishment. (emphasis added): R v Rushby [1977] 1 NSWLR 594 at 597 per Street CJ citing R v Radich [1954] NZLR 86 at 87 (adopted by this Court in Capral Aluminium at par 72). 49 In relation to specific deterrence, the first defendant submitted it should be given no weight because he has left the metal fabrication industry permanently and is in the process of becoming a mortgage broker. The second defendant accepted that the Court should have regard to specific deterrence, but that circumstances such as the fact that the second defendant had been operating for some 15 years in a highly dangerous industry with an unblemished safety record prior to the offence, would serve to reduce the impact of the principle on penalty. The second defendant also relies on the comprehensive safety procedures it had in place at the time of the offence. 50 With these matters in mind, I propose to give no weight to specific deterrence in relation to the first defendant. The principle is however clearly relevant to the second defendant's circumstances which includes the fact that operations are, and continue to be, conducted in a highly dangerous work environment. Consequences of the breach: first and second defendants 51 Mr Hales sustained serious injuries following the accident. He required surgery to repair his left foot and had his right leg amputated below the knee. Here the actual injuries sustained are indicative of the seriousness of the relevant risk to safety: Maddaford v CSR Limited and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337 at [17]. Respective culpabilities 52 Mr Chin urged the Court to find that the culpability of the first defendant was less than that of the second defendant by reason of the following items: (i) the second defendant was head contractor; (ii) the first defendant and Mr Hales were closely and directly supervised by the second defendant's director, Mr Cignarella; (iii) the first defendant had relatively little control over safety issues at the premises; the second defendant had more direct control. 53 Both defendants have been charged under the same section of the Act and in relation to very similar objectively factual circumstances. Against these factors it is relatively easy to make some assessment of the defendants' respective culpabilities. The second defendant owned the premises and the machinery and the equipment; and was the head contractor. The first defendant and Mr Hales were under the direct supervision of the second defendant. On the other hand, there is no doubt on the evidence that the first defendant had direct control over safety features in relation to the hood when it was lifted and being turned by Mr Hales. From this brief assessment in my view the first defendant had less control over safety issues at the site than did the second defendant and therefore it is open for me to conclude that the culpability of the first defendant is less than that of the second defendant: WorkCover Authority of New South Wales (Inspector Farrell) v Morrison (No 2) (2002) 112 IR 312 at [53 - 55]. No prior convictions: first and second defendants 54 I have also taken into account on sentence the fact that neither defendant has prior convictions. This entitles them to leniency which is normally extended to offenders who are otherwise not adversely recorded. Early pleas of guilty: first and second defendants 55 Both defendants indicated that they would enter pleas of guilty to the applications for order at an early stage. They are therefore entitled to a discount of their sentences in accordance with the principle outlined in R v Thompson; R v Houlton (2000) 49 NSWLR 383; 115 A Crim R 104. 56 I consider that in the circumstances here an appropriate discount for the utilitarian values of the pleas is 25 percent. Contrition and remorse: first and second defendants 57 The first defendant had a close and longstanding relationship with Mr Hales, both professionally and socially prior to the accident. He witnessed the accident first hand and was greatly affected by it. It was a factor in his decision to leave the industry. Although these matters of themselves do not warrant the extension of leniency on the grounds of contrition and remorse, certainly the entering of a plea of guilty at an early stage is a reflection of contrition which attracts leniency in addition to utilitarian considerations: Winchester (1992) 50 A Crim R 345 at 350. 58 The second defendant in the capacity of its directors, Mr Cignarella and Mr Mifsud was also deeply affected by the accident to Mr Hales. In addition Mr Cignarella attended Mr Hales in hospital on a number of occasions, and the directors took a personal interest in Mr Hales' rehabilitation efforts. This latter factor together with the early plea of guilty entitles the second defendant to leniency in accordance with the Winchester principle, referred to in the above paragraph. Cooperation: first and second defendants 59 The defendants are also entitled to some discount with respect to their cooperation with the WorkCover Authority during the investigation into the circumstances resulting in the accident to Mr Hales. Industrial record: second defendant 60 Mr Cahill submitted that the second defendant is a small sized corporation which has operated for a number of years in the metal fabrication industry without coming to the notice of the authorities prior to the offence. Moreover, the industry is one where dangerous machinery and equipment is used. I take these matters into account as mitigating factors relevant to the second defendant's claim for leniency in the context of its prior safety record including the absence of prior convictions. Post accident measures: second defendant 61 The second defendant implemented a number of safety measures and updated its safety procedures following the accident. The second defendant's procedures manual which contained a specific procedure in relation to turning objects by crane/hoist now has the additional instruction: Do not lift any items from bracing. 62 These measures constitute another factor in the second defendant's favour in the assessment of penalty. Respective capacities to pay a fine 63 The first defendant no longer operates in the industry. He is training to become a mortgage broker and works for a financial services business on a commission basis. His income tax returns for the years ending 30 June 2001 until 30 June 2003 show a modest taxable income (between $13,715 and $20,656). For the year ending 30 June 2004 the first defendant was required to pay the Australian Taxation Office $24,500.30. 64 The first defendant's affidavit also provides information on his current financial circumstances. He pays child support of $253 per month and his expenses exceed his average weekly income of $420 after tax. As a result he relies on savings to supplement expenses. He currently lives alone in a unit in his parent's home and does not pay them rent. He owns a 1999 Ford Falcon. 65 Taking all these matters into account it is evident that the first defendant has limited means with which to pay a substantial fine. I propose therefore to impose a fine which appropriately reflects the objective seriousness of the offence but at the same time takes into account the first defendant's limited financial means: Manpac Industries Pty Ltd at 467. 66 In relation to the second defendant it was accepted by Mr Cahill that it has the capacity to pay a fine. Penalties 67 In determining penalty against both defendants I have taken into account the objective seriousness of the offences, the personal factors described above and the absence of prior convictions. All of these factors have been considered by reference to the Crimes (Sentencing Procedure) Act 1999 in particular s 21A. I have also taken into account the respective culpabilities of both defendants as well as their respective capacities to pay a fine. Orders 68 In Matter No IRC 1404 of 2004 I make the following Orders: 1. The defendant Michelle Pontone is convicted of the offence. 2. The defendant Michelle Pontone is fined $5,000 with a moiety to the prosecutor. 3. The defendant Michelle Pontone is to pay the prosecutors costs as agreed or in the absence of agreement as assessed. 69 In Matter No IRC 1405 of 2004 I make the following Orders: 1. The defendant Klondu Engineering Pty Ltd is convicted of the offence. 2. The defendant Klondu Engineering Pty Ltd is fined $100,000 with a moiety to the prosecutor. 3. The defendant Klondu Engineering Pty Ltd is to pay the costs of the prosecutor as agreed or in the absence of agreement as assessed. ____________________ 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.