Industrial Relations Commission New South Wales Medium Neutral Citation: Inspector Fraser v Karabelas (No 2) [2011] NSWIRComm 153 Hearing dates: 16 March 2011 Decision date: 16 November 2011 Before: Boland J President, Walton J Vice-President, Haylen J Decision: (a) in relation to Matter No IRC 1090 of 2008: (i) the defendant, Peter Karabelas, is convicted of the offence as particularised; (ii) the defendant is fined the sum of $7000 with half that amount to be paid to the prosecutor by way of moiety; (iii) the defendant is to pay the costs of the prosecutor in a sum as agreed or, in the absence of agreement, as ordered by the Court. (b) In relation to Matter No IRC 1091 of 2008: (i) the defendant, Peter Karabelas, is convicted of the offence as particularised; (ii) the defendant is fined the sum of $8500 with half that sum to be paid to the prosecutor by way of moiety; (iii) the defendant is to pay the costs of the prosecutor in a sum as agreed or, in the absence of agreement, as ordered by the Court. (c) in relation to Matter No IRC 1092 of 2008: (i) the defendant, Peter Karabelas, is convicted of the offence as particularised; (ii) the defendant is fined the sum of $11,500 with half that sum to be paid to the prosecutor by way of moiety; (iii) the defendant is to pay the costs of the prosecutor in a sum as agreed or, in the absence of agreement, as ordered by the Court. Catchwords: OCCUPATIONAL HEALTH AND SAFETY ACT 2000 - s 8(1) s 26(1) - appeal upheld regarding inadequacy of penalties imposed - respondent subsequently provides affidavit regarding capacity to pay increased fines - evidence of financial circumstances deficient - increased penalties imposed - sentencing proceeds on basis that respondent in some financial difficulty yet has some capacity to pay fines. FINES ACT 1996 - s 6 - capacity to pay fines imposed under Occupational Health and Safety Act 2000 - appeal upheld regarding inadequacy of penalties imposed - respondent's evidence of financial circumstances deficient - sentencing proceeds on basis that respondent in some financial difficulties yet has some capacity to pay fines. Legislation Cited: Fines Act 1996 Cases Cited: Environmental Protection Authority v Barnes [2006] NSWCCA 246; BC200606364 Inspector Fraser v Forcom Holdings Pty Ltd [2010] NSWIRComm 114 Inspector Fraser v Karabelas [2011] NSWIRComm 56 Inspector Jelley v Albright & Wilson (Australia) Ltd [2007] NSWIRComm 148 [2007] 164 IR 456 McColl v John Watson Building Services Pty Ltd [2004] NSWIRComm 353; (2004) 137 IR 310 R v Reader (Brian Henry) (1988) 10 Cr App R(S) 210 at 214 Rahme v R (1989) 43 A Crim R 81; BC8901984 Retsos v Regina [2006] NSWCCA 85; BC 200601967 Sgroi v The Queen (1989) 40 A Crim R 197; BC8901125 Workcover Authority of NSW (Inspector Mansell) v Jian Chen and Obing Pty Ltd t/as Old But New [2004] NSWIRComm 247; (2004) 137 IR 33 Category: Sentence Parties: Inspector Colin Fraser (Appellant) Peter Karabelas (Respondent) Representation: C Magee of counsel (Appellant) P Barham of counsel (Respondent) Criminal Law Practice, Legal Group WorkCover Authority of NSW (Appellant) Law Corporation Pty Limited (Respondent) File Number(s): IRC 1014 of 2010 Decision under appeal Citation: [2010] NSWIRComm 114 Date of Decision: 2010-08-20 00:00:00 Before: Backman J File Number(s): IRC 1087 of 2008 IRC 1088 of 2008 IRC 1089 of 2008 IRC 1090 of 2008 IRC 1091 of 2008 IRC 1092 of 2008 Judgment 1In its decision in Inspector Fraser v Karabelas [2011] NSWIRComm 56, the Full Court upheld an appeal brought by the prosecutor challenging the inadequacy of penalties imposed at first instance in relation to three separate offences occurring at the same work site and involving similar breaches. The facts are fully set out in the judgment on appeal and in the first instance judgment ( Inspector Fraser v Forcom Holdings Pty Ltd [2010] NSWIRComm 114). 2In the course of submissions on appeal, counsel for the respondent indicated that, should the Court consider that the original penalties imposed were inadequate, an opportunity would be sought to place material before the Court concerning the personal circumstances of Mr Karabelas. It was agreed that evidence and submissions could be made in writing without the need for a further oral hearing. The Full Court, having determined that the original penalties were inadequate and that there had been a failure to properly apply the totality principle, established a timetable for receiving further evidence and submissions as to the personal circumstances of Mr Karabelas. While there has been some slippage in the timetable, the material filed by both parties has now been finalised and the Court is in a position to conclude the matter. 3Although provision was made in the timetable for the filing of evidence and submissions, in fact, the respondent filed no submissions but did file an affidavit sworn by Mr Peter Karabelas. In that affidavit Mr Karabelas stated that he was now employed by Mani Constructions Pty Ltd as a formwork carpenter and earned "approximately $1100 per week after tax." He stated that he was married, had a two-year old child and that his wife was employed, earning approximately $800 per fortnight after tax. 4Mr Karabelas annexed "group certificates" for the financial years 2007-2008, 2008-2009 and 2009-2010. Those PAYG payment summaries indicated that in the 2007-2008 financial year he earned a gross salary of approximately $51,000 and in 2008-2009 financial year he earned a gross salary of $8000. In the 2009-2010 financial year, Mr Karabelas earned more than $19,000. No explanation was provided for these widely varying earnings. 5A bank statement for the period 24 January 2011 to 3 June 2011 showed that Mr Karabelas had a credit of $5.63 in the account and he attested that this was "his only bank account." The transaction history showed during that period, there were some 39 internet deposits variously described but often identified by reference to "Peter K" with the only other similar deposit being a credit of $330. There were no clearly defined deposits that appeared to relate to payments for employment of approximately $1100 per week. The largest deposit was one in the sum of $2500, two deposits were in the sum of $2000, one was in the sum of $1500, one was in the sum of $1100, one was in the sum of $1000 and one in the sum of $900. There were a variety of deposits in much smaller amounts. 6Approximate figures were provided in relation to regular monthly expenses totalling $5,300. That figure comprised $1500 for groceries, $600 for utilities (including electricity and water), $2600 in rent, $450 for fuel and $150 for telephone services. Mr Karabelas stated that he also had significant debts or liabilities. An amount in excess of $33,000 was the subject of a judgement debt in relation to which the judgment creditor had proceeded to file a bankruptcy notice. A further amount owed to the same entity in the sum of approximately $97,000 was also the subject of a judgement debt in relation to which a bankruptcy notice had been served upon Mr Karabelas. Copies of the bankruptcy notices were annexed to the affidavit. 7In relation to these matters Mr Karabelas stated that he was unable to pay or "resist" his creditors and anticipated being made bankrupt in the foreseeable future. He said his present financial circumstances were "dire" and the worst he had ever experienced. His ability to pay any fine was therefore "limited" by his severe financial circumstances and the Court was requested to take those matters into account in setting the new penalties in relation to these three offences. 8Following the filing of the affidavit sworn by Mr Karabelas, the prosecutor filed an affidavit and an outline of submissions concerning the financial capacity of the respondent to pay a suitable fine. The affidavit was sworn by Mr William Steenson, the acting principal solicitor for the WorkCover Authority of New South Wales. Mr Steenson recorded that, in correspondence from solicitors acting for the respondent, the prosecutor had been served with Mr Karabelas' affidavit and requested to advise as to whether the prosecutor would be filing any evidence and submissions in reply. It was proposed that, if there was nothing further, then the Court should be requested to deal with the matter on the papers and in the absence of the parties. 9Mr Steenson reviewed Mr Karabelas' affidavit and then forwarded a letter to solicitors acting for the respondent. In that correspondence the prosecutor identified a number of concerns arising from the terms of Mr Karabelas' affidavit and a number of "apparent inadequacies" in the material. Mr Steenson raised the following matters: * an ASIC search had revealed that Mr Karabelas was a former director of Mani Constructions Pty Ltd but there was nothing in his affidavit regarding his employment such as payslips, PAYG summaries or a contract of employment indicating that he was employed by Mani Constructions. Details of corroborating material were sought, including details of the account into which Mr Karabelas' pay was deposited; * the current director of Mani Constructions Pty Ltd, as listed by ASIC, was Theodosia Tory Karabelas, residing at the same address as that nominated by Mr Karabelas. He was asked to confirm the relationship with Theodosia Karabelas; * the affidavit annexed PAYG summaries for three financial years but there were no personal or business taxation returns for those years. That documentation was requested; * the bank statement provided did not show a record of wage deposits although there were internet deposits from " Peter K." He was asked whether Mr Karabelas or a company of which he was a former director held or controlled another bank account and if so, details and associated documentation were to be provided; * the deposits into Mr Karabelas' bank account averaged $1186. 83 per week, an amount greater than stated in Mr Karabelas' affidavit as to his earnings. He was asked to confirm the nature and source of the payments paid into the account; * the earnings stated in the affidavit were an approximation and were not supported by documents such as payslips. Supporting documentation was requested; * it was pointed out that there was nothing in the affidavit specifying whether Mr Karabelas held any assets such as vehicles or real estate. He was asked to state the situation in relation to assets; * the affidavit provided approximation of monthly expenses but there was no supporting documentation such as rental receipts to support the asserted spending. Supporting documentation was requested. 10The request for further information and documents led to an adjustment of the timetable for the filing of submissions and evidence in reply. Mr Steenson wrote to solicitors acting for the respondent and requested a reply to his earlier letter pointing out perceived shortcomings in the affidavit filed by Mr Karabelas. This correspondence was followed by a telephone call to the respondent's legal representatives. Later that day, Mr Abrahamian, solicitor acting for the respondent, spoke to Mr Steenson. Mr Steenson asked if it was likely that he would receive any more documentation in relation to Mr Karabelas' circumstances and was told by Mr Abrahamian that he had contacted his client after receiving Mr Steenson's letter and that it was really up to Mr Karabelas to provide further details and he hoped to have information earlier the following week. Mr Steenson replied that it was possible that there would be a need to file submissions but that would depend upon what was provided by Mr Karabelas. That conversation took place on 1 July 2011. Mr Steenson recorded that no further information or documentation had been received from Mr Karabelas or his legal representatives. 11The submissions filed for the appellant/prosecutor drew attention to the terms of s 6 of the Fines Act 1996 and noted that the evidentiary onus of establishing matters in mitigation, including the financial position of the defendant, lay with the defendant. A defendant desiring to plead incapacity to pay was under an obligation to discharge that onus by providing the Court with all the information relied upon to support the submission, thus allowing proper consideration to be given by the Court in the exercise of its sentencing discretion. That proposition was supported by reference to WorkCover Authority of NSW (Inspector Mansell) v Jian Chen and Obing Pty Ltd t/as Old But New (2004) 137 IR 33; [2004] NSWIRComm 247. The onus was upon the respondent to satisfy the Court, on the balance of probabilities, that the evidence was truthful and relevant to the issue of penalty citing McColl v John Watson Building Services Pty Ltd [2004] NSWIRComm 353; (2004) 137 IR 310. 12The submission accepted that the affidavit of Mr Karabelas provided some guidance as to his financial means but that the Court could not be satisfied, on the balance of probabilities, that the defendant had provided the Court with all relevant information to exercise its sentencing discretion. 13The submission then, essentially, repeated the concerns raised in Mr Steenson's letter to the respondent's solicitors, further noting that the income shown in three PAYG summaries did not explain Mr Karabelas' ability to pay the expenses that he claimed during that period. It was also pointed out that Mr Karabelas stated that his wife earned approximately $800 per fortnight but those earnings were not supported by payslips, PAYG summary statements or any other source documents. It was submitted that, having regard to these deficiencies, Mr Karabelas had not discharged the onus of demonstrating incapacity to pay any increased fines to be imposed upon him in light of the Full Court's judgment on appeal. 14The respondent has not filed any further affidavit material nor has any further documentation been provided to satisfy the various enquiries and requests made by Mr Steenson. The respondent has not filed any submissions. CONSIDERATION 15It is well established that a court should first arrive at a penalty and then review it on the basis of any case properly made out by a defendant of a lack of capacity to pay a substantial penalty or any penalty ( Rahme v R (1989) 43 A Crim R 81; BC8901984). In this respect, s 6 of the Fines Act provides: 6. Consideration of accused's means to pay In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider: (a) such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and (b) Such other matters as, in the opinion of the court, are r relevant to the fixing of that amount. 16It has frequently been said by the Court that, in dealing with occupational health and safety prosecutions, the primary consideration is the objective seriousness of the offence. Subjective considerations, while important, are necessarily secondary considerations. Thus, when considering issues concerning the capacity of a defendant to pay a fine or a substantial fine in the context of the operation of s 6 of the Fines Act , as noted in Rahme, the Court will first determine an appropriate penalty and then, if persuaded by the available material as to the capacity of the defendant to pay such a fine, reduce the penalty. Nevertheless, where such issues are raised the Court is not to impose a crushing or oppressive penalty nor should it impose a fine that the offender does not have the means to pay ( Rahme at p 86; Retsos v Regina [2006] NSWCCA 85; BC 200601967; R v Reader (Brian Henry) (1988) 10 Cr App R(S) 210 at 214). The Court is to have regard to the burden a fine will impose ( Sgroi v The Queen (1989) 40 A Crim R 197; BC8901125 ). 17Section 6 of the Fines Act , therefore, operates on a broad basis: the Court is required to consider "such information regarding the means of the accused as is reasonably and practicably available to the court for consideration" and "such other matters as, in the opinion of the court, are relevant to the fixing of that amount." Those words do not suggest any narrow or confined consideration but they leave the court to assess the appropriateness and adequacy of the information according to the circumstances concerning each particular case. Individual directors and family companies may not be as well placed to provide extensive material or specialist opinions as other better resourced individuals or companies. 18The three breaches committed by the respondent, Mr Karabelas, are serious offences occurring in the context of a prior conviction for a similar breach. The offences have been found to be aggravated in each case and represent a continuing disregard for safety at a large building site. The penalty to be imposed must reflect that situation except for an assessment of the extent to which that penalty should be reduced because of the financial circumstances of the respondent. 19The evidence and submissions for the appellant/prosecutor highlight the inadequacy of the financial information provided by Mr Karabelas. The solicitor for the appellant/prosecutor drew to the attention of Mr Karabelas' legal representatives the inadequacy of the material provided in his affidavit and sought additional information and source documents. None have been forthcoming. No party has asked for an oral hearing and no objection has been raised to the Court receiving Mr Karabales' affidavit nor has he been required for cross-examination. 20While the Court accepts much of the criticism levelled by the appellant/prosecutor against the adequacy of the material provided, the absence of submissions and a more detailed response to the issues raised by the appellant/prosecutor may also be an indication of the straitened financial circumstances of Mr Karabelas. The present state of the evidence leaves the Court in a difficult position. Mr Karabelas has sworn to being in dire financial circumstances but the full extent of his financial circumstances is unclear. Bankruptcy notices were served in June 2010 and February 2011 but Mr Karabelas' affidavit does not state that bankruptcy proceedings have, in fact, been commenced. 21A further issue arises for consideration. The terms of Mr Karabelas' affidavit did not raise the question of costs but logically, any inability to fully pay fines must also apply to costs. As no submissions were filed for the respondent, this aspect has not been developed. Costs have been recognised "as an important aspect" of punishment (see Environmental Protection Authority v Barnes [2006] NSWCCA 246; BC200606364) and as falling within the considerations required by the Fines Act ( Inspector Jelley v Albright & Wilson (Australia) Ltd [2007] NSWIRComm 148; [2007] 164 IR 456). In the absence of precise figures or an estimate as to costs, this issue can only be taken into account in the broad exercise of discretion having regard to the fact that there have been two hearings, each occupying one day. 22Applying the spirit of s 6 of the Fines Act , the Court can accept that Mr Karabelas is facing financial difficulties but the extent of those difficulties has not been established. Importantly, Mr Karabelas has accepted a limited ability to pay increased fines rather than asserting a total inability to pay any fine. His position, so described, may be met by an application to the Registrar for time to pay and/or to pay by instalments. The Court will, therefore, proceed on the basis that there will be some modest reduction in the penalties to be imposed. ORDERS 23Having regard to the abovementioned matters, the Court makes the following orders: (a) in relation to Matter No IRC 1090 of 2008: (i) the defendant, Peter Karabelas, is convicted of the offence as particularised; (ii) the defendant is fined the sum of $7000 with half that amount to be paid to the prosecutor by way of moiety; (iii) the defendant is to pay the costs of the prosecutor in a sum as agreed or, in the absence of agreement, as ordered by the Court. (b) In relation to Matter No IRC 1091 of 2008: (i) the defendant, Peter Karabelas, is convicted of the offence as particularised; (ii) the defendant is fined the sum of $8500 with half that sum to be paid to the prosecutor by way of moiety; (iii) the defendant is to pay the costs of the prosecutor in a sum as agreed or, in the absence of agreement, as ordered by the Court. (c) in relation to Matter No IRC 1092 of 2008: (i) the defendant, Peter Karabelas, is convicted of the offence as particularised; (ii) the defendant is fined the sum of $11,500 with half that sum to be paid to the prosecutor by way of moiety; (iii) the defendant is to pay the costs of the prosecutor in a sum as agreed or, in the absence of agreement, as ordered by the Court. ********** 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. Decision last updated: 16 November 2011