District Court New South Wales Medium Neutral Citation: SafeWork NSW v Chemstore Group Pty Ltd [2019] NSWDC 598 Hearing dates: 12 September 2019 Date of orders: 24 October 2019 Decision date: 24 October 2019 Jurisdiction: Criminal Before: Strathdee, DCJ Decision: (1) The defendant is convicted. (2) The appropriate fine is $120,000.00 and that will be reduced by 25% to reflect a plea of guilty. (3) I accordingly order the defendant to pay a fine of $90,000.00. (4) I order pursuant to s 122(2) of the Fines Act 1996 that 50% of that fine is to be paid to the prosecutor. (5) I make no order as to costs. Catchwords: CRIMINAL LAW – prosecution – work health and safety – duty of persons undertaking a business – duty of employers – risk of death or serious injury 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 COSTS – prosecution costs Legislation Cited: Crimes (Sentencing Procedure) Act 1999 Fines Act 1996 Work Health and Safety Act 2011 Cases Cited: Capral Aluminium Limited v WorkCover Authority of New South Wales [2000] NSWIRComm 71 [(2000)] 49 NSWLR 610 Environmental Protection Authority v Barnes [2006] NSWCCA 246 EPA v Barnes [2006] NSWCCA 246 Inspector Beacham v J & L Marble Pty Ltd [2009] NSWIR Comm 100 Jahandideh v R [2014] NSWCCA 178 McColl v John Watson Building Services Pty Ltd [2004] NSWIR Comm 353; 137 IR 310 Nash v Silver City Drilling (NSW) Pty Ltd [2017] NSWCCA 96 WorkCover (Inspector Calvez) v TAFE Commission [2014] NSWDC 108 Environmental Protection Authority v Barnes [2006] NSWCCA 246 Category: Sentence Parties: SafeWork New South Wales (Prosecutor) Chemstore Group Pty Ltd (Defendant) Representation: Counsel: Mr N D Read appeared for the Prosecutor Mr M Cahill appeared for the Defendant Solicitors: Department of Customer Services (Prosecutor) Anne Hazelton, Megan Cant, Holding Redlich Lawyers (Defendant) File Number(s): 2018/328900 Publication restriction: None Judgment 1. On 17 June 2019 Chemstore Group Pty Ltd ('the defendant'), pleaded guilty to an offence contrary to s 32 of the Work Health and Safety Act 2011 ('the Act') by failing to comply with the health and safety duty imposed upon it by s19(1) of the Act, namely, to ensure so far as is reasonably practicable the health and safety of workers while the workers are at work in the defendant's business or undertaking and in doing so exposed workers to a risk of death or serious injury. 2. This offence carries the maximum penalty of $1,500,000.00. 3. The offence was committed at the defendant's premises on 9 May 2017. At that time and place there were workers working in the defendant's business that were exposed to a risk to their health and safety. One of the workers exposed to the risk was Aaron Punch ('Mr Punch') who, as a result of being exposed to the risk, was injured when the risk came home. 4. The prosecutor tendered an Agreed Statement of Facts and an Agreed Tender Bundle which forms the basis of the background set out below. BACKGROUND 1. At all material times the defendant was a corporation conducting a business or undertaking within the meaning of s 5 the Act. 2. The defendant's business or undertaking involved the fabrication of reinforced fibre glass tanks for the chemical storage, oil, gas and mining industries and in underground sewerage industries. The premises were a workplace within the meaning of s 8 of the Act. The defendant operated its business from factory premises located as 19-21 Clarke Street, Parkes in the State of New South Wales ('the site'). The site was a workplace within the meaning of s 7 of the Act. 3. The defendant is a family owned and run company which forms part of a broader group of companies that are family owned and run. Chemstore International Group Pty Ltd assumed the conduct of the business in or about 2002 and the business was assumed by Chemstore Group upon its incorporation in or about 2013. 4. Nelson Pridham was the sole director of the company. The day to day management of the company was the responsibility of Samuel Pridham, who held the position of Operations Manager. The company employed between 16-23 employees. The defendant retains the services of a substantial number of businesses in the Parkes Shire as suppliers and sub-contracted service providers. 5. Mr Punch had been employed by Chemstore since 2009 and had worked at the site in the assembly and winding sections of the business. 6. The other employees of the business included: 1. Jeremy Pridham as sales manager; 2. Jay Kross as production manager, who had been employed by the defendant since July 2005; 3. Jonathan Henry as winder supervisor, who had been employed by the defendant for approximately five years; 4. Jeffrey Punch as spray technician; and 5. Rodney Parker as spray technician, who had been employed since 2009 and was Mr Punch's uncle. 1. The defendant influenced or directed Mr Punch's activities while he was at work in that it was responsible for allocating tasks to, and supervising Mr Punch. 2. The defendant owned, and had management and control of, an item of plant referred to as 'Winder Number 1' ('the winder'). The winder was used to manufacture fibreglass chemical storage tanks. The winder consisted of various components, including: 1. the mandrel, which was a large cylindrical structure; 2. the shaft, which threaded through the mandrel; 3. the winder driver, which powered the winder enabling the shaft (and therefore the mandrel) to rotate; 4. the control panel; and 5. a fabricated metal A-frame structure with a metal catch plate, which was positioned immediately below the shaft. 1. The winder was purchased by the defendant in 2009 and consisted of a number of components including the mandrel, the shaft, a drive motor and a control panel. 2. Prior to the incident the moving parts of the winder and the rotating shaft were exposed and accessible to workers. 3. The shaft of the winder included a system of internal bolts to secure the mandrel to the rotating shaft. Whilst the winder was in use the bolts would gradually loosen and needed to be tightened by an operator. Mr Punch said the task of tightening the internal bolts was undertaken on a regular basis. 4. In about 2015 the shaft of the winder fell and broke. A metal A-frame structure was fabricated under the rotating shaft of the winder to catch it if it fell again. As a result of the fabrication/placement of the A-frame and catch plate a pinch point was created between the rotating shaft and the catch plate. 5. There was a small clearance between the shaft and the metal catch plate of the A-frame structure of approximately 1cm. When the shaft rotated a pinch point was created between the shaft and the metal catch plate. THE DUTY 1. The defendant had a duty under s 19(1) of the Act to ensure, so far as was reasonably practicable, the health and safety of workers, including Mr Punch, while they were at work in the business or undertaking. THE RISK 1. The risk was a risk of workers, in particular Mr Punch, suffering serious injury or death as a result of being caught in the pinch point between the rotating shaft of the winder and the catch plate of the A-frame. THE INCIDENT 1. On 17 March 2017, whilst undertaking the task of tightening the bolts, Mr Punch's right arm became entrapped in the pinch point between the shaft and the catch plate and was only freed once the shaft rotated at the catch plate itself. 2. Mr Punch sustained serious injuries, including a sub-total amputation of the right forearm above the wrist resulting in his right arm being shortened by a number of inches. Mr Punch required prolonged medical and rehabilitation services and remains with a very significant disability that has affected him and his family greatly. SYSTEMS OF WORK BEFORE THE ACCIDENT 1. Prior to the incident, the defendant had a Safe Work Method Statement ('SWMS') dated 5 November 2013 for the winder which referred to a work activity of 'check bolts, ensure that they are tight'. The SWMS did not set out any safe work procedure for the undertaking of the task of tightening the bolts. 2. The defendant also had a Safe Operating Procedure ('SOP') dated 14 March 2014. The SOP included a pre-start check of 'ensure mandrel bolts are sufficiently tightened'. The SOP specified that the winder was to be 'locked out before cleaning and maintenance' however the SOP did not set out any steps for isolating or 'locking out' the winder. Moreover, the winder could not be 'locked out' because there was no mechanism on the control panel that enabled it to be locked out, such as a removable key or tag system. 3. Mr Punch had been employed by the defendant since 2009, and although he had worked on the winder for about three years, he was not aware of any SWMS or SOP. He had received some on-the-job training in the use of the winder but he had not received any training in isolating the winder before tightening the bolts. 4. Prior to the incident Mr Punch understood it was normal practice to stop the winder using the speed dial on the control panel and not the brake button. 5. The defendant did not undertake a risk assessment of the winder post-alteration that identified the hazard of the pinch point and selected appropriate controls. 6. The moving parts of the winder, and the rotating shaft were exposed and accessible to workers. There was no guarding by any barrier that would only allow access to the winder at times during which it did not present a risk to safety. 7. There was no cage around the winder or an engineering control that prevented a worker from accessing it unless all energy sources were physically locked out. 8. There was no mechanism on the control panel to 'lock out' the winder to ensure that it was securely isolated so as to prevent unintended or accidental activation, nor was there any emergency stop/isolation switch in proximity to where Mr Punch was undertaking the maintenance task. DUTIES AND GUIDANCE MATERIALS Work Health and Safety Legislation 1. Chemstore had a duty under s 19(1) of the Act to ensure, so far as reasonably practicable, the health and safety of workers engaged by it, including Mr Punch, while they were at work in the business or undertaking. 2. Chemstore had a duty under Part 3.1 of the Work Health and Safety Regulation ('the Regulation') to: 'a. identify reasonably foreseeable hazards that could give rise to risks of health and safety; b. eliminate the risk to health and safety so far as reasonably practicable, and if not reasonably practicable to do so, minimise the risk so far as reasonably practicable by implementing control measures in accordance with the hierarchy of risk control under clause 36 of the Regulation; c. maintain the implemented control measure so that it remains effective; and d. review and, if necessary, revise all risk control measures.' 1. As the person with management and control of winder, Chemstore had the following duties under Part 5.1, Division 7 of the Regulation in relation to the winder: a duty under clause 203 to manage risks to health and safety associated the winder in accordance with Part 3.1; a duty under clause 208 to ensure that if access to the area of the plant requiring guarding was necessary during operation, maintenance or cleaning of the plant, the guarding was an interlocked physical barrier that allowed access to the area being guarded at all times when that area did not present a risk and prevented access to that area at any other time (clause 208(2)(b)): a duty under clause 210 to ensure that any operator's controls were: identified on the plant so as to indicate their nature and function, located so as to be readily and conveniently operated by each person using the plant, located or guarded to prevent unintentional activation, able to be locked into the "off' position to enable the disconnection of all motive power; a duty under cause 211 to ensure that emergency stop controls were clearly and durably marked and immediately accessible to the operator the plant; a duty under clause 213 to ensure that the maintenance of the winder was carried out by competent persons. CODE OF PRACTICE – Managing the Risk of Plant in the Workplace 1. The SafeWork publication. Managing the risks of plant in the workplace, July 2014, is an approved Code of Practice under s 274 of the Act ('the Code'). 2. Prior to and at the time of the incident, the Code was published and was available to Chemstore. 3. The Code described significant risks associated with using plant and noted that severe injuries may result from the un-safe use of plant, including limbs being amputated by unguarded moving parts of machines. 4. The Code provides that risk assessments should be conducted in relation to plant, including where an item of plant is altered, and that controls should be implemented to eliminate or minimise the risks created by the alterations (page 17). 5. Chapter 3.7 of the Code provides that plant should be isolated before any maintenance work commences. Where plant cannot be isolated, methods to prevent accidental operation must be implemented. The work should be carried out under a controlled procedure to allow for maintenance and cleaning without risk to health and safety of the person performing the work (page 19). 6. An isolation procedure is a set of predetermined steps that should be followed when workers are required to perform tasks such as maintenance. Isolation procedures involve the isolation of all forms of potentially hazardous energy so that the plant does not move or start up accidentally (page 28). 7. The Code further provides that: '(a) sufficient guarding is required to control access to dangerous areas of plant; (b) operator controls are to be within easy access of the operator and designed so the intended function can be easily read and understood, especially in the case of dials and gauges, and readily accessible for maintenance.' AUSTRALIAN STANDARD AS 4024.1201-2006 SAFETY OF MACHINERY 1. The Australian Standard AS4024.1201-2006 Safety of Machinery ('the Standard') is an industry standard for the safe operation of machinery. The standard includes a description of basic hazards, including typical mechanical hazards. The list of typical mechanical hazards includes the risk of crushing. 2. The Standard defines an unintended start-up of a machine as any start-up which, because of its unexpected nature, generates a hazard. The Standard notes that an unintended start-up may be caused by a number of factors, including a failure of the control system or inopportune action on a start control or other parts of the machine. 3. Part 1603: Design of controls, interlocks and guards - Prevention of unexpected start-up provides: 'Keeping a machine stopped while persons are present in danger zones is one of the most important considerations of the safe use of machinery and hence one of the major aims of machine designer and machine user... The risk assessment relating to the presence of persons in a danger zone of a stopped machine needs to take into account the probability of an unexpected start-up of the hazard generating elements.' 1. Clause 5 of Part 1603 provides that machines shall be provided with the means intended for isolation and energy dissipation, especially with a view to major maintenance, work on power circuits and decommissioning in accordance with the essential safety requirement expressed in AS 4204.1202. Examples of tasks which can require the presence of persons in danger zones includes minor maintenance/repair. 2. Clause 6.2 of Part 1603 provides that isolation devices shall be capable of being locked or otherwise secured in the 'isolated' position. Locking devices include trapped key interlocking devices and lockable housings or enclosures. SYSTEMS OF WORK AFTER THE INCIDENT 1. Following the incident, the defendant built a cage around the area where the task of tightening the bolts was required to be performed, that is around the winder driver which created a guarded area. 2. The defendant installed an interlocked physical barrier that only allowed access to the guarded area at times when it did not present a risk and prevented access to the area at all other times. The interlocked physical barrier was a lockout key system on the control panel. The operator turns the winder off and applies the break. The operator is then able to remove a key on the console. The key cannot be removed unless the winder is isolated. The key, once removed from the operating console, may be used to gain access to the guarded area via a gate. 3. The defendant also: 1. Lowered the A-frame so that the pinch/crush point was increased so an arm could not be caught; 2. Updated its Standard Operating Procedure for the winder (S Pridham, A276). PRIOR HISTORY 1. The defendant has not previously appeared before the Courts on health and safety matters, and co-operated with the SafeWork investigation. CONSIDERATIONS 1. I have had regard to the objectives set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 for the purpose of sentencing. OBJECTIVE SERIOUSNESS OF THE OFFENCE 1. The duties of the defendant require that it ensure that the health and safety of workers as far as reasonably practicable. As the defendant has pleaded guilty, it has admitted that the measures to ensure safety would have been reasonably practicable. 2. The duty requires the identification of risks in the workplace and an assessment of measures to address such risks. 3. Although the gravity of the risk, degree of foreseeability of the risk and the ease of implementation of remedial measures are relevant to the assessment of objective seriousness, I am not limited to taking in to account such factors. 4. In Nash v Silver City Drilling (NSW) [2017] NSWCCA 96 at [34] Basten JA explained the approach to sentencing as follows: '34. The sentencing judge commenced his consideration with the proposition that 'greater culpability attaches to the failure to guard against an event the occurrence of which is probable rather than to guard against the occurrence of which is extremely unlikely'. However the truth of that proposition depends upon other considerations including: (a)the potential consequences of the risk, which may be mild or catastrophic; (b)the availability of steps to lessen, minimise or remove the risk; and (c)whether such steps are complex and burdensome or only mildly inconvenient. Relative culpability depends on assessment of all those factors. (Nash v Silver City Drilling (NSW) Pty Limited; Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96 at [34]. ….. 42. The culpability of the Respondent is not necessarily to be determined by the remoteness of the risk occurring, nor by a step-by-step assessment of the various elements. Culpability will turn upon an overall evaluation of various factors, which may pull in different directions. Culpability in this case is reasonably high because, even if the pressure event of the force which occurred might not be expected to occur often, the seriousness of the foreseeable resultant harm is extreme and the steps to be taken to avoid it, which were not even assessed, were straightforward and involved only minor inconvenience and little, if any, costs.' 1. Had a very basic risk assessment been conducted, it would have been readily discovered that the failure to isolate the machine from the power supply or lock out the machine, created the very real prospect of a serious consequence. I accept that the defendant knew about the availability and sustainablilty of guarding as a control measure, but did not avail itself of such measure. 2. In entering its pleas the defendant accepts that the risk to workers – as a consequence of being trapped by the mandrel – was a risk of serious injury or death; and that the risk to which Mr Punch was exposed was a serious risk to his health and safety. 3. I also note that the defendant accepts that the risk of injury associated with the pinch point created by the modification of the machinery in or about 2015 was readily available and that it should have conducted a further risk assessment when the machinery was modified. 4. The risk could have been eliminated by the simple and relatively inexpensive step of installing an interlocked physical barrier around the winder, and this is accepted by the defendant. 5. I accept however that since the incident the defendant has taken not insignificant steps to review and update its work health and safety obligations and have engaged external expert assistance to that end. 6. I accept that the risk was obvious and that it was known by the defendant. Risks and accidents involving manufacturing machinery are notorious. The extent of harm if the risk came home was extreme and this is evidenced by the injuries sustained by Mr Punch. 7. These factors point to an objectively serious offence. DETERRENCE 1. In fixing a penalty in relation to this offence, an important objective feature is the need for specific and general deterrence. This is enshrined in s 3A(b) of the Crimes (Sentencing Procedure) Act 1999. The approach to be adopted is set out in Capral Aluminium Limited v WorkCover Authority of New South Wales [2000] NSWIRComm 71 [(2000)] 49 NSWLR 610 at 644 para [74]; 'Both aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be some exceptional cases (see, for example, Page v Walco Hoist Rentals Pty Ltd (No2) [2000] NSWIRComm 39 at [40]-[43] we would expect such cases to be very rare, and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted.' 1. The Court of Criminal Appeal in Bulga Underground Operations cited with approval the decision of the Full Bench of the Industrial Court of NSW in Capral Aluminium Limited v WorkCover Authority of NSW (Inspector Mayo-Ramsay), [177]-[180] reaffirmed the principle that both aspects of deterrence are matters which should be normally given weight of some substance in the sentencing process, unless there are exceptional circumstances which would allow a Court to depart from this rule; 'It follows that both aspects of deterrence [specific and general] are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, WorkCover Authority (NSW) (Inspector Page) v. Walco Hoist Rentals Pty Ltd (No. 2) [2000] NSWIRComm 39 at 40-43), we would expect such cases to be very rare and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted. …' 'Even where an offender demonstrates good character or a commitment to rehabilitation, the Court may be obliged to have regard to the need for general deterrence; see R v Thompson (1975) 11 SASR 217 at 222. This is particularly so where the offence in question is prevalent in society and represents a serious threat to the community. The need for general deterrence in relation to serious offences under the Act is undeniable.' 1. In relation to specific deterrence, the attitude of the defendant to questions of workplace safety and any steps taken to improve the safety following a breach of a duty are relevant, as is the propensity for the defendant to reoffend. Given the steps taken by the defendant, I accept that it is unlikely to reoffend. 2. The requirement to comply with the expectation of the community, that both large and small employers will comply with safety requirements, means that employers must take the obligations imposed by the Act very seriously. However, whilst general deterrence is a matter that I must consider in the sentencing process, however it is not a factor to dominate the exercise of my discretion. AGGRAVATING FACTORS 1. The injuries sustained by Mr Punch were severe and necessitated a prolonged period of hospitalisation and rehabilitation. He continues to suffer greatly, as does his family as a consequence of the dire injuries he sustained in the accident. MITIGATING FACTORS 1. The defendant entered a plea of guilty at an early stage and is entitled to a discount of 25% based on the utilitarian value of the plea (s 21A(3)(e)). 2. The defendant does not have any antecedents (s 21A(3)(e)). 3. The defendant co-operated with the SafeWork investigation (s 21A(3)(m)). 4. The defendant through its director has shown remorse and I accept that as genuine (s 21A(3)(h)). The affidavit of Samuel Pridham, Operations Manager of Chemstore, speaks of the defendant's remorse. 5. I accept that the defendant is of good character and is involved in may community activities in the Parkes area on a voluntary basis (s 21A(3)(f)). 6. After the incident, the defendant provided financial support to Mr Punch and his family by covering travelling expenses and topping up his workers compensation benefits. 7. The defendant has created a new administrative role in the group of companies designed specifically for Mr Punch. Initially after the accident Mr Punch was unable to work and was certified medically unfit for work. This new role is focused on product quality and his duties are performed from an office at the site. He works 20 hours per week. The defendant believes that Mr Punch is as a productive and valuable member of the business. OTHER OBJECTIVE FACTORS RELEVANT TO THE AVAILABLE RANGE 1. Basten JA [with whom Hoeben CJ at CL and Walton J agreed] in Nash v Silver City Drilling (NSW) Pty Ltd [2017] NSWCCA 96 [54]-[57] observed as follows; '54. Secondly, it is important to emphasise that the proportionality of the sentence should depend upon an assessment of the particular offence in the context of the penalties imposed by the Act. As noted above, the Act provides a gradation rising from category 3 through category 1, in order of seriousness. In addressing a category 2 offence, attention must be paid to the nature of the conduct which could have led to the employer being charged with a category 1 offence (namely reckless disregard as to the risk to the individual of death or serious injury), combined with a lack of a reasonable excuse for engaging in such conduct. Serious derelictions of duty, which do not reach that standard, will constitute the high end of objective seriousness for category 2 offences. That factor is to be considered in the context of a category 2 offence which must, to qualify as such, involve conduct which exposes the individual to a risk of death or at least serious injury or illness. 55. By contrast, a category 3 offence may involve a dereliction of duty, varying from the casual to the deliberate, but in circumstances where no individual is exposed to a risk of serious injury or illness. 56. Once the nature of the gradation is borne in mind, the relevance of the maximum penalties may be appreciated. As will be noted shortly, the trial judge erred in failing to give proper consideration to the maximum penalty imposed for the offence in the present case. 57. For these reasons, error having been established, it is appropriate for this Court to intervene, so that the resentencing may give guidance as to sentencing for offences under Pt 2 of the Work Safety Act.' 1. I also note that Basten JA observed at [59]: '59. Two factors would indicate that, objectively speaking, the fine should not be at or above the halfway point of the range available. The factors are related. First, the fine will apply to corporate employers of wide-ranging size and ability to absorb a fine. That which would hardly be noticed in the balance sheet of a large corporation may push a smaller corporation to the verge of insolvency, or over. Secondly, it is possible to be satisfied in the case of a small corporation that changes in management practice may diminish significantly the need for individual deterrence. That may not be so powerful a factor with a large corporation which will rely upon general systems and the quality and diligence of its supervisory officers.' 1. It is submitted by counsel for the defendant, in the context of the above quotes from Basten JA, that the size of the business was best indicated, on the evidence available to the Court of Appeal, by the size of the business' wages bill and noting that 'Silver City' operated in a number of different regions within Australia, that the burden which will be imposed by virtue of a fine of a particular level will, to some extent, depend upon the financial circumstances and resources of the defendant. 2. Counsel for the defendant then described the defendant as the sole trading entity within the Chemstore International Group of companies as a relatively small family-run business in Parkes. He directs my attention to the wages bill for the year ending 30 June 2019. 3. It was also submitted by the defendant that given the size of the defendant and its economic circumstances and its location in regional New South Wales that the offending falls within the lower end of the mid-range. I do not accept that submission – the risk was serious, could have been easily eliminated, and as such I am of the view that it is in the middle of the mid-range at the least. 4. In Exhibit 1, the deponent, Samuel Pridham, details the financial affairs of the defendant which has been referred to by counsel for the defendant as pointing to the capacity of the defendant as a stand-alone company, or Chemstore International Group of companies as a whole, the capacity to pay a fine is extremely limited and the imposition of a substantial monetary penalty may well push the Chemstore Group of companies to the verge of insolvency or over that verge. CAPACITY TO PAY 1. The defendant has raised the issue of its ability to pay any fine due to the financial circumstances of the defendant and its related companies. 2. Section 6 of the Fines Act 1996 provides as follows: '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 relevant to the fixing of that amount.' 1. In Inspector Beacham v J & L Marble Pty Ltd [2009] NSWIR Comm 100, Staff J said at [57]-[58]: 'The principles to be applied in respect of an application under s 6 of the Fines Act were discussed by Walton J, Vice-President in WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284 are as follows: '[83] The financial means of the defendant was a matter that was submitted in mitigation of penalty. In this regard I would adopt what I stated in Department of Mineral Resources v A M Hoipo & Sons (at par 50): 'It is proper, nonetheless, to have regard to the financial position and means of the defendant when considering the question of penalty: see Ferguson v Nelmac Pty Ltd (1999) 94 IR 188 at 209. The purpose of a fine is primarily to punish the offender. The burden which will be imposed by virtue of a fine at a particular level will, to some extent, depend upon the financial circumstances and resources of that offender. As a result, the amount and method of payment of a fine will need to take into account, as (2002) 112 IR 284 at 309 far as practicable, the financial resources and income of the defendant: see R v Sgroi (1989) 40 A Crim R 197 at 200-201.' [84] This approach was subsequently adopted in Manpac Industries where the Full Bench of this Court stated (at pars 81-82): '... Section 6 of the Fines Act 1996 provides that in exercising a discretion to fix the amount of any fine a Court is required to consider the means of the accused and such other matters as are relevant to the fixing of that amount. That statutory injunction, of course, has long been recognised as an appropriate part of the sentencing process: see, for instance, Warman International (80 IR at 339); WorkCover Authority (NSW) (Inspector Dowling) v Overtop Pty Ltd (1998) 86 IR 319 at 333; and Profab Industries (49 NSWLR at 714; 100 IR at 76).' However, and given the primacy of the objective seriousness of an offence in determining an appropriate sentence, the financial situation of a defendant, in our view, needs to be carefully scrutinised. In Ferguson v Nelmac Pty Ltd (1999) 92 IR 188 at 209 - 210, Wright J, President observed: '... Whilst I accept that the imposition of heavy fines would be a burden on the defendant and its financial resources and that consideration should be given appropriate weight on the question of penalty, it does not necessarily result in the Court not imposing a heavy penalty. ...... When viewed in the context of the statutory mandate in s 15 the offences were very serious and provided proper weight is given to the subjective considerations and insofar as deterrence is concerned some tempering thereof, the penalty should reflect the objective seriousness of the offence. ...' I would reiterate what the Court stated in WorkCover Authority (NSW) (Inspector Ankucic) v Lyndhurst Trading Co Pty Ltd (2000) 95 IR 462 at 476: 'Where the means of the defendant to pay any fine is raised, the proper course will be to assess the appropriate amount of the fine having regard to the gravity of the offence charged and then reduce the fine to take into account the defendant's means and impecuniosity: see R v Rahme (1989) 43 A Crim R 81 at 86.'' 1. The onus is on the defendant to satisfy the Court on the balance of probabilities as to the truth of such evidence and its relevance to the fixing of a penalty: McColl v John Watson Building Services Pty Ltd [2004] NSWIR Comm 353; 137 IR 310 at 224. The offender's capacity to pay is relevant but not decisive: Jahandideh v R [2014] NSWCCA 178 at [16]. 2. It is for the defendant to place detailed financial information that fully discloses the company's financial circumstances to the Court as a proper assessment of its capacity to pay. 3. However, notwithstanding the capacity of a defendant to pay a fine, the penalty to be imposed must be reflective of the objective seriousness of the offence. 4. It was submitted by counsel for the defendant that if I am satisfied that the defendant is entitled to the benefit of s 6 of the Fines Act, the appropriate course is first to reduce any proposed order for costs in favour of the prosecutor to take account of the impecuniosity of the defendant. It is only after the proposed order for costs in favour of the prosecutor has been reduced, that, if appropriate, the Court should reduce the fine to be imposed. If, after reducing the prosecutor's costs to zero there remains an issue then consideration may be given by the Court to a reduction in the fines to be imposed. See Environmental Protection Authority v Barnes [2006] NSWCCA 246 per Kirby J (as he then was) at [67]. 5. In support of this application, I have had regard to the financial documents of the defendant which were attached to Exhibit 1. Whilst I can see that the defendant has debts that are outstanding, I do not accept the financial circumstances of the defendant are as dire as has been submitted. There are a number of companies involved and there are various loans as between the various companies and family members. 6. Whilst the defendant may not have any cash or cash reserves which could be used to satisfy a significant fine, it seems to me that Chemstore International may well have. It was submitted by counsel for the defendant that the defendant does not own any plant or equipment, nor does it own any real property. However, I note that the defendant rents the plant and equipment it uses in its business from Chemstore International. 7. I accept that payment of a fine might be difficult for the defendant, but the objective seriousness of the offence is such that it must be reflected in a significant fine. I accept that the defendant is unlikely to reoffend, but the seriousness of the offence is such that a significant fine must be imposed to send a message to employers that they must take their obligations to protect their workers from a risk of injury very seriously. To reduce the fine would not provide the specific level of general deterrence that is expected given the risk that Mr Punch was exposed to, and which unfortunately came home causing him significant injuries which have left him permanently disabled. 8. The Court is entitled to take into account the fact that the defendant will be liable to pay the prosecutor's costs when considering any monetary penalty to be imposed on the defendant, particularly in circumstances where there is evidence of a limited capacity to pay a fine. The costs payable to the prosecutor are an important aspect of the punishment of the defendant. The Court can also have regard to the defendant's own costs that it will have to bear as a consequence of a breach of the Act. See Environmental Protection Authority v Barnes (supra) at [78]. 9. As I have accepted that the defendant may have some difficulty paying the fine, I am of the view that to waive the payment of the prosecution's costs forms a balance between the need for general deterrence and the defendant's somewhat limited capacity to pay. 10. The appropriate fine is $120,000. The defendant is entitled to a discount of 25% for the early plea. COSTS 1. On the basis that the defendant may have some difficulty in paying a fine imposed, I make no order as to costs. PENALTY 1. My orders are: (1) The defendant is convicted. (2) The appropriate fine is $120,000.00 and that will be reduced by 25% to reflect a plea of guilty. (3 )I accordingly order the defendant to pay a fine of $90,000.00 (4) I order pursuant to s 122(2) of the Fines Act 1996 that 50% of that fine is to be paid to the prosecutor. (5) I make no order as to costs. ********************************** 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: 24 October 2019