Industrial Court of New South Wales CITATION: Inspector Gill v Liana Park Pty Ltd [2006] NSWIRComm 348 Prosecutor: Inspector Stephen Gill PARTIES: Defendant: Liana Park Pty Ltd FILE NUMBER(S): IRC 485 of 2005 CORAM: Backman J CATCHWORDS: Occupational health and safety - plea of guilty to an offence under s 8(1) of the Occupational Health and Safety Act 2000 - defendant a labour hire company - incident at host employer's freight terminal when worker's clothing became entangled in moving parts of machinery - serious injuries - defendant had restricted access to workplace - principles in relation to labour hire companies considered - risk to safety was risk of workers' clothing becoming entangled or entrapped in machinery - risk to safety was reasonably foreseeable - general and specific deterrence considered - availability of remedial measures considered - gravity of breach and likely consequences considered - culpability of defendant considered by reference to culpability of host employer prosecuted in relation to the same incident - no prior convictions - early plea of guilty - contrition, remorse - assistance to accident victim - cooperation with authorities - frank acknowledgment by defendant of its responsibilities towards workers - insufficient evidence upon which to assess defendant's capacity to pay a fine - penalty - orders - costs. LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999 Occupational Health and Safety Act 2000 Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 Daly Smith Corporation (Aust) Pty Ltd and Anor v WorkCover Authority of New South Wales (Inspector Mansell) (2006) 151 IR 173 Drake Personnel Ltd t/a Drake Industrial v WorkCover Authority (Inspector Ch'ng) (1999) 90 IR 432 Inspector Gill v Qantas Airways Limited [2005] NSWIRComm 326 CASES CITED: Maddaford v CSR and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337 Morrison v Powercoal Pty Ltd (2003) 130 IR 364 Morrison v Powercoal Pty Ltd (No 3) (2005) 147 IR 117 R v Thompson; R v Houlton (2000) 49 NSWLR 383; 115 A Crim R 104 WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Limited and Anor (2000) 95 IR 383 WorkCover Authority of New South Wales (Inspector Legge) v Coffey Engineering Pty Limited (No 2) (2001) 110 IR 447 HEARING DATES: 15/12/2005 DATE OF JUDGMENT: 11/03/2006 Prosecutor: Mr D O'Neil of counsel Solicitors: Carroll & O'Dea LEGAL REPRESENTATIVES: Defendant: Mr T Dixon of counsel Solicitors: Edwards Michael Solicitors JUDGMENT: - 1 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Backman J Friday, 3 November 2006 Matter No IRC 485 of 2005 INSPECTOR STEPHEN GILL V LIANA PARK PTY LTD Prosecution pursuant to s 8(1) of the Occupational Health and Safety Act 2000 JUDGMENT [2006] NSWIRComm 348 1 Liana Park Pty Limited has pleaded guilty to an amended application for order which alleges that an offence was committed under s 8(1) of the Occupational Health and Safety Act 2000 (2000 Act). The offence arises out of an incident on 21 December 2003 at the Unit Load Distribution area, Qantas Freight Terminal at Mascot (the freight terminal). The freight terminal was operated by Qantas and the defendant, a labour hire company, which provided workers to the freight terminal under a labour hire agreement. This agreement was entered into between Qantas and another corporation, Blue Collar Personnel Pty Ltd (Blue Collar). The defendant was a wholly owned subsidiary of Blue Collar. Both corporations shared a common directorship. Cynthia Anne Smith was the sole director of both corporations. 2 The defendant employed Paul Evans to work in the freight terminal as a storeman and forklift driver. Mr Evans' role was to manually break down freight cans in the import section as well as general forklift duties. The import section consisted of a series of 56 semi-automated roller conveyors or roller decks lying adjacent to each other. Each roller deck was approximately 3.2 metres wide and 6.6 metres long. They were separately numbered and made of metal. Machines moving along tracks, called elevated transfer vehicles (ETV) transferred freight cans on and off the roller decks. 3 On 21 December 2003 freight cans were being unloaded and transferred to the ETVs via the roller decks. Mr Evans, who had been working in the area for about 6 months, walked to a semi-restricted zone in order to adjust a radio which had been placed on a flat-surfaced raised metal platform between roller decks numbered 47 and 48. Underneath the platform was a chain belt and an extractor arm, used for activating the rollers. While adjusting the radio Mr Evans squatted beside the roller deck. At the same time a Qantas employee operated an ETV. This in turn automatically engaged the roller decks which commenced to turn. Mr Evans became entangled in either the turning roller decks or the chain under the platform by his shorts which were baggy-style three quarter length. He suffered severe perineal injuries, damage to his lower vertebrae and ongoing psychological problems. He has not been able to return to work. 4 According to the agreed statement of facts, the defendant had never undertaken a risk assessment of the area or a job safety analysis in relation to the role performed by Mr Evans. Neither did it provide proper supervision in relation to the unloading of freight cans, nor, develop adequate systems of safety management in relation to the work. Neither Qantas nor the defendant ensured that Mr Evans wore industrial style (non baggy) shorts while at work. It was ascertained that the radio had been placed on the platform with the full knowledge of Qantas and in very close proximity to moving plant. The purpose of the radio appeared to be so that the workers could listen to sporting events. 5 Following the incident Qantas undertook an investigation. The conclusions from the investigation have been set out in the agreed statement of facts as follows: The root causes of the incident have been assessed as being a combination of:- * the radio's position * Mr Evans' action of either sitting or crouching very close to the rollers on the deck * Mr Evans' wearing of the non-Qantas issue baggy cargo style short pants * Mr Richard Loader activating the decks while a person was in close proximity to the rollers. ... the incident occurred whilst an employee was attempting to adjust a radio (non-work related) which had been placed in a hazardous area. 6 The amended application for order has particularised the offence as follows: The Defendant, being an employer, on the said date at the said site, contrary to section 8(1) of the 2000 Act, DID FAIL to ensure the health, safety and welfare at work of all of the employees of the Defendant employer, and in particular, Paul Evans. In particular, the Defendant failed to ensure the provision and maintenance of a safe system of work in relation to loading and unloading of freight at the site such that employees were not exposed to the risk of entrapment with roller decks at the site during the unloading process, in particular by failing to ensure that: (i) A risk assessment of the Roller Decks was undertaken; (ii) employees would not be sitting or squatting on or adjacent to the Roller Decks when engaged by the ETV; (iii) employees wore appropriate personal protective equipment including industrial style shorts; (iv) proper supervision was given to the unloading process. Consideration 7 The evidence reveals that Mr Evans, at the time of his accident, was working in an environment where inherently dangerous machinery and equipment were being operated. The area was a restricted area, accessible only to those workers who had the appropriate security clearance. This took the form of an Aviation Security Identification Card (ASIC). Sometime in 2000 Ms Smith was issued with an ASIC, however, this did not allow her access to the freight terminal where Mr Evans and other employees of the defendant worked. According to Ms Smith she was denied access to the area because she did not work there and was deemed a visitor. Instead she visited the offices at the freight terminal at least two or three times a week usually meeting with a Qantas administrative assistant, Sonia Necovski. During these meetings, which were about 30 to 45 minutes in duration, a range of issues were discussed such as work performance concerns raised by Qantas coordinators who were responsible for the control and supervision of labour hire staff; safety issues, uniforms and other matters. Periodically, Ms Smith requested access to the freight terminal, in order to speak to staff. If access was granted Ms Smith would be accompanied by either a coordinator or Ms Necovski, although there were often problems associated with the availability of the coordinators due to heavy workloads. These restrictions meant that the defendant could not directly supervise its workers on an ongoing basis. 8 During the sentence proceedings Ms Smith gave evidence. She said that the defendant had been sending workers to the freight terminal for about 5 years and that during that time she had been inside the freight terminal, accompanied at all times by a coordinator, about once every 6 months. Under the terms of the labour hire agreement between Qantas and Blue Collar, day to day supervision and control of the labour hire personnel were the sole responsibility of Qantas. 9 This type of arrangement in relation to supervision is not unusual as between labour hire companies and host employers where labour hire employees are sent to foreign work sites over which the labour hire company has limited control. One point of distinction relied upon by the defendant here is that it had been sending employees to the area for about 5 years. Mr Evans had been working in the area for 6 months. There was therefore a degree of familiarity with the worksite on the part of the defendant's workers, which was atypical of the more traditional labour hire arrangements. The critical concern here, in my opinion, is that like most labour hire arrangements the defendant was not in a position to provide day to day supervision of its workers at the workplace. This, as the authorities in this jurisdiction have made abundantly clear, gives rise to special responsibilities on the part of the labour hire company to ensure the safety of its employees in the workplace. 10 It is worthwhile to revisit some of the authorities on order to emphasise the important obligations on labour hire companies to ensure worker safety. Perhaps one of the best known statements of principle in relation to the obligations of labour hire companies is found in Drake Personnel Ltd t/a Drake Industrial v WorkCover Authority (Inspector Ch'ng) (1999) 90 IR 432 at 455: The relationship created between a labour hire company and its employees is distinguishable on a number of grounds from that existing between traditional employers and their employees. A labour hire agency does not employ people to work for itself but to work for a client, it does not directly on a day to day basis supervise the tasks carried out by the employee and it is usually not in control of the workplace where the work is done. However, these circumstances do not obviate, or diminish, the obligation of the employer under s 15(1) of the OH&S Act to "ensure the health, safety and welfare at work of all the employer's employees". Indeed, in our view, an employer who sends its employees into another workplace over which they exercise limited control is, for that reason, under a particular positive obligation to ensure that those premises, or the work done, do not present a threat to the health, safety or welfare of those employees. Certainly, there is no basis to consider that such an employer has a lesser liability or obligation under s 15(1) . and at 456: A labour hire company cannot escape liability merely because the client to whom an employee is hired out is also under a duty to ensure that persons working at their workplace are not exposed to risks to their health and safety or because of some alleged implied obligation to inform the labour hire company of the work to be performed. In our view, a labour hire company is required by the OH&S Act to take positive steps to ensure that the premises to which its employees are sent to work do not present risks to health and safety. This obligation would, in appropriate circumstances, require it to ensure that its employees are not instructed to, and do not, carry out work in a manner which is unsafe. 11 These observations have been expressly approved and applied in a number of decisions of this jurisdiction: see for example WorkCover Authority of New South Wales (Inspector Legge) v Coffey Engineering Pty Limited (No 2) (2001) 110 IR 447 at 465; Daly Smith Corporation (Aust) Pty Ltd and Anor v WorkCover Authority of New South Wales (Inspector Mansell) (2006) 151 IR 173 at [27] - [32]. 12 In Daly Smith Corporation the Full Bench confirmed the trial judge's findings in relation to the status of the corporate appellant as a labour hire company and its attendant statutory obligations under the occupational health and safety legislation. In that decision the labour hire company had relied on the host employer to ensure the safety of the workers hired out by the labour hire company. The Full Bench in commenting on this particular set of circumstances said (at [27]): As her Honour found, in such circumstances it is incumbent upon the labour hire company to make proper inquiries and implement proper processes to in turn ensure that the measures taken by those employers are adequate to ensure the safety of the workers. 13 In applying the above principles to the present circumstances it is no answer on the part of the defendant to contend that it could not properly assess and supervise its workers at the freight terminal because of security issues and restricted access or that the host employer had sole responsibility for worker safety. A labour hire company is required in accordance with its statutory obligations to ensure the safety of its workers. The nature of its relationship with its employees is that it is usually offsite and unable to directly and continuously supervise those employees. In the defendant's situation it was therefore incumbent upon it, in the absence of being able to provide direct day to day supervision to ensure, by appropriate contact with the host employer, that its employees were adequately supervised for example by ensuring that they wore correct clothing while on the job. In this latter respect the labour hire agreement made special provision for the wearing of uniforms at work: 5. UNIFORMS Uniforms will be issued following the completion of the Induction Program and only after all the required documentation has been provided, verifying that the Agency personnel meets all of the basic requirements, eg ASIC application form completed, Drivers' Licence, Forklift Truck Licence etc. The uniform authorisation form is to be issued by Qantas Freight and the uniform collected prior to commencement of work on the floor. Uniforms are available from: Qantas Uniforms QCD/1 Bourke Road MASCOT NSW 2020 14 The relevant risk to safety here was the risk of workers' clothing becoming entangled (or entrapped) in the roller system. This risk in my view was reasonably foreseeable. This is particularly so in the absence of any risk assessment or job safety analysis of the work performed by Mr Evans as well as the lack of adequate supervision of the employees in the context of restricted access to those employees working at the freight terminal. It is also relevant that the environment in which the employees worked contained dangerous equipment and machinery. Qantas has also been prosecuted in relation to the incident the subject of the present offence: Inspector Gill v Qantas Airways Limited [2005] NSWIRComm 326. On the question of the reasonable foreseeability of the risk to safety to Mr Evans, his Honour made certain observations which I adopt here: [20] The existence of a reasonably foreseeable risk to safety that is likely to result in serious injury or death is a factor that will be relevant to the assessment of the gravity of the offence: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 476; Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610, 99 IR 29 at [81]; Kembla Coal & Coke at 27. [21] I do not consider it was obvious that a person's clothing could become entangled in the rollers. But I do consider that an assessment of the risk posed by the rollers and associated mechanism would have: revealed the possibility of loose clothing becoming entangled; led to more effective measures being taken to prevent persons being near the roller decks; and, demanded a stricter regime as to the type of clothing worn in the terminal. 15 Both general and specific deterrence are also of importance. Boland J in Inspector Gill v Qantas expressed the need for the application of general deterrence in relation to the subject incident. I endorse his Honour's observations and adopt them in these remarks on sentence. At [25] of the judgment his Honour said: [25] In Capral Aluminium Ltd the Full Bench recognised that in the industrial context, it would be rare that a sentencing court need not impose a sentence that includes an element of general deterrence. The risk of entanglement of clothing in machinery has been known for many, many years and has been the cause of serious injury and even death. Modern practices, including the requirement to wear suitable clothing at work, has resulted in clothing entanglement becoming a much less frequent occurrence. It is important, however, that employers be reminded of the dangers of clothing entanglement and any penalty should compel attention to the risk. 16 Specific deterrence must also be considered. According to the defendant, the likelihood of its reoffending is low because it no longer hires labour to Qantas to work at the freight terminal. It also takes its occupational health and safety obligations seriously, and, it has taken extensive steps to avoid a re-occurrence of the incident. All this may be so but the defendant continues to operate as a labour hire company. According to Ms Smith in her affidavit sworn on 12 September 2005, as of that date the defendant engaged 420 workers all hosted by Qantas at its various facilities including the freight mail room, flight catering and in the baggage and cabin cleaning area of the international terminal. Notwithstanding the safety measures implemented by the defendant following the incident (an issue which I will discuss shortly) specific deterrence remains an important consideration: Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at [81] - [82]. 17 Another factor which heightens the objective seriousness of the offence is the availability of relatively simple measures that would have obviated the risk. The agreed statement of facts sets out a number of remedial steps that were taken by the defendant following the incident (at [21]): (i) updating the induction process given by the Qantas (sic) highlighting specifically the dangers of working near the roller decks; (ii) locking out of the power points located near the semi-automated equipment including roller decks; (iii) introducing procedures that only allow supervisors to enter the area where the incident occurred; (iv) erecting signage warning that the roller decks may move without notice; (v) retraining of all workers in the area in the new procedures; (vi) the issuing of a hazard alert by the Qantas to all its employees; (vii) Qantas provided guarding on the drive chains on parts of the roller decks; (viii) Qantas issued industrial style ("King Gee") shorts to employees of Liana; (ix) The Defendant arranged manual handling training for all its employees; (x) The Defendant obtained greater access to the site from Qantas and conducted more regular consultation with its employees; (xi) The Defendant developed a safety management system consisting of preliminary occupational health and safety induction program, a risk management and client management program and an incident and injury management program. 18 All of these steps which seem reasonably simple and straight forward could have been taken by the defendant in my opinion at any time before the offence. 19 The serious injuries suffered by Mr Evans are a manifestation of the degree of seriousness of the risk to safety. Although the fact of injury alone does not dictate the seriousness of the offence or the penalty, it nevertheless indicates in the circumstances here that the breach of the Act had every prospect of serious consequences: Maddaford v CSR and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337 at [17] [18] [23]; WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Limited and Anor (2000) 95 IR 383 at 428; Morrison v Powercoal Pty Ltd (2003) 130 IR 364 at [32]. 20 I turn now to consider the question of culpability of the defendant by reference to Qantas. Qantas was prosecuted and sentenced by Boland J in the judgment referred to above, in relation to the same incident. The parties have both referred the Court to the principle of parity as relevant to the Court's consideration on penalty. Strictly speaking the principle is not applicable, since the defendant and Qantas are not co-offenders. Different considerations apply to both defendants. The defendant's status as a labour hire company and the particular principles applicable to that status are not relevant to Qantas as the host employer. Both defendants also face different statutory maximums. Qantas came before the Court with prior convictions. The defendant has no prior convictions. Both defendants have been charged with different offences although those offences share some common elements. Nevertheless because both have been prosecuted in relation to circumstances arising out of the same incident the defendant's culpability may be compared to that of Qantas. 21 In considering the defendant's culpability by reference to the culpability of Qantas I am guided by the Vice-President, Walton J's observations on the principle of parity in WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Limited (at [103]): Whilst the principle of parity normally operates in relation to co-offenders or across the range of those convicted of the offence in question (see Siganto v The Queen (1998) 194 CLR 656at 670 and in relation to the same crime Postiglione at 309), this Court held in Warman (at 341) that where defendants (not being co-offenders) are prosecuted under different sections of the Act, the Court should nonetheless adopt an approach to sentencing which "shows consistency and not disparity in punishment in the same way as discussed by Mason J in Lowe " where there exists common factual circumstances giving rise to the charges. It should also be noted that the Court considered parity in Warman in the context of a labour hire company and the defendant who utilised that labour. Hence, the decision in Warman would require that the defendants, even though prosecuted under different sections of the Act, shall be treated consistently in accordance with the principles in Lowe v The Queen (1984) 154 CLR 606. The principle is also applicable to the consideration of Lyndhurst and each defendant. Lyndhurst was prosecuted under a different section of the Act, but was the employer of the deceased worker under licence and lease arrangements with the defendants. The prosecution of Lyndhurst and the defendants arise out of the same factual substratum. Nevertheless, the principle of parity only operates to the extent of comparing like with like. Differences in sentences arising from different circumstances will not violate the principle. These factors will include, in the case of the defendants, differences in the maximum penalty for the offence: Siganto v The Queen (1998) 194 CLR 656 at 670. 22 The defendant submits that its culpability is less than that of Qantas because of substantial mitigating factors applicable to it. Qantas, unlike the present defendant, was not a first offender and therefore faced a maximum penalty of $825,000. Qantas is a large international corporation and it did not, unlike the present defendant, plead guilty at the first opportunity. Qantas also restricted the defendant's access to its labour hire workers under the labour hire agreement due to site security imperatives. 23 I do not see that this last mentioned item is relevant to the question of the culpability of Qantas. It was no doubt legally entitled, under the agreement to restrict the defendant's access to its workers at the freight terminal. It was, however, as earlier discussed, incumbent upon the defendant to take appropriate measures to ensure the safety of its workers in circumstances where it was not able to supervise directly or on a day to day basis. Its particular status as a labour hire company and its special responsibilities towards its workers by virtue of their physical isolation from the labour hire company in my view is sufficient to provide a basis for concluding that its culpability is equal to that of Qantas. This is especially so when the statutory obligations to ensure safety under the occupational health and safety legislation are equally applicable to both the labour hire company and the host employer. 24 The Court has been informed that the defendant has no prior convictions. The maximum penalty therefore which the defendant faces is $550,000. The absence of prior convictions entitles the defendant to leniency normally extended to an offender who is otherwise not adversely recorded. 25 The defendant also entered a plea of guilty at the first opportunity. This is conceded by the prosecutor. It is therefore entitled to a discount of its sentence in accordance with the principles outlined in R v Thompson; R v Houlton (2000) 49 NSWLR 383; 115 A Crim R 104. 26 I consider an appropriate discount for the utilitarian value of the plea is 25 per cent. 27 I also take into account in the defendant's favour the impressive number of procedures and other measures it has developed and implemented following the commission of the offence. These have been earlier set out in this judgement. 28 The defendant through Ms Smith has also expressed its sincere remorse in relation to the incident involving Mr Evans. It has also provided assistance to Mr Evans throughout his rehabilitation through regular visits, frequent telephone calls, offers of assistance, direct assistance with regard to workers' compensation, as well as financial assistance. The defendant by its guilty plea, and as a separate consideration from utilitarian principles has also expressed contrition. It has also cooperated with WorkCover during the course of investigations. All these matters I take into account in the defendant's favour on penalty. 29 In addition the defendant has frankly acknowledged responsibility for its failure to conduct a risk assessment which contributed to creating a situation of potential danger to the safety of employees. It also acknowledges that it was responsible for inspecting the "full scope" of the work of its employees at the freight terminal. These matters are relevant to the defendant's expression of contrition and will be taken into account in its favour: Morrison v Powercoal Pty Ltd (No 3) (2005) 147 IR 117 at [119]. 30 Ms Smith in her affidavit sworn on 12 September 2005 stated that the defendant's profit margins had not increased since the incident although the defendant has invested considerable sums of money in improving matters of safety for its employees. In oral submissions the defendant conceded that there is no evidence before the Court of its capacity to pay a fine. In the absence of appropriate evidence the Court cannot therefore consider the issue. Penalty 31 In determining penalty against the defendant I have taken into account the objective seriousness of the offence, the personal factors detailed above, and the absence of prior convictions, These factors have been considered by reference to the Crimes (Sentencing Procedure) Act 1999 in particular s 21A. I have also taken into account the defendant's culpability by reference to the culpability of Qantas, which was charged in relation to the same incident. Orders 32 In Matter No IRC 485 of 2005 I make the following orders: (1) The defendant, Liana Park Pty Limited is convicted of the offence. (2) The defendant, Liana Park Pty Limited is fined $50,000 with a moiety to the prosecutor. (3) The defendant, Liana Park Pty Limited is to pay the costs of the prosecutor as agreed or in the absence of agreement as assessed. _______________________ 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.