Industrial Court of New South Wales CITATION: Inspector James v Umeda [2009] NSWIRComm 193 Inspector Amanda James of WorkCover Authority of New South Wales (Prosecutor) PARTIES: Hiroshi Umeda (First defendant) Jun Pacific Corporation Pty Ltd (Second defendant) FILE NUMBER(S): IRC 480; IRC 481 of 2009 CORAM: Marks J CATCHWORDS: OCCUPATIONAL HEALTH AND SAFETY - breach of s 8(1) of the Occupational Health and Safety Act 2000 by the corporate defendant - personal defendant deemed guilty by s 26(1) - early guilty pleas - appropriate penalty - objective seriousness - inadequate safety procedures - serious breach - injured worker - general and specific deterrence - remorse and contrition - no prior convictions - penalties imposed LEGISLATION CITED: Occupational Health and Safety Act 2000 - s 8(1), s 26(1) HEARING DATES: 11 November 2009 DATE OF JUDGMENT: 19 November 2009 Mr I Taylor of counsel (Prosecutor) Solicitor: Legal Group LEGAL REPRESENTATIVES: WorkCover Authority of New South Wales Mr M Cahill of counsel (First and second defendants) Solicitor: Bartier Perry JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Marks J Thursday 19 November 2009 Matter No IRC 480 of 2009 Inspector Amanda James v Hiroshi Umeda Prosecution under s 26(1) and s 8(1) of the Occupational Health and Safety Act 2000 Matter No IRC 481 of 2009 Inspector Amanda James v Jun Pacific Corporation Pty Ltd Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 JUDGMENT [2009] NSWIRComm 193 1 The prosecutor, Inspector Amanda James of the WorkCover Authority of New South Wales, has charged the defendants, Hiroshi Umeda ("Mr Umeda") and Jun Pacific Corporation Pty Ltd ("Jun") with breaches of s 8(1) of the Occupational Health and Safety Act 2000 ("the Act"). Mr Umeda is deemed to have contravened that section by virtue of s 26(1) of the Act, because he was at all relevant times a director of Jun. 2 I set out hereunder the charge and particulars brought against Mr Umeda because they recite in identical terms the charge and particulars brought against Jun. Mr Umeda was charged that being a director of (Jun): by virtue of s 26(1) of the Act, is taken to have contravened s 8(1) of the Act in that the corporation, being an employer, on 11 April 2007, at Unit 3, 380 Eastern Valley Way, Chatswood (also known as 3/171 Gibbes Street, Chatswood) in the State of New South Wales ("the premises") FAILED TO Ensure the health, safety and welfare at work of all its employees, and in particular, Edward Er-Er contrary to section 8(1) of the Occupational Health and Safety Act 2000. The particulars of the charge are that: a. At all material times the defendant was a director of the corporation. b. The corporation failed to provide and maintain a safe system of work for : i) accessing stock; ii) cleaning pallets; located at heights in steel storage racking at the premises. c. The corporation failed to ensure that employees were provided with and/or were using an adequate fall prevention system whilst working at heights at the premises whilst undertaking the task of accessing stock or cleaning pallets located at heights in steel racking at the premises. d. The corporation failed to ensure that employees were not raised on a pallet attached to the tines of a pallet jack (also known as a forklift) to access stock or cleaning pallets located at heights in steel storage racking at the premises. e. The corporation failed to ensure that employees did not stand on a pallet attached to the tines of a pallet jack (also known as a forklift) to access stock or clean pallets located at heights in steel storage racking at the premises. f. The corporation failed to ensure that employees did not climb on the steel storage racking in order to access stock or clean pallets located at heights in the steel storage racking at the premises. g. The corporation failed to provide ladders of more than 2.5 metres in height so that employees could safely access stock or clean pallets located at heights in steel storage racking at the premises. h. The corporation failed to provide adequate information, instruction, training and supervision to its employees in relation t the process of accessing stock or cleaning pallets located at heights in steel storage racking at the premises. j. The corporation failed to adequately assess the risks to employees from falls from heights associated with the tasks undertaken at the premises. As a result of the corporation's failures its employees, in particular Edward Er-Er, were placed at risk of serious injury. 3 The defendants pleaded guilty to the charges brought against them and this judgment is concerned only with the question of penalty. 4 An agreed statement of facts was tendered in evidence and was in the following form: 1. At all material times, INSPECTOR AMANDA JAMES of the WorkCover Authority of New South Wales, Level 3, 92 – 100 Donnison Street, Gosford in the State of New South Wales was an Inspector duly appointed under Division 1 of Part 5 of the Occupational Health and Safety Act 2000 and empowered under Section 106 of the said Act to institute proceedings in the within matter. 2. At all material times, JUN PACIFIC CORPORATION PTY LTD [ACN 054 434 061] ("the corporation") had its registered office situated at Unit 2, 380 Eastern Valley Way, Chatswood, in the State of New South Wales. 3. At all material times HIROSHI UMEDA of 108 Melwood Avenue, Killarney Heights, in the State of New South Wales was a director of the corporation. 4. At all material times the corporation operated a business at the site involving food storage and distribution. 5. At all material times the corporation was an employer. As at April 2007, the corporation employed approximately 37 employees at the said premises. 6. Mr Hiroshi Umeda was appointed as the managing director of the corporation on 6 April 2006. As managing director Mr Umeda had control over the day-to-day operations of the corporation. Mr Umeda's responsibilities as managing director included responsibility for occupational health and safety of employees, contractors and visitors at the premises as at the date of the subject incident and in his capacity as managing director, Mr Umeda authorised all expenditure on occupational health and safety. 7. On the day of the incident Mr Umeda was working in the offices located alongside the warehouse at the premises. While the general office area had a view of the warehouse area, Mr Umeda's office did not have a view of the warehouse and Mr Umeda did not observe the incident. 8. Prior to the incident Mr Umeda was aware of the stock accessing and cleaning systems of work carried out in the steel storage racking in the warehouse at the premises on a day-to-day basis as he had observed the systems being employed. He was aware prior to the incident that workers from time to time adopted a technique to access stock stored at heights of standing on a pallet and being raised by a pallet jack (forklift) to the relevant shelf. He told the inspectors that he did not approve that method of work and that he had warned staff not to do that. There were no written documents recording such warnings. 9. Prior to the incident the warehouse supervisor, Mr Tse, had observed staff being raised by a pallet jack to access stock and had himself been raised up in that manner for that purpose. Prior to the incident Mr Umeda had told Mr Tse, the warehouse manager, that stock picked above the first level should be accessed by a pallet jack (walking forklift) bringing the pallets to ground level so the stock could be picked from there. However prior to the incident Mr Tse had not been specifically instructed to stop workers adopting an alternative method that Mr Umeda had observed, namely accessing those higher levels by standing on a pallet lifted up by a pallet jack. 10. Edward Er-Er had been employed by the corporation as a warehouse assistant at the premises since 2 November 2006. His duties at the premises included unloading containers and goods for delivery, storage and retrieval of items on steel storage racking within the warehouse at the premises, care of warehouse equipment and ensuring the cleanliness and tidiness of the warehouse. As at the date of the incident Mr Er-Er was 27 years of age. 11. Tony Zheng also worked for the corporation at the premises as a warehouse assistant and had done so since approximately October 2005. His duties were essentially the same as those of Mr Er-Er. 12. An internal report on OHS issues written in 2004 and provided to the then directors included, under the heading "Warehouse Safety" the following: "Employees are not trained on the use of forklift use and safety" and "Forklifts and trolleys are used as skateboards and ride on toys at times." DETAILS OF THE INCIDENT 13. At about 4:50pm on 11 April 2007 both Mr Zheng and Mr Er-Er were working inside the warehouse at the premises in different marked lanes. Mr Zheng was working in lane G and Mr Er-Er was working in lane F. Various sections within each lane of the warehouse were marked with different numbers to identify each of those sections. Mr Er-Er was in the process of cleaning a pallet and making room for new stock. Mr Er-Er was standing upon a pallet that had been raised and was being supported by a Crown brand pallet jack serial no. 2A111403 (also known as a forklift). Whilst standing on the pallet Mr Er-Er called upon Mr Zheng to reverse the pallet jack to bay 301 of level 3 in lane F within the warehouse. 14. Mr Zheng moved the Crown pallet jack to shelf F301 whilst Mr Er-Er stood on the pallet being supported by the pallet jack. It is believed that Mr Er-Er continued making space for new stock upon the steel storage racking at F301. It would appear he stood on the steel storage racking to do this. 15. At one point Mr Zheng observed Mr Er-Er step back from the steel storage racking to the pallet on the pallet jack. As he did so Mr Er-Er lost his balance and fell through a gap between the shelving on level 3 and the raised pallet on the pallet jack. He landed heavily between the racking and the pallet jack. 16. An ambulance was called and Mr Er-Er was taken to the Royal North Shore Hospital having suffered life threatening brain injuries. He was placed into a medically induced coma for approximately two weeks in order to aid his recovery. After being in hospital for approximately two months, Mr Er-Er was transferred to the Royal Rehabilitation Centre in Sydney, where he underwent rehabilitation and was provided with treatment from personnel of the Brain Injury Community Rehabilitation Team. Mr Er-Er was unfit to carry out his pre-injury duties for approximately seven months, and returned to work on suitable duties in approximately October 2007. SYSTEMS OF WORK BEFORE THE INCIDENT 17. Prior to 11 April 2007 the system of work at the premises failed to ensure that employees did not access the higher levels (particularly levels 3 and 4) of steel storage racking within the warehouse at the premises by climbing the steel storage racking itself or being raised by a pallet jack/forklift which had attached to its tines a pallet. Although a number of A-frame ladders were available to access stock, these only had a maximum reach of 2.5 metres. RISK ASSESSMENT 18. The corporation failed to conduct any or any adequate risk assessment with respect to working at heights upon the premises. No fall prevention system was provided. TRAINING INFORMATION AND INSTRUCTION 19. Prior to the incident the corporation did not provide its employees with a formal orientation tour of the warehouse on commencement of their employment. Prior to the incident, the corporation provided new employees with an undocumented, informal orientation tour at the commencement of their employment. 20. Prior to the incident the corporation did not provide its employees with documented, formal training as to the use of the pallet jacks (also referred to as 'walking forklifts') to access and move pallets of stock within the warehouse. Prior to the incident, the corporation's employees were provided with informal on the job training. SUPERVISION 21. The corporation failed to ensure that employees complied with safe methods of accessing stock, including a failure to ensure that employees did not climb the racks and/or stand on pallets attached to the tines of pallet jacks which were to be raised at heights. 22. Mr Er-Er's immediate supervisor, the warehouse manager Paul Tin Shing Tse, was not present at the warehouse when the incident occurred. SYSTEMS OF WORK AFTER THE INCIDENT 23. Following the incident the corporation developed and implemented a safe operating procedure ("SOP") to safely access stock within the steel storage racking in the warehouse at the premises. Employees were trained in this SOP. 24. Additionally, the corporation purchased a number of stock picking ladders that complied with the Australian Standards to safely facilitate future stock picking and cleaning activity at heights. 25. Employees were not adequately trained in how to use the stock picking ladders before 28 June 2007. On 28 June 2007 the investigating inspector observed an employee who stepped from a stock-picking ladder onto the storage shelving. 26. After the subject incident, the defendant corporation provided its employees with formal, documented training in the use of its 'walkie' forklifts. 27. Jun Pacific Corporation Pty Limited engaged an occupational health and safety consultant to develop effective consultation mechanisms within the workplace. All employees received basic training in the consultation mechanism. 28. Specific job descriptions and a Safety Equipment Agreement were also developed and implemented. GUILTY PLEA 29. The defendants pleaded guilty on 29 July 2009. CO-OPERATION WITH WORKCOVER 30. The prosecutor acknowledges the co-operation of the defendants at all stages of the matter. PRIOR CONVICTIONS 31. The defendants have no prior convictions. 5 In addition to the documentation, which is referred to in the agreed statement of facts, there was tendered into evidence on behalf of the defendants an affidavit sworn by Mr Umeda with multiple annexures and an ASIC historical company extract pertaining to Jun, and, on behalf of Mr Umeda, three character references. 6 One of the photographs tendered into evidence indicates that at the time that he fell Mr Er-Er was standing about 3.3 metres above ground level. 7 Mr Umeda said in his affidavit that he commenced employment at the Sydney warehouse of the defendant in early 2006 and was appointed a director on 6 April 2006. At that time, the management of the warehouse was undertaken by a warehouse manager. Mr Umeda was not directly involved in the supervision of warehouse employees, but he did notice that warehouse staff were using forklifts to ascend to the higher shelving areas for the purpose of picking goods from pallets at those levels. He told the employees concerned to use the forklifts to bring the pallets from the upper levels onto the ground where items could be taken from them. These instructions were given verbally and were also communicated to the warehouse manager. 8 At the time of the accident, it was Mr Umeda's evidence that Jun "did not have in place a detailed written safety system addressing work of the kind Mr Er-Er was doing at the time he was injured." There were, however, a number of safety processes that were utilised by Jun including "employment regulations" which contain material relating to safe work practices, a requirement for the wearing of personal protective equipment in the warehouse, signage relating to various safety practices and signs affixed to forklifts warning persons against standing on forklift tines. At the time of the accident, Mr Umeda had made enquiries about the provision of a forklift training course for employees but, unfortunately, no training course had been introduced. 9 Mr Umeda gave evidence about significant and comprehensive steps taken by Jun after the accident to ensure compliance with its obligations under the Act. These are referred to in summary form in [23] to [28] of the agreed statement of facts. 10 Mr Umeda also gave evidence that the board of directors of Jun acknowledged the breach of the Act and accepted responsibility for the incident. Furthermore, Mr Umeda accepted personal responsibility as managing director to ensure that the company comply with its obligations under the Act. 11 I note the evidence of Mr Umeda that the company provided tangible support to Mr Er-Er and his family following the accident and the Court accepts, as did the prosecution, that the defendants have expressed genuine contrition and remorse for what had occurred. 12 Mr Umeda also set out in his affidavit some evidence concerning his personal circumstances. He was born in 1970 in Japan. He undertook some general labouring work for a company in Australia within the Jun group after finishing high school and then undertook general labouring and manual work in Japan. He returned to Australia in January 1994 where he worked in Queensland and Western Australia undertaking general "delivery, sales and purchasing work." 13 Jun is, in effect, owned and controlled by Seijiro Funayama and Taeko Funayama who are also directors. It may be inferred from the factual material put before the Court that Mr Umeda has a limited experience and background as a managing director, and when he was appointed as a director of Jun he was exposed to a situation where there had been little close attention paid to the discharge of the company's obligations under the Act. I shall refer to these and other matters later in these reasons for judgment when considering the appropriate penalty to be imposed upon Mr Umeda. 14 The commencement point for the consideration of an appropriate penalty is the objective seriousness of the offence with which each of the defendants is charged. As is obvious from the agreed statement of facts, Mr Er-Er was required to perform work at a significant height above a concrete floor in circumstances that were inherently dangerous. There were no protocols or procedures in place to regulate the performance of that work and to ensure that it was conducted safely. There was no or little instruction, training and supervision of the work that he was performing. Indeed, the evidence is that the direct supervisor of Mr Er-Er knew that a pallet being attached to the tines of a forklift was being used for the purpose of accessing the higher level of the shelving. In all the circumstances, the breach, judged objectively, must be seen as very serious. 15 Furthermore, in determining the appropriate penalty I will take into account the general deterrent effect that the imposition of a penalty will impose within that sector of that industrial community which operates warehousing and associated facilities, as well as the wider community. I shall also take into account the specific deterrent effect that a penalty will have on these defendants, albeit tempered by the demonstrated commitment to occupational health and safety obligations which occurred after the accident. 16 There are a number of subjective features to which the Court is entitled to have regard in lessening the quantum of any penalty imposed. The defendants pleaded guilty at the first available opportunity, they co-operated fully with the WorkCover Authority of New South Wales in connection with its investigations of the accident, they have expressed genuine contrition and remorse for what has occurred and they have demonstrated a commitment to the discharge of the occupational health and safety obligations of Jun under the Act. 17 In the case of Mr Umeda, there are some additional matters that I was invited by the parties to take into account in his favour in assessing the penalty payable by him. These include his limited experience as a managing director, the fact that when appointed he inherited a system which was inadequate, that even though he was appointed managing director, the owners of Jun exercised significant control, that Jun was aware in 2004, before Mr Umeda became managing director, that there was inadequate training of employees in the use of forklifts, that Mr Umeda had warned employees about the unsafe system of work being used by them (although these warnings were verbal and not followed up), and that Mr Umeda had endeavoured to arrange forklift training for employees a month prior to the accident occurring. 18 Neither defendant has any prior convictions under the Act. The maximum penalty that may be imposed upon Jun is $550,000 and on Mr Umeda, $55,000. 19 The prosecutor sought a moiety of the penalty and an order for costs, neither of which was opposed by the defendants. 20 Having regard to all of the matters to which I have referred, I have determined that an appropriate penalty in all the circumstances to be imposed on Jun is the sum of $115,000 and upon Mr Umeda the sum of $5,000. Orders 21 I make the following orders: 1. Each of the defendants is found guilty of the offence charged and is convicted accordingly. 2. I impose a penalty of $115,000 on Jun Pacific Corporation Pty Ltd and $5,000 on Hiroshi Umeda with a moiety to the prosecutor. 3. The defendants are to pay the costs of the prosecutor, assessed by the Court in default of agreement, in proportion that the penalties imposed bears to the overall costs assessed. 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