Industrial Court of New South Wales CITATION: WorkCover Authority of New South Wales (Inspector Christensen) v TP & MJ Holmes Pty Limited and Steven Holmes [2006] NSWIRComm 312 PROSECUTOR: WorkCover Authority of New South Wales (Inspector Christensen) PARTIES: DEFENDANTS: TP & MJ Holmes Pty Limited Steven Holmes FILE NUMBER(S): IRC 467 & 468 of 2006 CORAM: Staunton J CATCHWORDS: Occupational health and safety - pleas of guilty - general principles - foreseeability - objective seriousness of the offences - relative culpability of defendants - general and specific deterrence - defendants have no prior convictions - subjective features taken into consideration - respective financial positions of the defendants taken into account - penalties imposed - orders as to penalty, moiety and costs. Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Fines Act (1996) Occupational Health and Safety Act 2000 Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 Ferguson v Nelmac Pty Limited (1999) 92 IR 188 Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 Markarian v The Queen [2005] HCA 25: 18 May 2005 CASES CITED: R v Gallagher (1991) 23 NSWLR 220 R v Thomspon; R v Houlton (2000) 49 NSWLR 383 R v Way [2004] NSWCCA 131 Thorneloe v Filipowski (2001) 52 NSWLR 60 WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Limited trading as Old But New [2004] NSWIRComm 247 HEARING DATES: 23/8/2006 DATE OF JUDGMENT: 09/28/2006 PROSECUTION: Ms P Lowson of counsel SOLICITORS: Phillips Fox LEGAL REPRESENTATIVES: DEFENDANTS: Mr G Giagios of counsel SOLICITORS: O'Hearn and Bilinsky JUDGMENT: - 22 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Staunton J DATE: 28/9/2006 Matter No IRC 467 of 2006 WorkCover Authority of New South Wales (Inspector Christensen) v TP & MJ Holmes Pty Limited Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 Matter No IRC 468 of 2006 WorkCover Authority of New South Wales (Inspector Christensen) v Steven Holmes Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 JUDGMENT [2006] NSWIRComm 312 1 The first defendant in this matter, TP & MJ Holmes Pty Limited (TP & MJ Holmes), has entered a plea of guilty to an offence arising under s 8(1) of the Occupational Health and Safety Act 2000 (the Act). The second defendant, Steven Holmes, a director of the first defendant, by virtue of the deeming provisions arising under s 26(1) of the Act, has also entered a plea of guilty to an offence arising under s 8(1). Both offences arise from the same factual circumstances and the same particulars are pleaded in relation to both defendants. 2 In relation to TP & MJ Holmes, it is said that the defendant: Failed to ensure that its employees including Garry Raymond Hall (injured worker) were not exposed to risks to their health or safety at work in that as the injured worker was in the process of checking the operation of a horizontal screw conveyor at the premises, he tripped and fell and his right arm became entangled in the unguarded rotating screw auger of the conveyor and as a result his right arm was severed just below the shoulder. 3 The particulars of the charge in relation to TP & MJ Holmes are: [1] The defendant failed to ensure that plant provided for use at the premises was safe and without risks to health when properly used by reason that: [1.1] The rotating screw auger of the conveyor was not guarded; [1.2] There was no emergency stop switch fitted to the conveyor; [1.3] There was no main isolating stop switch fitted to the conveyor; [1.4] The stop switch fitted to the conveyor did not work; [1.5] The controls on the operating panel of the conveyor were not clearly marked. [2] The defendant failed to provide such information, training, instruction and supervision as necessary to ensure the health and safety of the injured worker in relation to the use of the conveyor. [3] As a result of said failures, Garry Hall was exposed to risk of injury and sustained serious injuries including the severing of his right arm. 4 The offence and particulars in relation to Mr Holmes are in identical terms, and as such, I do not repeat them. 5 The prosecution has tendered an agreed statement of facts. With respect to the two defendants, the following is agreed: [1] At all material times, TP & MJ Holmes Pty Ltd (ACN 000 660 480), (First Defendant): [1.1] Was a duly incorporated company with its registered office located at 1 Warabrook Boulevard, Warabrook, in the State of New South Wales; [1.2] Was engaged in the business of: [1.2.1] chicken manure processing; and [1.2.2] raising cattle at 1416 George Booth Drive Buchanan in the state of New South Wales (premises); [1.3] Was an employer in the State of New South Wales; [1.4] Employed Garry Raymond Hall (born 1 December 1956) (injured worker) as a casual farm hand; [1.5] Owned a horizontal screw conveyor (conveyor) which was located at the premises and had been used for the purposes of the chicken manure processing business; [2] At all material times: [2.1] Mr Steven Holmes (Second Defendant) was a working director of the First Defendant. [2.2] Ms Marion Holmes was a director of the First Defendant. [2.3] The premises constituted the First Defendant's place of work. Background [3] As at 17 June 2005 (date of the incident), the First Defendant was conducting its business of a chicken manure processing plant at the premises. [4] The premises are located in a rural area. The chicken manure processing business occurs in a large shed (chicken manure processing plant), which is located approximately 100 metres (or 300 metres by road) from the main buildings at the premises. Those main buildings include offices for Pace Farms. The First Defendant leases land to Pace Farms which operates an egg laying and chicken raising business. As well as working for the First Defendant, the Second Defendant works for Pace Farms. [5] The injured worker had been employed by the First Defendant since approximately 1997. The injured worker's normal duties included bagging manure, cleaning, mowing and tending stock. The injured worker usually worked alone in an area away from the main office that included the chicken manure processing plant. The injured worker was sometimes directed to do work and at other times was expected to find work to do. On some occasions there was not much work to do. The injured worker was not supervised in the performance of his work and did not know the name of his supervisor. [6] The process of turning chicken manure into fertiliser pellets took place in the chicken manure processing plant. With the exception of a period of time in November 2004, the chicken manure processing occurred on a different conveyor to the one involved in the incident. The First Defendant mainly produces regularly sized fertiliser pellets for use on plants. [7] The conveyor was located in the chicken manure plant and had been constructed from various bits and pieces lying around the farm and was not guarded in any way. There was no emergency stop button fitted to the conveyor and there was no main isolating device fitted. The stop button that was fitted to the conveyor did not work properly. [8] The prosecuting inspector made the following observations of the conveyor and premises when she attended at the site on 17 June 2005: [8.1] Located at one end of the conveyor was a receival bin 1.2m by 1.5m by 2.45m high; [8.2] The conveyor was 4m long with a 50mm shaft and 200mm diameter flights; [8.3] The screw conveyor was 1.2m above ground level; [8.4] Located adjacent to the receival bin were two sheets of steel approximately 6mm thick by 780mm by 400mm welded onto each side of the trough housing the conveyor; [8.5] The conveyor was driven by a 415V electric motor with an unguarded chain and sprocket drive; [8.6] Located on the right hand side of the conveyor was a control panel labelled "chiller 6 speed controller - Zener VSC". The control panel had a green button, a red button and a blue knob. These controls were not labelled; [8.7] Located approximately 15m from the conveyor were two orange control panels. The orange panel which was located beside the pelletising machine had 6 green start buttons and six red stop buttons; [8.8] Writing beside the green start buttons read "pelleter feeder – feed auger - inside conveyor - outside conveyor". [9] The First Defendant had installed the conveyor in November 2004 as part of an experiment for making large fertiliser pellets for trees. The injured worker assisted in the assembly of the conveyor in November 2004, and observed its operation at that time. [10] The experiment was unsuccessful and the conveyor was not used again after November 2004. Neither the First or Second Defendants took any steps to guard or decommission the conveyor at any time after November 2004. [11] Although the injured person was not required to use the conveyor during the course of his normal duties and had not been directed to use it on the day of the incident, the first defendant was aware that the injured worker would undertake activities around the premises to fill in his time usefully. Further the injured worker had not been trained in the use of this or any other conveyor; had not been trained in the risks posed by this or any other conveyor when in operation; and had not been directed not to operate this or any other conveyor. The Incident [12] On 17 June 2005 the injured worker found that he did not have very much work to do so he decided to turn on the conveyor to see if it still worked. As he was walking back towards the conveyor after turning it on he slipped and fell and his right arm became entangled in the unguarded rotating screw auger of the conveyor. [13] The injured worker was unable to turn off the conveyor as there was no emergency stop switch. He tried to turn it off using the on/off switch but it did not work properly and the conveyor did not stop. The injured worker called for help but no one heard him. [14] The injured worker then he felt his arm 'pop' and his arm was severed at the shoulder. [15] The injured worker then tried to walk to the main plant where the office was located however he felt faint, laid down and called the Second Defendant on his mobile. The injured worker told the second defendant he had hurt himself and asked him to call an ambulance. [16] The Second Defendant sent another worker, Bogdon Chyzy, to attend to the injured worker, and then telephoned for an ambulance. Mr Chyzy drove to the chicken manure processing plant and found the injured worker on the ground with his arm missing. He attempted to stem the blood flow before returning to the office for further assistance. A number of persons then attended the injured worker and treated him prior to the ambulance arriving. [17] Jeremy Wicks, farm hand, tried to shut off the conveyor in order to minimise the damage to the severed arm however he was unable to stop the conveyor and he left the severed arm in the conveyor and returned to assisting the injured worker. [18] The arm was eventually retrieved when a number of persons were available to co-ordinate the retrieval. One person held a number of the conveyor buttons at the same time to stop the conveyor operating, while others turned the conveyor by hand to disentangle and retrieve the arm. [19] The injured worker was transported to hospital by ambulance. The severed arm was provided to the paramedics however it was too badly damaged to attempt re-attachment. [20] The injured worker returned to work with the First defendant and continues to be employed. The stump is too small to consider attachment of an artificial arm. [21] Later Mr Chyzy attempted to turn the conveyor off but only succeeded after trying all of the switches on the main switchboard and finding the main breaker switch. The main switchboard was located approximately five metres from the conveyor. [22] At all material times: [22.1] the rotating screw auger of the conveyor was not guarded; [22.2] there was no emergency stop switch fitted to the conveyor; [22.3] there was no main isolating switch fitted to the conveyor; [22.4] the stop switch fitted to the conveyor did not work; [22.5] the controls on the operating panel of the conveyor were not clearly marked; [23] At all material times the First Defendant failed to: [23.1] provide information, training and instruction to the injured worker concerning the safe use and operation of conveyors or the risk to health and safety posed by conveyors; [23.2] direct the injured worker not to operate the conveyor; [23.3] supervise the injured worker in relation to the operation of the conveyor. [24] It was reasonably practicable for the First Defendant to provide guarding and emergency stop buttons to the conveyor and to ensure that the controls were properly labelled and functioning correctly, or alternatively to decommission the conveyor, prior to the incident. [25] At all relevant times the second defendant was concerned in the management of the first defendant, engaged in the day to day control of the first defendant, and influenced the conduct of the first defendant. [26] As a result of the failures of the First and Second Defendants the injured worker was exposed to the risk of, and in fact sustained, serious injuries including the severing of his right arm near the shoulder. [27] At the time of the incident the only personal protective equipment being worn by the injured worker was a dust mask, which he had purchased from his own funds. The injured worker also had purchased safety glasses from his own funds. The first defendant had provided the injured worker with paper dust masks but had not provided him with any other personal protective equipment. [28] Following the incident the defendant de-commissioned the conveyor. [29] The First and Second Defendants cooperated with Inspector Christensen and the WorkCover Authority during the investigation. [30] The first and second defendants have no prior convictions. 6 In addition to the agreed statement of facts, the prosecution has also tendered a bundle of documents including a factual report of Inspector Christensen, dated 7 July 2005; a prior conviction record dated 29 June 2006 disclosing no prior convictions for either defendant and a copy of Australian Standard No. 1755-2000 titled 'Conveyors - Safety Requirements'. 7 Also tendered by the prosecution, without objection, were a number of photographs, which have assisted me in understanding the type and nature of the machinery involved in the accident. 8 In addition to an affidavit from the defendant Mr Steven Holmes, an affidavit on behalf of the defendants was tendered without objection from Mr Robert Warren. Mr Warren is an accountant employed by Crosbie Warren Sinclair Pty Limited. He has acted as the corporate defendant's accountant since 1990. Mr Warren's affidavit details the financial history and background of the company including the company's current financial circumstances. 9 In his affidavit, Mr Holmes deposed to the structure and history of the company, it's financial liabilities and current financial position. Letters of reference as to Mr Holmes' overall good character were included from: (a) Mr Earl Morris, OAM. Mr Morris is a member of the Rotary Club of East Maitland with Mr Holmes. (b) Ms Jenny Wolter. Ms Wolter operates within the local poultry industry alongside Mr Holmes and has known him and his family for many years. (c) Mr Greg Standing. Mr Standing is the President of the Rotary Club of East Maitland. 10 No oral evidence was received in the course of these proceedings. Relevant principles 11 The overall approach to be followed in relation to the determination of penalty is to be found in the first instance within the statutory provisions of the Crimes (Sentencing Procedure) Act 1999 (CSPA) and in particular in relation to these proceedings, ss 3A Purposes of Sentencing, 21A Aggravating, mitigating and other factors in sentencing, 22 Guilty plea to be taken into account. 12 In R v Way [2004] NSWCCA 131 it was emphasised that the provisions of the CSPA referred to above are not to be construed as representing 'a departure from settled principles of sentencing practice, or an abandonment of the discretion that is essential to any system calling for individualised justice'. As was said at [59]: ....it is clear that the legislative policy.......so far as that can be discerned from the legislation itself, was not to create a straight jacket for judges...but rather were intended to provide 'further guidance and structure to judicial discretion.' 13 It is well settled that the starting point for considerations as to penalty is the objective seriousness of the offence charged: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 474. 14 The principle of foreseeability as a factor in determining the objective seriousness of an offence was considered and affirmed in the Full Bench decision of Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at 646. 15 On the issue of foreseeability, the Full Bench in Capral also stated: The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However, the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J, President, in Ferguson v Nelmac Pty Ltd (at 209-210) in these terms: ... reliance on 'hindsight' must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s 15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy. 16 The principles of general and specific deterrence are also relevant in sentencing considerations. The approach to be taken on that issue has also been dealt with in some detail in Capral at 643-645. Without detailing all that the Full Bench had to say on those issues I believe the approach to deterrence in the sentencing process is encapsulated in the following passage from the Full Bench in Capral at 644 as follows: ... both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Page v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39 at [40]-[43] we would expect such cases to be very rare, and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted. 17 In the context of the above well established sentencing principles it will also be necessary to have regard to those general matters going to aggravation, mitigation and other factors identified in s 21A (1) of the CSPA relevant to the defendant. As was said in R v Way at [56]: ... it is not to be overlooked that there is a well established body of principles that have been developed by the courts over a long period of time. By providing guidance in the form of a list of aggravating and mitigating factors in s 21A, the Parliament did not intend to overrule or disturb those principles or restrict their application. In so far as those principles refer to factors, whether objective or subjective, that affect the 'relative seriousness' of the offence, they are expressly preserved by s 21A(1)(c). 18 Ultimately, all of the above factors must be considered as part of 'a complex of inter-related considerations' (See R v Gallagher (1991) 23 NSWLR 220). Having said that, as was said by Spigelman CJ in Thorneloe v Filipowski (2001) 52 NSWLR 60 at 69, it still remains for the sentencing judge to ensure: ... that a sentence should be proportionate to the objective gravity of the offence. This necessarily requires a sentencing judge to consider, at some stage in the reasoning process, the sentence that is appropriate for the particular circumstances of the crime without reference to the subjective case of the particular offender. 19 In Markarian v The Queen [2005] HCA 25: 18 May 2005, the High Court, by majority (Kirby J dissenting) generally disavowed the sequential or two tiered approach to sentencing. In doing so, their Honours did not entirely reject the proposition that, in some circumstances, 'an arithmetical process' would be appropriate. As they said at [39]: Following the decision of this Court in Wong it cannot now be doubted that sentencing courts may not add and subtract item by item from some apparently subliminally derived figure, passages of time in order to fix the time which an offender must serve in prison. That is not to say that in a simple case, ... indulgence in arithmetical deduction by the sentencing judges should be absolutely forbidden. ... The law strongly favours transparency. Accessible reasoning is necessary in the interests of victims, of the parties, appeal courts, and the public. There may be occasions when some indulgence in an arithmetical process will better serve these ends . ... (emphasis added) 20 On that point, McHugh J also acknowledged the need, where appropriate, for the awarding of a nominated discount for 'some factor'. As he said at [74]: ... The distinction between permissible and impermissible quantification of "discounts" on a sentence will usually be found in whether the quantification relates to a sentencing purpose rather than some other purpose. So, the quantification of the discount commonly applied for an early plea of guilty or assistance to authorities is offered as an incentive for specific outcomes in the administration of criminal justice and is not related to sentencing purposes. The non-sentencing purpose of the discount for an early guilty plea or assistance is demonstrated by the fact that offenders are ordinarily entitled to additional mitigation for any remorse or contrition demonstrated with the plea or assistance, aside from the discount for willingness to facilitate the course of justice... 21 Overall, I observe nothing in Markarian that precludes me, properly in my view, from identifying a discount for the entry of an early plea of guilty. Additionally, to the extent that there are subjective and mitigating features relevant to the defendant, they are matters which also should be considered in accordance with the provisions of the Crimes (Sentencing Procedure) Act 1999, in particular s 21A(1) earlier referred to. Considerations 22 TP & MJ Holmes has no prior convictions. Accordingly, the maximum penalty that can be imposed is $550,000. As an individual without a prior conviction record, the maximum penalty that can be imposed on Mr Holmes is $55,000. 23 As the agreed facts confirm, Mr Hall was employed by the corporate defendant to undertake tasks such as bagging manure, cleaning, mowing and tending stock on its property. He was occasionally directed to perform specific tasks and at other times, he was required to find work to do. On the day of the accident, he not directed to operate the conveyor located in the chicken manure processing shed. He simply decided to turn it on to see if it still worked. 24 Assessment as to the objective seriousness of the respective offences evidences a number of relevant facts and considerations. 25 The conveyor was constructed on an experimental basis and had not been in use for pelletising activities since November 2004. It was a horizontal screw conveyor, otherwise known as an auger, situated in a four metre long trough. The auger was mounted in the base of a trough and was used to move bulky material along the trough in a spiral motion. It did not have any guarding except for two sheets of metal about 6mm thick and with dimensions of 780mm x 400mm, welded to the top of the trough and adjacent to the receival bin. 26 It is apparent that without guarding running along the entire length of the trough, when the machine was turned on, the unguarded screw auger presented real and foreseeable risks to safety. That risk was also highlighted in Australian Standard AS 1755 - 2000 'Conveyors - Safety Requirements' (the Standard), under 3.2 Design and Construction of Guards, 3.2.1 General: Guards shall be designed to prevent - (a) persons reaching into the danger zone; (b) clothes and hair and other body parts becoming caught ; (emphasis added). … (e) inadvertent contact with a danger point on the conveyor. 27 It is stating the obvious to observe that what was required was a proper guard covering the screw auger running the entire length of the trough in order to address the risks to safety set out above. 28 In addition to the inadequate guarding, there were other features missing from the screw conveyor which posed foreseeable risks to the safety of Mr Hall. 29 The conveyor was not equipped with signs indicating where emergency stop switches were located. Additionally, buttons and switches on the conveyor's three control panels were either unlabelled or the labelling was incomplete. It is self evident that emergency control measures on any machine should be easy for workers to identify and access. That much is emphasised in the Standard at 2.7.7 and 2.9.4, as follows: 2.7.7 Emergency stop controls shall be capable of being operated with minimal effort without danger to the operator and shall be provided where the operating control is clearly visible and readily accessible even for inaccessible conveyors. … 2.9.4 Each manually operated stop, start or other function control shall be identified with marking, signs or labels in writing clearly indicating the purpose of the control. Notwithstanding the generality of this requirement, the following shall also apply: (a) Emergency stop devices shall be indicated by a sign; (b) Actuators of knock-off emergency stops shall be coloured red; (c) Signs shall be provided at each end and every 30 m along a conveyor where a pull wire is used (eg: emergency stop). (d) Signs shall be provided at the isolating devices which clearly indicate the function and purpose of the device. 30 When the accident happened, the absence of any labelling or warning signs made it impossible to readily locate an emergency stop button or a main isolating switch to disarm the conveyor. Because of that, it took Mr Hall's co-workers an inordinate amount of time to locate the main breaker switch that eventually turned the machine off. That delay clearly exacerbated the extent of Mr Hall's injuries and rendered it impossible for his severed arm to be reattached because of the damage inflicted by the screw auger. 31 To make matters worse, the main breaker switch was subsequently found five metres away from the conveyor. As set out in the Standard under 2.7.7, the main breaker switch should have been in a position adjacent to the point at which the conveyer can be started and turned off. 32 The failure to have in place the correct safety features had dire consequences for Mr Hall as the traumatic amputation of his arm from the shoulder only too graphically illustrates. 33 As stated by the Full Bench in Capral at 650, 'a breach where there was every prospect of serious consequences might be assessed on a different basis to a breach unlikely to have such consequences'. In isolation, the potential for 'serious consequences' is not conclusive of the nature and quality of the offence, but it is clear that such a factor may be considered when assessing the ultimate culpability of a defendant. 34 Further, as was stated in Capral, the presence of foreseeability 'will necessarily result in the offence being more serious in nature'. As such, the starting point for the determination of foreseeability within the context of the objective seriousness of an offence is whether there was 'an obvious or foreseeable risk to safety against which appropriate measures were not taken'. (Lawrenson Diecasting at 476). 35 In addition to the above, neither defendant had put in place any risk assessment procedure or safe work instructions for work to be undertaken by Mr Hall in the use of the conveyor or otherwise. At best, it appears the defendants had an ad hoc and informal approach to work safety. Mr Hall performed work alone and unsupervised on a regular basis. He had a mobile phone with him and was able to call Mr Holmes if necessary. 36 The conveyer was not being used at the time of the accident and it is likely Mr Holmes did not anticipate Mr Hall would engage the machine on the day he did or at all. But that is not the point. On any view, the conveyer was inherently unsafe from the time of it's construction. It did not require it to be operated to evidence that fact given the long section of the unguarded metal screw conveyer. Not only should the machine never have been assembled as it was, once it was no longer being utilised, it should, at the very least, have been decommissioned. Mr Holmes acknowledged that. He was aware that Mr Hall undertook the bulk of his work in the shed where the conveyor was located and that there was a possibility Mr Hall might turn on the machine with all the attendant risks that that involved. 37 Given all the failures identified above in the safe operation of the conveyer and the failure to supervise or instruct as to safe work procedures concerning the conveyor's operations, the risks to safety in operating the conveyor were both obvious and clearly foreseeable. 38 It is relevant to the objective seriousness of an offence to consider if there were readily and easily available remediation steps which could have been undertaken by the defendant before the accident to prevent injury occurring. To put it another way, one should have regard to remediation or the extent of remediation that is done post the accident, as an indication of the extent to which foreseeability of injury was readily identifiable. 39 Following the accident, Mr Holmes decommissioned the conveyor. The company had already abandoned its pelletising efforts the month before Mr Hall was injured. It has not resumed any manure processing operations since the incident. These remedial actions were effected promptly. However, steps to decommission the conveyor could have, and should have been in place prior to the accident involving Mr Hall. Mr Holmes acknowledged as much in his affidavit, stating: There is not much I can say to the Court about the company's and my failure to place a guard over the auger. That particular machine was used on an experimental basis to produce larger pellets. The experiment was unsuccessful and I should have decommissioned the machine when we decided to give up pelletising the manure. 40 Considering all of the above matters, I assess the offences objectively as being in the upper range of seriousness. I propose to address penalty on that basis. 41 The decision of the Full Bench in Capral clearly indicates that general and specific deterrence are factors that should be given weight in all but exceptional circumstances. The Full Bench said at 643-644 that: We consider that the extract from the judgment of Hungerford J in Fisher v Samaras Industries Pty Limited accurately states the approach that members of this Court should take in relation to the question of deterrence, both general and personal or specific, when sentencing an offender in relation to a serious breach of the legislation. It follows that those aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process. 42 In respect of specific deterrence, the Full Bench held in Capral at 644-645: In sentencing, a court may disregard the element of specific deterrence if satisfied that the risk of re-offending is low or non-existent. The court may form such a view as a result of the rehabilitation of the offender: R v Corner (unreported, Court of Criminal Appeal, 19 December 1997) or because the offender will not have the opportunity to commit a similar offence in the future: R v Macdonell (unreported, Court of Criminal Appeal, 8 December 1995). However, we think it unlikely that the weight to be attached to specific deterrence could be reduced to zero in cases of offences under the Act. 43 Considerations of general deterrence are relevant in this context as agricultural and farming work involves real and ongoing risks to safety. In relation to specific deterrence, the corporate defendant has abandoned its pelletising business and it's primary commercial focus now is raising cattle by way of agistment. Mr Holmes is currently employed by Pace Farms as a feed manager using the corporate defendant's premises. In those circumstances, I consider specific deterrence to be of limited weight in relation to both defendants. 44 The defendants have produced material and made submissions as to their respective financial circumstances. In doing so, neither defendant is raising incapacity to pay but rather to put their respective financial positions into context. 45 In assessing a defendant's position to pay a fine, the court is guided by s 6 of the Fines Act (1996) which states as follows: In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider: (a) such information regarding the means of the accused as is reasonably and practicably available to the Court for consideration, and (b) such other matters as, in the opinion of the Court, are relevant to the fixing of that amount. 46 The affidavit of Mr Robert Warren, accountant and tax agent for the corporate defendant, sets out the company's financial position by reference to it's profit and loss statements over successive years. Those statements revealed company profits for the 2003, 2004 and 2005 financial years in the amounts of $29,586, $250,434 and $260,138 respectively. The years prior to 2003 revealed that the corporate defendant had been making consistent losses. 47 The reason why the company was able to salvage it's earlier losses was explained by Mr Warren as follows: The company was saved from complete financial ruin on the signing of a lease with Pace Farms injecting $625,000 per annum from March 2001 into the company… the last 3 years' profits were derived solely from the rent received from Pace Farms. 48 The lease with Pace Farms was for a five year period from March 2001 until March 2006. Pace Farms has not renewed its option to extend the lease and the amount of rent currently paid by Pace Farms to the corporate defendant represents a loss of $13,000 a month when compared with the rental income earlier received during the five year lease period. 49 Further, the company has a loan owing of approximately $300,000 and the only significant asset owned by the company is a parcel of land of some 400 acres valued at approximately $900,000. 50 Mr Warren annexed a letter from the National Australia Bank to his affidavit indicating a redraw facility available to the corporate defendant of $309,733.20. Mr Warren expressed concern in his affidavit of the company's ability to make repayments on the outstanding and remaining amount of the debt in addition to meeting a substantial penalty. He said: I am aware that the Court has power to order very significant fines. While on the surface it appears that the Company can redraw $300,000 on the Commercial Mortgage Instalment Loan I would point out that this would place the company in a financial crisis because that loan facility was serviced by the rent received from Pace Farms as originally agreed in the lease. The reduction in rent and the possibility that Pace Farms may not continue to rent the property would mean that the company would default on the loan and therefore allow the National Australia Bank to call up its security. … In reality that would mean the sale of the entire property upon which the Company now operates. I have no reason to question the truth of Mr Warren's affidavit evidence. 51 Mr Holmes' personal financial circumstances were set out in his affidavit. He has $14,600 in savings and $143,500 in assets, comprising half shares in a 1992 Ford Fairmont sedan and a 1988 Mariner boat. Mr Holmes also owns a one-quarter share in a 40 acre block of land and the remainder of the land is owned by his three siblings as tenants-in-common. Mr Holmes earns a gross salary of $50,000 from Pace Farms in his role as feed manager. He has not earned income from the corporate defendant for about five years. No evidence was given in Mr Holmes' affidavit as to the existence of any personal liabilities. 52 Having regard to the factors detailed above, I would assess the financial circumstances of the corporate defendant as finely balanced, particularly given the ongoing uncertainty of the leasing arrangements with Pace Farms. It is a small family company, incorporated by Mr Holmes' father in 1968. Mr Holmes and his mother are directors of the company. However, Mr Holmes has day-to-day management of, and essentially controls, the company. 53 It is a company that has long been engaged in the egg industry, initially on a direct basis by Mr Holmes' father. Losses were incurred by the company as a result of deregulation of the industry during the 1990s. As explained above by Mr Warren, it was not until the lease agreement was entered with Pace Farms that the company was able to reverse it's losses. The decrease in rent and uncertainty as to whether the lease will be continued by Pace Farms for any fixed period are factors that may impact on the defendant's ability to pay a substantial fine. 54 All of the above matters will be accorded appropriate weight on the question of penalty. However, penalty should properly reflect the objective seriousness of the offence. As was stated in WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Limited trading as Old But New [2004] NSWIRComm 247 where the Full Bench cited, with approval, the decision of Wright J, President in Ferguson v Nelmac Pty Limited (1999) 92 IR 188 at 210 where his Honour 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 ... the penalty should reflect the objective seriousness of the offence. 55 I accept the submission on behalf of the prosecutor that the relative culpability of each defendant is equal. Clearly, Mr Holmes is the controlling mind of the corporate defendant on a day to day basis. 56 Both defendants are entitled to have their plea of guilty taken into account in determination of penalty. In doing so, the court is guided by the decision of R v Thomspon; R v Houlton (2000) 49 NSWLR 383, the principles of which are well settled and need no elaboration. I assess that discount at twenty five percent. 57 There are additional mitigating factors in the defendants' favour which should be taken into account in the determination of penalty. 58 Mr Holmes has expressed contrition for the accident involving Mr Hall. He has stated: [24] I regret that injury to Mr Hall and the difficulties it has and will cause him. I have known him since we were boys and that makes it even harder for me to accept that he was injured while working for the company that I managed. I am grateful that he has been kind enough to visit me after the accident, that he does not bear a personal grudge against me. I am aware that the company's workers compensation insurer had paid compensation to Mr Hall. ... [26] Although I have been aware of the dangers associated with farm work for many years, this incident makes me even more aware of the risk to workers and the need to take every possible step to prevent work injuries. 59 Mr Holmes' contrition regarding the accident was also attested to by Mr Greg Standing, President of the Rotary Club of East Maitland. The testimonial material tendered on his behalf without objection said: I am aware that Steven has been charged with the serious offence of not supplying a safe working environment for his employees. After talking with Steven I am aware of how seriously he is taking this offence and the repercussions of it. He is very concerned and deeply sorry for what has occurred. 60 Ms Penny Wolters also attested to Mr Holmes' regret over the incident involving Mr Hall, stating, 'Steven was distraught by the accident which injured their employee and has been most concerned for the welfare of him and his family'. 61 Mr Holmes has visited Mr Hall following the accident. The company's workers compensation scheme has made the appropriate payments to Mr Hall. The prosecutor also concedes that both defendants cooperated with WorkCover in undertaking its investigations. 62 Considering all of the subjective elements I have identified, a further discount as to penalty in favour of both defendants is warranted. 63 Taking into account all the matters that I have referred to, I determine penalty as follows: (1) Matter No IRC 467 of 2006: WorkCover Authority of New South Wales (Inspector Christensen) v TP & MJ Holmes Pty Limited : Prosecution arising under s 8(1) of the Occupational Health and Safety Act 2000: (i) The defendant is guilty of the offence charged. (ii) I impose a penalty of $100,000. (iii) I allocate a moiety to the prosecutor on the usual terms. (2) Matter No IRC 468 of 2006: WorkCover Authority of New South Wales: (Inspector Christensen) v Steven Holmes : Prosecution arising under s 8(1) of the Occupational Health and Safety Act 2000: (i) The defendant is guilty of the offence charged. (ii) I impose a penalty of $10,000. (iii) I allocate a moiety to the prosecutor on the usual terms. (3) Between them, I order the defendants to pay the costs of the prosecutor as agreed or assessed. Failing agreement, the matter may be referred to the Registrar for assessment. 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.