Industrial Court of New South Wales CITATION: Inspector McKay v Homealloy Bodyworks Pty Limited [ACN 094 793 683] & Another [2010] NSWIRComm 103 Inspector McKay (Prosecutor) PARTIES: Homealloy Bodyworks Pty Limited (First Defendant) John Christopher Fitzer (Second Defendant) FILE NUMBER(S): 887 of 2009; 888 of 2009 CORAM: Backman J LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999 Occupational Health and Safety Act 2000 HEARING DATES: 27 November 2009 DATE OF JUDGMENT: 22 July 2010 Mr T Howard of counsel WorkCover Authority of New South Wales (Ms F Miller) LEGAL REPRESENTATIVES: Mr A Joseph of counsel Leitch Hasson Dent (Mr A Dent) JUDGMENT: - 5 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Backman J Thursday, 22 July 2010 Matter No IRC 887 of 2009 Inspector McKay v Homealloy Bodyworks Pty Limited [ACN 094 793 683] Prosecution pursuant to section 8(1) of the Occupational Health and Safety Act 2000 Matter No IRC 888 of 2009 Inspector McKay v John Christopher Fitzer Prosecution pursuant to section 8(1) of by virtue of section 26(1) of the Occupational Health and Safety Act 2000 JUDGMENT OF THE COURT [2010] NSWIRComm 103 1 Homealloy Bodyworks Pty Limited (Homealloy) pleaded guilty to one offence under s 8(1) of the Occupational Health and Safety Act 2000 (the 2000 Act). At the time of the offence, Homealloy manufactured truck bodies including table tops, pantecs and tautliners. 2 John Christopher Fitzer (Mr Fitzer) pleaded guilty to one offence under s 8(1) and s 26(1) of the 2000 Act. At the time of the offence, Mr Fitzer was one of two directors of Homealloy. The other director was his wife, Deborah Louise Fitzer. Mr Fitzer was involved in the operational side of the business. Homealloy managers reported directly to him. 3 Homealloy employed about 37 full-time employees in its Sydney premises at the time of the offences. Rodney Everett Brown was employed by Homealloy about three months before the offences as an auto-electrician, although he had no formal qualifications in that occupation. He had worked as a security guard prior to his employment with Homealloy. His duties at Homealloy included the wiring and mounting of lighting, taillights, harnesses, reverse cameras, screen alarms and central locking on the trucks. 4 Matthew Dunn was another employee of Homealloy. He was a vehicle body maker and had been in the employ of Homealloy since October 2003. Matthew Phillips was employed as a truck body builder and had been working for the defendant since about February 2001. Homealloy also employed three workshop supervisors to whom Mr Brown reported. The supervisors were also required to work as truck body builders or auto-electricians. They reported to Kieran Scott, the workshop manager. Mr Scott in turn reported to Paul Scott, the manager. 5 Mr Brown commenced work at about 7am on 30 July 2007. Shortly after, he required the use of a forklift truck (FLT). Homealloy utilised two FLTs at its Sydney premises. Mr Dunn was utilising one FLT to raise a floor plan (a metal structure also referred to as a truck body and base frame) from metal stands. It was agreed between the parties that the floor plan would have weighed somewhere in the vicinity of 1.3 to 1.5 tonnes. Its precise weight was not ascertained. The floor plan was also rectangular in shape with dimensions about 2.49 metres wide, 8.8 metres in length and 100 mm in height. It had been placed on high stands at a height of 1700 mm. Mr Dunn, with the assistance of Mr Phillips, was using the FLT to remove the floor plan from the high stands in order to place it on lower stands (at a height of 800 mm). Mr Brown decided to assist the two employees with the task. 6 While Mr Dunn raised the floor plan on the tynes of the FLT, Mr Phillips, with Mr Brown assisting, removed the high stands and placed the lower stands under the floor plan. While this manoeuvre was taking place, Mr Brown noticed that one of the lower stands required re-alignment to enable the floor plan to come to rest in the correct location. He stood underneath the raised floor plan to align the lower stands, while Mr Dunn was lowering the FLT tynes carrying the floor plan. While still underneath the floor plan the rear wheels of the FLT came off the ground and the floor plan slid off the tynes. Mr Brown was unable to get clear of the floor plan so he laid on his back raising his left leg against it in an attempt to prevent it from hitting his chest. He was, however, pinned to the ground by the floor plan, although one side of the structure came to rest on the lower stands and was therefore off the ground. 7 Eight to ten employees assisted in lifting the floor plan off Mr Brown who was shortly after taken by ambulance to Liverpool Hospital. He suffered a fractured left hip, dislocated left lip and dislocated left knee cap. It was an agreed fact that the incident could have resulted in more serious injuries if the floor plan had not come to rest on the lower stands. Objective Factors 8 At the time of the offences, Homealloy did not have a documented system for the work involved in raising or lowering floor plans from or onto stands. The floor plan involved in the accident was a tautliner floor plan. The work of raising or lowering floor plans from or onto stands was regular work at the premises. Messrs Dunn and Phillips usually performed this work about twice a week. The work was not within Mr Brown's usual sphere of duties, however, he also regularly assisted other employees in performing the work about twice a week. It was a common practice at the premises for employees to assist each other with various tasks. 9 Although the work in moving the floor plans to and from stands formed part of Messrs Dunn and Phillips' normal duties, neither had received any specific instructions on how to perform the task at the time of the offences. 10 Homealloy kept two FLTs on the premises. There was no written policy as to the requisite number of FLTs to use when performing the task. As a result, the employees sometimes used one FLT, although more often both FLTs were used. The decision was left entirely to the discretion of the workers. The workshop supervisors were aware that on occasions only one FLT was used. 11 Moreover, the system of work adopted by Messrs Dunn and Phillips, with Mr Brown assisting, at the time of the incident, was a common practice, that is, an employee was normally required to place himself underneath the floor plan in order to remove the stands. 12 These matters in combination, show a failure on the part of Homealloy to have regard to a number of basic precepts of safety at its Sydney premises. In particular, employees, such as Mr Brown, routinely carried out work which they were not trained or qualified to do, which was not part of their normal duties and which involved highly dangerous procedures. 13 Nor does it appear that they were adequately supervised. According to the agreed facts, Homealloy's managers and supervisors were inexperienced in their supervisory roles. Mr Dunn said that he was operating the FLT as a trainee on a logbook under the supervision of Brian Boon. Mr Boon was working in another area at the time of the incident and was not supervising Mr Dunn while he was operating the FLT. This was contrary to a requirement of the Occupational Health and Safety Regulation 2001 (2001 Regulation). Clause 266 of the 2001 Regulation dealing with "Scheduled work", which includes the operation and use of a FLT (Clause 266.10.1), required a worker to have necessary qualifications to do "Scheduled work". Clause 271 provides an exception for trainees but only if the trainee performs the work under the supervision of a supervisor. Under Clauses 272 and 273 a "responsible person" (in this case, Homealloy) is obliged to ensure that a trainee is "directly supervised" at all times, unless Homealloy has established that the trainee's level of competency was such that "direct supervision" was unnecessary and a lesser degree of supervision would not endanger his or her health and safety. There was no evidence that Homealloy had established any of the latter requirements with regard to Mr Dunn. 14 Mr Brown's supervisors, moreover, were unaware of the lengths or weights of the floor plans. The supervisors' roles were not documented. Some exhibited a poor understanding of the role. One supervisor, for example, when questioned, understood his supervisory role to be confined to ensuring the workers performed the work. Mr Scott had received no management training and had no experience as a Workshop Manager prior to his appointment by Homealloy. 15 In addition, there was no proper system of induction or training in place at the premises. No employees had been provided with formal induction training. Training at the premises was informal and consisted of the employees informing themselves and other employees how to perform tasks. No records of any training were kept. 16 FLTs were also routinely operated by employees who did not hold Certificates of Competency as required by Clause 270 of the 2001 Regulation. The operators used their own discretion to determine when it was safe to use one FLT instead of two. Their discretion was exercised in circumstances where they did not know the weight of the floor plans or the load bearing capacities of the FLTs or of the tynes. The FLT load plates contained inadequate information to permit proper assessment of the safety of a lift. Mr Dunn's decision, for example, to use one FLT to lift the floor plan at the time of the accident was based solely on the fact that it was the only one available. 17 Given this state of affairs, it seems hardly surprising that a number of unsafe work practices had evolved at the workplace. The procedures in use at Homealloy's premises were largely ad hoc. Inadequate supervision, lack of training and the lack of any properly formulated or documented procedures geared towards safety no doubt contributed to the development of unsafe work practices, in particular, the practice engaged in by Mr Brown at the time of the accident of placing himself underneath the path of the floor plan. 18 These matters, in combination, elevate the offences to a serious category. 19 The risk to Mr Brown's safety was also obvious and reasonably foreseeable. The floor plan weighed in excess of one tonne. One FLT was used in circumstances where no prior discussion had taken place and no procedures had been formulated which might have given guidance to the workers on the suitability of using one FLT instead of two. Mr Dunn's decision was based solely on the fact that only one FLT was available. Moreover, Mr Dunn was not certified in accordance with the 2001 Regulation, nor was he "directly supervised" which was a requirement for trainees (assuming Mr Dunn was a trainee) under the 2001 Regulation. The risk to Mr Brown's safety arose by reason of an unofficial sanctioning of a patently unsafe procedure which involved him placing himself underneath the floor plan, carried on the tynes of one FLT, which was operated by a trainee who was not being directly supervised at the time. 20 Relatively simple measures were also available to Homealloy which could have averted the risk. Compliance with the 2001 Regulation was one such measure. Two other measures which readily spring to mind involve formulating a procedure and ensuring the workers were properly instructed in the procedure, with regard to the use and number of FLTs when lifting floor plans, and prohibiting employees from placing themselves underneath floor plans while those floor plans were being moved or lifted. 21 The breaches of the offences with which each defendant has been charged involved potentially grave, possibly fatal consequences. Mr Brown was no doubt spared more serious injuries because the floor plan came to rest on one side of the lower stands. 22 General deterrence must also be factored into the Court's consideration of the objective seriousness of the offences. It was contended on behalf of both defendants that the type of work done at Homealloy's premises was somewhat exceptional which might in turn affect the "precedent value of any penalty (imposed) to some extent". The Court has not been enlightened by any evidence as to the extent or prevalence of the type of work in which Homealloy was engaged. FLTs, on the other hand, are widely used in industry to lift heavy items and are notoriously dangerous and unstable machines, particularly in the wrong hands or when operated by persons not properly qualified. One aspect of Homealloy's business therefore involved in general terms the lifting of heavy objects using FLTs, an operation widely used in many manufacturing and construction businesses. It follows that the principle of general deterrence has real significance in these sentencing proceedings. 23 With regard to the application of specific deterrence, the prosecutor acknowledged that the defendants had, following the offences, put in place a number of effective measures to ensure no other employees were exposed to the risk to which Mr Brown was exposed. I will address those matters in more detail shortly. For present purposes, they are relevant to the application of the principle and will be taken into account in the defendant's favour. The principle is nevertheless relevant and will be applied on the basis that Homealloy continues to operate in the same industry and employs 37 full-time employees. 24 Neither defendant has prior convictions. Homealloy therefore faces a maximum penalty of $550,000 and Mr Fitzer a maximum penalty of $55,000. Subjective factors 25 Both defendants also entered pleas of guilty at the first reasonable opportunity. I propose to award a discount of 25 percent of the penalties to be imposed for the utilitarian benefit derived from the pleas of guilty. 26 As a separate consideration, each defendant is also entitled to leniency in recognition of the remorse shown by the pleas of guilty. 27 The defendants also fully co-operated with the WorkCover Authority in its investigation and prosecution of the offences, for example, by promptly attending to improvement notices served by the prosecutor, following the accident. 28 The defendants also undertook extensive remedial action after the offences. Mr Fitzer in his affidavit sets out the matters which have been attended to by both defendants: Since the accident, I have drafted and implemented a procedure manual, in conjunction with the WorkCover Authority and this manual has been approved by WorkCover. It is also our operational requirement that all employees have forklift licences. The procedures in relation to the lifting of truck bodies requires that two forklifts be used at all times. It is a requirement that all employees are trained in each individual task and records of their training are maintained. All staff attended a training session conducted by our OH&S officer, Andrew Clarke, in which all of the procedures in the manual were explained to our employees and they have all acknowledged in writing their understanding of the procedures manual. All new staff received similar training before they commenced any work. The risk assessment process is ongoing and I am continually assessing work practices to ensure compliance with the procedures manual. I also routinely review all work practices to satisfy myself that there is no safer alternative method of performing each work operation. 29 The defendants also assisted Mr Brown through his rehabilitation process. 30 The absence of prior convictions also entitles both defendants to leniency. 31 The defendants also demonstrated contrition as reflected in the post-accident remedial measures undertaken by them and in their expressions of remorse for the injuries suffered by Mr Brown. 32 The defendants did not contend that they lacked the capacity to pay any fine imposed. Documentation annexed to Mr Fitzer's affidavit provides support for the financial capacity of Homealloy to pay a fine. It was expressly contended on Mr Fitzer's behalf that he had the capacity to pay a fine as an individual. With regard to Homealloy, it was put on its behalf that it was a family company, the two sole shareholders being Mr Fitzer and his wife, and that therefore the imposition of any penalty will fall heavily on those two individuals. 33 The prosecutor sought to emphasise that the financial records made available to the Court reveal an expansion of Homealloy's operation and a "fairly healthy business". 34 The records produced do in fact show that Homealloy is in a position to pay a fine. It did not seriously contend otherwise. No authorities were placed before the Court in support of the submission that the Court may take into account in Homealloy's favour its corporate status as a family company and the fact that any fine imposed on it would impact on the two sole shareholders. This may or may not be the case but factors such as general deterrence remain important considerations in an assessment as to whether or not a defendant should have imposed against it more than a nominal fine. The offences here are undoubtedly serious. In these circumstances, the Court is not able to accede to the defendants' submission. Both defendants have the capacity to pay fines which should properly reflect the severity of the offences, taking into account mitigating conduct. 35 The subjective factors mentioned above will be taken into account in mitigation of the penalties to be imposed. Penalty 36 In determining penalties, the Court has taken into account the relevant objective factors, subjective factors in mitigation, maximum penalties and the absence of prior convictions by reference to the Crimes (Sentencing Procedure) Act 1999, in particular, s 21A. In assessing penalties, the Court also considers that the respective culpabilities of each defendant are equal. Nothing was placed before the Court to suggest otherwise. Both defendants accepted that the offences were serious, and that appropriate penalties lay somewhere in the mid-range. The prosecutor submitted that the offences fall more appropriately in the mid to high range of penalties. I propose to impose penalties on both defendants in the mid-range of penalties available in order to reflect the matters placed before the Court which demonstrate serious offences, although not in the highest category, as well as those matters which serve to mitigate the seriousness of the offences. Orders 37 In Matter No. IRC 887 of 2009, I make the following orders: (1) The defendant, Homealloy Bodyworks Pty Limited [ACN 094 793 683], is convicted of the offence and fined $110,000 with a moiety to the prosecutor. (2) Homealloy Bodyworks Pty Limited [ACN 094 793 683] is to pay the reasonable costs of the prosecutor as agreed, or in the absence of agreement, as assessed. 38 In Matter No. IRC 888 of 2009, I make the following orders: (1) The defendant, John Christopher Fitzer, is convicted of the offence and fined $11,000 with a moiety to the prosecutor. (2) John Christopher Fitzer is to pay the reasonable 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.