District Court New South Wales Medium Neutral Citation: Safe Work (NSW) v Schaefer Systems International P/L [2016] NSWDC 321 Hearing dates: 10 November 2016 Date of orders: 28 November 2016 Decision date: 28 November 2016 Jurisdiction: Criminal Before: Judge AC Scotting Decision: 1. The offender is convicted. 2. The appropriate fine is one of $150,000 that will be discounted by 20% to take into account the plea of guilty. 3. I impose a fine of $120,000. 4. I order that pursuant to section 122(2) Fines Act 1996 that 50% of the fine is to be paid to the prosecutor. 5. I order that the offender pay the prosecutors 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 – safe work method statement – foreseeability of risk – supervision of work by offender – engagement of sub- contractor for installation – installation shelving system – overall responsibility – risk and hazards – victim unsupervised by offender at time of incident – safety measures available at the time of the incident SENTENCE – mitigating factors – aggravating factors – fine – capacity to pay – circumstances – objective seriousness – specific deterrence – general deterrence – appropriate penalty SENTENCE PRINCIPLES – parity – totality – community values – remorse – contrition – penalty – extra curial punishment COSTS – prosecution costs Legislation Cited: Work Health and Safety Act 2011 ss.19(1), 32 Crimes (Sentencing Procedure) Act 1999 ss.3, 3A, 21A(3)(e), 21A(3)(g), 21A(3)(i), 21A(3)(k), 21A(3)(m), 22 Fines Act 1996 ss. 6, 122(2) Cases Cited: Bulga Underground Operations Pty Ltd v Nash [2016] NSWCCA 37 R v Thomson & Houlton (2000) 49 NSWLR 383 R v Borkowski (2009) 195 A Crim R 1 Category: Sentence Parties: Safe Work (NSW) (Prosecutor) Schaefer Systems International P/L (Offender) Representation: Counsel: Mr Magee (Prosecutor) Mrs Thompson (Offender) Solicitors: Safe Work (NSW) (Prosecutor) HWL Ebsworth (Offender) File Number(s): 2014/00338643 sentence 1. Schaefer Systems International Pty Ltd (the offender) has pleaded guilty to an offence that being a person who had a health and safety duty pursuant to section 19(1) Work Health and Safety Act 2011 (the Act), it failed to comply with that duty and thereby exposed Kyell Lewis to a risk of death or serious injury contrary to section 32 of the Act. 2. The maximum penalty for the offence is a fine of $1.5 million. Facts 1. The parties presented an Agreed Statement of Facts which can be summarised as follows. 2. The offender conducted a business providing industrial storage systems, including providing design, project management and customer support services regarding the implementation of these systems. The offender did not install the storage systems but would engage specialist contractors to undertake this work. The offender would assist installation contractors on technical issues and monitor the progress, quality and safety of installation work. 3. On or about 18 April 2013, Fashion Biz (Aust) Pty Ltd (Fashion Biz) and the offender entered into an agreement to extend the existing industrial storage system that the offender had previously supplied at their industrial warehouse at 48 Bernera Road, Prestons (the premises). 4. The offender engaged Sundance Racking Pty Ltd (Sundance), a company that they had used on many prior occasions, to install an additional 3rd tier level to the existing storage system at the premises. 5. The offender provided Sundance with information about the supplied equipment, installation design and an installation schedule. The offender attended initial scoping meetings and conducted site inspections of the premises with Sundance. Risks and hazards associated with the installation were discussed with Sundance at the site inspections. They were then reduced into a Safe Work Method Statement (SWMS) that was drafted by Sundance. 6. Prior to work commencing at the premises, the offender reviewed the safety policy, safe work procedures and SWMS adopted by Sundance. The offender did not require that any changes be made to these documents. Installation commenced on 14 August 2013. 7. Installation of the storage system was conducted and controlled by Sundance day-to-day, however the offender maintained an overall responsibility for the installation. The offender had two employees at the premises: Richard Fuller, the project manager, and Robert Gaffey, the site supervisor. 8. Mr Fuller's role as Project Manager involved planning and coordinating project activities to ensure that the project was completed on time. He was also responsible for ensuring that adequate safety procedures were implemented and for identifying and assessing risks in the project. Mr Fuller inspected the premises approximately once per week to check on the progress of the installation and ensure that it was proceeding safely. 9. Mr Gaffey was the on-site point of contact representing the offender and attended the site daily staying for several hours at a time. His role involved monitoring the progress, quality and safety of the installation, and dealing with any technical issues that arose. Mr Gaffey checked that Sundance regularly held tool box meetings and complied with its SWMS. 10. Sundance employed Michael Grace as the site supervisor for the installation work. Sundance also engaged labour hire workers from Xtreme Workforce Pty Ltd (Xtreme). Xtreme would occasionally obtain additional labour hire workers from GK Engineering Services Pty Ltd (GK Engineering). Some of the workers supplied by Xtreme to Sundance were employed by GK Engineering. 11. Kyell Lewis and Joshua Lock were employed by GK Engineering as casual labour hire employees. Mr Lewis commenced this employment at the premises on 26 August 2013. He had no prior experience in installing industrial storage systems. 12. Mr Lock commenced employment with Xtreme in or around April 2011 and had approximately 2 years experience installing industrial storage systems at the date of the incident. Mr Lock commenced work for Sundance at the premises on 14 August 2013. 13. On 9 September 2013, Mr Lock, Mr Lewis and another labour hire worker were undertaking tasks on the second mezzanine level. The work involved laying flooring components into the racking framework on the second mezzanine level while they worked from this level. Mr Lewis was under the supervision of both Mr Lock and Mr Grace. 14. The flooring of the second mezzanine level was approximately 2.4 metres above the flooring of the first mezzanine level and 6 metres above the ground. Racking, shelving and handrails had not been installed on the second mezzanine level and there were unguarded voids. It was planned that permanent handrails would be installed after the floor panels had been laid. 15. At around 10.40am, Mr Lewis and Mr Lock began to move their tools to the middle row of newly laid mezzanine floor to adjust the floor sheeting to eliminate a gap in the floor. They walked towards a conveyor structure that had been installed on that level. The conveyor structure passed through a penetration in the floor to access the level below. Racking had been installed on the left hand side of the conveyor which operated as a physical barrier to the outside edge of the floor. On the right hand side of the conveyor the flooring had two unguarded edges. 16. Mr Lock then walked past the conveyor on the left hand side. Mr Lewis walked on the right hand side of the conveyor and fell off the unguarded edge onto the concrete floor approximately 6 metres below. 17. Mr Lewis was admitted to the Intensive Care Unit of Liverpool Hospital. He sustained a traumatic brain injury, right renal laceration, right lung contusion/effusion and injury to his back including spinal fractures. 18. There were no employees of the offender on-site at the time of the incident. Mr Gaffey had last attended the site on Friday 6 September 2013. On that occasion he gave a general direction to Mr Grace that handrails needed to be installed on all of the finished areas of the second mezzanine level. 19. The SWMS prepared by Sundance and reviewed by the offender noted a hazard of falling from heights when working at height to lay floors. The control measures specified were to lay temporary sheets to use as a base while laying sections of floor, to ensure that workers do not stand within 1 metre of the edge and for workers to work on their hands and knees if required to work near an unguarded edge. 20. The offender's systems did not require its site supervisor to check whether control measures had been put in place by Sundance prior to handrails being installed to prevent workers from falling from height. 21. Following the incident, the offender introduced a requirement for all sub-contractors to have a Safety Management Plan as well as a SWMS for the site that addressed the risks of falling from height, including the use of fall protection equipment. 22. The Safety Management Plan also required that supervisors complete a Workplace Inspection Checklist to audit the performance of subcontractors against their Safety Management Plan and SWMS. 23. Sundance implemented a number of measures to improve its safety systems following the incident including revising its SWMS and using temporary handrails. The Offender's Case on Sentence 1. The offender relied on an affidavit of Bradley John Welsman, the Executive General Manager of the offender, sworn 8 November 2016. Mr Welsman was present in Court for the sentence hearing but was not required for cross-examination. 2. Mr Welsman commenced working for the offender in November 2009 as Executive General Manager, Automation. In January 2012 he commenced as Executive General Manager, the most senior position in Australia. As part of this role, Mr Welsman is responsible for overseeing the offender's work health and safety systems. 3. The offender was first registered as a company in September 1998. It currently has 70 employees, 50 of which are in New South Wales. 4. Mr Welsman expressed deep remorse personally and on behalf of the directors and senior managers of the offender. 5. Mr Welsman deposed that the offender sought to ensure safety at the premises by engaging Mr Fuller and Mr Gaffey, both of whom had significant relevant experience, to oversee the installation work. Mr Fuller and Mr Gaffey were supervised by the offender's Engineering Manager, Brett Thirup. Messrs Fuller, Gaffey and Thirrup had regular discussions about the work at the premises including about site safety matters. 6. Sundance had been engaged by the offender for 18 separate projects in the 12 months prior to the incident and no health and safety incidents occurred during any of these projects. Mr Welsman deposed that Sundance had a reputation for having extensive experience in performing installation work and when the offender had worked with them previously, Sundance had taken responsibility for safety concerns during installation. Mr Welsman explained that the offender sought to ensure safety and comply with its work health and safety duties by engaging a specialised expert sub-contractor and it was for that reason that Sundance was engaged. 7. Mr Welsman gave evidence in his affidavit that the offender relied on the expertise of Sundance to ensure that their SWMS and work practices addressed safety risks involved in the installation work. The offender relied on Sundance to engage workers with appropriate experience and/or provide training to ensure that work was carried out safely. 8. Mr Welsman deposed that the offender has had no previous serious accidents or injuries. 9. Prior to the incident the offender had a workplace health and safety management system (WHS System) which it regularly reviewed. The System included: 1. Safety personnel; 2. Hazard identification and management; 3. Safety training; 4. Consultation and communication with workers and stakeholders about work health and safety matters; 5. Written policies and procedures. 1. The offender employed a Work Health and Safety Manager who was responsible for implementing safety management plans that were site specific. New employees were provided with a health and safety induction tailored to their role that was delivered by their manager. The offender encouraged workers to participate in the system and has maintained a Safety Committee since early 2011. 2. Following the incident, the offender created a Project Site Safety Committee to improve safety installation projects. The committee held its first meeting on 12 September 2013. The offender developed a SWMS checklist to be used by project managers and site supervisors. In October 2013 a new Work Health and Safety Management Plan was adopted by the offender. In 2014 the offender organised for a safety audit to be conducted by an independent contractor. The new comprehensive written work health and safety plan was developed as a combination of the efforts of the offender and the independent contractor. On 20 March 2015 the offender was assessed as complying with the Australian Occupational Health and Safety Management Systems Standard AS/NZS 4801:2001. The offender's management discuss safety at its monthly meetings and follow up on safety issues raised on prior occasions. 3. The system of inducting new and existing staff was reviewed. This resulted in the production of an Occupational Health and Safety Handbook and the delivery of general and site specific inductions by the WHS Manager. 4. Following the incident the offender attempted to make contact with Mr Lewis however he did not wish to be contacted. Consideration 1. I have had regard to the objects of the Act set out in section 3 and the purposes of sentencing set out in section 3A Crimes (Sentencing Procedure) Act 1999. Objective Seriousness 1. The risk of a worker falling from height during the installation of the storage system was a foreseeable one. There were unprotected edges on the second mezzanine floor and the offender was aware that handrails would not be installed until the flooring had been laid and that the laying of the floor required the workers to work at height. 2. Simple remedial steps were available that could have minimised or eliminated the risk. These included adequately reviewing the work practices and SWMS of Sundance, the use of temporary handrails, and/or the use of fall protection or arrest devices. 3. A mobile scissor lift was present at the premises but was unable to be used in the space where Mr Lewis fell. After the incident a smaller scissor lift was obtained for use in that area. 4. The risk was one of serious injury or death. The second mezzanine floor was 2.4 metres above the first mezzanine floor and 6 m above the concrete ground floor. 5. The injuries sustained by Mr Lewis were very serious. I do not have any information about his recovery because he has not wanted to be involved with the proceedings. 6. The offender's role in the installation was a supervisory one. The prosecutor accepted that Sundance was more culpable in the circumstances. 7. The objective seriousness of the offences is in the mid-range. Deterrence 1. The penalty imposed in relation to this offence must provide for general deterrence. Employers must take the obligations imposed by the Act very seriously. The community is entitled to expect that both small and large employers will comply with safety requirements. General deterrence is a significant factor when safety obligations are breached: Bulga Underground Operations Pty Ltd v Nash [2016] NSWCCA 37 at [180]. 2. There is also a need for specific deterrence because the offender continues to supply and oversee the installation of industrial storage systems, however in this case it is reduced. The offender took immediate steps to improve its systems. The offender did not have day-to-day control of the installation work but retained an overall responsibility to supervise the work. The offender has accepted responsibility for its breach of duty causing the injury to Mr Lewis. Aggravating factors 1. There are no relevant aggravating factors. Mitigating factors 1. The offender does not have any previous convictions: section 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. The offender has been in operation since 1998. 2. The offender is unlikely to reoffend: section 21A(3)(g) Crimes (Sentencing Procedure) Act 1999. At the time of the offence the offender had systems in place to train its employees and analyse the SWMSs of its sub-contractors. The offender has identified that these systems were inadequate. The offender has undertaken a very substantial review of its safety systems and I am satisfied on the balance of probabilities that it is unlikely to reoffend with those systems in place. 3. The offender has demonstrated remorse: section 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. The offender expressed remorse through the affidavit Mr Welsman. I am satisfied on the balance of probabilities that the offender has accepted responsibility for its actions and demonstrated genuine remorse and contrition. 4. The offender entered a plea of guilty: section 21A(3)(k) and section 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 a 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]. 5. The original summons was filed on 15 December 2014. An amended summons was filed on 27 September 2016 and the offender pleaded guilty to the offence on that date. The delay was caused in part by Sundance's negotiations with the prosecutor to enter into an enforceable undertaking. The prosecutor accepted that the offender is entitled to a discount at the upper end of the range. The appropriate discount is 20%. 6. The offender co-operated with the Safe Work investigation: section 21A(3)(m) Crimes (Sentencing Procedure) Act 1999. Penalty 1. The offender is convicted. 2. The appropriate fine is one of $150,000 that will be discounted by 20% to take into account the plea of guilty. 3. I impose a fine of $120,000. 4. I order that pursuant to section 122(2) Fines Act 1996 that 50% of the fine is to be paid to the prosecutor. 5. I order that the offender pay the prosecutors 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: 28 November 2016