Industrial Court of New South Wales CITATION: Inspector Michael Dall v Gregory Banks & Jeffrey Britton [2006] NSWIRComm 216 Prosecutor: PARTIES: Inspector Michael Dall Defendants: Gregory Banks & Jeffrey Britton FILE NUMBER(S): IRC5597&5598 of 2004 CORAM: Kavanagh J CATCHWORDS: Prosecutions - OHS - s8 & 26(1) - s10 of Crimes (Sentencing Procedure) Act 1999 - s6 of Fines Acts 1996 - Pleas of guilty - directors of company in liquidation – failure to ensure safe work method for employees – inherently dangerous demolition work – demolition conducted with faulty calculations for work method - no WorkCover permit – no secondary system of support or bracing of structure – no risk assessment – financial status of defendant - penalty Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Fines Acts 1996 Occupational Health and Safety Act 2000 Inspector Stephen Cooper v Kwik-Seal Pty Ltd and Anor [2006] NSWIRComm 48 Lawrenson Diecasting Pty Limited v WorkCover Authority of New South Wales (Inspector James Swee Ch'ng) (1999) 90 IR 464 Manpac Industries v WorkCover Authority of New South Wales (Inspector Glass) 106 IR 435 Markarian v R (2005) 215 ALR 213 CASES CITED: R v Thomson; R v Houlton (2000) 49 NSWLR 383 Thorneloe v Filipowski (2001) 52 NSWLR 60 Tyler v Sydney Electricity (1993) 47 IR 1 WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Limited t/as Old But New [2004] NSWIRComm 247 WorkCover Authority of New South Wales (Inspector Downie) v Menzies Property Services Pty Limited (2004) 136 IR 449 HEARING DATES: 01/03/06 DATE OF JUDGMENT: 07/07/2006 Prosecutor: Mr R. Reitano of counsel Solicitors: LEGAL REPRESENTATIVES: Ms H. Cameron/Ms O. Koudrina WorkCover Authority of NSW Defendants: Mr J. Britton appeared in person and for Mr G. Banks JUDGMENT: - 1 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Kavanagh J Friday 7 July 2006 Matter No IRC 5597 of 2004 INSPECTOR MICHAEL DALL v GREGORY BANKS Prosecution under s8(1) of the Occupational Health and Safety Act 2000 Matter No IRC 5598 of 2004 INSPECTOR MICHAEL DALL v JEFFREY BRITTON Prosecution under s8(1) of the Occupational Health and Safety Act 2000 JUDGMENT [2006] NSWIRComm 216 1 Each of two defendants, Gregory Banks and Jeffrey Britton, face prosecution under s8(1) of the Occupational Health and Safety Act 2000 by virtue of s26(1). It is alleged that Gregory Banks and Jeffrey Britton each: . . . being a director of Demtech Pty Ltd (In Liquidation) [ACN 096 989 123], is deemed to have contravened section 8(1) of the Occupational Health and Safety Act 2000 ("Act") by virtue of section 26(1) of the Act, in that Demtech Pty Ltd, being an employer, on 19 September 2002, at premises known as 'BHP Newcastle Main Site', Selwyn Street, Port Waratah, Newcastle, in the State of New South Wales ("site") FAILED TO ensure the health safety and welfare at work of all its employees, and in particular Gregory John Rees, Anthony John Edwards, Jason Wayne Eric Maybury and Robbie William Hague. 2 The particulars of the charges are the same against each defendant. Both were directors of Demtech Pty Ltd, a company formed to perform demolition work on the BHP site in Newcastle. The particulars of the charges were as follows: a) At all material times Demtech Pty Ltd (In Liquidation) [ACN: 096 989 123] ("company") was an employer. b) At all material times the company employed Gregory John Rees, Anthony John Edwards, Jason Wayne Eric Maybury and Robbie William Hague. c) At all material times the defendant was a director of the company. d) The company failed to provide a safe system of work for the demolition of Boiler No. 6 ("boiler") at the site, in that: i. The company failed to ensure that redundant demolition material which had accumulated on the site was removed. ii. The company failed to prepare an adequate work method for the demolition of the boiler at the site. e) The company failed to ensure that a permit pursuant to clause 332 of the Occupational Health and Safety Regulation 2001 was obtained prior to performing demolition work for the collapse of the boiler in a westerly direction at the site. f) The company failed to undertake a sufficient investigation or provide sufficient information concerning the structure of the boiler prior to performing demolition work upon it for the purpose of ensuring that any calculations concerning the structural capacity of the columns of the boiler to sustain loads imposed during the demolition process for the collapse of the boiler were accurate and did not give rise to the risk of unexpected collapse of the boiler. g) The company failed to take any steps to ensure that calculations that were undertaken in respect of the structural capacity of the columns of the boiler to sustain the loads imposed during the demolition process for the collapse of the boiler were accurate and did not give rise to the risk of unexpected collapse of the boiler. h) The company failed to undertake a proper risk assessment in relation to the demolition process for the collapse of the boiler. i) The company failed to ensure that it engaged a suitably qualified and experienced engineer who was able to properly undertake with appropriate skill and care all of the calculations necessary for the induced collapse of the boiler. j) The company failed to ensure that the system associated with the induced collapse of the boiler was failsafe and that risks to health and safety were eliminated by reason of the implementation of a secondary system of restraint so as to prevent unexpected collapse. 3 Each defendant pleads guilty to the charge. 4 Mr R. Reitano, of counsel, appeared for the prosecution in the hearing as to penalty. He tendered an Agreed Statement of Facts. The prosecution also relied upon photographs of the site and engineering reports from experts, namely, Mr Chris Turner, Dr Kevan Heathcote and Mr Terry Kershaw. Each in their reports address the causes of the incident. 5 The defendant, Jeffrey Phillip Britton, appeared on his own behalf and on behalf of Mr Banks. Reliance was placed upon a letter from Graham Herbert of Herbert Jeffery Investments Pty Ltd, Chartered Accountants dated 28 February 2006, Balance Sheet as of June 2005 and 2005 financial year Profit and Loss Statements for the company Banitton Pty Ltd, a medical certificate from Dr Omar Shariff of Wyoming Medical & Dental Centre issued to Mr Britton dated 18 January 2006. Mr Britton and Mr Banks tendered their Income Tax returns. 6 An Agreed Statement of Facts, similar in content to each charge, was tendered. In matter No. IRC5598 of 2004, the charge against Jeffrey Britton, the Agreed Statement of Facts relevantly reads: 4. At all material times BHP Billiton Limited was responsible for the demolition of structures on the premises known as the BHP Newcastle Main Site located on Selwyn Street, Port Waratah and contracted with Brambles Australia Limited ("Brambles") for the demolition of all buildings and structures at the site. 5. Brambles contracted Demtech to remove the Power Plant Boilers at the site, which included Boiler No. 6. 6. William Caesar Porta ("Porta") was the engineer sub-contracted by Demtech to engineer and oversee the induced collapse of the Power Plant Boilers. Porta held an Unrestricted Demolition Licence, a Structural Engineering Certificate and a Civil Engineering degree. 7. At all material times Demtech employed Gregory John Rees, Anthony John Edwards, Jason Wayne Eric Maybury and Robbie William Hague. 8. At approximately 11.30am on Thursday 19 September 2002 Boiler No. 6 ("boiler") at the site collapsed without warning. Gregory Rees ("Rees"), 33 years of age, sustained fatal injuries and Anthony Edwards ("Edwards"), 38 years of age, sustained a broken rib and lacerations and was hospitalised for several hours. Both Rees and Edwards were employed by Demtech as demolition workers. 9. At the time of the boiler collapse Rees and Edwards were positioned in the bucket of an elevated work platform (cherry picker) approximately 25 to 30 feet from ground level. Rees was operating the elevated work platform and Edwards was performing cuts to the south west column of the boiler using an oxygen propane cutting torch to cut the metal of the column. Porta was providing directions for the work from the base of the elevated work platform. 10. Rees and Edwards had completed the top cut to the south west column and were working on the cut underneath when the boiler collapsed. Edwards was knocked to the bottom of the bucket of the elevated work platform when the boiler collapsed and was rescued from underneath the collapsed structure. A steel beam fell on Rees as a result of the boiler collapse and he sustained fatal injuries. 11. Jason Maybury and Robbie Hague, employees of Demtech, and Michael Dwyer ("Dwyer"), a supervisor contracted to Demtech, were on the site and witnessed the boiler collapse. Events prior to the incident 12. Demtech entered into a contract with Brambles on 12 July 2001 for the removal of the Power Plant Boilers. The contract provided for occupational health and safety conditions to be met. Brambles performed a safety audit on 20 January 2002 and site direction notices were exchanged between Brambles and Demtech over the course of the demolition work. The contract also provided for Brambles to purchase all scrap metal arising from the demolition activities from the company. 13. The Power Plant Boiler Nos 1 to 5 were demolished by Demtech prior to the end of August 2002. 14. On 10 August 2002 the gas flu ducting and beam B11 was removed from the boiler by Dwyer. This was done apparently in accordance with instructions from Porta. 15. On 27 August 2002 Demtech wrote to Brambles and noted the lack of scrap truck supply to remove demolished sections of the plant resulting in the need to stockpile scrap metal, which created safety issues. The sale of the scrap metal by Demtech to Brambles then became an issue in dispute between the companies. The persons performing demolition work at the site were working in the vicinity of significant amounts of redundant demolition material, principally scrap metal, which were not restrained or secured. Australian Standard AS 2601 – 1991 The Demolition of Structures provides in clause 2.2.1.2 that demolished material shall be removed progressively from the site and shall not be allowed to accumulate to the extent that it presents a hazard to site personnel. 16. Brambles was responsible for removal of scrap from the site – the removal of scrap from the site was managed by Brambles. 17. On 30 August 2002 Porta faxed to WorkCover a proposal for the induced collapse of the boiler prepared by Porta. The induced collapse method involves weakening the structure by strategically cutting columns of the structure and then pulling the structure using slings to fall in a defined position. The proposal involved the collapse of the structure in a northward direction. It also involved the use of a 100 tonne excavator. 18. On 2 September 2002 the company prepared a job instruction and safety analysis for the demolition of Power Plant Boilers Nos 6 to 7. The proposal and job safety analysis documents did not provide details of the structural support system of the boiler and the principal materials of its construction in accordance with AS 2601 – 1991. 19. On 16 September 2002 WorkCover sent a letter to Demtech granting a permit for the induced collapse in a northward direction subject to certain conditions. 20. On 17 September 2002 discussions were held between Britton, Porta, Dwyer and Rees regarding the direction of the collapse of the boiler as a coal bunker was in the fall path of the boiler in the northward direction and the 100 tonne excavator at the site was not available. Britton advised Porta, Dwyer and Rees that it would be necessary to get approval from WorkCover for any change in the plans for the collapse of the boiler. 21. On 18 September 2002 Demtech made efforts to remove a coal bunker and other structures from the fall path of the boiler and were not able to move these structures with the available equipment. The defendant was not on site on this date. 22. Porta then made a decision to fell the boiler in a westerly direction. Porta contacted Rick Rech, WorkCover's State Co-ordinator of Asbestos Demolition, and advised him that Demtech would now be felling the boiler in a westerly direction and different types of cuts to the columns would be made. Rick Rech advised Porta that he would review the amended proposal when he was next in the office Rech did not approve what Porta was proposing by word, conduct or documentation. 23. On 18 September 2002, Porta faxed to WorkCover the amended proposal incorporating the plan that the boiler was to be felled in a westerly direction and with variations to the cuts to be made to the boiler ("amended proposal"). A new permit for the amended proposal was not issued by WorkCover prior to the demolition work commencing or at any time. The application for the permit did not include a risk assessment and was not submitted seven days before the proposed work was to be undertaken as required by the regulations. 24. The amended proposal for the proposed weakening sequence was to remove sections of the lower east west beams known as B1 and B12, then make cuts to the western columns. The three cuts to be performed were detailed as a "birdsmouth cut" through the flange to the web on one side and a flat cut through the flange to the web on the other side. These cuts left the web intact. Slings would then be attached at the prescribed points and the hinge points prepared on the eastern side columns. The western columns would then be pulled outwards using two 30 tonne excavators. There was nothing in the amended proposal about temporary bracing or a secondary system of restraint. 25. On 18 September 2002 beam B1 was removed. 26. On the morning of 19 September 2002 Porta held a tool box meeting with Rees and Edwards to discuss the position of the cuts to be made. Rees informed Porta that he had noticed a slight movement in the structure. Beam B12 was removed on the morning of 19 September 2002. The top cut to the south west column was then performed and it was whilst the middle cut was being undertaken that the boiler collapsed. 27. Britton visited the site on the morning of 19 September 2002. 28. Calculations done by Porta for the induced collapse of the boiler in the westerly direction did not take into account the fact that beam B11 had been removed from the boiler on 10 August 2002. Those calculations were important to the system of induced collapse Porta had developed, and in particular, where the cuts were to be made. 29. The mass of the collapsed structure was estimated by Porta to be in the vicinity of 300 tonnes. Investigations after the incident 30. At approximately 1.30pm on 19 September 2002 Inspector Michael Dall attended the site and observed the following: (a) A demolition site, which was approximately 2 hectares in size. The site was principally rectangular in configuration. This site was described as the remains of the BHP Power House Department. (b) Standing vertically at a height of approximately 31 metres in the approximate centre of the site was the rectangular structure of boiler number 7, which had been partially demolished. The top of this structure was a gable roof lined with corrugated iron sheeting, as were the southern and eastern sides to an approximate depth of 6 metres and 12 metres respectively. Dimensions of structure – 21 metres x 13 metres x 31 metres ridge height sitting on reinforced concrete foundation. (c) Adjacent to this on the south-western side was the collapsed structure of boiler number 6. This consisted of four steel columns, steam drum, integral steel tubing, supporting steel beams and associated structure. Dimensions of structure – 14 metres x 14 metres x 30 metres ridge height sitting on reinforced concrete foundation. (d) An approximate 1.8 metre high chain wire fence boarded the perimeter of the demolition site. (e) On the north eastern side of the site was an excavator red in colour with the number '12' painted on the front right hand side in colour white. At the base of the boom written in large text in the colour white were the words Moltoni Adams. (f) Behind the before mentioned excavator in a northwest direction was another excavator principally yellow in colour with a black base. (g) The site was strewn with large piles of demolition refuse and rubbish which consisted of rubble, steel, steel tubing, ducts, synthetic mineral fibre, cable and piping. 31. Chris Turner, Senior Engineer employed by WorkCover, carried out an investigation into the collapse. Mr Turner was of the opinion that the mechanism of failure was by a buckling collapse of the southwest column about the two hinge points formed by the cuts. In Mr Turner's opinion, this was caused by the removal of beams and the weakening cuts made for the induced collapse reducing the structural capacity of the column to the point at which it could no longer sustain the imposed loads. 32. The engineering calculations provided by Porta were also reviewed by Mr Turner. The calculations were based on the working stress design method of steel design covered by AS 3990 – 1993. Mr Turner noted the following in respect of the calculations: (a) The calculations were based on beam B11 being in position. Beam B11 had been removed on 10 August 2002. (b) The structure at the time of preparation for the induced collapse was "side sway not prevented" and in accordance with clause 6.3.3 of AS 3990 the reduction factor of 0.9 should not have been used. (c) The calculated stress in the northwest column was 23.3MPa, which was larger than the permissible stress of 20MPa. (d) The calculated maximum stress in the southwest column was 34MPa. The revised maximum permissible stress to this column calculated by Mr Turner after taking into account the missing beam B11 and not using the 0.9 reduction factor, was 20MPa. Accordingly, the southwest column was considerably overstressed. (e) The calculations for the western columns were based on both the birdsmouth cuts and the flat cuts finishing 50mm from the web. This differed from the amended proposal submitted to WorkCover and the actual cuts made on site which were taken right up to the web. The cuts performed would have resulted in an even weaker section than considered in the calculations. 33. Dr Kevin Heathcote, an engineer employed by Access UTS, also prepared a report in relation to the collapse of the boiler. Dr Heathcote concluded that the demolition procedure adopted for the boiler was inadequate, and the cuts made to the southwest column created instability in the structure. Dr Heathcote was of the opinion that the provision of temporary bracing of the structure during the weakening operations would have allowed the cuts to be made safely. 34. Mr Terry Kershaw, principal engineer of GHD Pty Ltd, also prepared a report in relation to the uncontrolled collapse of the boiler. Mr Kershaw was of the opinion that the work plan for the demolition of the boilers did not comply with the Australian Standard AS 2601 "Demolition of Structures" in that temporary bracing was not used to stabilise the structure 35. Between 26 August 2002 and 24 September 2002 Inspector Steve Martin, Inspector Michael Dall, Inspector Gary Sandall and WorkCover Engineer Chris Turner attended the site and took twenty-eight (28) photographs, which have been compiled into a bundle. Attached and marked with the letter "A" is a copy of these photographs. 36. On 19 September 2002 Detective Senior Constable Timothy Hockey attended the site and took photographs. Attached and marked with the letter "B" is a copy of 14 photographs taken by Detective Senior Constable Timothy Hockey. Events after the incident 37. On 20 September 2002 Demtech was issued with a Prohibition Notice which required that all work involving the demolition of the boiler cease until Australian Standard AS2601 – 1999 Demolition of Structures had been complied with. 38. Demtech prepared a revised job safety analysis and work plan and inducted all personnel to ensure the documents were understood. Work on site was then executed in accordance with those plans. 39. On 24 October 2002 Brambles issued a notice to Demtech detailing defaults and breaches under the contract. The particulars of the breaches related to observing and complying with all relevant laws, regulations, codes and rules as well as the lawful requirements of all relevant authorities, especially in respect of safety. On 1 November 2002 Brambles issued Demtech with a notice stating that the demolition work was to be taken out of the control of Demtech. On 12 May 2004 Demtech went into liquidation as a result of a voluntary winding up by creditors. An additional Statement of Fact was tendered in Matter No IRC5597 of 2004, the charge against Gregory Banks: The defendant (Gregory Banks) and Jeffrey Britton ("Britton") were directors of Demtech. The defendant was on site 5% to 10% of the time demolition work was being performed. Relevant Principles 7 In considering penalty, I take guidance from the reasoning of the High Court in Markarian v R (2005) 215 ALR 213. The court, using the "instinctive synthesis" approach, would include an assessment of the objective and individual subjective factors, with the appropriate weight given to each factor, and could (but not should) give a degree of deduction in penalty to some element in the consideration, in such circumstances as where it better serves the interests of transparency, which element should be narrowly confined (for example, the utilitarian value of the plea). 8 Their Honours recognised the "instinctive synthesis" approach to sentencing gives rise to an inevitable tension between the need for transparency and adequate reasoning on the one hand, and the need to avoid a mathematical approach pursuant to which the sentencing court engages in a "staged sentencing process" starting at the maximum penalty and then making deductions from it without adequately assessing (even in a provisional way) the sentence called for by the objective facts (see Markarian at [32]). 9 Spigelman CJ in R v Thomson; R v Houlton (2000) 49 NSWLR 383, correctly, given the consideration in Markarian, recognised this "instinctive synthesis" approach to sentencing saying: [57] The instinctive synthesis approach is the correct general approach to sentencing. This does not, however, necessarily mean that there is no element which can be taken out and treated separately, although such elements ought be few in number and narrowly confined. As long as they are such, their separate treatment will not compromise the intuitive or instinctive character of the sentencing process considered as a whole. 10 Proper regard is to be had to express legislative provisions and to the relevant statutory regime (Markarian at [27]). The object of the Act is to protect employees from risk to safety, health and welfare whilst compelling attention to occupational health and safety issues so that persons are not exposed to risk to their health and safety at the workplace. The task of sentencing must acknowledge the effect of the applicable legislative provisions (in this case s8(1) of the Occupational Health and Safety Act 2000 with ss21A, 22, 23, 34 of the Crimes (Sentencing Procedure) Act 1999). Of relevance particularly is the effect of s21A of the Crimes (Sentencing Procedure) Act 1999. Section 21A sets out factors that the court is to take into account in any sentencing hearing and states, inter alia: . . . (2) Aggravating factors . . . (d) the offender has a record of previous convictions, … (g) the injury, emotional harm, loss or damage caused by the offence was substantial, . . . (3) Mitigating factors . . . (e) the offender does not have any record (or an significant record) of previous convictions, ... (g) the offender is unlikely to re-offend, … (k) a plea of guilty by the offender (as provided by section 22), (l) the degree of pre-trial disclosure by the defence (as provided by section 22A), (m) assistance by the offender to law enforcement authorities (as provided by section 23) . . . Consideration 11 In a consideration of penalty, the court must consider the objective seriousness of the offence or, as has been said, the nature and quality of the offence. The Full Bench commented in Lawrenson Diecasting Pty Limited v WorkCover Authority of New South Wales (Inspector James Swee Ch'ng) (1999) 90 IR 464 ad idem with the view expressed in Markarian (at 474) as follows: . . . in our view, it is important to reiterate that the primary factor to be considered when a judicial officer is determining the appropriate sentence to impose is the objective seriousness of the offence charged. In case of prosecutions under the OH&S Act, this proposition has often been expressed by saying that the "true measure of penalty lies in the nature and quality of the offence" . . . 12 The prosecutions arise from the demolition of a boiler on the BHP site in Newcastle. BHP contracted with Brambles Australia Limited for the demolition of all buildings and structures at the Newcastle site. Brambles sub-contracted with Demtech for the demolition of seven boilers. Boiler 6 which weighed approximately 300 tonnes and was 31 metres in height was the next boiler to be demolished. It was one of two very large boilers. 13 It was originally intended to "drop" the boiler to the north. WorkCover issued a permit for the demolition of the boiler to the north. Given the existence of a coal bunker in the fall path to the north, after the Permit issued it was determined to drop Boiler 6 in a westerly direction. Mr Porta adjusted his calculations for an amended application for a new permit and on 18 September 2002, faxed the amended methodology to WorkCover. The methodology and calculations were technically similar to the methodology for the induced collapse of Boiler 6 to the north. Those calculations were however erroneous. Therefore the calculations used for the methodology for the western drop were also erroneous as they were calculated from the August plan. 14 Mr Porta was advised by the WorkCover Authority that it would review the amended proposal. No permit for the amended proposal was issued prior to an on-site tool box meeting of Demtech on the morning of 19 September 2002 with the four employees who were to be involved in performing the task. Mr Rees, one of the employees commented at that morning meeting he had noticed a slight movement in the structure. This comment was not considered. 15 Without a further permit issued from the WorkCover Authority as to the proposed new method for the demolition to the west, the employees of Demtech went about implementing the amended method proposed by Mr Porta for the collapse of the Boiler 6 on 19 September 2002. 16 Mr Porta's original calculations had been based on an understanding that a major structural beam, the B11 beam, was still within Boiler 6. The cross beam had however been removed on 10 August 2002. On 18 September 2002, B1 was removed. On the morning of 19 September 2002, B12 was removed. Then two employees were raised up in a cherry picker and they began to cut the columns of the structure to make "hinges" to bring down the boiler. Due to the lack of cross support, the columns could not hold the transfer of weight which caused Boiler 6 to collapse in an uncontrolled manner. There was no secondary restraint or bracing on Boiler 6. 17 Mr Rees, the employee performing the cut in the cherry picker, suffered fatal injuries as the cherry picker was struck in the fall of the boiler. Another employee, Mr Edwards, in the cherry picker suffered injury. 18 The collapse was caused "by the removal of beams and the weakening cuts made for the induced collapse reducing the structural capacity of the column to the point at which it could no longer sustain the imposed loads" and "the demolition procedure adopted for the boiler was inadequate and cuts made to the south-west column created instability in the structure" and "the work plan for the demolition of the boilers did not comply with the Australian Standard AS 2601 . . . in that temporary bracing was not used to stabilise the structure". 19 Mr Britton, visited the site on the morning of 19 September 2002. There was no evidence Mr Banks visited the site on the morning of 19 September 2002. Particulars of the charges assert that the two defendant/directors (and employees of Demtech) (now wound up by creditors) failed to provide a safe system of work in ensuring redundant demolition material was removed from the site; failed to prepare an adequate work method for the demolition of the boiler; failed to ensure a permit was obtained; failed to undertake a proper risk assessment for the demolition of the boiler by induced collapse and in so failing, failed to ensure the structural calculations as to loads were accurate; failed to engage a suitably qualified and experienced engineer; and failed to implement a secondary system of restraint to prevent an unexpected collapse. 20 In submissions, Mr Britton relied upon the following propositions: (1) They (he and Mr Banks as directions and employees of Demtech) had hired an experienced and qualified engineer who had already performed six induced collapses for Brambles on the site. (2) A general work method statement had been prepared and there was a tool box meeting on the day which should have been reflected in a Jobs Safety Analysis for the work method. (3) There was much demolition material on the site but this is common on all demolition sites. (4) The engineer had informed him that he had notified WorkCover and was expecting the permit. 21 Mr Britton submitted both he and Mr Banks relied upon the experience and qualifications of the demolition expert engineer, Mr Porta, with whom Demtech had contracted to do the calculations and methodology. He asserted he had thought the engineer had built into the system, given the WorkCover permit, some secondary restraint system. 22 In an assessment of the objective seriousness of the offence, I accept the defendants had prepared some general statements acknowledging an awareness of site safety. I accept they prepared a Job Instruction and Safety Analysis particularly directed to the drop of Boilers 6 and 7. However, the Job Safety Analysis was not a particularised work method statement nor was there an associated risk assessment of the particular task. 23 The defendants, through Demtech, had to ensure safe working at their worksite. They were, through Demtech, responsible for the safety of their employees. They cannot meet their obligations under the Act by suggesting the responsibility lies with Mr Porta, the expert engineer. The defendants had a number of employees on this worksite. While they entrusted their calculations to Mr Porta, an experienced engineer, the evidence reveals the defendants failed to ensure the permit for the amended methodology for the collapse of Boiler 6 in the westerly direction was issued. 24 Further while the calculations were amended when it was determined the induced collapse would fall to the west instead of the north the defendants failed to recognise, given the B11 beam was missing, that Mr Porta's calculations were incorrect and the cuts were being made right to the web of the column. The methodology being employed was erroneous. 25 Mr Porta redesigned the methodology for the drop to the north. He incorporated into his amended calculations an original error leading to a false estimate of the weight bearing capacity of the boiler's columns. It cannot be accepted the tool box meeting of employees could be perceived as meeting the requirements and the need for a formal work method statement and risk assessment of the particular task. 26 The prosecutor contends a risk assessment could well have informed the defendants that the calculations were not accurate. The defendant failed to carry out that risk assessment. The basic methodology used for the collapse of Boiler 6 was faulty; no risk assessment was conducted; there was no bracing of the structure nor a secondary restraint in accordance with regulations and industry standards; and no permit had been issued by WorkCover for the amended methodology. The defendants failed in their duty to ensure safe working by failing to check on the above requirements. 27 The principles applicable to an application of a proper system of work were enunciated in WorkCover Authority of New South Wales (Inspector Downie) v Menzies Property Services Pty Limited (2004) 136 IR 449 where the Full Bench stated: [67] The . . . discussion of paper systems in WorkCover Authority (NSW) v Fernz Construction Materials Ltd (No 2) (2000) 100 IR 23 at [35] is pertinent: The existence of a system on paper alone is clearly not sufficient to comply with the obligations imposed by the Act. The employer is required to ensure that its ''paper systems'' are implemented and maintained in its daily operations: see Sydney City Council v Coulson (1987) 21 IR 477 at 480; WorkCover Authority (NSW) v Abigroup Contractors Pty Ltd (2000) 99 IR 196 at [26]. The Court must have regard not merely to the system as it exists in theory, but as it is implemented in practice. In WorkCover Authority (NSW) v Supercoat Feeds Pty Limited (unreported, Industrial Relations Commission, NSW, Fisher P Matter No CT96/1020, 22 April 1997) for example, Fisher P said: The relevant system of work, however, is the customary method of carrying out the operation in which the employer is engaged — the system of work is that actually utilised and operated at the place of work. "Paper" systems whose prescriptions are not followed do not represent the actual system of work utilised and are irrelevant. See also WorkCover Authority (NSW) v Kirk Group Holdings Pty Limited and Anor ( 2004) 135 IR 166 at [155]-[156]. 28 In the circumstances, I find there was an element of foreseeability to the offence. It was foreseeable that in the above circumstance, given the neglect by the employers of requirements under the Act, regulations and standards that there would be a risk to safety in the way Boiler 6 was collapsed. 29 In all the circumstances, I find this a serious offence. 30 The maximum penalty against an individual for an offence under the Act is $55,000.00. 31 In consideration of penalty a number of subjective features to the offence have been placed before the court. The defendants continue to operate another demolition business through another company, Banitton Pty Ltd 32 I accept each defendant had a continuing commitment to occupational health and safety and this commitment was reflected before the incident in the existence of the general policy statement and regular Job Safety Analysis prepared before demolitions. There was a Job Safety Analysis in a generic form prepared in preparation for the demolition of Boilers 6 and 7 as well as other policy documents directed to safe working. The defendants have reviewed their existing procedures and have ensured their work method statements are prepared particular to each demolition. They have incorporated the requirements for bracing and putting in place secondary restraint on all structures to be demolished. Procedures for future practice in the demolition industry have been revised. A risk assessment for each task is now conducted. 33 The defendants' description of the work they perform through their new company provides a general profile of the demolition industry. On occasions they have less than six employees and on occasion employ up to 22 employees. They have faced significant litigation arising from this incident and their original company, Demtech (now in liquidation) was found liable for a considerable sum. Mr Britton has outlined a litany of misfortunes that have followed both since the incident including the severe effect on their ability to obtain further business and the attack on their personal reputations. These are the natural consequences of such a serious incident. They will have to live with those consequences and only by future safe work practices will they re-establish their professional and personal reputations. I am persuaded they are endeavouring to do so. 34 I have no doubt as to their genuine remorse. I have no doubt as to their commitment to safe working. What I see in this case are two young men, establishing a new business without rigorously enforcing known standards in the performance of a particularly dangerous task. Small business carries the onerous, but necessary, obligations which, under the Act, require they ensure safe working practice. The failure to provide a safe work system to perform a large demolition in what is an inherently dangerous operation created a most serious risk. 35 I accept the defendants now ensure, through their new company, Banitton Pty Ltd that there is a rigorous application of safe working methods and a commitment to ensure awareness for safe work practices on its worksites. The regulations under the Act and the Australian Standards for demolition work are designed in recognition of demolition being a dangerous task and to ensure compliance with a safe working regime. There were on 19 September 2002 on the worksite many breaches of this well designed protocol directed to ensure safe working. All procedures were known to the defendants. I accept they now ensure each regulation and standard is rigorously enforced. 36 I am satisfied there should be no re-offence. I accept the defendants have not manifested, by their commission of this offence, a continuing attitude of disobedience to the law or a likelihood that any offence of like kind will be committed in the future. The defendants are first offenders and now have in place proper safety practice and procedures which procedures ensure there should be no risk of re-occurrence. 37 The defendants have no prior recorded convictions. Nonetheless, there must be an element of both specific and general deterrence in any penalty applied. The defendants continue to operate in what is a recognised dangerous industry and this incident once again reiterates the need to remind the industry generally as to the care that must be taken by employers in a notoriously dangerous occupation to ensure the safety of its employees. 38 The prosecution supports the submission that the defendants co-operated with all inquiries in relation to this incident. I accept the pleas of guilty were entered at the earliest reasonable opportunity. I am satisfied the circumstances reflect the pleas should attract a discount for their utilitarian value. In accordance with the guideline in R v Thomson; R v Houlton (2000) 49 NSWLR 383, I allow a discount of 25 per cent for the utilitarian value of the plea of guilty entered by each defendant. 39 Each defendant placed before me its personal financial circumstances. The defendants held small mortgages until this incident. Both have now taken out larger mortgages to establish their new company. Under s6 of the Fines Acts 1996 the personal financial circumstance of the defendants is a matter for consideration. The prior company had good earnings until this incident. At present, in their new venture they take out $500 each week and put further company earnings back into the business. They take no distribution of profits from the company. The company has assets of some $180,000 and a turnover of $1 million for the 2005 financial year. Both defendants support families with young children. Each defendant's wife works for the company without income in an effort to re-establish their reputation within the industry. 40 Both defendants were established employees of Brambles and broke away from the Brambles Demolition Division to set up a demolition company to benefit financially from Brambles' head contract with BHP. It was for each a disastrous decision. 41 They seek the protection of s10 of the Crimes (Sentencing Procedure) Act 1999. Guidance in this consideration is given in Inspector Stephen Cooper v Kwik-Seal Pty Ltd and Anor [2006] NSWIRComm 48, where Haylen J stated in consideration of a similar application: [40] Significantly, in Berrima Coal , the Vice-President, Walton J, stated: [174] In applying the foregoing authorities for an application for the exercise of the Court's discretion under s 10 of the Crimes (Sentencing Procedure) Act , it is important, however, to bear in mind that each matter requiring consideration under s 10 of that Act needs to be considered in the light of its own particular circumstances: WorkCover Authority (NSW) (Inspector Robins v Ecolab Pty Ltd (1999) 90 IR 413 at 430. [41] It is appropriate in this discussion to set out the relevant provisions of s10 of the Sentencing Act : 10 Dismissal of charges and conditional discharge of offender (1) Without proceeding to conviction, a court that finds a person guilty of an offence may make any one of the following orders: (a) an order directing that the relevant charge be dismissed, (b) an order discharging the person on condition that the person enter into a good behaviour bond for a term not exceeding 2 years, (c) an order discharging the person on condition that the person enter into an agreement to participate in an intervention program and to comply with any intervention plan arising out of the program. (2) An order referred to in subsection (1)(b) may be made if the court is satisfied: (a) that it is inexpedient to inflict any punishment (other than nominal punishment) on the person, or (b) that it is expedient to release the person on a good behaviour bond. . . . (3) In deciding whether to make an order referred to in subsection (1), the court is to have regard to the following factors: (a) the person's character, antecedents, age, health and mental condition, (b) the trivial nature of the offence, (c) the extenuating circumstances in which the offence was committed, (e) any other matter that the court think roper to consider. . . . Haylen J in dealing with this issue also relied on the Court of Criminal Appeal judgment in Thorneloe v Filipowski (2001) 52 NSWLR 60 and the words of Spigelman CJ: [151] The discretion conferred by s10 is wide-ranging. There is no warrant for treating the scope and range of matters which it is "proper" for a sentencing judge to take into account in a narrow way. Nevertheless, it is a discretion which must be exercised judicially. The identification of relevant considerations turns on the scope and purpose of s10. [152] As Windeyer J said in Cobiac v Liddy (1969) 119 CLR 257 at 269 in the context of concluding that the then equivalent of s10 in South Australia applies to the offence there under consideration: ". . . The whole history of criminal justice has shewn that severity of punishment begets the need of a capacity for mercy. The more strict a rule is made, the more serious become the consequences of breaking it, the less likely it may be that Parliament would intend to close all avenues of exception. Especially when penalties are made rigid, not to be reduced or mitigated, it might seem improbable that Parliament would not retain a means of escaping the imposition of a penalty which must follow upon conviction, that it would abolish it, not directly but by a side wind. This is not because mercy, in Portia's sense, should season justice. It is that a capacity in special circumstances to avoid the rigidity of inexorable law is of the very essence of justice." 42 Mr Reitano for the prosecution submitted that the court would not be satisfied as to each defendant's financial status. In Manpac Industries v WorkCover Authority of New South Wales (Inspector Glass) 106 IR 435 the Full Bench commented: [82] However, and given the primacy of the objective seriousness of an offence in determining an appropriate sentence, the financial situation of a defendant, in our view, needs to be carefully scrutinised. In Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 at 209-210, Wright J, President observed: "... Whilst I accept that the imposition of heavy fines would be a burden on the defendant and its financial resources and that consideration should be given appropriate weight on the question of penalty, it does not necessarily result in the Court not imposing a heavy penalty ...... When viewed in the context of the statutory mandate in s 15 the offences were very serious and provided proper weight is given to the subjective considerations and insofar as deterrence is concerned some tempering thereof, the penalty should reflect the objective seriousness of the offence...." 43 Mr Reitano asserted the court would find unsatisfactory the evidence before it. Both individuals were unrepresented. They exhibited to the court a Balance Sheet as of June 2005 of their new company, Banitton Pty Ltd, and a Profit and Loss Statement for the period of 1 June 2004 to 30 June 2005. Also tendered were the tax returns for Mr Banks for the 2002, 2003 and 2004 financial years and Mr Britton's tax return for the 2004 and 2005 financial years. The Full Bench in WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Limited t/as Old But New [2004] NSWIRComm 247 stated: [51] . . . where a defendant desires to plead incapacity to pay as a determinative issue in the imposition of penalty, it behoves the defendant to discharge the onus that such a submission invokes by placing before the Court all of the information it relies upon in support of that submission in order for the Court to give that information proper consideration in the exercise of its sentencing discretion. 44 I have considered the prosecution's challenge to the evidence and their submissions. In all the circumstances, I am satisfied I have sufficient evidence before me to be satisfied as to each defendant's financial position. The documentation I find is thorough if not all encompassing. I accept the individuals have minimum assets, a commitment to mortgages and the education of children. I accept they have financial constraints upon them. 45 Nonetheless, this cannot be a case where no penalty is imposed and I reject the application for an order under s10 of the Crimes (Sentencing Procedure) Act 1999. The breach of the Act created a risk to safety the gravity of which was reflected in the death of one of their employees and the injury to another. As was held by Hill J in Tyler v Sydney Electricity (1993) 47 IR 1 (at 5): The gravity of the damage or injury actually resulting from breach does not, of itself, dictate the amount of penalty. However, the gravity or otherwise of the potential risk flowing from breach and its foreseeability are clearly relevant as are the measure of gravity of the breach itself and the measure of culpability. 46 I must impose a penalty which reflects the gravity of the offence while taking into account the above mitigating factors. I find there is no difference in the circumstance of each defendant. 47 In matter No. IRC5597 of 2004, I find the defendant, Gregory Banks, guilty. The defendant is fined in the sum of $18,000. 48 In matter No. IRC5598 of 2004, I find the defendant, Jeffrey Britton, guilty. The defendant is fined in the sum of $18,000. 49 Given the way these prosecutions were advanced, the prosecution shall have one order as to costs. Orders 1. In Matter No. IRC5597 of 2004, I find the defendant guilty of the offence as charged. 2. The defendant is fined in the sum of $18,000 with a moiety to WorkCover Authority of New South Wales. 3. In Matter No. IRC5598 of 2004, I find the defendant guilty of the offence as charged. 4. The defendant is fined in the sum of $18,000 with a moiety to WorkCover Authority of New South Wales. 5. The defendants, in equal part, shall pay the prosecutor's costs of the proceedings in an amount as agreed or, if there is no agreement, leave is granted to each party to approach the court for final orders as to costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.