Industrial Court of New South Wales CITATION: Inspector Craig Przibilla v Klanstin Pty Ltd; Inspector Craig Prizibilla v Klanstin Pty Ltd [2007] NSWIRComm 214 PROSECUTOR: Inspector Craig Przibilla PARTIES: DEFENDANT: Klanstin Pty Ltd FILE NUMBER(S): IRC 3289 and 3290 of 2006 CORAM: Haylen J CATCHWORDS: Occupational Health and Safety Act 2000 - s 8(1) - two breaches within two days concerning unguarded screw-hole in slaughter floor of abattoir - unguarded external conveyor also particularised - pleas of guilty entered - failure of safe system of work at many levels - employee slips into open screw-hole receiving severe injuries - serious breach established - general and specific deterrence considered - principle of totality applied - no prior convictions - significant subjective factors - defendant seeks exercise of discretion under s 6 Fines Act - inadequate information before Court as to corporate arrangements under which defendant operated abattoir - penalties imposed. LEGISLATION CITED: Fines Act 1999 s 6 HEARING DATES: 9 May 2007; 14 August 2007 DATE OF JUDGMENT: 23 August 2007 PROSECUTOR: Mr I Taylor of counsel SOLICITORS: WorkCover Authority LEGAL REPRESENTATIVES: Legal Group DEFENDANT: Mr Peter Frazer, Solicitor SOLICITORS: Kemp Strang JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: HAYLEN J 23 August 2007 Matter No IRC 3289 of 2006 INSPECTOR CRAIG PRZIBILLA v KLANSTIN PTY LTD Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 Matter No IRC 3290 of 2006 INSPECTOR CRAIG PRZIBILLA v KLANSTIN PTY LTD Prosecution under s 8(1) of the Occupational Health and Safety Act 2000 JUDGMENT [2007] NSWIRComm 214 1 Since July 2002, Klanstin Pty Ltd ("Klanstin") has operated the abattoir in Deniliquin having taken over its operation from the owner of the abattoir, Famicorp Pty Ltd ("Famicorp"). In October 2004, two events occurred which ultimately led Inspector Przibilla to commence prosecution proceedings against Klanstin for two alleged breaches of s 8(1) of the Occupational Health and Safety Act 2000. The initial incident was a near miss when an employee, Peter Mitchell, slipped on the greasy slaughter room floor placing his foot in an unguarded hole leading to an under-floor screw conveyor. Fortunately for Mr Mitchell, he was able to extract his foot before being caught in the underground screw mechanism. Two days later, Lachlan Hardy, working in the same area, slipped into the same unguarded screw-hole but became entangled in the mechanism having his leg up to his crotch caught in the mechanism and receiving serious injuries. The charges laid by the Inspector particularised the slippery work surface near the chute/screw-hole, the lack of guarding on the chute/screw-hole, the failure to identify risks to health following introduction of new methods of work, failing to identify the risks associated with the manner in which waste was removed from the kill-floor, the absence of an emergency stop button inside the kill-floor, the lack of signage identifying the stop/start button for the screw conveyor on the inside wall of the kill-floor, the absence of an operational emergency stop button for the screw conveyor outside the kill-floor, the absence of a main isolating switch to completely isolate the sources of drive energy for the screw conveyor and the conveyor system, the lack of compliance with the requirements of AS1755-2000 Conveyors, Safety requirements, the failure to provide induction safety and training and other appropriate safety training to every employee working on the kill-floor and, in particular, in respect of removing heads and waste from the kill-floor, the steps to be taken in an emergency involving the under-floor screw conveyor and the means of stopping the underfloor screw-conveyor from inside the kill-floor. The second charge repeated those several grounds but added a failure in relation to the operation of the screw conveyor where it emerged from under the kill-floor building and that it was inadequately guarded. 2 On the second occasion these matters were listed before the Court the defendant entered a plea of guilty to both charges as particularised. This judgment deals with the evidence and submissions on sentence. 3 The evidence for the prosecutor was constituted by the following documents: an extensive Agreed Statement of Facts; an excerpt from the Australian Standards dealing with conveyors; a bundle of documents comprising a prior conviction report, noting that the defendant had no prior convictions; a number of photographs taken by the Inspector and other photographs taken by the police; the Inspector's factual report with drawings and a complete version of the Australian Standard on Conveyors, AS1755-2000. During the course of evidence, the prosecutor also tendered a bundle of improvement notices and ASIC extracts in relation to Klanstin, Famicorp, Kelthan Pty Ltd ("Kelthan") and Cedar Meats (Aust) Pty Ltd ("Cedar Meats"). The Agreed Statement of Facts deals with a large number of matters and is annexed to this judgment to assist in a better understanding of the evidence before the Court. 4 The evidence for Klanstin was constituted by an affidavit sworn by Tony Kairouz, the general manager of the defendant. Mr Kairouz gave oral evidence and was extensively cross-examined, particularly in relation to the financial affairs of the defendant. 5 Mr Kairouz described the Deniliquin abattoir as being a sheep slaughtering plant that when operating processed approximately 3,300 animals per day. The abattoir provided a service "kill facility", meaning that it killed sheep for other entities: the sheep were chilled and despatched daily for further processing by the customer. At the time of swearing his affidavit, the defendant had only one Melbourne customer. 6 The Deniliquin abattoir had been operated by the defendant since the beginning of July 2002 having been taken over from the owner of the abattoir, Famicorp. While Famicorp still owned the abattoir, it was leased to the defendant on a week-to-week basis without a formal lease. Mr Kairouz described the relationship as being largely dependent "on good faith". The takeover of the business by the defendant was meant to be a temporary measure because the owners of Famicorp wished to close the plant for personal reasons. In taking over the plant, the defendant sought a smooth transition so as not to destabilise the business nor to give rise to concern amongst the abattoir's employees: the transition did occur smoothly with minimal changes being made for the first two years of operation. It was noted that Famicorp had the right to resume its role as operator and if it did, the defendant was unsure of what would happen to its investment in the premises because there was no agreement with Famicorp in relation to reimbursement for equipment installed or changes made since the defendant took over the operation of the abattoir. 7 Deniliquin was described as a small country town located approximately 280 kilometres north of Melbourne and 600 kilometres from Sydney with the nearest town being Echuca, itself 80 kilometres from the New South Wales/Victorian border. Mr Kairouz described Deniliquin as a fairly isolated town with a population of approximately 8,000 people. The largest employer in the town had been the rice mill but, due to the effects of the drought and the consequential scale of its operation, the only other employer of major significance was the abattoir. The abattoir employed between 80 and 100 people. Mr Kairouz commented that, without the rice mill and the abattoir, employment opportunities in Deniliquin were extremely limited. He further stated that the defendant not only provided employment in the town but played an important social role by supporting a number of community events, usually by way of sponsorship. Mr Kairouz was also closely associated with his employees, taking a personal interest in their welfare and providing personal loans in circumstances of need. Because of the town's isolated location, there was a considerable skills shortage and Mr Kairouz described it as being "very difficulty to source any labour for abattoir work". He described his custom of regularly driving around in the morning, knocking on doors to collect employees to ensure they attended for work. Many of the abattoir workers were "substantially uneducated" and to assist the business, the defendant had adopted the Skilled Workers' Migration scheme with more than 10 Vietnamese now being employed. 8 Mr Kairouz then considered industry factors, the drought, the value of the Australian dollar and how they affected the defendant's business. The meat industry operated seasonally with winter supply drying up. Nevertheless, the defendant had in the past tried to operate for 12 months of the year absorbing losses during the quiet period to ensure maintenance of its workforce. By providing employees with a year round job, the defendant ensured that they did not leave during the slower periods and were ready for work when the season improved. Most of the maintenance on the plant was performed during the off season when the operation was scaled down to a two or three day working week, with the remainder of the week being devoted to plant maintenance. There had also been a slowdown brought about by the drought and the high value of the Australian dollar. Initially, during the drought, farmers had dumped a number of sheep onto the market but that supply had now substantially dried up and the cost of sheep had risen. Cedar Meats, the defendant's only client, was an exporter and recent increases in the Australian dollar had significantly reduced its international competitiveness. Cedar Meats required less work from the abattoir and the defendant had to shut it down rather than try to continue to operate as had been done in the past. While this was a temporary measure, Mr Kairouz could not see the business improving to any great extent for several years. 9 For the first few years of the operation of the abattoir, the system of work remained unchanged with Mr Karouiz relying heavily on the existing workers, especially experienced employees such as Peter Mitchell. There were existing safety policies and procedures, training procedures and reporting that continued to be used under the defendant's management and there was a works committee that met and discussed safety concerns. The supervisors were in regular contact with Mr Kairouz and raised any matters requiring his attention: these measures appeared to be "reasonably effective". Mr Kairouz said, in the early years, it was not the defendant's desire to make any significant change since the company did not know for how long it could be operating the abattoir - it might have been a short term operation and there was no agreement or arrangement to be reimbursed for any changes made or money spent on the plant by the defendant. The defendant was also making little, "if any", money operating the abattoir. 10 Despite that situation, Mr Kairuoz decided that widespread changes were required to make the system safer and more user friendly. He had worked at all the slaughtering positions on the chain to become aware of what was involved in the operation. He concluded that it was labour intensive under the system used by Famicorp. However, production was extremely efficient under the previous system, with the total number of sheep being killed per day reaching approximately 3,800, approximately 500 per day more than the defendant now averaged following the extensive changes introduced by Klanstin. 11 Mr Kairouz noted that the chain system operated by Famicorp was not only labour intensive but it was very hard work. Over time, he noticed that common problems began to emerge with workers including back pain from the leggers; arm, shoulder and wrist pain due to using the knife excessively, problems caused by sheepskins being manually pulled by two people; excessive knife work and high skill, nevertheless, resulting in many cuts, and, high staff turnover, due to the heavy nature of the work leading to the re-training of other existing staff or locating new staff, which was difficult. 12 The defendant commenced implementation of a new system and introduced a wide range of changes following Mr Kairouz's decision that the solution was to modernise the plant and to replace the excessive manual work with machinery and to make the operation safer. These new processes required a complete re-vamp of the slaughter process which was described by Mr Kairouz in his evidence. He gave evidence of six changes introduced with a description of what was involved in each change, noting their improvement to safety and the fact that those changes involved an expenditure of nearly $1 million. All these changes were implemented using the defendant's finances, an investment described as "extremely risky" but necessary if the company was to have a safer workplace. Mr Kairouz noted that the previous system, while far more efficient in terms of the numbers of sheep that could be processed, was accident prone and incredibly hard on the workers. Since implementing the new process, the plant had been fine- tuned and modified to be user friendly and provided a safe work environment for everyone. Mr Kairouz noted that there had been no accidents or near misses for over one year although, prior to that, there had been a number of improvement notices issued. 13 In relation to the accident involving Lachlan Hardy, Mr Kairouz noted that work had been slow in June, July, August and September 2004 and the abattoir had been working with minimal staff and was not employing workers. In October and November 2004, production increased and the defendant began to employ more workers: 30 workers were formally inducted in November 2004. Mr Hardy had commenced a little earlier than most of these new employees and was initially not "formally inducted" but had been taken around the plant and shown the ropes face-to-face by experienced supervisors, Mr Mitchell and Mr Jamie Avery. During this time, the defendant was still using Famicorp policies and procedures including training procedures. 14 The incident on 20 October 2004 involving Mr Hardy occurred shortly after the major changes to the slaughter room had been introduced. A new head-cutting tool had been installed that was intended to be a safety upgrade. However, a guard was removed from the waste disposal hole/chute located at ground level which fed a screw below which the waste went to a bin. Mr Hardy slipped into the chute where the guard would ordinarily have been in place and was injured. Mr Kairouz described it as "the worst feeling" he had experienced. The guard was normally bolted in place over the chute and met all safety standards required for that position. Management had not authorised the removal of the guard and Mr Kairouz was unable to ascertain who had removed it since no one admitted to taking that action. No one informed Mr Kairouz why the guard was removed: it was suggested that it was taken away in order to remove an excessively large head caught between the guard and the floor, which was blocking the passage for the removal of other heads. This type of blockage was regarded as being unusual. An internal investigation was unable to determine precisely when the guard was removed but Mr Kairouz believed it had been within several days of the date of the incident, but after the head cutters were installed on 14 October 2004. 15 Mr Kairouz expressed his disappointment in learning that one of the experienced supervisors, Mr Mitchell, had a near miss at the exact place involved in Mr Hardy's accident only two days beforehand but did not report the matter or ensure that the guard was replaced. The general terms of employment included an obligation for employees to report injuries and to be involved in safety matters. Mr Kairouz normally visited the floor on a regular basis and during those visits would have discovered the missing guard. However, in the days prior to 20 October 2004, he had spent all his time in the office preparing paperwork for an audit and dealing with administrative matters surrounding the implementation of the new system. 16 The standard procedure at the time of the incident was for any supervisor to report a safety concern to management immediately. Mr Kairouz described himself as taking swift action many times after safety reports were made to management but in this instance, because no report was made, the safety hazard went undetected until the injury occurred. When asked why the hazard was not reported, the supervisor was unable to answer Mr Kairouz's enquiry. 17 When the defendant commenced operating the abattoir, Mr Kairouz relied heavily on Mr Mitchell because he was one of the most experienced employees at the plant. It was impossible to find a more experienced person than Mr Mitchell and he was usually vocal about safety. Mr Kairouz expressed the view that he was still at a loss to explain why Mr Mitchell, having been personally involved in the near miss, had allowed the situation to continue and had not made a report about the absence of the guard. Mr Mitchell had completed two training modules and held certificates dealing with participation in occupational health and safety systems, followed safe workplace procedures and contributed to improving occupational health and safety. The flaw in the system so exposed was quickly rectified and was followed by a "more intensified look" at the defendant's safety procedures to ensure that flaws were discovered, reported and rectified. 18 Detailed evidence was given by Mr Kairouz of the steps he took following the incident to monitor Mr Hardy's health and wellbeing and the contacts he had with his family to ensure their continued welfare. These contacts had led, amongst other things, to a number of loans and amounts of money being paid personally by Mr Kairouz to see the family through the difficult times following Mr Hardy's accident. As soon as Mr Hardy was fit for light duties, Mr Kairouz took steps to make available a suitable position and to assist in his rehabilitation. Mr Hardy made a full recovery and was able to return to full duties. 19 Following the accident, Mr Kairouz said that the defendant remained in close consultation with the WorkCover Authority both in relation to the accident and the further improvements to be made at the abattoir. He gave evidence dealing with 24 particular changes and improvements that were introduced and gave detailed explanations as to what was achieved by making those changes. 20 Profit and loss statements for the financial years ending June 2002/2003, June 2004/2005 and June 2006 were provided as part of Mr Kairouz's affidavit. He described the poor financial circumstances of the defendant, noting the years the business had either made a loss or a very small profit. The 2006 accounts were not finalised but current calculations suggested a loss of nearly $16,000 with some late income and a reimbursement creating a net profit of approximately $7,000. There was an assessment that, before income tax, profit was likely to be just under $10,000. The defendant's two bank accounts for the beginning of May 2007 showed almost $20,500 in the cheque account and approximately $1800 in the management account. Those amounts were expected to decline due to expenses and lease costs. Because the plant was not operating, there was unlikely to be any substantial income. Mr Kairouz said the defendant had no other cash reserves or capital but had over $64,000 in accrued annual leave entitlements owing to its employees. 21 The income and expenditure statement for the year ending 2002 showed income of over $860,000 with a net profit of just over $4,000; in 2003, income was just over $6 million but a loss of nearly $2,500 was recorded. In 2004, there was over $4.3 million in income and a net profit of just under $14,000; for the year ending June 2005, there was income of just over $5 million with a net profit of just over $14,000. 22 The difficulties of operating the abattoir in circumstances of drought, the rising Australian dollar and its effect upon the abattoir's only client, an exporter, meant the financial circumstances of the defendant were currently strained. This combination of events had forced the closure of the plant on a temporary basis because the defendant was unable to absorb losses as it had been able to do in the past. The present circumstances of the abattoir were such that it was closed for the first time since Klanstin had take over its operation. Mr Kairouz was hoping to obtain further work shortly. His estimate was that it would be a struggle for the defendant company to survive for the next two to three years and Mr Kairouz expressed his concern for the Deniliquin community should the plant be closed. He also said that the company could not absorb further capital outlay at the present time because this could place the business into an insolvent position. That was confirmed to Mr Kairouz in a letter from the accountant, Graeme Knott. That letter briefly stated that they acted as the accountants for the company and expressed the opinion "that any substantial penalty may place the company in a position of insolvency". Mr Kairouz stated that if the business was not to re-open or was to close at a later time, there were insufficient financial reserves to meet the accrued and untaken employees' leave liabilities. 23 Mr Kairouz was closely cross-examined on the structure of the company and its financial viability. The company previously had two clients and provided slaughter services for carcasses provided by those clients. Cedar Meats was the ongoing customer which owned the product but the defendant company was entitled to sell the offcuts. When Mr Kairouz commenced work with the defendant he had been contracted to perform the work of general manager of the plant by Kelthan and had previously been a director of Kelthan. He believed that Kelthan charged Klanstin for his services but that he was now employed by Klanstin. He was now the only shareholder in Klanstin. At the time of the incident, a relative owned the only share in the company and he did not recall paying any money for acquiring Klanstin. 24 Klanstin's ASIC records showed that the registered office was at the address of Famicorp. Mr Kairouz said that he had taken over the business at the abattoir from Famicorp that was owned by friends but there was no family relationship involved. There was a family friendship with the owner of Famicorp, Nordan Becker. 25 In relation to a number of questions, Mr Kairouz said he was unable to assist the Court because they were matters that he left to his financial adviser whom he trusted implicitly. There were occasions when he was advised to take a course of action and he followed that advice without question. Mr Kairouz was not able to assist in identifying the assets of the company against which a charge had been recorded in favour of Cedar Meats and he did not know what assets were involved. The charge was now in favour of Suncorp-Metway Ltd but he could not state how much had been lent to the defendant. He had worked in Cedar Meats in IT, but took the opportunity to get out and establish his own business with Klanstin. Cedar Meats was a business owned by his father and his uncle and was now Klanstin's only customer. Mr Kairouz did not accept that Klanstin was part of a wider family business but asserted that it represented his independent business interest. Between April and June 2002, Mr Kairouz had learned the business of the abattoir before he took over: during this period he was an employee of Kelthan. During this period he also worked with Mr Becker from Famicorp and said that Kelthan Pty Ltd had an arrangement with Famicorp to supply his services. 26 When the business of the abattoir was taken over, Mr Kairouz knew that there was work to perform because Cedar Meats were aware that, if the abattoir closed, there was nowhere else for them to have their stock killed. Although there were family connections, he believed that his family would put him out of work if it were necessary to make such a decision. 27 The arrangement for Klanstin to operate the abattoir was an arrangement between Mr Kairouz and Mr Becker and was not an arrangement with his father. Mr Kairouz described it as a handshake arrangement and there were no deeds covering the lease of the plant. He was responsible for employee liabilities after the takeover but the licence to kill for meat export product was owned by Famicorp. 28 Another company, Delriada, was responsible for and owned the plant required to deal with its product which was essentially a conveyor. There was no family or corporate relationship involved with Delriada. At one time, work had been obtained from the Mudgee Co-operative but it had since gone with an abattoir with better licence conditions than those available at the Deniliquin abattoir. Mr Kairouz confirmed that Klanstin paid for the equipment to upgrade the abattoir, that the equipment belonged to Famicorp and that there was no arrangement for him to be reimbursed. 29 Klanstin provided Mr Kairouz with an income of $840 per week although he could have earned more earlier in the operation. Mr Kairouz was not solely reliant on the income from the abattoir, but had other businesses, not necessarily family companies, from which he obtained income including consulting work for Kelthan and a directorship of a construction company which was a quite separate business. His personal position was that a debt of $1.5 million was substantially secured by his home, although he owned other properties. He denied that Klanstin operated as part of a family group of companies or that decisions relating to the operation of Klanstin were made by somebody else and simply followed by him. Mr Kairouz stated that there were no other amounts paid to him by Klanstin other than a wage of $840 per week; there was no money paid by way of mortgage payments or the provision of a car as part of a remuneration package; there was no other member of his own and immediate family who were paid money by Klanstin. He was interested in purchasing the abattoir but a suitable price was not obtainable from Mr Becker. The current circumstances of the abattoir were that, even if a suitable price could be agreed upon, he was not in a position to purchase it nor was it an appropriate time to purchase the abattoir given its financial instability and lack of an assured continued life. 30 In his oral evidence, Mr Kairouz said that he lived in Melbourne but would spend two to three days per week at the abattoir and in the season might spend up to four to five days per week there. While he was now employed by Klanstin, at the time of the accident he was engaged by way of contract labour by Kelthan as the general manager. He did not previously recall being a director of Kelthan and did not think he had anything to do with the company but he was now the only shareholder of Klanstin. He was not aware if his uncle owned Kelthan when it employed him but his accountant would have that information. At the time of the accident a relative, Charbel Kairouz, owned the only share in Klanstin but Mr Kairouz did not recall paying any money for Klanstin. Klanstin ASIC records showed its registered office at the same address as Famicorp. Mr Kairouz was not sure if he was, on two separate occasions, previously a director of Klanstin and relied on his accountant as to those arrangements. Mr Kairouz did not know what assets of the company had been offered against the charge in favour of Cedar Meats recorded in ASIC records. There was a further charge with Suncorp but he could not say how much had been loaned and he could not say what financial assets were utilised for the purpose of this charge or the Cedar Meats charge. He did not know what were the assets of Klanstin and required advice on that matter. Mr Kairouz said that he may have previously been a shareholder in Klanstin but initially stated that presently he was not a shareholder in that company, before correcting himself. He was not aware until recently that he was a shareholder in Klanstin as he left a lot of this detail to his accountant. In relation to working for Kelthan, Mr Kairouz thought that this company could have been charged for providing his services to Klanstin at the time of the accident but he could not say and it was best to direct that question to his accountant. He was not sure if Kelthan was paying Famicorp for providing his services and it may not have involved a direct payment but a payment factored into the service for the kill. He did not know if that was a fee paid by Cedar Meats as he was not familiar with the structure and those questions needed to be answered by the accountant. He still received some income from Kelthan for consulting services. Mr Kairouz said that he would not have gone into the business without "knowing my business back to front" but he was not "financially driven" in taking on the project and did not need to make millions as the business was a challenge. He was happy if paid a wage, and that there were no major losses and local people retained employment. 31 The $1 million spent to update the abattoir, he understood, had come from his own trading funds. They were listed as repairs and maintenance in the books of the company although some funds were sought for the hide puller. With this update, Klanstin paid for the equipment although Mr Kairouz believed that, once installed, it belonged to Famicorp. No funds were set aside in the books of Klanstin to meet any fines imposed in these proceedings. In relation to the profit and loss statements, it was always the case that expenses broadly met the income. It did not matter if turnover was low or $5m or $6m, this would be the result. The accountant for Klanstin was the accountant for Kelthan and Cedar Meats. In relation to Cedar Meats, the ASIC records showed that his father and his uncle were the directors but the members of the company were his father and his father's five brothers. Although Cedar Meats, Klanstin and Kelthan discharged their arrangements with the Arab Bank in July 2006 and then entered into arrangements for a new charge with Suncorp on the same day, this did not mean that it was the same transaction or that the three companies operated as a group. He undertook the charge arrangement at the same time because he was getting a better rate and he jumped on their band wagon. He did not know what Klanstin gained from the charge in favour of Suncorp. It was put to Mr Kairouz that no real interest was paid in relation to this charge by Klanstin, but he said that it could have been a line of credit that had been obtained but not utilised. There was presently no such line of credit available to Klanstin. It was put to him that Klanstin was the vehicle to operate the abattoir and to hold liabilities and that Famicorp isolated its assets but Mr Kairouz denied that proposition. He stated there was no such connection. 32 At the conclusion of Mr Kairouz's evidence, the prosecutor made it clear that, in accordance with well-established authority, it would be submitted that the financial information relied upon by the defendant was inadequate to support the exercise of any discretion under s 6 of the Fines Act 1999 and that there were many questions left unanswered as to the relationship between the companies. After some discussion, an application was granted allowing the defendant to bring additional evidence as to its financial arrangements. The matter was scheduled to resume in approximately three months to allow that exercise to be undertaken and to meet the convenience of the parties. 33 On the resumption of the matter, the defendant read a further affidavit of Mr Kairouz but he was not required for further cross-examination. In that affidavit, Mr Kairouz provided as annexures: the balance sheets for the 2005, 2006 and 2007 financial years with assets and liabilities identified; tax returns for the 2005, 2006 and 2007 financial years; a bank statement from Suncorp-Metway; and, a bank statement said to be a Klanstin account although the account holder was nominated on the document as "Lleywensuper". No explanation was offered as to this misidentification. 34 Mr Kairouz stated the bank account had been closed and only the Suncorp account was remained. Since 9 May 2007, the abattoir operated by the defendant had remained closed. He stated the defendant had severely limited financial means, notwithstanding the abattoir had not been operating because it continued to incur costs. Those costs included the continuing maintenance of permanent and other key employees in relation to wages, workers compensation premiums, accrued entitlements and the like. Those employees had to be retained in order to provide the abattoir with the opportunity to re-open in the future and, if not been retained, they would have moved away and found employment elsewhere. There was also expenditure on maintenance, electricity, water and like facilities. Further expenditure was incurred because Famicorp, the owner of the abattoir, which had begun "to seek lease payments" notwithstanding that the abattoir was not operating. Lease payments were previously based on the number of days of operation per week. 35 Mr Kairouz had some discussions on the possibility of extending the licence of the abattoir having regard to the fact that the operating licence was limited to slaughtering mutton, not lamb, which product was suitable only for a limited market. It was not marketable in the United States. He had been advised that the existing abattoir could not be brought up to the necessary standard: it would better to demolish and rebuild it. That was not a viable option for the defendant because it had already spent a "massive amount" upgrading what had been an old abattoir. It also appeared that the level of expenditure was going to be an on-going "scenario". During the period since the adjournment, the Australian dollar continued to remain high and availability of sheep for slaughter remained almost non-existent. 36 Mr Kairouz said he made the difficult decision that the abattoir permanently cease its operation and the business was now essentially closed. His intention was to wind-up the business once the present prosecution had been finalised and the business debts had been met. Employees had been notified of this decision as had the landlord and relevant contractors and suppliers. The defendant had managed to pay out employee entitlements. The defendant had outstanding liabilities including more than $17,000 to AQIS, BAS and PAYE-G remissions at nearly $88,000, legal fees estimated in the order of $15,000 incurred in relation to the present proceedings and sundry debts of over $16,000. Mr Kairouz said that the defendant did not have the financial resources to meet these costs. His intention, nevertheless, was to close down the business but not to liquidate it. His strong wish was to ensure that, through his own means, the proper expenses and liabilities of the defendant were met before the company was wound-up. He did not believe that he would be able to obtain a bank loan and would have to seek a loan from his family to meet these debts. He was currently contracting to a company building a new abattoir in Victoria, he was helping to commission a new chain system and that contract would finish this year. He had been involved in the development of units for sometime and intended to focus on that work for the future. 37 The balance sheet of 30 June 2007 showed liabilities at over $36,000 with an income of over $6.5 million. The balance sheet for the defendant as at 30 June 2005 showed net assets of over $29,000 while the income and expenditure statement showed an income of over $5 million with a net profit for the year of $14,000. The 2005 company tax return was signed by Mr Charbel Kairouz as the defendant's public officer. He also signed the 2006 and 2007 company tax returns as the defendant's public officer. DELIBERATION 38 Despite the evidence of the effort and resources put into upgrading the abattoir, the particulars of each offence to which the defendant has pleaded guilty, demonstrates a comprehensive failure to ensure the safety of employees working at the abattoir. These breaches could not legitimately be considered as a one-off incident or a one-off incident and a near miss involving the dangers of slipping into the screw-hole - the risks to safety were far more widespread. The failure to provide a safety system of work for the removal of heads meant that employees working around the screw-hole were at risk of slipping into the screw-hole because it was not guarded and there was a failure to ensure that the floor around the screw-hole was not slippery. There was a failure to have a system to identify, assess and control risks when processes were changed or new processes introduced such that there was a failure to have a system identifying risks associated with the introduction of new work methods and in particular how the heads and waste were removed from the kill-floor. Besides the failure of guarding the under-floor screw conveyor, there was no emergency stop button inside the kill-floor, the stop/start button on the inside of the kill-floor was not identified by signage, there was no operational emergency stop button outside the kill-floor that could be used without risk to safety, there was a failure to have a main isolating switch to completely isolate the source of driving energy from the conveyor or conveyor system which was capable of being locked in the isolated position, and, there was a failure to comply with the requirements of the Australian Standard for conveyors and to ensure that the conveyor was operated and maintained in accordance with those procedures. There was a failure to provide induction training or appropriate safety training to those employed on the kill-floor and in particular to address working safely when removing heads and waste from the kill-floor, the steps to be taken in an emergency involving the under-floor screw conveyor and how to stop the under-floor screw conveyor from outside the kill-floor. All of these failures were common to both offences, committed two days apart. The second offence also particularised a failure to ensure that the plant provided for use was safe and without risk to health in that at the point where the under-floor screw conveyer emerged outside from under the floor-kill building, it was not adequately guarded. There was also a failure to ensure that the incline conveyor was safe by having it properly guarded, providing an emergency stop button, a main isolating switch and otherwise complying with the Australian Standard for conveyors. 39 The seriousness of the breach is further demonstrated by the fact that the screw-hole was large enough to take in a employee's leg and inflict serious injury. While recently installed as part of the defendant's upgrade at the abattoir, the new guard was removed sometime between 12 and 18 October 2004, although an investigation failed to reveal who removed it and for what purpose. The fact was that senior and experienced slaughtermen failed to take any action in relation to having the guard re-connected. It was sought to reduce the alarming absence of attention to this obvious risk to safety by suggesting that had not Mr Kairouz been involved in administrative matters that prevented him from inspecting the slaughter floor, it would have otherwise been picked up by him in the course of his usual inspections. Beside Mr Mitchell, there was a kill-floor supervisor as well as a quality assurance manager and a production manager. It speaks volumes of the gaps in the defendant's safety systems that this raft of senior employees did not pick up or take any action in relation to the guard that had been removed from covering the screw-hole on the slaughter floor. Each breach is properly described as a serious breach and posing a significant risk to the health and safety of employees engaged at the abattoir. It is particularly disturbing that at the time that Mr Hardy slipped into the unguarded screw-hole, two employees who attempted to render assistance ran off the slaughter room floor to an outside on/off switch to stop the underground screw because they were unaware there was a stop button inside and at the slaughter room floor. While those working generally in the abattoir were at risk if they came into this area, there were four particular employees who were required to work in the near vicinity who were particularly at risk. In addition, the external incline conveyor had been modified and for a period of approximately six weeks had an unguarded hole. The conveyor was unguarded along its full length, approximately 4 metres. This external conveyor had a tin cover acting as a guard removed for a period of approximately six weeks before the incident to enable larger sheep heads to be more freely moved along the conveyor and there was no emergency stop button and no main isolating switch. 40 There are inherent dangers involved in the operation of abattoirs and general deterrence will form a significant element of the penalty to be imposed. 41 The position in relation to specific deterrence is a little more complex. When the matter was first before the Court submissions were made not only as to the amount of money spent on upgrading the abattoir and introducing safer equipment, albeit with gaps in that system of safety, but also many steps had been taken to address the issues thrown up by the investigation by the WorkCover Authority and the variety of improvements notices that had been issued to the defendant. At that stage, the defendant was arguing that account had to be taken of its strained financial situation, how a substantial fine would put it out of business and how that would affect the local community. The defendant pointed to the overall steps taken by the defendant to address the gaps in its system of safety and pointed to the fact that it had been accident free for nearly a year although there was evidence of a crush incident. On the resumption of the hearing, Mr Kairouz's evidence was that a decision had been made to close the abattoir and steps had already been taken in that regard by paying out certain entitlements to employees. It was proposed that the company would be wound up once these proceedings were concluded and private financial arrangements made so that Mr Kairouz could pay the company's debts. Although the defendant company remained in existence, there was no cross-examination challenging these statements or examining the possibility that the defendant might resume work at the abattoir if circumstances altered. Bearing those matters in mind, specific deterrence will play a much reduced role in the setting of an appropriate penalty. 42 The prosecutor properly conceded that there were some significant subjective features. The defendant had no prior convictions and, having regard to the nature of the industry in which it was involved, this could be considered to be a good industrial record. The evidence also showed that the defendant, through the activities of Mr Kairouz, to be a good corporate citizen, engaged with the local community and an employer that had otherwise attended to the welfare of its employees who were in need of assistance. There was strong evidence of contrition not only by the pleas of guilty that had been entered, but by the assistance, including financial assistance, given to Mr Hardy and his family following the accident. It was also accepted that there had been co-operation with the WorkCover Authority and that is to be regarded as an important consideration. The prosecutor accepted that there was an early plea of guilty entered in relation to each breach and the Court accepts that submission. It is appropriate in those circumstances that, in each case, there be a discount of 25 per cent in recognition of the early pleas and a further discount for the remaining subjective features. 43 The next issue to be considered is the defendant's application that its financial position should be considered with the Court exercising its discretion under s 6 of the Fines Act to reduced the penalty to be imposed. In light of the recent evidence of Mr Kairouz that the company is to be wound-up, the earlier submissions relating to the possibility of insolvency and the effect on the local community become irrelevant. The defendant then simply points to the fact that its financial records disclose either a relatively small loss or small profit over recent years of operation even though there has been a turnover up to $5m and $6m in that period. It was submitted that Mr Kairouz always knew that the operation would be financially tight but that he hoped to develop the business over time. As it now stands, Mr Kairouz has financed the significant upgrading of the facilities but regards that equipment as belonging to Famicorp and he has no arrangements with Famicorp to be compensated for those improvements. It was also submitted, but without any supporting evidence, that the improvements cannot be removed from the abattoir so as to realise any significant financial return, not because they are fixtures or caught by any such difficulty arising from the Famicorp interest but because there is simply no market for equipment removed in that way. 44 The prosecutor spent considerable time in testing the financial information brought forward by the defendant and strongly submitted that the information, such as it is, was inadequate to support the exercise of the discretion under s 6 of the Fines Act. The prosecutor submitted that the evidence showed that there were closely related companies in their operation that were owned by family members or family friends. Famicorp had allowed Mr Kairouz through Klanstin to operate the abattoir for the benefit of Mr Kairouz's father, his brothers and an uncle who owned the carcasses and who obviously needed the slaughtering facilities to operate their business. It was suggested that, despite significant turnover, the abattoir has operated quite deliberately so that expenditure either slightly exceeded or came slightly beneath total income. Mr Kairouz came from Melbourne to spend anywhere between a few days to a substantial part of the week in operating the abattoir for something over $800 per week with no other remuneration benefits. It was put that the strong inference was that this extraordinary arrangement had come about so as to isolate the assets of Famicorp from the operating costs of Klanstin and to thereby provide slaughtering services to Cedar Meats owned by Mr Kairouz's father and five brothers. 45 While there are unusual features about the operation of the defendant company, I am unable to come to all the conclusions urged by the prosecutor. Nevertheless, there are many matters of concern. During the first day of evidence, Mr Kairouz was unable to answer many questions about the structure and operation of the defendant and regularly resorted to a plea that he left much of the business aspects in the hands of the accountant and did what he was told, although he also stated that he knew his business "back to front". This approach was offered in relation to past shareholdings in the companies, the assets of the defendant which supported a significant bank charge, the fact that a number of the companies had the same charge facilities with the same financial institution that were altered on the same day to an identical alternative financial provider in circumstances where Mr Kairouz did not know what amount was involved and whether it was a line of credit not yet used or availed of. In his sworn evidence, Mr Kairouz denied that Klansatin was run as part of a group of companies or in the interests of his father's company and asserted that it was his independent business. That business, however, is quite extraordinary. Mr Kairouz purchased Klanstin from a relative but was not sure if he paid anything for it. It became the vehicle by which he took over the operation of the abattoir previously run by Famicorp when it did not wish to continue operating the business. His substantial and ultimately only client was his father's company but he said that he had no guarantee of this business although he knew that business was available when he spent nearly $1m of his own money to refurbish the facility. The circumstances surrounding the refurbishment themselves are extraordinary: there was no written agreement about the terms of the lease nor what payments would be made by Klanstin nor were there arrangements as to Famicorp reimbursing Klanstin for any part of this extensive refurbishment. 46 When the matter was adjourned to allow the defendant to call further evidence to clarify the financial arrangements under which it operated the abattoir, there was an expectation that many of these issues raised in cross-examination by the prosecutor that had been beyond the knowledge of Mr Kairouz would be addressed by the accountant on the resumed hearing. That course was not taken by the defendant on the resumption of the matter but some further financial records were presented which did not appear to substantially add to the material already before the Court. 47 The Court is therefore left in a state of considerable uncertainty as to many of these curious arrangements and the failure to have them clarified by the accountant, the person nominated by Mr Kairouz as having the necessary knowledge about those matters. The accountant was also the accountant to a number of the companies involved in the overall operation. Ultimately, the Court, in exercising its discretion, must be satisfied that a case has been made out under s 6 of the Fines Act by a defendant. While it can be noted that the company has a history of small surpluses or deficits in a significant turnover, it cannot be satisfied as to the full extent of the financial arrangements and company structures which have led to the operation of the abattoir in Deniliquin. 48 In relation to totality, the prosecutor accepted that the principle was applicable in these circumstances and conceded that it was available to the prosecutor to charge both these offences in the one charge notwithstanding the fact that they were, in the main, two days apart. It was submitted for the prosecutor that the second offence containing the additional particulars relating to the external incline conveyor made that the more serious offence, although it was conceded that matter could have been particularised in the first charge. In both cases, the particulars in relation to the unguarded screw-hole were identical, with the first charge dealing with a near-miss accident and the second charge dealing with actual injury suffered as a result of the same risk to safety. The second charge also particularises the unsafe nature of the external incline conveyor and it is appropriate to consider that as a more serious offence. Having considered the objective seriousness of each charge and the factors of deterrence and subjective features, a penalty of $80,000 would be imposed in relation to the first offence and $110,000 in relation to the second offence. In view of the substantial overlap in the particulars of the two offences, it is appropriate to apply the principle of totality resulting in an overall penalty of $95,000. That sum will be divided such that the first offence will carry a penalty of $40,000 and the second offence will carry a penalty of $55,000. ORDERS 49 The Orders of the Court are: (a) In relation to matter No IRC 3289 of 2006: (i) 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 3289 of 2006, to which the defendant pleaded guilty; (ii) the defendant is fined the sum of $40,000 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 as agreed or, in the absence of agreement, as ordered by the Court. (b) In relation to Matter No IRC 3290 of 2006 : (i) 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 3290 of 2006, to which the defendant pleaded guilty; (ii) the defendant is fined the sum of $55,000 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 as agreed or, in the absence of agreement, as ordered by the Court. ANNEXURE AGREED STATEMENT OF FACTS 1. At all material times, the Prosecutor was an Inspector duly appointed and empowered by Section 106(1)(c) of the Occupational Health and Safety Act 2000 to institute proceedings in the within matter. 2. At all material times, the defendant, KLANSTIN PTY LTD [ACN NO: 100 098 753] ("Klanstin") a corporation whose registered office is situated at 14 Larne Grove, Preston in the State of Victoria ("the defendant") was an employer. 3. At all material times, the Deniliquin Abattoir, Saleyard Road, Deniliquin in the State of New South Wales ('premises') was the Defendant's place of work. 4. At all material times, Peter Mitchell, Edward Kellagher, Ricky Salan and Lachlan Hardy were employees of the Defendant employed to work at the said premises. 5. There are two separate charges. Firstly relating to occurrences 18 October 2004 and secondly to occurrences on 20 October 2004, at the said premises, where the defendant, being an employer, failed to ensure the health, safety and welfare at work of all its employees, in particular, Peter Mitchell, Edward Kellagher, Ricky Salan and Lachlan Hardy. 6. The two charges arise substantially out of the same failures on the part of the Defendant and the respective particulars of the two charges are the same, save that additional particulars are pleaded at paragraphs 1 (b) (iii) and 2 (b) of the Application for Order in relation to the 20 October incident. 18 October 2004 incident ('near miss'): particulars of the charge 7. In respect of the charge in relation to the failures on 18 October 2004, the particulars (as outlined in the Application for Order) in respect of Peter Mitchell are: 1. The defendant failed to ensure the provision and maintenance of a safe system of work and a safe working environment in relation to the removal of heads and waste from the kill-floor such that employees were not exposed to the risk of injury, in particular: (a) by failing to ensure that employees working in and around the head collection chute/ screw hole were not at risk of slipping or stepping into the chute hole, and in particular; (i) by failing to ensure that the head collection chute/ screw hole was guarded during production; (ii) by failing to ensure that the floor around the head collection chute/ screw hole was not slippery; (b) by failing to have systems in place to identify, assess and control risks to health when processes changed or new processes were introduced, in particular by failing to have a system in place to: (i) identify the risks to health associated with the introduction of new methods of work, in particular the new head lopping position and new shackling position; (ii) identify the risks associated with the method by which heads and waste were removed from the kill-floor. 2. The defendant failed to ensure that plant provided for the use by the employees at work was safe and without risks to health, in particular: (a) by failing to ensure that the under-floor screw conveyor was safe and without risks to health, in particular by failing to ensure: (i) that the head collection chute/ screw hole inside the kill-floor for the under-floor screw conveyor was guarded; (ii) that the under-floor screw conveyor had an emergency stop button inside the kill floor; (iii) that the stop/start button for the under-floor screw conveyor on the inside wall of the kill floor was identified as such by signage; (iv) that there was an operational emergency stop button for the under-floor screw conveyor outside the kill floor that could be used without risk to safety; (v) that the under-floor screw conveyor had a main isolating switch to completely isolate the sources of drive energy from the conveyor or conveyor system and which was capable of being locked in the isolating position; (vi) that the under-floor screw conveyor complied with the requirements of AS1755-2000 Conveyors - Safety requirements, or was otherwise operated and maintained in a manner which achieved the same or better standard of safety. 3. The defendant failed to provide such information, training and supervision as may be necessary to ensure the employee's health and safety at work, in particular: (a) by failing to provide induction safety training or other appropriate safety training to every employee working on the kill-floor, and in particular by failing to train such employees: (i) as to how to work safely and without risks to health in respect of removing heads and waste from the kill-floor; (ii) as to what steps to take in an emergency involving the under-floor screw conveyor; and (iii) as to how to stop the underground screw conveyor from inside the kill floor. 20 October 2004 incident: particulars of the charge 8. In respect of the charge in relation to the failures on 20 October 2004, the particulars (as outlined in the Application for Order) in respect of Edward Kellaghar, Ricky Salan and Lachlan Hardy are: 1. The defendant failed to ensure the provision and maintenance of a safe system of work and a safe working environment in relation to the removal of heads and waste from the kill-floor such that employees were not exposed to the risk of injury, in particular: (a) by failing to ensure that employees working in and around the head collection chute/ screw hole were not at risk of slipping or stepping into the chute hole, and in particular; (i) by failing to ensure that the head collection chute/ screw hole was guarded during production; (ii) by failing to ensure that the floor around the head collection chute/ screw hole was not slippery; (b) by failing to have systems in place to identify, assess and control risks to health when processes changed or new processes were introduced, in particular by failing to have a system in place to: (i) identify the risks to health associated with the introduction of new methods of work, in particular the new head lopping and new shackling position; (ii) identify the risks associated with the method by which heads and waste were removed from the kill-floor; and (iii) ensure that any near miss incident was reported and acted upon to ensure that there was no further risk to health. 2. The defendant failed to ensure that plant provided for the use by the employees at work was safe and without risks to health, in particular: (a) by failing to ensure that the under-floor screw conveyor was safe and without risks to health, in particular by failing to ensure: (i) that the head collection chute/ screw hole inside the kill-floor for the under-floor screw conveyor was guarded; (ii) that the under-floor screw conveyor had an emergency stop button inside the kill floor; (iii) that the stop/start button for the under-floor screw conveyor on the inside wall of the kill floor was identified as such by signage; (iv) that at the point where the under-floor screw conveyor emerged outside from under the kill-floor building it was adequately guarded; (v) that there was an operational emergency stop button for the under-floor screw conveyor outside the kill floor that could be used without risk to safety; (vi) that the under-floor screw conveyor had a main isolating switch to completely isolate the sources of drive energy from the conveyor or conveyor system and which was capable of being locked in the isolating position; and (vii) that the under-floor screw conveyor complied with the requirements of AS1755-2000 Conveyors - Safety requirements, or was otherwise operated and maintained in a manner which achieved the same or better standard of safety. (b) by failing to ensure that the incline conveyor was safe and without risks to health, in particular by failing to ensure that: (i) it was properly guarded; (ii) it had an emergency stop button; (iii) it had a main isolating switch; and (iv) it complied with the requirements of AS1755-2000 Conveyors - Safety requirements, or was otherwise operated and maintained in a manner which achieved the same or better standard of safety. 3. The defendant failed to provide such information, training and supervision as may be necessary to ensure the employees' health and safety at work, in particular: (a) by failing to provide induction safety training or other appropriate safety training to every employee working on the kill-floor, and in particular by failing to train such employees: (i) as to how to work safely and without risks to health in respect of removing heads and waste from the kill-floor; (ii) as to what steps to take in an emergency involving the under-floor screw conveyor; and (iii) as to how to stop the underground screw conveyor from inside the kill floor. Investigation 9. In response to a verbal notification to WorkCover on 22 October 2004 Inspector Martin and Inspector Przibilla attended the Deniliquin Abattoir premises operated by Klanstin Pty Ltd, ACN 100 098 753 ('the defendant') located at Abattoir Road, Deniliquin, NSW. WorkCover had been informed on 20 October 2004 that an employee of the defendant, Mr Lachlan Hardy, had been injured while working on the 'kill-floor' of the abattoir ("the Hardy Incident"). 10. An inspection of the incident site and associated plant and equipment was conducted. Inspector Martin recorded factual details and prepared a Factual Report. Inspector Przibilla photographed the incident site and associated plant and equipment. 11. The investigation on that day revealed that: (a) Two conveyors of the floor waste conveyor system were in an unsafe condition without guarding of the screw (but with guarding on the drive unit). There was a stop button, but there was not an emergency stop button that complied with the Australian Standard (i.e. it was not an emergency stop button that once activated required the system to be manually reset and the conveyor restarted from the control panel). There was no signage to indicate what machine the stop button would stop. (b) The chute/hole inside the kill-floor leading to the under floor screw conveyor was unguarded. The guarding for this chute/hole had recently been removed and not replaced. This chute/hole was the only accessible point to the under floor screw conveyor inside the kill floor. (c) Some of those working at the site had been exposed to risk of injury as a result of their proximity of their work to an unguarded under-floor screw conveyor. (d) There had been a near miss incident that had occurred 2 days before the Hardy incident involving the same under-floor screw-conveyor, which had no guard in place covering the chute/hole leading to the screw. 12. Inspector Przibilla then completed a full investigation of the matter on behalf of WorkCover, which included obtaining statements and relevant documents. Klanstin's involvement with the Deniliquin abattoir site 13. Klanstin employs approximately 80 to 100 people at its meat processing business at the Deniliquin Abattoir ('the abattoir'). It is the largest employer in the rural city of Deniliquin. Production varies considerably through out the year. The peak production period is between October and February. 14. Klanstin has been operating the abattoir since taking over operations from Famicorp Pty Ltd on 1 July 2002. Since that date the defendant was, and remains in control of the abattoir and all its plant and equipment. System of work in October 2004 15. The abattoir operated by Klanstin includes a 'kill floor' at which employees of the Klanstin work, processing sheep carcasses. 16. On the kill floor is an electric overhead chain conveyor, which runs tthrough the floor on which the sheep carcasses are conveyed for processing. 17. At the start of the process the sheep are 'knocked' (killed and throat cut), then the carcass moves along the chain, over a pit, toward the 1st changeover area. 18. In October 2004 near the 1st changeover area was a 'head collection chute / screw hole' in the pit under the chain. The 'head collection chute/ screw hole' was a circular opening within the pit of the kill floor into which the pushed or placed heads and waste, fell into an electric conveyor which ran underneath the floor of the building ('the under-floor screw conveyor'). The head collection chute/ screw hole measured approximately 370mm in diameter and the screw of the underfloor conveyor was approximately 330 mm from the floor opening. 19. When the kill-floor was operating, the pit into which the waste fell before being pushed into the head collection chute/ screw hole was normally wet and so that part of the floor around the chute could be slippery under-foot. Two or three employees at a time were required to work on this part of the floor. Other employees worked on an elevated platform. 20. Up until about 12 October 2004 the head collection chute/ screw hole was guarded by a steel guard bolted to the floor. This guard measured approximately 650mm long by 560mm wide by 300mm high. It consisted of metal sheet plating with 2 uprights welded to a flat bar on one end which were bolted to the floor and at the other end 2 lugs which were bolted to the wall of the pit. Waste was pushed under the guard into the head collection chute/ screw hole. 21. The under-floor screw conveyor conveyed the waste to a second conveyor outside the building. This second conveyor was inclined ('the inclined screw conveyor') and conveyed the waste up and into a waste bin. 22. New head lopping shears were installed on or about 12 October 2004 and were first used in production on 14 October 2004. 23. A new position on the production line at the 1st changeover area, the 'shackling position', was introduced as part of the introduction of the new head lopping system. It was introduced to reduce the manual handling workload associated with the process of inverting sheep at the 1st changeover. 24. The shackling person's role is to place spreader-bars in the front hocks of the suspended beast in readiness for lifting the forelegs onto the overhead production chain (the chain). The shackling position follows the head lopping position on the line. The head collection chute/ screw hole was located between these two positions, but nearer to the shackling position. Mr Hardy was shackling at the time the Hardy incident occurred. 25. The previous head lopping system was being replaced. There was to be an Australian Quarantine & Inspection Service (AQIS) inspection on 14 October 2004. 26. The heads that were removed were pushed into or placed by hand into the head collection chute/ screw hole along with other waste that had dropped on to the floor of the pit. This was primarily the responsibility of the floor-person or 'floor-boy'. 27. At some time between 12 October 2004 (when the new system for lopping heads was introduced) and 18 October 2004, the guard fixed over the head collection chute/screw hole was unbolted and removed. The precise reason this occurred and why it was not replaced is unknown. It is thought that the guard may have been removed after a ram's head with horns became stuck Near-miss incident on 18 October 2004 28. On 18 October 2004, Mr. Peter Mitchell, Slaughterman Supervisor, aged 39, an employee of the defendant, was working on the kill-floor of the abattoir operated by the defendant at Abattoir Road, Deniliquin NSW 2710. 29. On this day Mr. Mitchell was working on the kill floor at the 1st changeover area. 30. The guard over the head collection chute / screw hole had been removed and it was not in place. 31. Whilst shackling at the 1st changeover area, Mr Mitchell reached up to get a spreader bar off the overhead stand and stepped backwards and his left leg went into the unguarded head collection chute / screw hole. He was able to extract his leg without sustaining an injury. This occurred in the presence of Mr Nathan Gordon Redden, Slaughterman, who was an employee of the defendant. 32. Neither Peter Mitchell, Slaughterman Supervisor, nor Nathan Redden, nor any other employee reported the absence of the guard to management. 33. The guard was not bolted back into place following this incident. Hardy incident on 20 October 2004 34. At approximately 10:00 am on 20 October 2004, Lachlan Hardy, aged 16, employed by the defendant, was injured while working at Klanstin Pty Ltd's, Meat Processing Business at the Deniliquin Abattoir, Abattoir Road, Deniliquin NSW 2710. 35. Mr. Hardy had commenced employment with Klanstin Pty Ltd at the Deniliquin Abattoir on 11 October 2004. He had only been in the defendant's employment 9 days prior to his incident. 36. He was employed as a labourer and had undertaken various labouring roles during his short period of employment. Mr. Hardy had not undergone a formal induction process. 37. On 20 October 2004 Mr. Hardy was working on the defendant's kill-floor at the '1st changeover' area undertaking the shackling role, the newly created role. The shackling position is located between the head lopping position and the 1st changeover person. 38. At the time of his incident, Mr. Hardy had returned to the kill-floor following a 'lappo' (a five minute production break). He walked to the shackling area, gathered and untangled spreader-bars from the overhead spreader-bar rail, and whilst reaching to grab another spreader-bar, slipped into the unguarded head collection chute / screw hole. The rotating screw at the bottom of the head collection chute / screw hole grabbed his right leg, pulling him and his right leg down. 39. At the time of the incident there was sheep blood and body parts on the floor where Mr. Hardy slipped. 40. Mr. Ricky Salan, an employee of the defendant working on the kill-loor at that time, witnessed Mr. Hardy slip into the unguarded head collection chute / screw hole. Mr. Redden, another employee of the defendant present on the kill-floor at that time, did not see Mr. Hardy slip but saw him in the screw hole. Both Mr. Salan and Mr. Redden, being present at the time of the incident, ran off the kill-floor and outside to the location of an on/off switch for the underground screw in order to turn it off. Mr. Salan and Mr. Redden at the time were not aware that there was a stop button inside the kill floor. 41. Mr. James Henshaw, Kill-Floor Supervisor, who was employed by the defendant, was working on the kill-floor at the time of the Hardy incident. He was aware that there was a stop button for the under-floor screw conveyor inside the kill-floor. He pushed that stop button and asked Mr. Eddie Kellagher, Floor Boy, to hold down the stop button. There was no emergency stop button on the kill floor within the building. There was no main isolating device installed that could completely isolate the sources of drive energy from the conveyor or conveyor system and which could be locked in the isolating position. 42. By the time the under-floor screw conveyor was turned off by either Mr. Henshaw or Mr. Salan, it had pulled Mr. Hardy down to his crotch. 43. Mr. Hardy remained trapped in the conveyor for approximately 2 hours whilst a rescue was mounted. 44. Mr. Hardy sustained severe injuries to his right leg and foot including: a crushed right foot; multiple bone fractures to his foot and leg; lacerations, flesh and tissue damage to right ankle, calf and knee; muscle, ligament and bone damage to right knee. 45. First aid was administered by on-site personnel. Medical attention was administered by local Ambulance personnel and para-medics who flew in from Bendigo to assist. Voluntary Rescue Association (VRA) personnel took over the rescue of Lachlan Hardy from onsite personnel upon arrival. 46. Mr Hardy recovered and returned to light duties on 21 March 2005 and full duties on 23 May 2005. 47. At the time of the incident the absence of the guard had not been reported to management. Had the guard been in place the injury would not have occurred. Kellagher on 20 October 2004 48. On 20 October 2004, Mr. Edward Kellagher, age 50 years, an employee of the defendant, was exposed to risk whilst working in the 'Floor-person' or 'Floor-boy' role on the kill-floor at Klanstin Pty Ltd's meat processing business at the abattoir. 49. On 20 October 2004 Mr. Kellagher was working on the kill-floor undertaking the Floor-boy role. The Floor-boy role included working at the '1st changeover' area in close proximity to the head collection chute / screw hole. 50. In particular, on 20 October 2004, Mr Kellagher pushed waste into the head collection chute/ screw hole and on occasion picked up sheep heads and placed them into the screw hole by hand. 51. On that day the head collection chute/ screw hole was unguarded. 52. The area beneath the chain where wastes accumulate is normally wet and can be slippery under-foot. 53. On 20 October 2004 Mr Kellagher was exposed to the risk of slipping into the unguarded head collection chute/ screw hole, in the manner that Mr Hardy slipped that day. Salan on 20 October 2004 54. On 20 October 2004, Mr. Ricky James Salan, 21 years old, an employee of the Defendant, was exposed to risk whilst working in the shackling role on the kill floor at Klanstin Pty Ltd's meat processing business at the Deniliquin Abattoir, Abattoir Road, Deniliquin NSW 2710. 55. On 20 October 2004, shortly before 10.00am, the workers on the kill-floor had a 5-minute break. Immediately before that break Mr Salan had performed the shackling role, placing spreader bars in the front legs of the sheep carcasses and Mr Hardy had operated the head-lopping shears. After the 5-minute break Mr Salan and Mr Hardy swapped roles, so that Mr Hardy had the shackling role placing spreader bars and Mr Salan was in the role of cutting heads off carcasses. Immediately after the 5-minute break Mr Hardy slipped into the unguarded hole, as described above. 56. On 20 October 2004 Mr Salan, whilst performing the shackling role, was exposed to the risk of slipping into the unguarded head collection chute/ screw hole, in the manner that Mr Hardy slipped that day. An unsafe system of work following the introduction of the new head lopping process, resulting in the removal of a fixed guard 57. A new system for lopping heads off knocked sheep was introduced from 14 October 2004. 58. At some time between 12 October 2004 and 18 October 2004, the guard fixed over the head collection chute/screw hole was unbolted and removed. During the introduction of the new system, the guard over the head collection chute/ screw hole remained absent, creating a risk of injury for those working in the area, in particular Mr. Salan, Mr. Kellagher, Mr. Mitchell and Mr. Hardy. No risk assessment or system of regular safety inspections 59. Neither prior to its introduction nor over the period from 12 October to 20 October 2004 was a formal risk assessment in relation to the new shackling position undertaken. 60. Neither prior to its introduction nor over the period from 12 October to 20 October 2004 was a formal risk assessment in relation to the changed head lopping process undertaken prior to, and after using the new head lopping shears in production. 61. Neither prior to its introduction nor over the period from 12 October to 20 October 2004 was a formal risk assessment undertaken, as to the method by which heads and hocks were removed from the kill-floor. 62. There was no system of regular safety specific inspections of plant and equipment. In particular, there was no safety specific inspection of the under-floor screw conveyor and the incline screw conveyor. Safety and compliance inspections of the abattoirs conveyors had not been undertaken since taking over operations from Famicorp Pty Ltd on 1 July 2002. No induction or training 63. Mr Hardy did not receive induction training prior to the 20 October 2004 incident. On 19 October 2004, Mr Hardy received instruction and on the job training in relation to the shackling task from another employee whilst working in the shackling area on that day. Mr Salan received induction training on 4 April 2001. 64. Of the 18 new employees who commenced work between 17 August 2004 and 12 October 2004, none had received induction training. 65. The defendant had not trained all its employees as to what to do in case of an emergency involving the under-floor screw conveyor, in particular how to stop the conveyor. 66. In particular, the defendant had not trained all its employees as to how to stop the underground screw from inside the kill floor. 67. Mr Salan and Mr Redden had not been made aware that there was a stop button inside the kill floor. Mr James Henshaw, Kill Floor Supervisor, was aware of the stop button inside the kill floor. 68. The defendant had a system in place for reporting injuries, but not for reporting 'near-misses'. Lack of systems to identify, assess and control risks to health when processes are changed and or new processes introduced 69. The defendant did not undertake a safety audit or conduct a due diligence report of the site at the time it took over control of the Deniliquin Abattoir meat processing business. 70. There was no safety committee or safety representative at the workplace. There was an informal and ad hoc system whereby safety issues could be brought to the attention of supervisors who in turn could make requests to maintenance. Alternatively such concerns could be raised at a Works Committee meeting. The Works Committee was a formal forum but no minutes were kept. 71. In the days prior to the Hardy incident a number of employees of the defendant observed that the guard had been removed. Some employees recognised the lack of the guard as a safety concern. None reported the matter. Other than the informal and ad hoc system whereby safety issues could be brought to the attention of supervisors, there was no system in place, which required such concerns to be reported and acted upon. 72. There was no system requiring an employee to report near miss incidents to the defendant or for the defendant to then act on such reports. The incident on 18 October 2004 was not reported and hence, the risk of the unguarded head collection chute/ screw hole was not identified and removed. Plant and equipment – The under-floor screw conveyor: Failure to ensure that plant was safe and without risks to health when properly used. 73. During October 2004, Klanstin had control and/or operated the under-floor screw conveyor in circumstances where: (a) the head collection chute/ screw hole inside the kill-floor for the under-floor screw conveyor was unguarded; (b) it did not have an emergency stop button inside the kill floor; (c) the stop/start button for that conveyor that was on the inside wall of the kill floor was not identified as such by any signage; (d) at the point where that conveyor emerged outside from under the kill-floor building it was unguarded for about 600mm; (e) an emergency stop button outside the kill floor adjacent to where the screw conveyor emerged from under the kill floor was not operational and placed in a position where, to operate it, a person would have to lean across an unguarded portion of the screw conveyor; (f) it had no main isolating switch to completely isolate the sources of drive energy from the conveyor or conveyor system which was capable of being locked in the isolating position; (g) the defendant had failed to operate and maintain this conveyor to the standard of AS1755-2000 Conveyors - Safety requirements, or otherwise operated and maintained this conveyor in a manner which achieved the same or better standard of safety. Plant and equipment – The external incline conveyor: Failure to ensure that plant was safe and without risks to health when properly used. 74. During October 2004 the defendant had control and/or operated the incline conveyor in circumstances where: (a) the side casing of the machine at the bottom of the conveyor had been modified, creating an unguarded hole. This had been done about 6 weeks before the incident; (b) that conveyor was unguarded along the full length of the conveyor, approximately 4 metres. About 6 weeks before the incident a tin cover that had acted as a guard was removed. This enabled larger sheep heads to move more freely up the conveyor; (c) it had no emergency stop button; (d) it had no main isolating switch; (e) the defendant had failed to operate and maintain this conveyor to the standard of AS1755-2000 Conveyors - Safety requirements, or otherwise operated and maintained this conveyor in a manner which achieved the same or better standard of safety. Plant and equipment – the under-floor screw conveyor - Australian Standards 75. The defendant had control of, and operated, the under-floor screw conveyor. 76. Australian Standard AS1755-2000 Conveyors - Safety requirements set out various requirements for such conveyors. It became apparent during the Inspector's investigation that the conveyor did not comply with the relevant Australian Standard. Plant and equipment – Incline conveyor – Australian Standards 77. At all material times, the defendant had control of, and operated, the incline conveyor. 78. Australian Standard AS1755-2000 Conveyors - Safety requirements set out various requirements for such conveyors. It became apparent during the Inspector's investigation that the conveyor did not comply with the relevant Australian Standard. Remedial action by Klanstin Pty Ltd 79. On 20 October 2004, after the Hardy incident, the head collection chute/screw hole was initially secured by bolting a stainless steel sheet over the screw hole. The existing guard was later refitted. 80. After the Hardy incident the defendant undertook safety risk assessments in respect of matters, which were the subject of Work Cover Improvement Notices. 81. Subsequently a new system and equipment was put in place, as follows: (a) First, the head collection chute/ screw hole had its guard bolted down. Waste other than heads continued to be pushed into the guarded head collection chute/ screw hole and out via the under-floor screw conveyor. (b) Second, a head chute was installed at the head-lopping station, such that the heads that are lopped off fell into the chute and then straight out of the building into an external waste collection bin. (c) Third, at the 1st shackling station a new raised platform was placed, with a grill floor, through which fluids can fall to the pit floor below. The raised platform covers the guarded head collection chute/ screw hole and provides secondary guarding for the head collection chute/ screw hole. (d) Fourth, railings have been placed around the head-lopping zone to prevent other workers, such as the worker at the 1st changeover area doing the shackling role, from entering that zone. (e) Fifth, a lock-off emergency stop button for the under-floor conveyor screw has been installed inside the kill-floor, with prominent signage indicating its purpose. (f) Sixth, staff who work in an area where there are conveyors have received training and instruction as to how and when to stop the conveyors. (g) Changes have also been made to the screw-conveyors. The external incline conveyor has been decommissioned as a result of a new Waste Collection System, which was installed plant wide. The underfloor screw conveyor now forms part of the new Waste Collection System. (h) The direction of the under-floor screw conveyor has been reversed, such that it carries the waste product to a new second stage conveyor outside the kill floor building. (i) The new external screw conveyor runs perpendicular to the under-floor conveyor and has a meshed guard bolted to it. The point where the two conveyors meet is guarded. At the outside of the building, at the point where the conveyors meet, there is a further emergency stop button which is prominently identified. (j) Following the incident maintenance personnel have been provided with lock-out tags to hang on machinery that has been isolated. (k) Since the Hardy incident there are usually two Floor-Boy positions per shift with the responsibility for removing waste off the floor, which reduces the risk of workers slipping on the waste. 82. If the head collection chute guard had been in place at all relevant times prior to and on the 20th October 2004, the Hardy and Mitchell incidents would have been prevented. 83. The other above changes would have assisted in minimizing risks to workers. Continual Improvement 84. A recent visit to Klanstin Pty Ltd on 14 March 2007 revealed that further refinements to the head lopping area had been incorporated, including the installation of a head conveyor to eliminate manually pushing heads along the incline collection chute into the head collection bin. 85. This new head collection conveyor now transfers all head waste (sheep and rams heads) to an external bin. The guarded Head collection chute / screw hole is now only used to collect hocks and no longer used for the collection of heads. 86. A truncated oblique chute/guard is now fitted to the Head collection chute / screw hole. Compliance with Improvement Notices 87. WorkCover issued a number of Improvement Notices to Klanstin. The company took steps to comply with each of the Notices issued. Co-operation with WorkCover 88. The defendant co-operated with WorkCover throughout the investigation of this matter. Early plea of guilty 89. The defendant entered early pleas of guilty and is therefore entitled to have the Court take this into account when imposing sentence. No Prior Convictions 90. The defendant has no prior convictions under the Occupational Health and Safety Act 2000. Moiety 91. The prosecutor seeks a moiety of any fine imposed by the Court in this matter. Costs 92. The prosecution seeks its reasonable costs and disbursements in an amount as agreed with defendant, or failing agreement, as assessed. oo00oo DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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