Industrial Court of New South Wales CITATION: Inspector Janet Corbett v BBC Hardware Ltd and Bunnings Pty Ltd [2006] NSWIRComm 401 PROSECUTOR: Inspector Janet Corbett PARTIES: DEFENDANTS: BBC Hardware Ltd and Bunnings Pty Ltd FILE NUMBER(S): IRC Nos 1854, 1855 and 1856 of 2006 CORAM: Haylen J CATCHWORDS: Occupational Health and Safety Act 2000 - s 8(1), s 8(2), s 86 - guilty pleas entered - retail hardware companies separately registered but fully integrated in operation - collapse of racking hit by forklift - racking holding 6 to 8 tonnes of pre-packed potting mix - potting mix falls into aisle and over forklift - racking in area used by public and employees - risk of serious injury - defendants developing safety system after hostile acquisition - significant safety systems shown to be deficient - safe weight loads not known or identified - racking system maintained by specialist supplier - multi-faceted breach considered to be serious - general and specific deterrence - substantial subjective facts - early plea and co-operation with authorities - practical integration of companies warrants global approach to penalty for s 8 offences - little evidence as to s 86 offence - failure to notify collapse of plant as soon as possible - penalties imposed HEARING DATES: 7/12/2006 DATE OF JUDGMENT: 12/14/2006 PROSECUTOR: Mr P Newall of counsel SOLICITORS: DLA Phillips Fox LEGAL REPRESENTATIVES: DEFENDANTS: Mr R Ray QC with Mr R Taylor of counsel SOLICITORS: Lander & Rogers Lawyers (Melbourne) JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Haylen J 14 December 2006 Matter No IRC 1854 of 2006 INSPECTOR JANE CORBETT v BBC HARDWARE LTD Prosecution under s 86 of the Occupational Health and Safety Act 2000 MATTER No 1855 of 2006 INSPECTOR JANE CORBETT v BBC HARDWARE LTD Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 MATTER No 1856 OF 2006 INSPECTOR JANE CORBETT v BUNNINGS PTY LTD Prosecution under s 8(2) of the Occupational Health and Safety Act 2000 JUDGMENT [2006] NSWIRComm 401 1 The premises known as Bunnings Warehouse located on the corner of Parramatta Road and Frederick Street, Ashfield, New South Wales is a large site from which hardware and handyman materials are sold. On 8 July 2004, BBC Hardware Ltd ("BBC") and Bunnings Pty Ltd ("Bunnings") both being employers were present at the site when an employee of BBC using a forklift truck to place pallets of timber on the ground beneath steel racking, clipped the racking causing the fixture to collapse. As a result approximately 6 to 10 tonnes of prepacked potting mix stock stored on the racking fell to the ground into an aisle and also fell on to the forklift. Following that incident, Inspector Corbett of the WorkCover Authority commenced proceedings alleging a breach of s 8(1) of the Occupational Health and Safety Act 2000 by BBC Hardware Ltd as well as a breach of s 86 of the Act and also alleging a breach of s 8(2) of the Act by Bunnings Pty Ltd. Both defendants entered pleas of guilty to these charges. This judgment deals with the evidence and submissions on penalty. 2 The evidence for the prosecutor comprised of an Agreed Statement of Facts, a factual report prepared by the Inspector, a number of photographs taken by the Inspector and by or on behalf of the defendants at the site, a certificate of prior convictions and copies of the relevant Australian Standard dealing with steel storage racking. The immediately relevant parts of the Agreed Statement of Facts were as follows: 1. ... 2. ... 3. ... 4. Bunnings and BBC jointly operated a hardware store under the registered trading name of 'Bunnings Warehouse' from premises at the Corner of Parramatta Road and Frederick Street, Ashfield in the State of New South Wales ( premises ). 5. At all material times BBC employed Jean-Marie (Jack) Powell ( Powell ), as a forklift truck driver. 6. At all material times BBC and Bunnings: 6.1 were engaged in retail operations, in particular the sale of hardware and garden products; 6.2 were employers in NSW; had equal involvement and equal responsibility for the business trading as 'Bunnings Warehouse' and the employees working for the business; 6.3 had equal involvement and equal responsibility for the OHS of the business trading as 'Bunnings Warehouse'; 6.4 had an arrangement with Dexion Australia Pty Limited ( Dexion ) for a Dexion representative to conduct bi-annual audits on the steel storage racking installations located in the outside yard of the premises ( yard ). 7. At all material times BBC: 7.1 was the occupier of the premises; 7.2 was listed on the certificate of title for the premises as the owner of the premises. Incident 8. On 8 July 2004, Powell, whilst in the course of his ordinary duties at the premises, was engaged in the task of placing pallets of stock onto steel storage racking installations located in the yard. For this activity, Powell used a forklift, which he was licensed to operate. On this occasion, Powell was placing a pallet of firewood on the ground immediately below a section of the fixture commonly referred to as the 'Potting Mix racks'. 9. The potting mix racks consisted of bays of metal racking known as Dexion racking. Dexion is a proprietary brand of racking and storage systems. The racks were arranged in rows and the racking that collapsed could accommodate three pallets across in each bay. Each of the bays was two levels high with the upper level measuring approximately 3.6m above ground level. There was a vacant area underneath the potting mix rack where pallets of timber and firewood were stored directly on the ground. 10. On each of the levels of potting mix racking there were pallets of potting mix stored which were pre-packaged in plastic bags. 11. At approximately 3.30pm on 8 July 2004 whilst attempting to place the pallet of timber on the ground beneath the racking, the left corner of the pallet furthest from the forklift clipped the far left vertical upright of the racking, causing the fixture to collapse. Powell switched off the forklift and exited the vehicle as the racking was collapsing. The stock stored on the racking fell to the ground in the aisle and onto the forklift. 12. Powell was not physically injured by the falling stock, however the potential for serious injuries was high for Powell and any other person who may have been in the vicinity at the time. The yard was not only accessible by all employees of BBC, but also by customers. 13. At all material times Powell was exposed to a risk of injury. 14. At all material times non employees of BBC and Bunnings including customers were exposed to a risk of injury. 15. A number of managers of Bunnings attended the scene shortly after the incident and deemed the incident area as unsafe and quarantined the area. 16. As a result of the incident the racking sustained major damage and needed to be completely replaced. 17. BBC failed to report the incident to WorkCover once it became aware of the occurrence. 18. On 12 July 2004, WorkCover received a complaint by telephone regarding the incident. 19. Based on recommendations by Dexion Limited, BBC and Bunnings made the decision that the broken racking and fallen stock was to be cleared away by staff at the premises under the direction of store management prior to the initial inspection of the premises by the Inspector on15 July 2005. 20. Between the time of the incident and 15 July 2005 the damaged racking was replaced with new racking. 21. On 3 May 2004 Michael Stubbings of Storage Design and Sales had conducted an audit of the racking at the premises on behalf of Dexion as part of the six monthly review process pursuant to an agreement between Dexion and Bunnings ( audit report ). 22. The audit report identified a number of areas of racking at the premises, including the potting mix racking, as Code Red. The audit report described Code Red as requiring that immediate action be taken to rectify the identified defects 'thus preventing any accidents or possible litigation'. 23. The audit report was sent by mail to Bunnings on 8 May 2004. 24. The report was addressed to Mr Tom Gilchrist, Complex Manager of Bunnings Ashfield. However, Mr Gilchrist, in response to a question asked by the Prosecutor in an interview conducted on 29 October 2004, stated that 'I can't answer that', when questioned in relation to whether there was a reason as to why no representative of Bunnings was informed of the results of the audit conducted in May 2004. The reasons why Mr Gilchrist did not become aware of the report prior to the incident could have included that the report did not arrive in the mail, or that it did arrive and was not brought to the attention of Mr Gilchrist. Investigation 25. ... Section 8(1) charge against BBC; Section 8(2) charge against Bunnings Systems of work 26. Prior to the incident, no repairs had been made to any defects in the 'Potting Mix' racking. 27. BBC and Bunnings relied on Dexion for the steel storage and racking, which included the responsibility to conduct audits and ensure that complex managers received the audit reports in order that any recommendations could be implemented. 28. Dexion conducted audits of the storage installations and racking on approximately a six monthly basis. 29. Prior to the incident, BBC's and Bunnings' systems for inspection, maintenance and repair of the steel storage racking installations consisted of monthly hazard inspections as well as the bi-annual audit by Dexion. Implementation of the monthly hazard checklists was intermittent. There was no monitoring system in place to ensure that the checklists were completed each month. The process for carrying out any repairs was unclear. Safe working loads of steel storage racking installations 30. Prior to the incident, the safe working loads of the steel storage racking installations in the yard was not indicated on any of the fixtures, despite the 'Dexion Leaders Training Guide' which states that 'safe working load stickers must be used on external racking'. 31. The system of determining whether a pallet load could be placed safely on the steel storage racking installation was unclear, with varying accounts provided by managers of Bunnings as to what the limit was, and how this information was provided to the employees. 32. Employees of BBC have stated that they were unaware prior to the incident of the safe working loads of the steel storage racking installations. Assessment of pallet weight prior to placement on steel storage racking installation 33. Prior to the incident, employees of BBC assessed the pallet loads to be placed on the steel storage racking installations by multiplying the number of packages by the package weight, or by taking the weight off the supplier invoice. 34. Employees of BBC received no training or instruction relating to safe working loads or the assessment of the weight of a load to be placed on steel storage racking installations prior to the incident. Procedures for reporting damaged racking 35. Prior to the incident, employees of BBC would verbally inform management of Bunnings of damaged racking. There was no record of appropriate training for this system. 36. While this was not part of the employees' job description, management stated that it was part of the employees' day to day duties. Non-compliance with Australian Standard 4084-1993 'Steel Storage Racking' 37. No plaque was attached to the racking displaying safe working load, either by bay or by beam. 38. The racking configuration drawings and specifications were not available at the site. 39. No collision protection devices were attached to lower portions of frames. 40. Employees of BBC did not know safe working loads of the racking and assumed it was 3000kg. 41. Employees of BBC did not receive formal training in either the assessment of the weight of pallets and stock to be stored on the racking. 42. Employees of BBC did not receive formal training in either the assessment of safe working load of the racking. 43. BBC and Bunnings failed to make regular inspections of the racking. Notices 44. On 19 July 2004, the Inspector issued Improvement Notice 760410 requiring Bunnings to implement a system of work to ensure that each new member of the OHS Committee undertakes training with respect to that position as soon as practicable after the person's election to the Committee. 45. On 19 July 2004, the Inspector issued Improvement Notice 7-60416 requiring Bunnings to democratically elect an employee to the position of Chairperson of the OHS Committee; 46. On 19 July 2004, the Inspector issued Improvement Notice 7-60424 requiring Bunnings to develop and implement a safe system of work for the regular inspection and repair of all steel storage racking installations; 47. On 19 July 2004, the Inspector issued Improvement Notice 7-60426 requiring Bunnings to develop and implement a system of work to ensure the safe working load of all steel storage racking installations is permanently attached to the installations in order to avoid the risk of overloading and potential collapse of the installation. Subsequent to the incident 48. Subsequent to the incident Bunnings and BBC have: 48.1 Complied with WorkCover Notices under Section 62 of the Act by providing all requested documents. 48.2 Developed a flowchart for the conduct of 'Bunnings Store Rack Audits'. 48.3 Attached safe working load signs to each steel storage racking installation in the yard. Employees of BBC have also undertaken training regarding safe working loads of steel storage racking. 49. Training has been undertaken by employees of BBC with regard to the assessment of loads to be placed on steel storage installations. 50. Training has been undertaken by employees of BBC with regard to reporting damaged racking to management. 51. Temporary collision protection was installed to the main ends and sides of the steel storage racking installations in compliance with Australian Standard 4084-1993 'Steel Storage Racking'. 52. An employee representative has been elected chairperson of the OHS Committee. All members of the OHS Committee have received consultation training and systems developed to ensure that all new members of the Committee receive consultation training as soon as practicable upon joining the Committee. Section 86 charge against BBC 53. The incident was a notifiable incident within the meaning of Clause 341 of the Regulation in that the incident involved damage to plant and equipment which impeded safe operation. 54. The incident was a serious incident within the meaning of clause 344 of the Regulation in that it involved major damage to plant, namely the racking. 55. BBC, being an occupier of premises, failed to notify WorkCover of the incident by the quickest available means immediately after becoming aware of the incident. Co-operation with the WorkCover Authority 56. BBC and Bunnings cooperated with WorkCover during the investigation. 3 In relation to the s 8(1) and (2) offences the Particulars were similar and the substance of each charge was the same but the different Particulars make it appropriate to briefly detail what was alleged in each case. In relation to BBC, the s 8(1) charge alleged: 1. The defendant failed to ensure that systems of work and the working environment of the employees was safe and without risk to health in that - 1.1 the defendant failed to ensure that the weight of stock stored on the racking was within the safe working load (SWL) recommended by the manufacturer of the racking; 1.2. the defendant failed to ensure that any defects in the racking were identified and repaired in a timely manner. 2. The defendant failed to ensure that plant, namely, the racking, which was provided for use by the employees at work were safe and without risk to health when properly used in that: 2.1 the racking had defects that were in urgent need of repair or replacement; 2.2 the SWL of the racking was not displayed on the racking. 3. The defendant failed to provide such information, instruction and training as necessary to its employees to ensure their health and safety at work while storing stock on and underneath the racking in that: 3.1 the employees were not adequately trained in relation to assessing the weight of stock to be stored on the racking; 3.2 the employees were not adequately trained in relation to the SWL of the racking. 4 In relation to Bunnings, the Particulars of the s 8(2) charge were: 1. The defendant failed to ensure that the weight of stock stored on the racking was within the safe working load (SWL) recommended by the manufacture of the racking. 2. The defendant failed to adequately audit the racking to ensure that any defects in the racking were identified and repaired in a timely manner. 3. The racking had defects which were in urgent need of repair or replacement. 4. The SWL of the racking was not displayed on the racking. In relation to Bunnings, it was further particularised that it was part of the defendant's undertaking to ensure occupational health and safety at the premises, that the defendant had management rights at BBC sites and, as a result of the failure of the defendant, the worker Mr Jean-Marie (Jack) Powell was placed at risk of serious injury. 5 The charge under s 86 brought against BBC alleged that the defendant failed to give WorkCover notice of a serious incident at the premises, namely, the collapse of steel racking and failed to do so by the quickest available means after becoming aware of the incident. 6 The evidence for the defendants constituted an affidavit sworn by Willem Pruys a Director of Bunnings and BBC. Mr Pruys was the General Manager of Human Resources responsible for a number of areas including occupational health and safety, training and development. Mr Pruys stated that both Bunnings and BBC were public companies and were wholly owned subsidiaries of Wesfarmers Ltd. He said that Bunnings operated through a chain of warehouse superstores and traditional stores in Australia and New Zealand and catered predominantly for the do-it-yourself customer as well as builders and contractors. 7 In approximately September 2001, a subsidiary of Wesfarmers acquired Howard Smith Ltd and its subsidiaries including BBC. BBC remained registered and continues trading as a separate entity to this day. Since the acquisition however BBC had been "notionally incorporated" into Wesfarmers and operating under the Bunnings name. 8 As at October 2006, the re-branded Bunnings operated 144 warehouses and 70 smaller stores. There were approximately 23,000 employees in Australia and New Zealand with over 8,000 employees in the stores in New South Wales/ Australian Capital Territory. There were 157 full-time and casual employees at the Ashfield store. 9 Mr Pruys explained that, prior to the acquisition, Bunnings had employed approximately 8,000 people across all sites in Australia and New Zealand and with the acquisition that number grew to 18,000 people. Bunnings had a very focused approach to occupational health and safety: it was a mandatory part of the induction programme. The acquisition of BBC was described as "unfriendly", meaning that there was no opportunity to conduct due diligence prior to the takeover. In the first few months following the acquisition, Bunnings management focused on learning about the BBC business and its personnel. There was an integration process which involved Bunnings management meeting with all employees in the BBC support office and reviewing their roles. Bunnings management sought to establish what were the occupational health and safety policies and procedures in BBC and how they were implemented and were informed such policies existed and that there was a high level of compliance regarding implementation. 10 Bunnings review ultimately showed that the previous owners of the BBC business had not spent sufficient funds on the proper implementation of health and safety to create safe working environments. Bunnings incoming management resolved upon an approach to address the shortcomings including inducting all BBC in the Bunnings health and safety system and to undertake a total review of BBC and Bunnings approach to safety. Mr Pruys dealt in some detail with the way in which the BBC induction was conducted, being completed in New South Wales in November 2001. The New South Wales team member induction programmes commenced in October 2001 and were completed in mid-December 2001 and involved across Australia 7,500 team members completing a two day orientation workshop. The Bunnings induction programme was introduced to BBC for all new starters involving attendance at a three day induction programme. All managers were instructed to review their sites and make recommendations for improvement to health and safety. A review was conducted of existing Bunnings and BBC hardware systems to determine the best way forward as it was recognised that existing BBC systems were inadequate and it was also apparent that Bunnings systems could be improved to take into account the fact that the business had grown significantly. A number of safety consultants were engaged in April 2002 to conduct safety audits across Bunnings to assess the business level of compliance with safety laws throughout Australia. Those consultants included Dupont (Australia) Ltd who were engaged specifically to assist with the development and implementation of safety leadership training. It was concluded that in order to properly address safety it was necessary to effect behavioural change and Dupont were appointed in May 2003 to act as consultants in this area. Mr Pruys described Dupont's role in that regard. 11 On completion of the review of BBC sites, it became apparent to Bunnings that safety systems needed to be developed and implemented regarding steel storage racking. Bunnings engaged the services of an expert in the area, Dexion Ltd. By September 2003, Bunnings had an arrangement with Dexion for a representative to conduct bi-annual audits of the steel storage racking installed at its sites and Dexion arranged a calendar when audits would be carried out. Once safety audits were carried out they were to be sent to the store within seven days and repairs, if needed, were to be carried out by Dexion. If the audit report showed a red alert, meaning urgent attention, the store manager arranged immediate repairs through Dexion. If the audit report showed a green or yellow alert, suggesting repairs within a six to twelve month period, a capital expenditure form was completed and, when approved by management, repairs were effected through Dexion. 12 It was stated that Bunnings relied on Dexion's expertise in racking systems to identify and rectify non-obvious breakdowns in the integrity of the system and that there was an expectation that Dexion would follow-up the schedule and escalate the issues in an appropriate manner which would be supported by the store systems and authority levels to authorise repairs. Training was provided at national and state levels for all complex managers who were delegated the responsibility of ensuring compliance with the audit process. The complex managers participated in Dexion training. This training was introduced by Bunnings in October 2003, covering issues such as safe working loads, the construction of the racking, loading racking with pallets and key areas for damage. The Ashfield site manager participated in that training. It was said to be also part of team members' day-to-day duties to report noticeable damage to racking. Employees were encouraged to report unsafe working systems to management and/or the occupational health and safety committee members. 13 In early May 2004, approximately two months before the incident, an audit was conducted of the racking at the Ashfield site on behalf of Dexion as part of the six monthly review. The audit report was sent by mail to Bunnings on 8 May 2004 but was not received until after the incident. 14 Considerable detail was given by Mr Pruys about the July 2003 introduction of the Bunnings Safety Awareness for Everyone ("BSAFE") strategy. The BSAFE programme included the development and implementation of the Occupational Health and Safety Manual launched in January 2004. The nature of that Manual was described and was in evidence. The Manual dealt with safe working procedures including those for forklifts. Procedures required drivers to check load capacity and they were required to perform a manual calculation of the weight of the load and check the capacity plate located on the forklift. All forklift drivers at the Ashfied site had the required certification. 15 In November 2002, the senior safety leadership team was created with the express purpose of developing strategy, providing direction and resources as well as monitoring performance in relation to the BSAFE programme. The team was chaired by the managing director and was made up of each department's senior managers. Each member of the team had undergone the BSAFE safety leadership training programme and meetings were held quarterly for half a day. At those meetings, previous performance was assessed and initiatives were considered as a means to address health and safety issues across the business. 16 In relation to the incident in July 2004, team leaders immediately declared the incident area unsafe and quarantined it. Bunning's engaged Dexion to carry out an audit as to the cause and circumstances of the incident and to report how the area should be cleaned and a similar incident avoided. Dexion provided Bunnings with a report dated 12 July 2004 which detailed immediate actions and recommendations. The report's recommendations were immediately implemented by Bunnings and the damaged Dexion racking was replaced. Bunnings developed a flow-chart to assist team members in the procedures and processes involved in inspecting and maintaining store racking. This flow-chart was now part of the BSAFE manual and was used in all stores. 17 Following the incident, any damage identified as a safety risk under the relevant Australian Standard concerning racking requires all stock to be removed and the area immediately quarantined. A team leader then contacts Dexion to carry out a risk assessment and to advise on the steps needed to make the racking safe. If the recommendation is to repair or replace the racking, Dexion is to carry out the necessary work. The area remains quarantined until Dexion gives permission to use the racking. Dexion has been engaged on an on-going basis to conduct audits every six months and now reports its findings to store management prior to leaving the site rather than mailing the report to the stores. The store manager is also required to sign off on sighting and receiving the audit findings while the Dexion representative is present at the store thus allowing the manager to clarify any issues and to ensure that there is an understanding of the findings. 18 Safe working load signs have been attached to each storage rack installed in the yard and employees have undergone training regarding safe working loads of steel racking. Training has been undertaken in relation to reporting damaged racking to management and ensuring that employees are aware of what constitutes damaged racking in accordance with the Australian Standard. New team members starting with Bunnings are required to participate in a formal three day company induction programme and the sessions include a BSAFE component which itself now includes a section on racking safety and safe work load signage. 19 Signage in relation to the maintenance of racking structures has been erected at the end of the steel storage racking thus reminding team members of the importance of identifying and recording damaged racking. Load labels have been affixed to every pallet bearing beams that exceed the Australian Standard. Those labels have been designed to be suitable to Bunnings and its retail operations. Temporary collision protection was installed at the main ends and sides of steel storage racking in compliance with Australian Standards. 20 A training programme had been developed for team members involving participation in a three hour seminar in not only how to perform a safety observation but incorporating training in relation to the causes of incidents, unsafe acts and behaviour, self-correction and correcting others. Since the incident, an employee representative has been elected chairperson of the Occupational Health and Safety Committee. All members of the Occupational Health and Safety Committee have received consultation training and systems have been developed to ensure that all new members of the Committee receive consultation training as soon as practical upon joining the Committee. 21 In 2005, the Ashfield store underwent a complete upgrade during which the age and integrity of all racking was reviewed and replaced if required. The Ashfield store continues to carry out safety observations, monthly hazard checklists and internal audits. The BSAFE Manual was amended to cover safe work procedures in relation to traffic management, pallet inspections, top stock safety and loading and unloading procedures. 22 At the end of 2006, it was decided to significantly update the BSAFE manual. In October 2006, Bunnings began issuing the revised manual to all stores. The manual deals with, amongst other things, hazard identification, racking safety, traffic management, emergency preparedness and manual handling. 23 During 2005 and 2006, as an indication of its commitment to safety, Bunnings had implemented a number of measures that included completely revising the manual handling, training with a two day safety leadership workshop, implemented traffic management plans, had over 2,300 team members attend team safety leadership training, had over 3,200 new team members participate in occupational health and safety induction, had 3,000 forklift operators attend forklift licence and refresher training and delivered to over 5,000 team members the Safety for Team Members Pilot Programme. The annual national occupational health and safety budget for Bunnings was in excess of $2m. Despite the high risk associated with the business, Bunnings had been able to reduce its lost time injury frequency rate by 19 per cent in 2005. At the Ashfield store there had been three lost time injuries over the past two years. In relation to its status as a good corporate citizen, Mr Pruys listed numerous occasions when Bunnings and its employees had contributed to worthy causes and charities. During the 2005/2006 year, Bunnings had assisted in raising funds and contributed almost $4.6m to various charities and community groups throughout Australia. There was a strong community focus at each of the stores and direct support provided to local organisations. DELIBERATION 24 There can be little doubt that the collapse of racking and the spilling of six to ten tonnes of potting mix represented a serious safety breach. The spill occurred in an area where employees were working, including the forklift driver who triggered the spill by clipping the racking. The area was open to the public. It was fortunate that nobody was injured but the lack of an injury is not determinative of the seriousness of the risk. Similarly, the incident itself is not the focus of the Court's enquiry when considering a breach of the Occupational Health and Safety Act but the incident provided an evidentiary basis for establishing the nature and seriousness of the breach. 25 Indeed, there was no suggestion in the submissions for the defendants that the s 8 breaches were other than serious and the submissions sought to place the incident in a context: there was no evidence, despite defects in the racking and the need for repair or replacement, that the racking failed by itself. The failure occurred when the forklift truck carrying pallets clipped the racking at a point that was conceded to be defective. While that general point might be accepted, the risks to which pleas were entered also identified the failure to consider safe working loads, the failure to display safe working loads on the racking and the failure to train employees in relation to assessing the weight of stock to be stored on the racking. Moreover, the racking did not comply with Australian Standards. No repairs had been made to defects in the racking, the hazard checks were intermittent and there was no monitoring system to ensure checks were completed. There was no collision protection. The seriousness of the offence in each case therefore must be assessed having regard to the multi-faceted defects identified in the defendants' system of safety. I accept the description in the Agreed Statement of Facts that the potential for serious injury was high for both the forklift driver and other persons in the vicinity. 26 In relation to the s 86 charge concerning BBC, I accept the prosecutor's submission that the section is an important element in the operation of the Act. It is accepted that there was no evidence of a deliberate act of deception nor was there concealment of the damaged racks that were available for inspection by the WorkCover Inspector. BBC emphasised that it took immediate action to have the area quarantined and brought in Dexion immediately to identify the cause of the failure of the racking, then cleaned the area so that safe racking could be erected. Those steps taken by BBC were at least understandable but nothing has been put forward explaining why BBC did not notify the WorkCover Authority of such a significant incident, although it appears that after WorkCover attended the site, solicitors for BBC belatedly (and for no discernible purpose) formally notified WorkCover of the incident. 27 In all the evidence, which was considerable as to the systems of work introduced and promulgated by Bunnings on taking over BBC, nothing was identified as bringing to the attention of managers and employees the importance of notifying WorkCover of such incidents. There can be no doubt that it is frequently the case that the ability of WorkCover Inspectors to examine the site promptly after an incident enhances the capacity to determine the present state of safety, and, the causes and factors involved in a particular incident - it also equips WorkCover to advise industry about those matters and raise awareness when a particular set of circumstances with wider ramifications is identified. Taking into consideration the matters raised by the defendants, nevertheless, an incident of this nature should have been promptly reported and the failure to do so, without any explanation, constitutes a significant breach of the Act. 28 It is accepted that in each matter general deterrence is a proper and appropriate consideration. In relation to specific deterrence for both BBC and Bunnings, they are continuing corporate entities with an integrated operation. There is no reason why specific deterrence should not be fully considered in the setting of an appropriate penalty. It was suggested by the prosecutor that the prior record of BBC might influence considerations of specific deterrence, but the evidence demonstrated that since 2001 the two companies operated in an integrated way with safety systems and rules promulgated by Bunnings also the safety systems and rules applicable to BBC. In those circumstances, no particular distinction should be made between the two defendants. 29 As to subjective factors, in all matters pleas were entered at an early stage and the utilitarian value of the pleas is such that a discount of 25 per cent should be allowed. It should be noted that, had the matter proceeded to a contested hearing, unravelling the operations of the two corporations may well have led to a lengthy and detailed hearing. A 25 per cent discount for the early plea should also apply to the s 86 offence concerning BBC. 30 It was of considerable importance that, having regard to the size of its operation and the nature of its business, Bunnings had no prior record. On the other hand, BBC has a number of prior convictions arising from its operation as Nock and Kirby Ltd and Burns Philp Hardware Ltd. The prior convictions record showed a number of appearances before the Chief Industrial Magistrate and between 1980 and 1989 there were numerous breaches of the Factories, Shops and Industries Act. The prosecutor did not rely heavily on that record but it should be noted that Staunton J in Inspector Marshall v BBC Hardware Ltd (2004) NSWIRComm 296, in dealing with the same defendant and the same prior record, stated that these matters were predominantly to do with trading hours breaches. There were six breaches of the Occupational Health and Safety Act between 1992 and 2000 (all prior to the acquisition by Bunnings), and all of those offences were dealt with by the Chief Industrial Magistrate with the highest penalty imposed being $10,000. Senior counsel for BBC pointed out, without demur from the prosecutor, that a penalty of $156,000 imposed by the Commission in Court Session in 2004 was, in fact, not a prior conviction and was therefore not part of the relevant record. 31 Dealing with the differing prior records of the defendants presented some difficulties although it might be said that, considering the very much larger enterprise constituted by BBC, its occupational health and safety record was not a bad record. However, it was disturbing to see six breaches of the Act in a period of eight years although occurring prior to the acquisition by Bunnings. In sentencing BBC, the practical course requires recognition to be given to the full integration with Bunnings since 2001. 32 In relation to other subjective factors, it is significant that, in the matter dealt with by Staunton J relating to BBC, her Honour was impressed with the systems of safety introduced by Bunnings and was satisfied that BBC was now part of a corporation that had taken its occupational health and safety obligations to heart with a genuine commitment to its policies by taking practical and innovative steps designed to ensure implementation in of the workplace. This was not merely a paper system. There were policies and procedures to ensure that the measures adopted were adhered to in the workplace by appropriate attention to instruction, training and supervision as well as ongoing reinforcement as to the importance of adhering to ongoing safe work practices. The material before the Court in the present matter supports those comments. The defendants also took prompt action to isolate the area immediately after the incident, engaged a specialist to advise as to the causes of the incident and as to what remedial steps might be taken and has otherwise addressed the issues arising from this incident so that a similar risk might not arise again. It is also significant that the defendants fully co-operated with the WorkCover Authority in investigating the incident despite its failure to promptly notify the Authority of the occurrence. There was an abundance of evidence as to the good corporate citizenship of Bunnings in the integrated operation. All of these matters combined to require a significant mitigation of the penalty. 33 One further matter should be dealt with that arises from the full integration of the operations of the two companies since 2001. A Full Bench in Haynes v CI & D Manufacturing Pty Ltd and anor (1995) 60 IR 455 gave consideration to a similar situation stating at 458: Should the prosecution of the closely related companies attract one penalty or two penalties assessed as against each company? The evidence available showed that Manufacturing at the time of the accident employed at the Somersby plant about nine workers and that for the purposes related to company structure was a company wholly-owned by Industries. The personnel on whom the ultimate responsibility for ensuring the supervision of the employees rested at the time of the accident were the same. We have come to the view that on the evidence that the connection between the two companies was so intimate that it is permissible to view the offence in a global way. We are of the view that an appropriate penalty in all the circumstances would be a total fine of $30,000. We have considered whether it was within the authority of the Court to order the payment of the fine as if the respondents were jointly and severally liable for the total amount. Were such a course available any risk that the impecuniosity of the one respondent would cause undue hardship would be avoided with management being able to determine the most convenient method of funding the fine. We have been unable to come to the view that such a course is open to the Court. In determining the way in which the totality of the fine should be apportioned, we have decided that Manufacturing and Industries are so clearly linked that each should bear the fine equally - $15,000 by Manufacturing and $15,000 by Industries. 34 It is important that in the present proceedings it is accepted that BBC and Bunnings jointly operated the hardware store as a Bunnings warehouse at Ashfield, had equal involvement and equal responsibility for the business and the employees working for the business and had equal involvement and equal responsibility for the occupational health and safety of the business trading as Bunnings Warehouse. The controlling mind of the integrated operations seems to have been accepted to have been Bunnings because, on 19 July 2004, the Inspector issued four Improvement Notices to Bunnings and did not appear to have issued any Improvement Notices to BBC, although it is stated that both BBC and Bunnings complied with those notices. 35 In all of those circumstances, I am of the view that the global approach adopted by the Full Bench in Haynes is an appropriate course to adopt in the present case having regard to the integration of the businesses since 2001. The overall criminality of the offence justifies a total fine of $175,000 and that fine shall be equally divided between the two defendants in relation to the ss 8(1) and s (2) breaches subject only to subjective factors. 36 In relation to the s 86 charge, the parties did not draw to the Court's attention any previous occasion on which this Court had been called upon to give consideration to the nature and operation of the section. There appears to have been a small number of prosecutions before the Local Court with fines ranging from $1,000 to $5,000 but no other information was immediately available as to the context in which those offences occurred. As earlier indicated, I am unable to conclude that this was a deliberate and intentional act on behalf of the defendant or that it was part of a plan to conceal the occurrence. The speedy engagement of Dexion to address the site and the requirement that it be quarantined until investigated and repaired by Dexion may well have become the sole occupation of the defendant especially as the immediate incident was quickly the focus of what needed to be done in the future. In those circumstances the Court is entitled to take the view that this was an unintended oversight. Besides the discount for the early plea referred to earlier, the defendant is entitled to significant further discount arising from its prompt action in addressing the risk, the significant steps taken after the accident to implement a wider and effective safety system, the co-operation with the WorkCover Authority and its good industrial citizenship (although arising through the integration with Bunnings after the acquisition). The defendant has not previously breached this provision and it is by operation of s 4 of the Act that its other prior offences lead to a maximum penalty of $82,500 being available. Having regard to the post-acquisition concentration and emphasis on building an effective safety system, I am of the view that the defendant is unlikely to offend again in this way and that a modest fine only is warranted in all those circumstances. ORDERS 37 A. In relation to Bunnings Pty Ltd - breach of s 8(2) of the Act: 1. The defendant is found guilty of a breach of s 8(2) of the Occupational Health and Safety Act 2000 as particularised in Matter No IRC 1856 of 2006, to which the defendant pleaded guilty. 2. The defendant is fined the sum of $56,875 with half that sum to be paid to the prosecutor by way of moiety. 3. The defendant is to pay the costs of the prosecutor in a sum as agreed, or in the absence of agreement, as ordered by the Court. B. In relation to BBC Hardware Ltd - breach of s 8(1) of the Act: 1. The defendant is found guilty of a breach of s 8(1) of the Occupational Health and Safety Act 2000 as particularised in Matter No IRC 1855 of 2006, to which the defendant pleaded guilty. 2. The defendant is fined the sum of $56,875 with half that sum to be paid to the prosecutor by way of moiety. 3. The defendant is to pay the costs of the prosecutor in a sum as agreed, or in the absence of agreement, as ordered by the Court. C. In relation to BBC Hardware Ltd - breach of s 86 of the Act: 1. The defendant is found guilty of a breach of s 86 of the Occupational Health and Safety Act 2000 as particularised in Matter No IRC 1854 of 2006, to which the defendant pleaded guilty. 2. The defendant is fined the sum of $10,000 with half that sum to be paid to the prosecutor by way of moiety. 3. The defendant is to pay the costs of the prosecutor in a sum as agreed, or in the absence of agreement, as ordered by the Court. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.