District Court New South Wales Medium Neutral Citation: Safe Work New South Wales v Waycon Bulk Pty Ltd [2015] NSWDC 254 Hearing dates: 4 September 2015 Date of orders: 10 September 2015 Decision date: 10 September 2015 Jurisdiction: Criminal Before: Judge AC Scotting Decision: 1) In relation to the section 32 offence I impose a fine of $187,500 and in relation to the section 38 offence I impose a fine of $7,500. 2) I order pursuant to section 122(2) Fines Act 1996 that 50% of the fines are to be paid to the prosecutor. 3) I order that the offender pay the prosecutor's costs as agreed or assessed. Catchwords: CRIMINAL LAW – prosecution – work health and safety – duty of persons undertaking business – duty of employers – risk of death or serious injury – failure to notify authority SENTENCE – mitigating factors – aggravating factors – fine – capacity to pay – circumstances – objective seriousness – specific deterrence – general deterrence – appropriate penalty COSTS – prosecution costs – moiety of fine OTHER – wood splitting machine – ram lade – splitting blade – safety – modifications to machine – operation - guarding Legislation Cited: Work Health and Safety Act 2011 (NSW) ss 32, 38 Crimes Act 1900 (NSW) s21A Fines Act 1996 (NSW) s6 Trustee Act 1925 (NSW) Cases Cited: Veen v R (No 2) (1988) 164 CLR 465 Baumer v R (1988) 166 CLR 51 Capral Aluminium Limted v Workcover Authority of New South Wales (2000) 49 NSWLR 610 R v Thomson & Houlton (2000) 49 NSWLR 383R v McNaughton (2006) 66 NSWLR 566 R v Wilkinson (No 5) [2009] NSWSC 432 R v Borkowski (2009) 195 A Crim R 1 BW v R [2011] NSWCCA 176 Jahandideh v R [2014] NSWCCA 178 Category: Sentence Parties: Safe Work New South Wales (Prosecutor) Waycon Bulk Pty Ltd (Offender) Representation: Counsel: Mr Chin with Mr Parkin (Prosecutor) Mr Van Alst (Offender) Solicitors: Safe Work New South Wales (Prosecutor) File Number(s): 2014/296737; 2014/296744 Judgment 1. Waycon Bulk Pty Limited (the offender) has pleaded guilty to: 1. An offence that as a person who had a health and safety duty under section 19(1) Work Health and Safety Act 2011 (the Act), it failed to comply with that duty and thereby exposed Edward Murray, an employee of the offender, to a risk of death or serious injury contrary to section 32 of the Act (the section 32 offence); and 2. An offence of failing to notify the WorkCover Authority of New South Wales of a notifiable incident, being the injury to Mr Murray contrary to section 38 of the Act (the section 38 offence). 1. The maximum penalty for the section 32 offence is a fine of $1.5 million. The maximum penalty for the section 38 offence is a fine of $50,000. 2. On the sentence hearing, Mr Chin appeared with Mr Parkin for the prosecutor and Mr Van Aalst appeared for the offender. Facts 1. The parties presented an Agreed Statement of Facts for each offence. These Statements can be summarised as follows. 2. The offender conducted a business producing and supplying firewood, and providing bulk haulage services. At the relevant times, Wayne Campbell was the sole director of the offender. 3. In or about September 2012 Mr Campbell placed an order with Hursts' Engineering Pty Ltd for a wood splitting machine that was designed and manufactured to meet the requirements of the offender (the machine). The machine was delivered to the offender in or about February or March 2013. 4. The machine had two splitting rams with blades attached. The two rams/blades were controlled by two people operating independently on opposite sides of the machine. The ram/blade took 4-5 seconds to fully descend. 5. At the time of delivery of the machine to the offender a ram/blade would only descend where an operator simultaneously depressed two buttons located underneath the splitting table. If the operator removed their hand(s) from one or both buttons the ram/blade would retract. This was to protect the operator from the risk of injury to their arms and hands, by reason of the descent of the ram/blade. 6. On one side of the machine there was an emergency stop button and controls for the gate of the bin in which blocks of wood were held. Once a block of wood was released from the bin onto the work-table, galvanised hooks were used by employees to position the block beneath the ram/blade. 7. At some time between the delivery of the machine and the incident, Mr Campbell authorised the modification of it so as to allow an operator to cause the ram/blade to extend by pressing only one button. This modification was thought to be safer as it allowed employees to have one hand free to defend their face or chest area in the event that a log 'exploded' when it was split by the blade. 8. Edward Murray commenced employment with the offender as a "woodsplitter" on or about 8 April 2013. Mr Murray had worked in the timber industry, and had worked for Mr Campbell about five to six years prior to the incident. At the time of the incident Mr Murray had not operated a wood splitting machine for approximately two years. 9. On 15 April 2013 Mr Murray was working with another employee operating the machine. He commenced work at 1:00pm and was due to finish at 9:00pm. Mr Murray was working on the left side of the machine being the opposite side to where the emergency stop and other controls were located. At the time of the incident no other employees were present. 10. At approximately 8:00pm, Mr Murray moved a block of wood directly under the splitting ram/blade. The block was not sitting correctly and the wood would not slide easily as there was insufficient oil on the work surface. Mr Murray leaned across the machine, placing his right hand on top of the wood block to enable him to dislodge it. In the process of leaning over the machine Mr Murray's right thigh pressed one of the buttons activating the ram/blade. Mr Murray's right hand was severed above the wrist. The other employee retrieved Mr Murray's hand before driving him to hospital. The other employee phoned Mr Campbell to inform him of the injury to Mr Murray and that Mr Murray had been taken to hospital. 11. The offender failed to notify the WorkCover Authority of NSW that the incident had occurred. The Regulator was notified of the incident on 17 April 2013 by the police. 12. At the time of the incident there was an Australian Standard (AS 4024.2601-2008) (the Standard) which applied to all two-hand control devices including the machine. Clause 6.2 of the Standard required that two-hand control devices be designed in such a way as to require an operator to use both hands simultaneously, i.e. one on each control in order to operate the device. 13. The modification of the machine to allow rams/blades to be activated with only one hand meant that the machine failed to comply with clause 6.2 of the Standard at the time of the incident. 14. At the time of the incident there were no guards around the buttons to prevent them from being depressed inadvertently. There were no documented procedures which employees were required to follow when operating the machine. 15. Following the incident the offender's employees continued to use the machine in its modified configuration. 16. On 19 April 2013 the offender was directed by WorkCover Inspector Yates to return the wood splitter to its original state; requiring two buttons to be depressed to activate the extension of the ram/blade. This direction was complied with whilst Inspector Yates was present. Inspector Yates took some video footage on that day of the operation of the machine in its modified and original state. 17. The offender installed metal guarding around the buttons at some time between 19 April 2013 and 27 June 2013. Additional evidence for the prosecution on the section 6 Fines Act 1996 issue 1. The Prosecutor also read an Affidavit of Sandra Margaret McCarthy, affirmed on 26 June 2015. Inspector McCarthy's affidavit annexed the notices issued to the offender and the Trust pursuant to section 155(2) of the Act and the responses and documents received by the prosecutor as a result, which included a copy of the Deed of Trust dated 1 July 2002 (the Trust Deed). Video evidence 1. The footage of the operation of the machine taken by Inspector Yates on 19 April 2013 was played to the Court. The footage depicted the following relevant matters. 2. In the clip entitled "Demonstration splitting large block" the footage depicted the ram/blade to descend slowly and steadily before splitting the block. The machine was being operated in its modified form. The operator used his hands to manoeuvre the block into place and then used his hands to sweep the wood that had been split towards the rear of the machine. In so doing, the operator's hands were moved under the blade as it was rising and when it was fully retracted. In cross-examination when shown this footage, Mr Campbell accepted that this was an inherent part of the process. 3. In the clip entitled "Single button dual operators" the operator was seen on a number of occasions to lean towards the bin where the blocks of wood were stored to bring them closer to the ram/blade in preparation for them to be split. In so doing, the operator's leg came close to the button that would have caused the ram/blade to descend if the machine was operating in its modified form. 4. Both of the clips to which I have referred showed the operator with his hand on top of the block of wood whilst it was in the process of being split or shortly thereafter on a number of occasions. As I understood the evidence this was the thing that that Mr Campbell expressly instructed the operators not to do and was in his opinion the cause of the injury sustained by Mr Murray. In further support of this was the observation from the footage that the ram/blade reached full extension at a height of about 10-15 cm above the splitting table, meaning that it was necessary for Mr Murray's arm to be caught between the blade and a block of wood in order for it to be severed. 5. In the clip entitled "Dual button operation" the ram/blade ascended when the operator took one of his hands off one of the buttons. Further, a piece of a block being split flew to the left hand side of the operator at high speed. The operator reacted with a hand movement after the piece of wood had passed him. The piece of wood did not appear to hit the operator. This phenomenon was what Mr Campbell said in his interview with Inspector McCarthy was the reason for the modification of the machine. The offender's evidence 1. The offender read an Affidavit of Wayne Campbell affirmed on 6 April 2015. Mr Campbell was cross-examined on 4 September 2015. The offender also read an affidavit of Connie Campbell sworn on 6 April 2015. Mrs Campbell was present at the sentence hearing but was not required for cross-examination. 2. Mr Campbell maintained in cross-examination that he had authorised the modification of the machine and had done so to allow operators to have one hand free to protect themselves from exploding pieces of wood. Mr Campbell gave evidence that it was quite uncommon for pieces of wood to explode and that had never seen such an event before. Mr Campbell understood prior to modifying the machine that the two button operation was a safety feature designed to keep the operator's hands and arms away from the descent of the ram/blade. Mr Campbell said that operators would have a 50/50 chance of being able to defend themselves from flying wood if they had one hand free. He accepted that this method relied on the reflexes of the employees and that he had no idea how effective it was. Mr Campbell agreed that he had not looked into alternative measures to protect employees from this risk. 3. Mr Campbell agreed that he knew at the time of modifying the machine that from time to time operators would pass their hands under the blade to sweep the wood away and that it was an inherent and necessary part of the process. He also agreed that he knew that operators would put their hands on the top of the blocks of wood being split, but that he gave them verbal instructions never to do so. 4. The offender is the trustee for the WJ & CA Campbell Family Trust (the Trust). Connie Campbell acts as the bookkeeper and maintains the financial records of the Trust. Annual tax returns and quarterly BAS for the Trust are completed by accountants Logan & Hall Pty Ltd. Financial reports for the Trust for the 2013 and 2014 financial years were annexed to Mr Campbell's affidavit. 5. Mr Campbell was cross-examined about the structure of the Trust. Funds for the Trust are derived from the operation of the offender and the assets used by the offender in the course of the business are beneficially owned by the Trust. The beneficiaries of the Trust are Mr and Mrs Campbell, their three children and Waycon Logging Pty Ltd (Waycon Logging). Waycon Logging has acted as a guarantor for certain loans of the offender, and the offender is a major shareholder of Waycon Logging. 6. A copy of the record of interview between Mr Campbell and WorkCover Inspector Sandra McCarthy dated 27 June 2013 was annexed to Mr Campbell's affidavit. Mr Campbell was questioned as to some of the answers provided in this interview. In that interview, Mr Campbell stated that the injury to Mr Murray was "his own fault". During cross-examination Mr Campbell agreed that he was still of that view. Consideration Objective seriousness of the offence 1. The proportionality principle requires that a sentence should neither exceed nor be less than the gravity of the crime having regard to the objective circumstances: Veen v R (No 2) (1988) 164 CLR 465 at 472, 485-6, 490-1 and 496. At common law, the term "objective circumstances" was used to describe the circumstances of the crime. The gravity of the offence was assessed by reference to its objective seriousness: R v McNaughton (2006) 66 NSWLR 566 at [15]. 2. The task requires the court to consider where in the range of conduct covered by the offence the conduct of the offender falls: Baumer v R (1988) 166 CLR 51 at 57. This assessment will generally indicate the appropriate range of sentences available which will reflect the objective seriousness of the offence committed, and set the limits within which a sentence proportional to the criminality of the offender will lie: BW v R [2011] NSWCCA 176 at [70]. 3. The sentencing judge should take into account not only the conduct which actually constitutes the crime, but also such of the surrounding circumstances as are directly related to that crime and are properly regarded as circumstances of aggravation or mitigation: R v Wilkinson (No 5) [2009] NSWSC 432 at [61]. 4. The existence of a reasonably foreseeable risk to safety that is likely to result in serious injury or death is a factor relevant to the gravity of the offence: Capral Aluminium Limited v Workcover Authority of New South Wales (2000) 49 NSWLR 610 at [89]. The question of forseeability of the risk is to be determined objectively. 5. The risk presented by the modification of the machine was obvious. It involved the circumvention of the safety features of the machine and rendered it non-compliant with the Standard. 6. It was an agreed fact that the machine was modified to ameliorate an alternative risk, being the risk of injury from an "exploding" piece of wood from the splitting process. The alternative risk was a risk of minor injury. The offender did not require its employees to wear any protective equipment to prevent injury to their faces, other than specifying that they should wear glasses, for which sunglasses would suffice. There was no evidence that an employee had ever suffered a facial injury. The risk of injury to the torso area was one involving a contusion or bruising. There was no evidence that an employee had ever suffered such an injury. 7. The decision to modify the machine was inappropriate and ill considered. The offender did not investigate any other means of ameliorating the alternative risk. The modification of the machine created a risk far more serious than the alternative risk it was intended to address. 8. The verbal instruction given to the workers by the offender not to place their hands on top of the blocks of wood was in no way capable of preventing the injury that occurred. Further, the verbal instruction was not being enforced by any or any adequate supervision of the workers during the course of the operation of the machine. 9. The risk included a risk of serious injury by way of the amputation of a hand or part of an arm and also the risk of death as a result of the blood loss that would accompany an amputation. 10. The risk caused by the modification of the machine was only present for about 1 to 2 months prior to the incident. 11. The continued operation of the machine after the incident in its modified form is an aggravating feature of this offence: R v Wilkinson (No 5) at [61]. The machine was not returned to its original state until the offender was ordered to do so by the WorkCover Inspector on 19 April 2013. 12. The conduct of the offender fell very considerably short of that expected by a reasonable employer of workers who were required to use a machine that was capable of inflicting serious injury and/or death. 13. The section 38 offence was explained by an ignorance of the requirement on the behalf of the offender. Deterrence 1. General deterrence is of significance in this case. The penalty should draw attention to persons operating similar businesses which are inherently dangerous to employees that it is necessary to ensure that they operate without avoidable risk to the health and safety of their employees. 2. There is also a need for specific deterrence in this case. The offender should be punished for taking active steps to disable an in built safety mechanism without any or any proper consideration of the consequences that may flow from that. Further, whilst the offender no longer operates the supply of firewood business it continues to conduct a logging operation which is inherently dangerous to its employees and the penalty should draw its attention to the need for compliance with the relevant legislation. Aggravating factors 1. The injury, emotional harm, loss or damage caused by the offence was substantial: section 21A(2)(g) Crimes (Sentencing Procedure) Act 1999. Mr Van Aalst on behalf of the offender conceded that I could be satisfied beyond reasonable doubt that the injury to Mr Murray was substantial. Mitigating factors. 1. The offender does not have any prior convictions: section 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. This factor should be assessed by reference to the fact that the offender has operated the supply of firewood business for some time, although the evidence does not enable me to understand precisely how long that period was. The offender was incorporated on 3 June 2003 and I am prepared to infer that it operated the business from about that time. 2. The offender entered a plea of guilty to the Amended Summons at the earliest possible opportunity: sections 21A(3)(k) and 22 Crimes (Sentencing Procedure) Act 1999. The offender is entitled to a discount on penalty that reflects the utilitarian value of that plea. The extent of the discount should generally be assessed in the range of 10-25%, but that is only a guide. The primary consideration in determining where in the range particular case should fall, is the timing of the plea so that the earlier the plea the greater the discount: R v Thomson & Houlton (2000) 49 NSWLR 383 and R v Borkowski (2009) 195 A Crim R 1 at [32]. The plea also indicates remorse: Borkowski at [32]. The prosecutor accepted that the offenders plea was an early one. In the circumstances, the appropriate discount for the plea of guilty is 25%. 3. The offender co-operated with the investigation: section 21A(3)(m) Crimes (Sentencing Procedure) Act 1999. 4. Mr Van Aalst submitted that I should also find on the balance of probabilities that the offender has demonstrated remorse in the context of section 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. In my view the evidence does not permit me to do so. Put simply, there was no relevant evidence in the Affidavit of Mr Campbell, or in his oral evidence that the offender accepted responsibility for the failures that led to the injury to Mr Murray. The relevance of the offender's position of trustee of the Trust 1. Section 6 Fines Act 1996 provides: 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 relevant to the fixing of that amount. 1. The Court is required to have regard to this provision before imposing a fine. Where an offender seeks to have a fine reduced on the basis of a limited capacity to pay, it bears the evidentiary onus of convincing the Court that it should exercise its discretion to limit the amount of the fine. The offender's capacity to pay is relevant but not decisive: Jahandideh v R [2014] NSWCCA 178 at [16]. A substantial fine may still be warranted as a result of the seriousness of the offence and the need for general deterrence. 2. In this case, the bulk of the evidence led on behalf of the offender related to the financial position of the Trust and I had initially assumed that it was led to persuade me to exercise the discretion provided for in section 6 Fines Act 1996. However, the ultimate submission was not based on section 6 but on the application of the law of trusts. 3. Mr Van Aalst submitted that the Trust was not a sham and that as a result the offender, as trustee for the Trust was not beneficially entitled to any of the income or assets referred to in the financial accounts. He further submitted that the offender only had control over its issued capital in the sum of $2.00 and it followed that imposing any penalty on the offender would be futile because: 1. it could not meet any fine in excess of $2.00; and 2. it owed a fiduciary duty to the beneficiaries of the Trust. It could not therefore act to provide for the payment of the fine, because to do so would not be in the best interests of the beneficiaries and the Appointor of the Trust (Mr Campbell) would be required to appoint an alternate trustee to prevent it from doing so. 1. Mr Van Aalst was unable to provide any authority for the proposition that the Court should not impose a fine in circumstances where it would be futile to do so, based on the offender being a trustee of a trust. 2. Mr Van Aalst further submitted that the offender had been upfront with the prosecutor on this point and invited the Authority to join the Trust to these proceedings, so that recourse could be had to the income and assets of the Trust. 3. The principles set out in Jahandideh at [16] are sufficient reason to reject these submissions out of hand. However, the submissions are also fundamentally flawed for the following reasons. 4. First, the Trust is not a separate legal entity that can be prosecuted under the Act. 5. Second, the offender has admitted in the Statement of Agreed Facts that it was the business or undertaking that had the relevant health and safety duty that was breached, and to suggest that some other entity was responsible would involve a traversal of the plea of guilty. 6. Third, the submissions insofar as they relate to the inability of the prosecutor to enforce any fine reflect a lack of understanding of the law of trusts. The definition of "Trust Fund" in clause 1.18 of the Trust Deed is in my view wide enough to include all of the income and assets identified in the financial statements that are said by Mr Van Aalst to be beyond the trustee's reach. Further, the trustee's right of indemnity provided for in clause 14 of the Trust Deed is from the Trust Fund and is expressed in the broadest possible terms, and expressly includes the trustee's right to be indemnified that is provided for by Trustee Act 1925 as well as the trustee's right to be indemnified that arises from the common law. In the event that the trustee chooses to exercise its discretion to avoid paying a lawfully imposed fine, it would be open to the prosecutor to take action in the Supreme Court to have the trustee removed and replaced with a trustee that would comply with its legal obligations. The Supreme Court also has power to order how the powers provided for by the Trust Deed are exercised by the trustee or the Appointor, to ensure that the trustee will comply with its legal obligations. The result that the beneficiaries will ultimately bear the burden of Mr Campbell's decision is not unjust, because they also stand to benefit from the existence of the Trust. 7. Mr Van Aalst submitted that in the event that I did not accept his futility submission that he did not require me to consider the financial material as relevant to a question under section 6 Fines Act 1996. Accordingly, I will not do so. Penalty 1. A conviction and the imposition of a fine for each of the offences is required in this case. The offender is convicted of both offences. 2. I have had regard to the Victim Impact Statement prepared by Mr Murray dated 2 March 2015. I consider it appropriate to do so. 3. Taking all of those matters into account the appropriate penalty in relation to: 1. the section 32 offence is a fine in the sum of $250,000; and in relation to 2. the section 38 offence is a fine in the sum of $10,000. 1. In recognition of the early plea of guilty both of those fines are to be discounted by 25%. 2. In relation to the section 32 offence I impose a fine of $187,500 and in relation to the section 38 offence I impose a fine of $7,500. 3. I order pursuant to section 122(2) Fines Act 1996 that 50% of the fines are to be paid to the prosecutor. Costs 1. I order that the offender pay the prosecutor's costs as agreed or 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. Decision last updated: 05 November 2015