Industrial Court of New South Wales CITATION: Simpson Design Associates Pty Ltd v Inspector Ching [2010] NSWIRComm 98 PARTIES: Simpson Design Associates Pty Ltd (Appellant) Inspector Barnabas Ching (Respondent) FILE NUMBER(S): IRC 503 of 2010 CORAM: Boland J President CATCHWORDS: APPEAL - OCCUPATIONAL HEALTH AND SAFETY - Interlocutory proceedings - Application to stay costs order and order imposing fine on the appellant - Whether serious question to be tried - Whether risk of prejudice or damage - Balance of convenience - Stay ordered on terms Fines Act 1996 LEGISLATION CITED: Industrial Relations Commission Rules 2009 Occupational Health and Safety Act 2000 Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 Burgess v Mount Thorley Operations Pty Ltd [2002] NSWIRComm 290; (2002) 119 IR 52 Campbells Cash & Carry Pty Ltd v National Union of Workers, New South Wales Branch [2001] NSWIRComm 79; (2001) 104 IR 400 Inspector Ching v Hy-Tec Industries Pty Ltd [2010] NSWIRComm 73 Inspector Ching v Simpson Design Associates Pty Ltd [2009] NSWIRComm 213 Kalifair Pty Ltd v Digi-Tech (Australia) Ltd; McLean Tecnic v Digi-Tech (Aust) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 CASES CITED: Lyco Industries Pty Ltd v Inspector Buggy [2006] NSWIRComm 19 New South Wales Bar Association v Stevens [2003] NSWCA 95; (2003) 52 ATR 602 State of New South Wales (Department of Education and Training and Department of Juvenile Justice) v Cahill [2009] NSWIRComm 122 Transport Industry - Waste Collection and Recycling (State) Award, Re [2000] NSWIRComm 236; (2000) 102 IR 192 United Mexican States v Cabal [2001] HCA 60; (2001) 209 CLR 165 Wallaby Grip Ltd v QBE Insurance (Australia) Ltd; Stewart v QBE Insurance (Australia) Ltd [2010] HCA 9; (2010) 264 ALR 425 Zelbarry International Pty Ltd v Inspector Christensen [2004] NSWIRComm 183 HEARING DATES: 9 July 2010 DATE OF JUDGMENT: 19 July 2010 Mr I M Neil SC with Mr P C Moorhouse of counsel (Appellant) Kennedys LEGAL REPRESENTATIVES: Mr S Crawshaw SC WorkCover Authority of New South Wales JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: BOLAND J, President Monday 19 July 2010 Matter No IRC 503 of 2010 SIMPSON DESIGN ASSOCIATES PTY LTD v INSPECTOR BARNABAS CHING Application by Simpson Design Associates Pty Ltd for an appeal against a judgment and orders of Justice Haylen given on 15 September 2009 and 9 June 2010 in Matter No IRC 404 of 2008 INTERLOCUTORY JUDGMENT [2010] NSWIRComm 98 1 Simpson Design Associates Pty Ltd has appealed two decisions of Haylen J and the orders made following those decisions. In Inspector Ching v Simpson Design Associates Pty Ltd [2009] NSWIRComm 213, his Honour found the appellant guilty of contravening s 11(1)(a) of the Occupational Health and Safety Act 2000 ('the Act'). The incident giving rise to the prosecution occurred on 14 October 2003 at the premises of Hy-Tec Industries Pty Ltd at Coward Street, Mascot when a large and heavy gate fell during the course of it being manually operated resulting in the death of a non-employee, Ms Melissa Maybury. 2 In Inspector Ching v Hy-Tec Industries Pty Ltd [2010] NSWIRComm 73, Haylen J dealt with the sentencing of the appellant and two other defendants. In respect of the appellant, his Honour ordered: (i) Simpson Design Associates Pty Ltd is found guilty of a breach under of (sic) s 11(1)(a) of the Occupational Health and Safety Act 2000 as particularised in Matter No IRC 404 of 2008; (ii) the defendant is fined the sum of $185,000 with half that sum to be paid to the prosecutor by way of moiety; (iii) the defendant is to pay the costs of the prosecutor in a sum agreed or, in the absence of agreement, as assessed and ultimately ordered by the Court. 3 The appeal has been scheduled for hearing in November 2010. However, in the meantime, the appellant seeks a stay of the order made imposing the fine and the order of costs. This decision deals with the stay application, an application opposed by the respondent. 4 The appellant was a structural engineering firm that provided the structural steel design for the framework of the gate to be operated at Hy-Tec's concrete batching plant. It was alleged in the charge against the appellant that, 'between 3 September 2001 and 24 June 2002, the company designed plant in the course of a trade, business or other undertaking, namely plant related to gates … for use by persons at work which it failed to ensure was safe and without risk to health when properly used.' Haylen J found that the appellant's relevant failure was that it had failed to include in the design of the gate any or any adequate devices to prevent the western leaf of the western gate falling during manual operation. 5 In the sentencing judgment, Haylen J summarised (at [1]) what occurred on 14 October 2003: [1] ... On that day Ms Maybury attended a concrete batching plant operated by Hy-Tec Industries Pty Ltd ("Hy-Tec") at Mascot. Ms Maybury had arranged to drive home Mr Jason Sheath, an employee of Hy-Tec, who was, amongst other things, responsible for closing the gates to the site. Mr Sheath experienced difficulties closing the bi-sliding metal gates on the western side of the premises. The electronic system used to close the gates had failed and so Mr Sheath disengaged the motor and commenced to manually close the gates. In trying to move the western leaf of the western gate, Mr Sheath experienced difficulties in moving that gate by himself. This difficulty had occurred previously and Mr Sheath had been given the benefit of assistance in order to manually close the gates. On this occasion, Ms Maybury came to the assistance of Mr Sheath in manually closing the gate. At the time that Mr Sheath was attempting to close the western leaf of the western gate, the eastern leaf of that gate was still in the open position. In the course of Mr Sheath and Ms Maybury attempting to manually close the western leaf, they pulled the western leaf, the front edge of the gate leaf, past the mid-point of the driveway and the gate moved out of its supporting portal and fell on Ms Maybury causing her fatal injuries. The metal gate was nearly 11m long and over 2½ metres wide. The weight of the western leaf of the western gate was approximately 1340 kgs. 6 At [14] of his primary judgment Haylen J stated: [14] ... Under s 11 it would be within the power (rather than outside the power of the designer) to make enquiries as to the type of motor to be used to operate the gates after being informed that they are to be motorised and whether there is a manual override function in relation to the motorised mechanism. It is not to be assumed, for example, that merely because a gate is intended to be motorised in its operation rather than being manually operated that the (sic) a motorised gate will never have to be manually operated. A motor without a manual override might satisfy the designer that the use of the gate is such that, if for some reason the motor failed, manual operation would not be possible. Proper enquires (sic) would need to be made regarding the operation of such a motor. After making the simple enquiry about how the gates were to be moved and finding that a manual override motor would or could be used, the designer, to comply with s 11(1), would either need to advise the client that a stop would be required to prevent the gate from drawing beyond the portal and falling with risk to safety, or, alternatively, specify a stop in the design either as part of the design or to be supplied as a proprietary line. 7 There were some 12 grounds of appeal. The main grounds may be summarised as follows: (1) opinion evidence . The primary judge erroneously admitted opinion evidence of Mr Colin Simpson and Mr Raj Garg. Mr Simpson's opinion evidence related to professional engineering and was irrelevant and insofar as it related to structural engineering, Mr Simpson was not qualified to give it. The primary judge erred in giving any significant weight to Mr Raj Garg's opinion evidence in determining what the appellant, as a professional engineer and/or a structural engineer, could and should have done to comply with the duty imposed by s 11(1)(a) of the Act; (2) reliance on regulations . The primary judge erroneously used obligations imposed by the Regulations to ascertain and determine the nature and content of the duty imposed on the appellant by s 11(1)(a) of the Act, and whether the appellant had failed to comply with that duty, particularly when the appellant had not been charged with having failed to comply with the Regulations; (3) designer of plant . The primary judge erroneously treated the appellant as though it was a designer of plant for the purposes of s 11(1)(a) of the Act, when it (a) was charged as, and (b) on the evidence was in fact, only a designer of particular components for plant for a particular, and limited, purpose; (4) charge period . The primary judge erroneously found that the appellant had failed to ensure that the so-called 'gate plant' that it designed during the period to which the charge related ('the charge period') was safe for use when, as the evidence showed, as at the end of the charge period the appellant contemplated that it would have the opportunity to make further contributions to the design of the 'gate plant', but was denied the opportunity to do so by no fault of its own. 8 In relation to sentence, it was asserted: 11. The primary judge erroneously failed to have any or sufficient regard in determining the appropriate penalty to the justifiable sense of grievance that the appellant was entitled to feel in circumstances where other entities which were found to bear significant culpability for the risk to which its charge related were not prosecuted. 12. The primary judge erroneously failed to have any or sufficient regard in determining the appropriate penalty to the evidence which demonstrated that, in acting in the manner found in the liability judgment as giving rise to an offence, the appellant was acting in a manner consistent with the usual practice of structural engineers operating as part of a multi-disciplinary design team. Evidence 9 The Court heard evidence from Andrew John Simpson, the sole director and secretary of the appellant ('SDA'). Mr Simpson, who was required for cross-examination, described the appellant as a specialist structural engineering practice. Its clients included architects, builders, developers, project managers, government and owners. The appellant employed 19 staff. 10 In relation to the appellant's financial position Mr Simpson stated: (a) SDA has available cash on hand in the amount of approximately $162,000. (b) SDA has a tax liability to the Australian Taxation Office in the amount of approximately $120,549 due to be paid on 28 July 2010 (July BAS and Payroll tax liability). (c) SDA is required to pay its professional indemnity, workers compensation, public liability and officer's insurance premiums in the amount of approximately $60,000 before 29th August 2010. (d) SDA's average monthly expenses are approximately $162,500 which includes the payment of salaries, rent, office expenses and other incidentals necessary for the running of its business. (e) The majority of SDA's assets within the SDA Company are in the form of trading debts. The amount due from trade debtors is approximately $280,000. The moneys associated with this asset will only be available once the money has been paid to SDA. (f) SDA expects that it will receive approximately $100,000 from trade debtors in the next month. (g) SDA's average monthly turnover is approximately $ 175,000. 11 Mr Simpson also deposed that the appellant could make monthly payments around $10,000, commencing in August 2010, without causing significant adverse and detrimental effect on its capacity to continue to operate its business, meet its contractual obligations to its clients, employ its existing staff, and otherwise meet its liabilities as they fall due. Appellant's submission 12 In support of a stay pending the appeal the appellant, in summary, submitted: a. the grounds of appeal were at least 'plausibly arguable': Zelbarry International Pty Ltd v Inspector Christensen [2004] NSWIRComm 183; State of New South Wales (Department of Education and Training and Department of Juvenile Justice) v Cahill [2009] NSWIRComm 122; b. the respondent would suffer no inconvenience if the stay were granted; c. on the other hand if a stay in the terms sought was not granted compliance with the orders as they now stand would expose the appellant to significant financial hardship; the appellant does not have assets sufficient to meet the amount that it is presently obliged to pay; d. the balance of convenience overwhelmingly favours a stay. Respondent's submission 13 In opposing the stay the respondent, in summary, submitted: a. the Court has the power to grant a stay on terms and conditions the Court may direct: r 8.3 of the Industrial Relations Commission Rules 2009; b. there is no general principle in criminal law that a conviction or penalty will as a matter of course be stayed when there is an appeal: see United Mexican States v Cabal [2001] HCA 60; (2001) 209 CLR 165 at [39]; c. that the appeal has reasonable prospects of success is disputed; d. as to the balance of convenience, the appellant has not led cogent evidence that its financial position is such that it cannot comply with the order as to penalty. Nor did the appellant raise its financial position for consideration in the sentencing proceedings other than to lead evidence of an annual turnover of $1.9 million; e. the appropriate way to deal with any financial difficulty in paying the penalty is the normal course available under s 10 of the Fines Act 1996; f. the respondent agrees to the order as to costs being stayed subject to the appellant giving an undertaking to the Court to prosecute the appeal and provide security to the Registrar for the payment of any amount of the penalty stayed and the estimated costs figure of $180,000; g. in relation to the order for the payment of the penalty, the appellant has been unable to satisfy the onus referred to in Re Transport Industry - Waste Collection and Recycling (State) Award [2000] NSWIRComm 236; (2000) 102 IR 192. In these circumstances, the order of the trial judge as to the penalty should not be stayed. Alternatively, there should only be a partial stay of the penalty; g. the appellant's arguments about its financial position give rise to a reasonable apprehension on the part of the respondent that the expending of further legal costs on this appeal will diminish its capacity to comply with the orders of the trial judge in the event that the appeal is unsuccessful: Kalifair Pty Ltd v Digi-Tech (Australia) Ltd; McLean Tecnic v Digi-Tech ( Aust) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 at [28]; Lyco Industries Pty Ltd v Inspector Buggy [2006] NSWIRComm 19 at [44]. Consideration 14 The principles relating to a stay pending the hearing and determination of an appeal are well known: see New South Wales Bar Association v Stevens [2003] NSWCA 95; (2003) 52 ATR 602 at [83] per Spigelman CJ (Meagher JA and Sheller JA agreeing); Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685; Re Transport Industry - Waste Collection and Recycling (State) Award; Campbells Cash & Carry Pty Ltd v National Union of Workers, New South Wales Branch [2001] NSWIRComm 79; (2001) 104 IR 400; Burgess v Mount Thorley Operations Pty Ltd [2002] NSWIRComm 290; (2002) 119 IR 52 at [19]-[20]. The parties referred to the principles and it is not necessary to repeat them here except to say that I am not dealing here with civil proceedings and the consideration that the respondent is entitled to the fruits of his judgment. 15 In any event, I need to ask whether there is a serious issue for determination: Kalifair at [18]? I think there are at least two such issues: whether Mr Colin Simpson and Mr Garg were qualified to give the opinions they did regarding structural engineering when neither was a structural engineer; and whether Haylen J was entitled to rely on the regulations in the way he did (see Wallaby Grip Ltd v QBE Insurance (Australia) Ltd; Stewart v QBE Insurance (Australia) Ltd [2010] HCA 9; (2010) 264 ALR 425 at [21] where it was held that regulations cannot be used to construe, and thereby to alter, provisions of the Act which created them). 16 Is there a real risk that the appellant will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal: Kalifair at [18]? This is very much a borderline issue. The appellant contended it would suffer significant financial hardship in circumstances where it does not have assets sufficient to meet the amount that it is presently obliged to pay under the orders made by Haylen J, notwithstanding that the respondent is prepared to agree to a stay of the costs order, subject to appropriate security being provided to the Industrial Registrar. The fine is $185,000. However, I note it was not put that the appeal would be rendered nugatory because the appellant could not afford to conduct the appeal. 17 Where does the balance of convenience lie? Although I have reservations, I am satisfied the appellant, a small employer, will be put under significant financial strain in conducting the appeal if it were required to comply with the orders of Haylen J made on 9 June 2010, whereas the respondent is a significant statutory authority (Inspector Ching is an Inspector of the WorkCover Authority of New South Wales) that would suffer little inconvenience if there is a delay in collecting the fine and its costs. 18 I have taken note of the respondent's submissions based on Cabal that the granting of a stay of a fine is a 'serious interference with the administration of justice' and 'makes the conviction appear contingent until confirmed'. However, I think that in the circumstances of this case, those considerations are marginally outweighed by an exercise of discretion that will ensure there is no impediment to the appellant conducting the appeal. 19 What does justice require in this case? I have decided that order (a)(ii) will be stayed pending the determination of the appeal in the matter, provided the appellant shall pay to the Court $25,000 of the amount of the fine at least five weeks prior to the date fixed for hearing the appeal and provided further that the appellant is to provide appropriate security in a form suitable to the Industrial Registrar for the payment of the outstanding balance of the fine of $160,000. 20 I have also decided that order (a)(iii) should be stayed pending the determination of the appeal subject to the appellant providing appropriate security in a form suitable to the Industrial Registrar for an amount of $180,000 estimated for costs and provided further that Mr Andrew Simpson, on behalf of the appellant, is required to provide an undertaking that the appellant will diligently prosecute the appeal. Orders and directions 21 The Court makes the following orders and directions: 1. The appeal is listed for hearing before a Full Bench on 4 and 5 November 2010. 2. By consent, the Court makes the following directions: (a) The appellant shall file 3 copies of, and serve, the appeal book by 13 August 2010. (b) The appellant shall by 4pm on 23 September 2010 file 4 copies of, and serve: (i) a detailed outline of submissions in relation to the appeal; and (ii) a chronology which should usually be in the form of the chronology specified in Practice Note SC CA No 1 issued on 27 March 2009 applicable in the Supreme Court of New South Wales in relation to appeals to the Court of Appeal. (c) The respondent shall by 4pm on 7 October 2010 file 4 copies of, and serve: (i) a detailed outline of submissions in reply as to the appeal; and (ii) if the respondent considers it necessary, a chronology in reply which shall be limited to those areas where the respondent disputes matters set out in the appellant's chronology. (d) The appellant shall by 4pm on 21 October 2010 file 4 copies of, and serve, replies to the documents filed and served by the respondent in accordance with (c) above. (e) Liberty to apply on short notice; such liberty to be exercised by application made to the Associate to the presiding member of the Full Bench and the Full Bench delegates its powers for the purposes of giving directions to the presiding member. 3. Order (a)(ii) of the orders made by Haylen J on 9 June 2010 in Matter No IRC 404 of 2008 is stayed pending the determination of the appeal in the matter provided the appellant shall pay to the Court $25,000 of the amount of the fine at least five weeks prior to the date fixed for hearing the appeal and provided further that the appellant is to provide appropriate security in a form suitable to the Industrial Registrar for the payment of the outstanding balance of the fine of $160,000. 4. Order (a)(iii) of the orders made by Haylen J on 9 June 2010 in Matter No IRC 404 of 2008 is stayed pending the determination of the appeal in this matter subject to the appellant providing appropriate security in a form suitable to the Industrial Registrar for an amount of $180,000 estimated for costs and provided further that Mr Andrew Simpson, on behalf of the appellant, is required to provide an undertaking that the appellant will diligently prosecute the appeal. 5. Liberty to apply generally in relation to the execution of orders 1 to 4 hereof. ________________________________ 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.