Industrial Relations Commission of New South Wales in Court Session CITATION: Paul Bastian v James Hardie Australia Pty Limited [2006] NSWIRComm 201 PROSECUTOR: Mr Paul Bastian PARTIES: DEFENDANT: James Hardie Australia Pty Limited FILE NUMBER(S): IRC 1669 of 2005 CORAM: Staunton J CATCHWORDS: Occupational health and safety - plea of guilty - general principles - objective seriousness of the offence - foreseeability - general and specific deterrence - subjective features taken into consideration - one prior conviction - application for indemnity costs in interlocutory notice of motion - indemnity costs in criminal proceedings considered - order for party/party costs - moiety to prosecutor granted - penalty imposed - orders made as to penalty, moiety and costs. Crimes (Sentencing Procedure) Act 1999 LEGISLATION CITED: Fines Act 1996 Occupational Health and Safety Act 2000 Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 Coombes v Patrick Stevedores Holdings Pty Limited [2005] NSWIRComm 56 Geoff Derrick v ANZ Group Limited (No 2) [2005] NSWIRComm 145 Geoff Derrick v Westpac Banking Corporation [2006] NSWIRComm 76 Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 Markarian v The Queen [2005] HCA 25: 18 May 2005 CASES CITED: O'Sullivan v The Crown in the Right of the State of New South Wales (Department of Education and Training) [2003] NSWIRComm 303 Peter Presdee v Commonwealth Bank of Australia [2005] NSWIRComm 389 R v Gallagher (1991) 23 NSWLR 220 R v Thompson; R v Houlton (2000) 49 NSWLR 383 R v Way [2004] NSWCCA 131 Stephen Finlay McMartin v Newcastle Wallsend Coal Company Pty Limited and ors [2005] NSWIRComm 31 Thorneloe v Filipowski (2001) 52 NSWLR 60 HEARING DATES: 16/6/2006 DATE OF JUDGMENT: 06/28/2006 PROSECUTION: Mr T Slevin of counsel SOLICITORS: Turner Freeman Lawyers LEGAL REPRESENTATIVES: DEFENDANT: Mr A Moses of counsel SOLICITORS: Corrs Chambers Westgarth JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM : Staunton J DATE: 28/6/2006 Matter No IRC 1669 of 2005 Paul Bastian v James Hardie Australia Pty Limited Prosecution arising under s8(1) of the Occupational Health and Safety Act 2000 JUDGMENT [2006] NSWIRComm 201 1 The defendant has entered a plea of guilty to an offence arising pursuant to s8(1) of the Occupational Health and Safety Act 2000 (the Act). 2 The offence details state that, on 2 April 2003, the defendant being an employer, contravened s8(1) of the Act in that it failed to ensure the health, safety and welfare at work of it's employees, in particular Mr Alan Taylor in that: The defendant failed to ensure that the system of work used by employees when removing blockages from the plant used to recycle cement sludge were safe and without risks to health. 3 As a result of the defendant's failure, employees were placed at risk of injury. Further, as a consequence of the defendant's breach, Mr Alan Taylor sustained burn injuries to his face, arms and neck. 4 Following the entry of the plea of guilty, an agreed statement of facts was tendered, stating as follows: [1] The defendant is and was at all material times the operator and employer at a manufacturing plant at 10 Colquhoun Street Rosehill, in the State of New South Wales ('the premises'). [2] On 2 April 2003 Alan James Taylor, a qualified fitter and turner, was employed by the defendant as a maintenance operator. At that time he had been employed by the defendant for approximately 11 years. [3] There was plant on the premises which was used to recycle cement sludge (the plant), which was installed and has been operational since 1995. [4] The plant included a series of sludge pumps designed to propel cement slurry and water through hoses into, around and out of the plant. [5] On occasion the pumps and/or hoses on the plant would become blocked, requiring employees of the defendant to clear the blockages. [6] On 2 April 2003, at approximately 7.00pm the plant, at the main sludge tank transfer pump, became blocked. At that time, Mr Taylor had the sole responsibility of clearing any blockages in the plant. [7] There were no documents available to him on 2 April 2003 setting out the work procedure to be followed when clearing blockages in the plant. [8] Mr Taylor, working alone, followed his usual practice when attending to a blockage in the plant. He isolated number 6 sludge pump, he isolated the main valve of the sludge tank, and he isolated the directional control valve. These steps were taken to ensure that the pump was fully isolated before any attempt to unblock the plant was made. [9] He placed his hand on the pipe on the bottom of main sludge tank transfer pump to determine whether the sludge at the blockage was hot. The pipe was not hot so he proceeded to open the pump at the point at which the hose met the pump. [10] Mr Taylor placed his right arm around the hose and pulled until the hose popped off. Cement slurry burst from the hose and pump and sprayed over Mr Taylor's face, eyes, nose, mouth, ears, neck, hands and lower forearms. The cement slurry was hot and Mr Taylor suffered burns. [11] Mr Taylor was wearing steel capped boots, long King Gee pants, a long sleeve shirt with sleeves rolled up, a baseball cap and a pair of protective glasses. The glasses were not sealed at the sides. This clothing offered some but not total protection from the hot cement slurry. [12] In extreme pain, Mr Taylor ran to the kitchen sink, which was about a minute from where the incident occurred and applied cold water to his injuries. He was later assisted to the shower where he had cold water applied for approximately 30 minutes. [13] He was then taken by ambulance to Westmead Hospital where he spent four days before being transferred to the Burns Unit at Concord Hospital where he was for a further three days. Mr Taylor spent another month as an outpatient at Concord Hospital and undertook physiotherapy. [14] Following the incident, Mr Taylor was off work until 15 August 2003, he then returned to work with the defendant and performed restricted duties for approximately one month. Mr Taylor attempted to perform his full employment duties but found it difficult as they exposed him to cement fibres, which caused rashes, skin cracking, and skin itchiness, to the areas where he had sustained burns in the incident. His employment with the defendant came to an end when he accepted a redundancy package, effective 7 November 2003. [15] The defendant in an internal memorandum of 15 January 1999, identified that the system of work relating to the clearance of blockages from pipes put its employees at 'risk of physical injury and burns'. [16] Following the incident on 2 April 2003 the defendant produced a document known as a work instruction which was entitled "Unblocking the Main Sludge Pump Transfer Pipes". [17] Prior to the accident on 2 April 2003, involving Mr Taylor there has been 4 incidents whereby employees of the defendant have sustained injuries as a result of clearing blockages from pipes attached to raw sludge pumps at the premises as follows: (i) Mr Jim Beaty on 10 December 1999. (ii) Mr George Evening on 10 September 2001. (iii) Mr Mathew Sultana on 11 October 2001. (iv) Mr Lam Tran on 19 September 2002. 5 There were a number of attachments accompanying the agreed facts. They are not reported here. 6 In addition, the prosecutor tendered without objection additional relevant material including the defendant's own report of the incident involving Mr Taylor on 2 April 2003 as well as a number of photographs of the equipment being used by Mr Taylor on the day of the accident. I will refer to that additional material as necessary later in this judgment. 7 On behalf of the defendant, the following affidavit material was produced without objection: (i) Affidavit of Mr Steve Wawrzyniak sworn 7 October 2005, 23 November 2005 and 30 May 2006 respectively. The affidavit of 7 October 2005 has been amended by the deletion of paras [7], [8] and [9]. Mr Wawrzyniak is the Quality Coordinator at James Hardie Australia Pty Limited and has been employed at the defendant's Rosehill site for the past twenty four years. Mr Wawrzyniak deposes to the verbal instruction that was in place prior to Mr Taylor's accident to unblock the sludge pumps. (ii) Affidavits of Ms Pauline Mary Knox with annexures sworn on 7 October 2005, 13 October 2005 and 30 May 2006 respectively. Ms Knox is the Environmental Health and Safety Manager with the defendant. She has been employed in that position since 2 March 2005 and has been employed in occupational health and safety positions in diverse industries for the past five years. Amongst other matters, Ms Knox deposes to the defendant's occupational health and safety systems generally, the training Mr Taylor has received during his time with James Hardie as well as remedial steps taken by the defendant since Mr Taylor's accident in relation to clearing blockages in sludge pumps. (iii) Affidavit of Mr Gary Jarvi sworn on 21 November 2005. Mr Jarvi is the Legal Counsel for the defendant. 8 The deponents were not required for cross examination. 9 The defendant has one prior conviction. Accordingly, the maximum penalty for the offence is $825,000. Relevant principles 10 The overall approach to be followed in relation to the determination of penalty is to be found in the first instance within the statutory provisions of the Crimes (Sentencing Procedure) Act 1999 (CSPA) and in particular in relation to these proceedings, ss 3A Purposes of Sentencing, 21A Aggravating, mitigating and other factors in sentencing, 22 Guilty plea to be taken into account. 11 In R v Way [2004] NSWCCA 131 it was emphasised that the provisions of the CSPA referred to above are not to be construed as representing 'a departure from settled principles of sentencing practice, or an abandonment of the discretion that is essential to any system calling for individualised justice'. As was said at [59]: ....it is clear that the legislative policy.......so far as that can be discerned from the legislation itself, was not to create a straight jacket for judges...but rather were intended to provide 'further guidance and structure to judicial discretion.' 12 It is well settled that the starting point for considerations as to penalty is the objective seriousness of the offence charged: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 474. 13 The principle of foreseeability as a factor in determining the objective seriousness of an offence was considered and affirmed in the Full Bench decision of Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at 646. 14 On the issue of foreseeability, the Full Bench in Capral also stated: The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However, the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J, President, in Ferguson v Nelmac Pty Ltd (at 209-210) in these terms: ... reliance on 'hindsight' must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s 15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy. 15 The principles of general and specific deterrence are also relevant in sentencing considerations. The approach to be taken on that issue has also been dealt with in some detail in Capral at 643-645. Without detailing all that the Full Bench had to say on those issues I believe the approach to deterrence in the sentencing process is encapsulated in the following passage from the Full Bench in Capral at 644 as follows: ... both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Page v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39 at [40]-[43] we would expect such cases to be very rare, and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted. 16 In the context of the above well established sentencing principles it will also be necessary to have regard to those general matters going to aggravation, mitigation and other factors identified in s 21A (1) of the CSPA relevant to the defendant. As was said in R v Way at [56]: ... it is not to be overlooked that there is a well established body of principles that have been developed by the courts over a long period of time. By providing guidance in the form of a list of aggravating and mitigating factors in s 21A, the Parliament did not intend to overrule or disturb those principles or restrict their application. In so far as those principles refer to factors, whether objective or subjective, that affect the 'relative seriousness' of the offence, they are expressly preserved by s 21A(1)(c). 17 Ultimately, all of the above factors must be considered as part of 'a complex of inter-related considerations' (See R v Gallagher (1991) 23 NSWLR 220). Having said that, as was said by Spigelman CJ in Thorneloe v Filipowski (2001) 52 NSWLR 60 at 69, it still remains for the sentencing judge to ensure: ... that a sentence should be proportionate to the objective gravity of the offence. This necessarily requires a sentencing judge to consider, at some stage in the reasoning process, the sentence that is appropriate for the particular circumstances of the crime without reference to the subjective case of the particular offender. 18 In Markarian v The Queen [2005] HCA 25: 18 May 2005, the High Court, by majority (Kirby J dissenting) generally disavowed the sequential or two tiered approach to sentencing. In doing so, their Honours did not entirely reject the proposition that, in some circumstances, 'an arithmetical process' would be appropriate. As they said at [39]: Following the decision of this Court in Wong it cannot now be doubted that sentencing courts may not add and subtract item by item from some apparently subliminally derived figure, passages of time in order to fix the time which an offender must serve in prison. That is not to say that in a simple case, ... indulgence in arithmetical deduction by the sentencing judges should be absolutely forbidden. ... The law strongly favours transparency. Accessible reasoning is necessary in the interests of victims, of the parties, appeal courts, and the public. There may be occasions when some indulgence in an arithmetical process will better serve these ends . ... (emphasis added) 19 On that point, McHugh J also acknowledged the need, where appropriate, for the awarding of a nominated discount for 'some factor'. As he said at [74]: ... The distinction between permissible and impermissible quantification of "discounts" on a sentence will usually be found in whether the quantification relates to a sentencing purpose rather than some other purpose. So, the quantification of the discount commonly applied for an early plea of guilty or assistance to authorities is offered as an incentive for specific outcomes in the administration of criminal justice and is not related to sentencing purposes. The non-sentencing purpose of the discount for an early guilty plea or assistance is demonstrated by the fact that offenders are ordinarily entitled to additional mitigation for any remorse or contrition demonstrated with the plea or assistance, aside from the discount for willingness to facilitate the course of justice... 20 Overall, I observe nothing in Markarian that precludes me, properly in my view, from identifying a discount for the entry of an early plea of guilty. Additionally, to the extent that there are subjective and mitigating features relevant to the defendant, they are matters which also should be considered in accordance with the provisions of the Crimes (Sentencing Procedure) Act 1999, in particular s 21A(1) earlier referred to. Considerations 21 In assessing the objective seriousness of the offence, it is a relevant consideration that the work being performed by Mr Taylor which resulted in the injuries sustained involved a procedure that created a risk to safety. That much is evident, in the first instance, by reference to the Internal Memorandum of the defendant included with the prosecutor's documentary material. That memorandum, dated 15 January 1999, was sent by Mr Frank Hill, Project Engineer with the defendant, to a number of senior management of the defendant. That memorandum dealt with the sludge recycle system. Amongst other matters canvassed in that memorandum was pipe work and blockages. On that issue, Mr Hill wrote: The two major problems with the pipe work for the sludge system are identification and blockages. Very few of the pipes have any identification labels which makes location difficult for anyone who may not be familiar with the process. Due to various modifications, the pipe runs in certain areas leave a lot to be desired and will cause blockages. To clean pipes, the operators are required to remove valves to gain access to the pipe. This can be unsafe and cause manual handling injuries . Blockages in pipes have been a major source of the system not being reliable. This causes housekeeping problems, but more seriously creates a safety issue. Operators are put at risk of physical injury and burns from water and sludge at the entry to pumps . It is therefore important to reduce the blockage at the source. This will mean running pumps in a ring main system when not batching. (emphasis added) 22 Clearly, in 1999, the defendant was on notice that the clearing of blockages was a problem and that the need for operators to access the pipes in the way they were required to was 'unsafe'. Further, that blockages in pipes 'creates a safety issue'. 23 Whatever steps may have been taken by the defendant to address the issues raised by Mr Hill, they were clearly inadequate. That much would be evident from the circumstances of the accident to Mr Taylor. However, there is more adverse evidence than that of the defendant's continuing failure to address the need for a safe system of work to clear blockages from pipes used to recycle cement sludge at it's workplace. Incidents which occurred between 1999 and 2002 whereby employees of the defendant sustained injuries while in the process of clearing pipe blockages are as follows: (i) Mr Jim Beaty on 10 December 1999. (ii) Mr George Evening on 10 September 2001. (iii) Mr Mathew Sultana on 11 October 2001. (iv) Mr Lam Tran on 19 September 2002. 24 Counsel for the defendant submitted that reference to the above earlier incidents for the purposes of emphasizing the reasonable foreseeability of Mr Taylor's accident were not relevant. They were not relevant, it was said, because the above earlier incidents involved the clearing of pipe blockages at number 6 sludge pump and not the main sludge tank transfer pump which was where Mr Taylor suffered his injury. The two pumps 'perform a different function'. 25 That may well be so but ultimately they each pump sludge with the attendant problems of potential blockage and the need for clearing. That much is clear in the penultimate sentence of para [9] of the affidavit of Mr Jarvi, where he stated: Each one pumps sludge, but at different parts of the plant and in different parts of the process. 26 Further, the memorandum of Mr Hill detailed above makes no distinction between the different functions of pumps at the defendant's premises as far as identifying the safety issues caused by blockages with the pipe work for the sludge system. 27 Against the above background, Mr Taylor's accident was clearly foreseeable. As was stated in Capral, the presence of 'a reasonably foreseeable risk of injury' will necessarily result in the offence being more serious in nature. As such, the starting point for the determination of foreseeability within the context of the objective seriousness of the offence is whether there was 'an obvious or foreseeable risk to safety against which appropriate measures were not taken': Laurenson Diecasting at 476. 28 On the basis of the warning contained in Mr Hill's memorandum in 1999 and the continuing incidents that occurred involving employees of the defendant in the clearing of pipes associated with the sludge recycling system culminating in the accident involving Mr Taylor in 2003, I am satisfied there were clearly foreseeable risks inherent in the clearing of blockages in the defendant's sludge recycle system. Further, I am satisfied that since 1999 at least, the defendant has failed to deal with those clearly foreseeable risks adequately such as to ensure its employees were not exposed to risks to their health and safety in unblocking the sludge cycle pipes. 29 Given the way in which the hot slurry burst from the hose and pump when Mr Taylor opened the pump at the point at which the hose met the pump, it was fortunate that the burns he sustained were not more serious. Certainly, the protective clothing he had on went some way to reducing the impact of what could otherwise have been much more serious injuries. 30 Further, it is relevant to the objective seriousness of an offence to consider if there were readily and easily available remediation steps which could have been undertaken by the defendant before the accident to prevent injury occurring. To put it another way, one should have regard to remediation or the extent of remediation that is done post the accident, as an indication of the extent to which foreseeability of injury was readily identifiable. 31 The affidavit of Ms Knox deposes to those steps the defendant has taken since Mr Taylor's accident. As she stated: [20] Since the accident, James Hardie continues to be committed to improving its OHS system, as demonstrated by engineering changes that were made to the number 6 sludge test pump (Pump), these include: (a) replacing the cam-lock with a bauer fitting; (b) adding a dump value to the pump; and (c) altering the pump to include flush pipes. These engineering changes have been designed to eliminate any risk of exposure to hot cement slurry when removing blockages from the pump. Exhibited to me at the time of afffirming this Affidavit and marked 'PK23' is a photograph of the pump taken after these changes were made. [21] The introduction of the bauer fitting has resulted in three significant safety improvements being made, as the bauer fitting: (a) requires less force to open the fitting than the cam-lock; (b) is easier to open at a distance with a rope or similar device than the cam-lock; and (c) it has a single longer lever (as opposed to the cam-lock having two smaller lever devices) which enables a simpler mechanism to control the opening of the lock. [22] The introduction of the flush pipes and dump value allow the maintenance operator to further check where a blockage might be located and enables easier access to remove blockages located near the dump valve. [23] Since the accident, James Hardie has equipped the Rosehill Site with infra-red temperature guns to provide employees with easier access to temperature guns to check the temperature of a machine which could have latent heat. [24] Since the accident, James Hardie has changed the work instruction in relation to removing blockages from slurry pumps. The new work instruction outlines in detail the steps that should be taken to unblock the sludge pump. This instruction has been communicated to all relevant employees. Exhibited to me at the time of affirming this Affidavit and marked 'PK8' is a copy of the new work instruction, entitled 'RWI-UBP 417, Unblocking the main sludge pump transfer pipes'. [25] Since the accident, a new procedure has been developed to ensure that employees have considered all the risks before attempting to unblock pumps. The new procedure requires a maintenance operator to obtain a specific clearance to work from their direct supervisor before clearing any blockage. The procedure provides that a maintenance operator must report to their Team Leader so they can discuss and evaluate the task. After the Team Leader has provided a secondary opinion, the Team Leader places his or her personal lock on the machine and provides a written clearance to work for the maintenance operator. After the task has been completed the Team Leader must return to the machine to remove his or her personal lock before the machine can be switched back on. Exhibited to me at the time of affirming this Affidavit and marked 'PK9' is a copy of the Clearance to Work Procedure entitled RWI-450-CC, Clearance Certificate'. 32 Reference to the documented new work instruction RWI-UBP-417 and the Clearance to Work procedure RWI-450-CC annexed to Ms Knox's affidavit confirms the steps taken by the defendant as deposed to by Ms Knox. It must be said, however, that the defendant was not only in a position to have done all it has now done well before the accident but one would wonder why those steps were not taken when the similar incidents occurred to other employees before Mr Taylor. 33 Mr Wawrzyniak deposes to the verbal instructions that he says was in place prior to the accident. He stated: [5] Prior to the accident to Mr Taylor there was a procedure in place to unblock the sludge pumps. Jason Biggs, the Manufacturing Superintendent, verbally communicated the procedure to James Hardie employees. The general steps that were reiterated to check that it was safe to open were: (a) Wearing personal protective equipment; (b) Isolating the pump; (c) Waiting until latent heat or pressure had dissipated from the sludge pump by: (i) waiting for up to an hour for the sludge pump to cool; (ii) hosing cold water over the machine; and (d) Using an implement, such as a narrow rope, to release the cam-lock on the sludge pump at a distance. [6] One of the reasons that it is important to wait until the heat has dissipated from the sludge pump before attempting to open the cam-lock is because the heat of the cement slurry does not always transfer to the external metal parts of the pump. 34 It cannot be said with any certainty that Mr Biggs' verbal communication to 'James Hardie employees' included Mr Taylor. Further, there is nothing to confirm when and the circumstances in which such a verbal communication was made. Given the importance of ensuring a safe system in the unblocking of sludge pumps, a 'verbal communication' in the most general sense is inadequate in all the circumstances. The fact that the defendant has pleaded guilty to the offence in the terms pleaded is acknowledgement by the defendant of that inadequacy. 35 I do acknowledge, however, when regard is had to Ms Fox's affidavits as to the extensive training programmes Mr Taylor had undertaken with the defendant between 1998 and 2002 in relation to both trade and safety training matters, that the defendant has an extensive and ongoing programme evincing a proactive commitment to occupational health and safety. 36 I note Ms Knox's affidavit that, prior to the accident in 2003 relevant to this offence, Mr Taylor had been awarded certificates that authorised him to do particular tasks. Those certificates were known as General Clearance to Work Certificates. In 2001, Mr Taylor was awarded such Certificates in relation to 'the mixing station, the silica plant and hot work'. Additionally, in May 2001, Mr Taylor had undertaken and been assessed for Clearance to Work training. 37 The significance of these Clearance for Work Certificates as well as the training undertaken, all completed in 2001, is that it underscores the defendant's proactive attention to training and the assessment of employees in order to ensure they are able to carry out a job safely. In short, whatever inadequacies are highlighted by the accident involving Mr Taylor, they demonstrate an aberration in the defendant's occupational health and safety systems rather than evidence of a systemic disregard for workplace safety. 38 Taking account of the facts and circumstances as well as those considerations identified, I assess the offence objectively as being in the mid range of seriousness. 39 The decision of the Full Bench in Capral clearly indicates that general and specific deterrence are factors that should be given weight in all but exceptional circumstances. The Full Bench said at 643-644 that: We consider that the extract from the judgment of Hungerford J in Fisher v Samaras Industries Pty Limited accurately states the approach that members of this Court should take in relation to the question of deterrence, both general and personal or specific, when sentencing an offender in relation to a serious breach of the legislation. It follows that those aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process. 40 In respect of specific deterrence, the Full Bench held in Capral at 644-645: In sentencing, a court may disregard the element of specific deterrence if satisfied that the risk of re-offending is low or non-existent. The court may form such a view as a result of the rehabilitation of the offender: R v Corner (unreported, Court of Criminal Appeal, 19 December 1997) or because the offender will not have the opportunity to commit a similar offence in the future: R v Macdonell (unreported, Court of Criminal Appeal, 8 December 1995). However, we think it unlikely that the weight to be attached to specific deterrence could be reduced to zero in cases of offences under the Act. 41 The defendant is part of a large multinational corporate structure. As Ms Fox deposed: [5] James Hardie is a subsidiary of the publicly owned company James Hardie Industries NV. James Hardie was registered as a proprietary limited company on 6 October 1998. In November 1998, James Hardie took over the Rosehill site from an associated entity. [6] James Hardie's business is purely involved in the business of manufacturing and marketing fibre cement building products. [7] James Hardie operates three fibre cement plants in Australia at the following sites: (a) Rosehill in New South Wales; (b) Carole Park in Queensland; and (c) Meeandah in Queensland. [8] As at the end of September 2005, James Hardie employed 573 employees Australia wide, of whom 281 were located at the Rosehill site. [9] The scope of the operation at the Rosehill Site is such that: (a) The production capacity is currently 22 million standard yards of product per year; and (b) The man hours are currently 6,040 hours per week and 314,080 hours per year (depending on the demands in the building industry). 42 On behalf of the defendant, the need for consideration going to general deterrence was acknowledged. In relation to specific deterrence, it was submitted, given all the defendant has undertaken both before and since Mr Taylor's accident, specific deterrence could be disregarded as part of my penalty considerations. 43 I have already acknowledged the defendant's overall proactive commitment to occupational health and safety. Nevertheless, the defendant continues to operate in an industry that presents ongoing and significant responsibilities in order to ensure that it's employees can work in a workplace environment free of risks to safety. In all the circumstances, I believe specific deterrence is relevant to my considerations on penalty tempered by those matters to which I have earlier referred, evincing as they do, a positive commitment to workplace safety. 44 The defendant is entitled to have taken into account it's early plea of guilty. In assessing that, the Court is guided by the decision of R v Thompson; R v Houlton (2000) 49 NSWLR 383, the principles of which are well settled and need no elaboration. I assess that discount at twenty five per cent. 45 It was acknowledged by the prosecutor that the defendant cooperated in relation to it's investigations concerning the accident involving Mr Taylor. 46 On the documentary evidence before me, I am satisfied that the defendant does approach it's occupational health and safety responsibilities as part of a structured and ongoing process with generally commendable results. Overall, the defendant is entitled to be given credit as an employer who is both proactive and properly committed to it's workplace safety responsibilities. 47 I note also Ms Fox's statement on behalf of the defendant to the following effect: [34] As James Hardie operates a heavy manufacturing industry involving fibre cement manufacture they are acutely aware of the OHS risks in its businesses and James Hardie takes its OHS responsibility very seriously. James Hardie is constantly changing and developing and improving its OHS System. What occurred to Mr Taylor was, and remains a matter of profound regret to James Hardie. On behalf of James Hardie, I would like to express James Hardie's sincere regret that this accident occurred. 48 According to the medical report tendered by the prosecutor, Mr Taylor returned to work with the defendant in June 2003 on light duties. He subsequently accepted a redundancy package in November 2003. He is now employed elsewhere as a maintenance fitter. 49 I am satisfied the defendant is entitled to further favourable consideration by way of mitigation for the subjective features I have identified. 50 The prosecutor has sought a moiety of the penalty imposed. The prosecutor is the Secretary of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) New South Wales Branch. His affidavit in support of the moiety stated as follows: [1] I am the Prosecutor in these proceedings. [2] The AMWU has an OHS Unit, at the Granville Office, which is headed up by Mr Dave Henry. [3] The OHS Unit undertakes the following tasks on behalf of the AMWU for AMWU members: (a) Conducting training as an accredited WorkCover trainer for AMWU members and companies and delivering non-WorkCover OHS training. (b) Conducting safety inspections at workplaces where the AMWU has award coverage and there is a suspected breach of the OHS Act. (c) Organising and running the bi-annual AMWU NSW Branch OHS Conference. (d) Writing OHS newsletters for AMWU members. (e) Representing the interests of the AMWU with regards to health and safety at Unions NSW. (f) Negotiating OHS and workers compensation policies and programs with key government departments. (g) Developing and implementing AMWU campaigns on safety and workers compensation and responding to all branch based enquiries. [4] I undertake to give any moiety of the penalty ordered to be paid to me by this Court to the AMWU. [5] I am authorised by the AMWU to give an undertaking that those funds will be used by the AMWU solely for occupational health and safety related purposes. 51 Mr Bastian was not required for cross examination and his affidavit was admitted without objection. Further, no objection was taken by the defendant to the order sought by the prosecutor in relation to a moiety of the penalty. 52 There have been a number of prior first instance decisions of this Court that have dealt with the issue of the allocation of a moiety of the penalty imposed to persons other than the usual statutory authority such as WorkCover, as being within the scope of s122 of the Fines Act 1996: see the decision of Walton J Vice-President in O'Sullivan v The Crown in the Right of the State of New South Wales (Department of Education and Training) [2003] NSWIRComm 303 at [185] - [194]; Haylen J in Coombes v Patrick Stevedores Holdings Pty Limited [2005] NSWIRComm 56 at [101]-[111]; and Boland J in Geoff Derrick v ANZ Group Limited (No 2) [2005] NSWIRComm 145 at [3]-[25]. In each case, for the reasons stated, the Court ordered a moiety of one half of the penalty imposed to be paid to the prosecutor. See also my earlier decisions in Peter Presdee v Commonwealth Bank of Australia [2005] NSWIRComm 389 and Geoff Derrick v Westpac Banking Corporation [2006] NSWIRComm 76. 53 As reference to the cases referred to will attest, taken together, they represent an exhaustive consideration of this issue. I do not propose to repeat them in this judgment. Suffice to say, I would concur with the overall conclusion in those judgments that the prosecutor in this matter falls within the scope of s122 of the Fines Act and that the Court has the capacity to order a moiety in his favour. I propose to do so. Costs 54 There are issues relating to costs between the parties requiring my consideration and determination. 55 The first is the question of costs relating to a summons for production served by the prosecutor on the defendant in June 2005. That summons was the subject of objections from the defendant culminating in a notice of motion filed by the defendant on 10 June 2005 seeking orders that certain parts of the summons be set aside for reasons going to lack of specificity, vagueness, incompleteness and oppression. That notice of motion was dealt with by me on 15 July 2005. Ultimately, after some observations from me, the parties resolved their differences relating to the summons and the question of costs was reserved. 56 Having considered the transcript of those proceedings and the respective actions of both parties culminating in the notice of motion filed by the defendant in June 2005, I believe that each party should bear its own costs of those proceedings. I so order. 57 The second costs issue that arises is the costs for the notice of motion filed by the defendants in November 2005 seeking orders that the prosecutor's notice of motion seeking leave of the Court to file an amended application for order be struck out and the proceedings be dismissed. The basis for the defendant's motion was that the defect in the prosecutor's initiating process was such as to render it a nullity, the defect could not be cured by an amendment and was out of time. 58 For reasons that I will not canvass in detail in this judgment, after the receipt of written submissions and following brief oral submissions, the defendant sought leave to discontinue it's notice of motion. 59 That leave having been granted, senior counsel for the prosecutor sought costs on an indemnity basis relying on what I would paraphrase as the 'hopeless case' principle justifying a special costs order. Support for that proposition is to be found in the Law of Costs: Dal Pont, Butterworths (2003) at [16.44] where the author states: It is appropriate to consider making a special costs order where it appears to the court 'that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success', as in such cases the action 'must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law'. Notwithstanding this 'presumption' it is not a prerequisite to the power to award special costs that a collateral purpose or some species of fraud be established. It is sufficient to enliven the discretion that, for whatever reason , a litigant, whether as plaintiff or defendant, persists in what on proper consideration should be seen to be a hopeless case. 60 It should be said at this point that, in objecting to an indemnity costs order, counsel for the defendant did not oppose a party/party costs order against the defendant. As well, he submitted, it would be entirely appropriate, in making such a costs order, to observe that it would have required senior counsel to be briefed by the prosecutor given the nature of the arguments to be put. 61 After a proper consideration of the submissions made by both parties in relation to the notice of motion referred to, I agree it was highly unlikely the defendant would have been successful in having the proceedings dismissed for the grounds and reasons relied upon. However, that does not, in my view, entitle the prosecutor to indemnity costs as opposed to party/party costs. 62 The approach to be taken to indemnity costs in criminal proceedings was considered by me in Stephen Finlay McMartin v Newcastle Wallsend Coal Company Pty Limited and ors [2005] NSWIRComm 31 in particular as follows: [328] The quantification of costs on an indemnity basis in criminal proceedings is not an approach, as best as I can determine, that has met with support in the courts. [329] In Law of Costs by Dal Pont, Butterworths (2003) at 833, when discussing costs in criminal cases, the author states at [24:53]: References in the cases to costs being an indemnity to the 'successful' party in this context should not be read as judicial acceptance of a complete costs indemnity. It is within the discretion of the court to award an amount limited to what are regarded as 'party and party' costs rather than the full amount of costs and disbursements the solicitor charged (or was entitled to charge) to the client. The courts have, to this end, met with a frosty reception submissions that costs in criminal matters may be quantified on an indemnity basis . (emphasis added) and further in the same judgment: [352] Costs orders are not made to punish an unsuccessful party. There are however circumstances where the court will recognise some 'relevant delinquency' on the part of the unsuccessful party and order costs on an indemnity basis: See Oshlack v Richmond River Council (1998) 193 CLR 72 at 89 per Gaudron and Gummow JJ. [353] Closer to home the Full Bench of the Commission reviewed the approach to indemnity costs in WorkCover Authority of NSW v Plastachem (2001) 110 IR 351 at 366-368. In doing so the Full Bench endorsed the approach of Hill J in Boner v Anderson (No 2) (1993) 50 IR 470 at 475 where his Honour said: It is fair to say that generally speaking an order for costs on an indemnity basis is justified in a case in which there are special or unusual features of an unmeritorious or improper nature surrounding the case of one party (usually the loser) which make it unreasonable and unfair that the successful party should be out of pocket as a result of the proceedings. It is unnecessary to traverse the cases in any detail; they demonstrate in one form or another special or unusual circumstances which manifest themselves in improper or unmeritorious conduct by the unsuccessful party as, for example, in cases involving the maintenance of a vexatious claim or defence, the institution and/or maintenance of an action or defence which, while not vexatious or involving an ulterior or collateral purpose, may, on a rational basis, be described as untenable or doomed to failure and cases where a party has conducted its case in wilful disregard of known facts or clearly established law. 63 I am not persuaded that the 'hopeless case' circumstances advanced on behalf of the prosecutor warrant the making of an indemnity costs order. Further, I am not satisfied that the defendant's motion was improper or unmeritorious to such a degree as to amount to a 'relevant delinquency' warranting indemnity costs. 64 In relation to the notice of motion filed by the defendant in November 2005, I order that the defendant pay the prosecutor's costs on a party/party basis as agreed or assessed. Further, in any assessment of costs on that basis, it is a matter where senior and junior counsel's fees should be taken into account. Orders relating to the substantive offence 65 In relation to the offence before me and taking account of all relevant considerations including those identified by ss21A and 22 of the Crimes (Sentencing Procedure) Act 1999, I determine a penalty of $98,000. 66 Accordingly, in relation to these proceedings, I order as follows: (i) The defendant is guilty of the offence as charged. (ii) I impose a penalty in this matter of $98,000. (iii) I allocate a moiety to the prosecutor of one half of the penalty imposed. (iv) I order the defendant to pay the costs of the prosecutor as agreed or assessed. Failing agreement, the matter may be referred to the Registrar for assessment. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.