District Court New South Wales Medium Neutral Citation: SafeWork NSW v Yan Huai Wu and Zenger (Aust) Pty Ltd [2018] NSWDC 211 Hearing dates: 16 July 2018 Date of orders: 30 July 2018 Decision date: 30 July 2018 Jurisdiction: Criminal Before: Scotting DCJ Decision: See paragraphs [55]-[61] in relation to the first defendant See paragraphs [51]-[54] and [61] in relation to the second defendant Catchwords: CRIMINAL LAW – prosecution – work health and safety – duty of persons undertaking business – duty of employers – risk of death or serious injury – injury to worker SENTENCING – mitigating factors – aggravating factors – objective seriousness – general deterrence – substantial harm, injury, loss or damage – no record of previous convictions – good character – prospects of rehabilitation – plea of guilty SENTENCING – penalty – alternative orders – training orders – WHS undertaking SENTENCING PRINCIPLES – remorse WORK HEALTH AND SAFETY – undocumented risk assessment – lack of employee training COSTS – prosecution costs OTHER – unguarded feed chute on pillow filling machine – machine not isolated from electricity supply prior to being cleaned – fingers severed by shredder component of machine – workers with limited literacy skills Legislation Cited: Crimes (Sentencing Procedure) Act 1999 Fines Act 1996 Work Health and Safety Act 2011 Cases Cited: Bulga Underground Operations Pty Ltd v Nash [2016] NSWCCA 37 at [180]. R v Borkowski (2009) 195 A Crim R 1 R v Thomson & Houlton (2000) 49 NSWLR 383 R v Youkhana [2004] NSWCCA 412 Category: Principal judgment Parties: SafeWork NSW v Yan Huai Wu and Zenger (Aust) Pty Ltd Representation: Counsel: Mr M Moir (Prosecution) Mr C Magee (Defendants) Solicitors: Department of Finance, Services and Innovation (Prosecution) Norton Rose Fulbright Australia (Defendants) File Number(s): 2017/127279 and 2017/127305 Publication restriction: None Judgment 1. Zenger (Aust) Pty Ltd (Zenger) has pleaded guilty to an offence that being a person who 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 Fengyu Ni to a risk of death or serious injury contrary to section 32 of the Act. The maximum penalty for the offence is a fine of $1.5 million. 2. Yan Huai Wu has pleaded guilty to an offence that as an officer of Zenger who had a health and safety duty under section 27(1) of the Act, she failed to comply with that duty and thereby exposed Fengyu Ni to a risk of death or serious injury contrary to section 32 of the Act. The maximum penalty for the offence is a fine of $300,000. Facts 1. The parties presented an agreed statement of facts that can be summarised as follows. 2. Zenger conducted a business manufacturing woollen quilts and pillow cases. Ms Wu is the sole director and shareholder of Zenger, and at the time of the incident she exercised control over the work methods employed at the work site. 3. Mrs Ni was employed by Zenger to pack finished quilts, fill pillow cases using the pillow filling machine and tidy up the work area around the machine. She had no English or Mandarin literacy skills, and was given on the job training by the site foreman (Ms Zhang) and a co-worker (Ms He) in relation to the use of the pillow filling machine. No written record was kept of this training. 4. The pillow filling machine operated as follows: wool was transported along the conveyor belt and through a feed chute, which fed the wool into a shredder component located under the exit end of the belt. The feed chute was not fitted with a guard to prevent access to the moving parts of the shredder. After the wool was shredded, it was sucked into the blower component of the machine, which blew wool into the pillow cases. There was a shut-down period of three to four minutes before the shredder component of the machine came to a complete halt. Mrs Ni was unaware of this shut-down period. 5. At the time of the incident, Mrs Ni was the main operator of the pillow filling machine, and had undertaken this task for approximately a year. Prior to the incident, there were no reported injuries, incidents or accidents involving the machine. 6. On 4 February 2016, Ms Zhang tasked Mrs Ni with filling pillow cases using the pillow filling machine. At approximately 5pm, Mrs Ni switched the machine off for the day, and swept the floor around it. She proceeded to clean the machine by removing excess wool from the feed chute by hand. While doing so, she put her hand into the feed chute in the vicinity of the shredder component, which had not yet come to a complete halt. As a result, all four fingers and the thumb of her left hand were severed. On the day of the Incident, there was insufficient supervision in place to ensure that work being done on or near the pillow filling machine was stopped if it became unsafe. 7. At no point prior to or on the day of the incident was Mrs Ni instructed to clean the feed chute of the machine. Through her training, she was aware that Zenger engaged dedicated maintenance personnel to clean inside the machine. As an operator of the machine, she was required to clean the wool off the floor around the machine, and to use a metal rod to remove excess or clogged wool from the conveyor component. 8. When the pillow filling machine was installed at the site, a hazard assessment identified the feed chute as a hazard. This assessment was not documented, save for the warnings depicted on two signs attached to the shredder end of the machine, each featuring an image and Chinese characters. The signs warned of the risk of injury associated with persons putting their hands into moving parts of the machine. At the time of the incident, Zenger's workforce comprised 10 workers of culturally and linguistically diverse backgrounds. The workers had limited literacy skills, with little to no ability to read or write in either English or their native languages. 9. Zenger had in place undocumented safe operating systems associated with the use of the pillow filling machine. Only trained and authorised workers were allowed to operate the machine, and only dedicated, specialised workers were permitted to clean inside it. Workers were trained not to place their hands inside the shredder, and a metal rod in excess of one metre in length was used to clear any jams caused by wool getting stuck in the feed chute. 10. Prior to the incident, Zenger had not installed guarding on the nip points where the shredder was located. Nor had it implemented procedures to ensure that the inside of the machine was isolated from the electricity supply prior to the performance of cleaning or maintenance work on it. Workers (including Mrs Ni) were not trained to identify workplace hazards such as the risk of fingers or hands coming into contact with the unguarded shredder components inside the machine, and were not taught how to avoid such risks. Australian Standard 4024.1801:2014 was available prior to the incident, and provided guidance on minimum distances required to be maintained to prevent danger zones from being reached by limbs. 11. Zenger conceded that it should have ensured that workers received oral and pictorial training regarding the risk and available control measures associated with using the machine, and verified that they understood this information. Ms Wu conceded that she should have exercised due diligence to take reasonable steps to ensure that Zenger had the resources to provide this training. 12. Zenger complied with a Prohibition Notice, issued to it by SafeWork NSW on 8 February 2016. It ceased operating the machine until guarding was installed to prevent access to the nip point where the shredder was located within the machine. It engaged the services of a consultant to review its operating procedures and to assist in ensuring compliance with the SafeWork Prohibition Notice. Additionally, it undertook a documented risk assessment of the hazards and risks associated with use of the machine, and created a safe operating procedure in both English and Mandarin which has been affixed to the machine. Workers have been trained in accordance with the safe operating procedure, and an air hose has been installed to clear built up wool from the shredder component of the machine. 13. Both Zenger and Ms Wu cooperated with SafeWork NSW. The offenders' case on sentence 1. The offenders read an Affidavit of Yan Huai Wu sworn 6 July 2018. Ms Wu has been the sole director of Zenger since its incorporation in 1996. She emigrated from China in 1992, and has two children, both of whom currently reside with her. 2. At the time of the incident, Zenger's workforce comprised mostly Chinese workers. The other workers, who are of Filipino, Indian and Sri Lankan heritage, speak basic English. Due to the limited literacy skills of its workers, Zenger provided on-the-job oral inductions and refresher training to its operators in relation to the use of the pillow filling machine. No written record of this training was kept. 3. Zenger engaged a safety management consultant, Clark Wright, to assist with taking corrective actions in the aftermath of the incident. Ms Wu personally inspects the guards on the pillow filling machine twice daily. She has implemented a control system ensuring isolation of the electricity supply from the machine prior to maintenance or cleaning, and a supervisor is on site at all times. 4. Zenger conducts fortnightly meetings to address workers' safety concerns. In relation to the pillow filling machine, it has implemented pictorial warnings, language-appropriate oral training and refresher training, a written training register and a buddy system pairing junior workers with experienced co-workers. 5. Zenger continues to employ workers with limited literacy skills, and accordingly its safety management system is not document-heavy. 6. Ms Wu emphasised that neither she nor Zenger has any prior convictions under work health and safety legislation. 7. Ms Wu expressed regret, personally and on behalf of Zenger, for the incident and its impacts on Mrs Ni. Zenger has offered to modify its equipment or retrain Mrs Ni so that she can return to work. As a consequence of the incident, Ms Wu has had trouble sleeping, and has suffered symptoms of depression for which she has seen a counsellor. 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 failure to guard machinery presents an obvious risk. The moving parts of the pillow filling machine were able to be reached by an operator. 2. There had been some risk assessment of the machine, which resulted in the implementation of administrative controls. Mrs Ni had been trained in the operation of the machine and had operated it without incident for about 12 months. There were some pictorial warnings to the operator as to the risk of getting fingers caught in the machine. When the machine was cleaned it was done so by maintenance personnel with the use of equipment designed to distance their hands from the dangerous components. A thorough risk assessment for the machine would have identified the need for guarding, especially as the machine took time to shut down after being switched off creating a latent danger to the operator. 3. The pillow filling machine was guarded relatively quickly for a cost of approximately $2,000. The guard installed made it impossible for a person's hand to be put in the vicinity of the moving parts of the machine. 4. The risk was a risk of serious injury. 5. Mrs Ni lost the fingers and thumb from her right hand in the incident. There was no evidence as to her current condition or the extent of any disability. 6. Ms Wu had engaged the assistance of a WHS consultant prior to the incident. She had ordered the machinery from China to be compliant with the Australian Standard. Deterrence 1. The penalty imposed in relation to the offences must provide for general deterrence. PCBUs must take the obligations imposed by the Act very seriously. The community is entitled to expect that both small and large businesses 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. The need for specific deterrence is significantly reduced. Zenger and Ms Wu had a demonstrated commitment to providing for the health and safety of the workers. Zenger had undertaken a risk assessment and implemented control measures. Zenger, through Ms Wu, had involved external consultants to enhance its WHS capabilities and to provide protection for the workers. Both offenders have undertaken further extensive steps to make the workplace safer as a result of the incident. Aggravating factors 1. The injury, harm and loss caused by the section 32 offences was substantial: section 21A(2)(g) Crimes (Sentencing Procedure) Act 1999. In order for the aggravating factor to be established, I must be satisfied beyond reasonable doubt that the harm was greater or more deleterious than may ordinarily be expected for the offence in question: R v Youkhana [2004] NSWCCA 412 at [26]. The offence does not require an injury to be sustained but only the creation of a risk. The injuries sustained by Mrs Ni were serious. I am satisfied beyond reasonable doubt that the injury, harm and loss caused by the offence was substantial. Mitigating factors 1. The offenders do not have any previous convictions: section 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. Zenger was incorporated in 1996 and Ms Wu is 52 years of age. 2. Ms Wu was a person of good character: section 21A(3)(f) Crimes (Sentencing Procedure) Act 1999. 3. The offenders have good prospects of rehabilitation: section 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offenders have accepted responsibility for the failings that led to the risk to which Mrs Ni was exposed and her subsequent injury. Ms Wu has, through Zenger, implemented changes that are significant and are likely to create a safer operation. 4. The offenders have demonstrated remorse: section 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. The offenders expressed remorse through the affidavit of Ms Wu, as well as through their actions in implementing changes and trying to provide a future position for Mrs Ni. I am satisfied on the balance of probabilities that the offenders have accepted responsibility for their actions and have demonstrated genuine remorse and contrition. 5. The offenders entered a plea of guilty: section 21A(3)(k) and section 22 Crimes (Sentencing Procedure) Act 1999. They are entitled to a discount on penalty that reflects the utilitarian value of that plea.: 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 appropriate discount is 25%. 6. The offenders co-operated with the Safe Work investigation: section 21A(3)(m) Crimes (Sentencing Procedure) Act 1999. 7. I have taken into account the personal toll that the incident has had on Ms Wu. Consideration of other available penalties 1. A court may make any of the other orders provided for by Division 2 of Part 13 of the Act, in addition to any other penalty imposed, if the court finds a person guilty or convicts the person of an offence: section 234 and 235 of the Act. 2. During the course of argument, I raised with the parties the possibility of making a training order pursuant to section 241 of the Act in relation to Ms Wu, and linking that to a Work Health and Safety Undertaking pursuant to section 239 of the Act to ensure compliance with that order. I indicated that it seemed appropriate to order that Ms Wu receive training from Mr Wright for a total of 24 hours within 6 months. I was informed that Mr Wright charges $100 per hour for his services, representing a total cost for the order of $2,400. 3. The prosecutor sought leave to put on further submissions on these orders. The effect of the prosecutor's further submissions is that the matters are too objectively serious to be dealt with in this way and that general deterrence would not be reflected in such an order. The prosecutor sought a further opportunity for procedural fairness to comment on any proposed order. 4. I do not accept the prosecutor's submissions for the reasons that follow. 5. The objects of the Act include the protection of workers and other persons from harm and to provide for the national harmonisation of WHS laws by consistent application of them across the relevant jurisdictions: section 3 of the Act. These must be considered in the context of the purposes of punishment set out in section 3A Crimes (Sentencing Procedure) Act 1999. 6. Training orders are regularly made in Queensland, under the model legislation:www.worksafe.qld.gov.au/laws-and-compliance/prosecutions/court-summaries. Training orders provide an important mechanism for rehabilitation of offenders and the protection of the community by the prevention of future risk and/or injury. If national harmonisation is to be achieved, some attempt must be made to use the other available orders consistently between the relevant jurisdictions. 7. For the reasons set out above, I do not accept that the objective seriousness of Ms Wu's offence is as high as that contended for by the prosecutor. 8. General deterrence can be reflected in a training order. An order requires that the person incurs the cost of the training and is required to complete it or face further sanction. It is the adequate communication of those requirements to would be offenders that is intended to deter them. The dissemination of sentencing outcomes is provided for by publication of them by the regulators and by the courts. 9. General deterrence will also be reflected in the fine to be imposed on Ms Wu. The training order to be imposed is in addition to that penalty and this is a further reason to reject the prosecutor's argument. 10. In argument, I specified the order I intended to make. I do not see the need to allow the prosecutor a further opportunity to comment because that will only result in further costs. 11. Overall, this is an appropriate case to make a training order to assist Ms Wu to comply with her section 27(1) duty in the future. Penalty – Zenger 1. Zenger (Aust) Pty Ltd is convicted. 2. The appropriate fine is $80,000 that will be reduced by 25% to reflect the plea of guilty. 3. I impose a fine of $60,000. 4. I order that pursuant to section 122(2) Fines Act 1996, 50% of the fine is to be paid to the prosecutor. Penalty – Ms Wu 1. Yan Huai Wu is convicted. 2. The appropriate fine is $10,000 that will be reduced by 25% to reflect the plea of guilty. 3. I impose a fine of $7,500. 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 Ms Wu complete 24 hours of training with Mr Clark Wright, as to her responsibilities in relation to Zenger's business pursuant to section 27(1) Work Health and Safety Act 2011, on or before 28 February 2019 (the Training Order). 6. I order that Ms Wu enter into a WHS Undertaking pursuant to section 239 Work Health and Safety Act 2011 on the following conditions: 1. The matter is adjourned to 25 March 2019 and the offender is required to appear on that date; 2. The offender is to appear before the court if called on to do so during the term of the adjournment; 3. The offender is not to commit any offence under the Work Health and Safety Act 2011 during the term of the adjournment; 4. The offender is to complete the Training Order and to provide evidence of its completion to the Court on 25 March 2019; 5. The offender is to notify the Registrar of the District Court at the Downing Centre of any change of address for service. 1. I order that the offenders pay the prosecutor's costs as agreed in the sum of $31,000. ********** Amendments 20 November 2019 - Catchwords added 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: 20 November 2019