Industrial Relations Commission New South Wales

• Medium Neutral Citation: Inspector Cooper v Schwarz (No 2) [2013] NSWIRComm 112
• Hearing dates: 17 September 2012, 12 December 2013
• Decision date: 20 December 2013
• Jurisdiction: Industrial Court of NSW
• Before: Staff J

Decision

Matter No IRC 1621 of 2011

1. The offence is proven and a verdict of guilty is entered.

2. The personal defendant is convicted of the offence, as charged.

3. The personal defendant is fined an amount of $4000 with a moiety thereof to the prosecutor.

4. The personal defendant shall pay the prosecutor's costs of the proceedings as agreed, or if agreement cannot be reached, as assessed.

Matter No IRC 1623 of 2011

1. The offence is proven and a verdict of guilty is entered.

2. The corporate defendant is convicted of the offence, as charged.

3. The corporate defendant is fined an amount of $70,000 with a moiety thereof to the prosecutor.

4. The corporate defendant shall pay the prosecutor's costs of the proceedings as agreed, or if agreement cannot be reached, as assessed.

• Catchwords: OCCUPATIONAL HEALTH AND SAFETY - s 8(1) of the Occupational Health and Safety Act 2000 - labour hire - printing industry - employee injured when hand caught in printing press- objective seriousness - general and specific deterrence - subjective factors - financial position of defendants - Fines Act 1996 - principles - comparison of sentences - principles - plea of guilty - s 10 Crimes (Sentencing Procedure ) Act 1999 - penalties imposed - costs
• Legislation Cited: Occupational Health and Safety Act 2000
• Cases Cited: Capral Aluminium Ltd v WorkCover Authority of New South Wales [2000] NSWIRComm 71; 49 NSWLR 610; (2000) 99 IR 29; Drake Personnel Drake Personnel t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432; Corinthian Industries (Sydney) Pty Ltd v WorkCover Authority of New South Wales (Inspector Wilson) [2000] NSWIRComm 46; (2000) 99 IR 159; Department of Mineral Resources of NSW (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8; Ferguson v Nelmac Pty Limited (1999) 92 IR 188 at 209; GEO Group Australia Pty Ltd v WorkCover Authority of New South Wales (Inspector Hannah) (No 3) [2012] NSWIRComm 34; Inspector Ankucic v Chalhoub [2013] NSWIRComm 93; Haynes v C I & D Manufacturing Pty Ltd (No 2) (1995) 60 IR 455 at 457; Manpac Industries Pty Ltd v WorkCover Authority of New South Wales (2001) 106 IR 435; Inspector Beacham v J & L Marble Pty Ltd [2009] NSWIRComm 100; Inspector Cooper v J I T Offset Pty Ltd [2013] NSWIRComm 90; Inspector Cooper v Schwarz [2012] NSWIRComm 107; Inspector Fraser v Karabelas (No 2) [2011] NSWIRComm 153; Inspector Jelley v Albright & Wilson (Australia) Limited [2007] NSWIRComm 148; (2007) 164 IR 456; Inspector Gregory Maddaford v Graham Gerard Coleman [2004] NSWIRComm 317; Lowe v The Queen (1984) 154 CLR 606; Maddaford v CSR Limited and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337; Morrison v Power Coal Pty Limited (No 3) [2005] NSWIRComm 61; (2005) 147 IR 117; Morrison v Powercoal Pty Ltd (2003) 130 IR 364; Morrison v Coal Operations Australia Ltd (No 2) [2005] NSWIRComm 96; (2005) 141 IR 465; Nelmac Pty Ltd v Franke (Inspector) [2006] NSWIRComm 100; (2006) 151 IR 63; Newcastle Wallsend Coal Company Pty Ltd v WorkCover Authority (NSW) (Inspector McMartin) [2006] NSWIRComm 339; (2006) 159 IR 121; Riley v Australian Grader Hire Pty Ltd; WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284; R v Thomson; R v Houlton (2000) 49 NSWLR 383; T and M Industries (Aust) Pty Ltd v WorkCover Authority (NSW) (Inspector Sequeira) (2006) 151 IR 130; Warman International Limited v WorkCover Authority of New South Wales (1998) 80 IR 326; WorkCover Authority of New South Wales (Inspector Barber) v Gundagai Shire Council [2002] NSWIRComm 243; (2002) 118 IR 193; WorkCover Authority (NSW) (Inspector Batty) v Graincorp Operations Ltd [2002] NSWIRComm 49 and WorkCover Authority of New South Wales (Inspector Barber) v Gundagai Shire Council [2002] NSWIRComm 243; (2002) 118 IR 193; WorkCover Authority of New South Wales (Inspector Downie) v Menzies Property Services Pty Limited (2004) 136 IR 449; WorkCover Authority of New South Wales (Inspector Hopkins) v Profab Industries Pty Ltd (2000) 100 IR 64; (2000) 49 NSWLR 700; WorkCover Authority of New South Wales (Inspector Lancaster) v Burnshaw Constructions Pty Ltd (2002) 121 IR 119; WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Ltd trading as Old But New [2004] NSWIRComm 247; WorkCover Authority (NSW) (Inspector Mason) v Wild Geese Building and Maintenance Group Pty Ltd [2006] NSWIRComm 350; (2006) 157 IR 313; WorkCover Authority of New South Wales (Insector Petar Ankucic) v McDonald's Australia Limited [2000] NSWIRComm 277; (2000) 95 IR 383; WorkCover Authority (NSW) (Inspector Shaw) v Du Pont (Australia) Pty Ltd (2006) 152 IR 68
• Category: Principal judgment
• Parties: Inspector Stephen Cooper (Prosecutor); Harold Ernest Schwarz (First Defendant); Harry Schwarz Consulting Pty Ltd (Second Defendant)
• Representation: Mr A Casselden (Prosecutor); Mr I Latham (Defendants); Solicitors: WorkCover Authority of New South Wales (Prosecutor); Gillis Delaney Lawyers (Defendants)
• File Number(s): IRC 1621 and 1623 of 2011

Judgment

1 These proceedings relate to charges brought pursuant to s 8(1) of the Occupational Health and Safety Act 2000 ("OHS Act") against Harry Schwarz Consulting Pty Ltd, a labour hire company ("the corporate defendant") and Harold Ernest Schwarz, the sole director of the corporate defendant ("the personal defendant").

2 Each defendant pleaded guilty to the charges.

3 During the sentencing hearing on 17 September 2012, Mr A Casselden of counsel, who appeared for the prosecutor, informed the Court that prosecutions had been brought against four other defendants, arising out of the same incident, who had pleaded not guilty to the charges. These matters were before Haylen J.

4 Mr I Latham of counsel, who appeared for the defendants, submitted that the Court should have regard to the principles of parity in sentencing the defendants and that the Court was entitled to refer to the significantly greater culpability of the other defendants.

5 Although the parties opposed any adjournment of the sentencing hearing, I adjourned the hearing as part heard, observing in an ex tempore judgment: Inspector Cooper v Schwarz [2012] NSWIRComm 107 at [6] - [9] as follows:

[6] Mr Latham further submitted that the Court was entitled to refer to the significantly greater culpability of two other organisations. Counsel accepted that this exercise in respect of these defendants was complicated by the fact that the prosecutions in respect of the other companies had not been finalised. These matters are before another member of the court.

[7] I should note that both parties opposed an adjournment of the sentencing hearing.

[8] In circumstances where an issue has arisen in respect of applying the principle of parity, I do not see how I can proceed with these matters when there are prosecutions of other defendants yet to be determined that arise out of the same incident that has given rise to the prosecutions brought against the corporate and personal defendants in this matter.

[9] Furthermore I do not see how I can resolve the question of parity without, what I might describe as, the principal defendants having their matters determined.

6 The related matters have now been determined: Inspector Cooper v J I T Offset Pty Ltd [2013] NSWIRComm 90.

The defendants

7 The corporate defendant is a labour hire company providing skilled and unskilled labour to commercial clients. It has approximately eight employees. The personal defendant is the sole director of the corporate defendant.

8 The corporate defendant employed Mr Lance Shiels in July 2009. At that time, Mr Shiels was aged 18 years and had limited work experience.

9 Mr Shiels was engaged to work as an unskilled factory process worker with Zac's Packs Pty Ltd ("Zacs"), a corporation which undertook the business of paper and corrugated cardboard box manufacturing and printing. It had approximately 20 employees.

10 J.I.T. Offset Pty Ltd ("JIT Offset") was a corporation which undertook the business of lithograph box printing and manufacture. It had approximately 35 direct employees.

11 A third entity, JIT Box Pty Ltd ("JIT Box") was a corporation affiliated with J.I.T. Offset and Zacs, and performed management and administrative functions for Zacs and JIT Offset.

12 The three companies operated from the same premises located at 5 Williamson Road Ingleburn in the State of New South Wales.

13 In early 2009, presumably at the direction of Zacs, Mr Shiels changed roles from a process factory worker to a printer's offsider. The corporate defendant was not informed of the changed role by either JIT Box, or Zacs.

14 At approximately 11.00am on 20 October 2009, Mr Paul Skulski, a qualified printer machinist, who had been working as a contractor for Zacs for approximately 16 years, and Mr Shiels, were loading a new varnish plate onto a KBA 142 Varimat printing press. While the cylinder was being rotated, Mr Shiels' hand became entangled in the rollers. The details of how, and in which part of the press Mr Shiels hand became trapped, are not clear.

15 Mr Shiels suffered partial amputation of the small, or, as the prosecutor described it, "pinkie" finger, and crush injuries to the tips of his ring and middle fingers on his right hand. Mr Shiels remained in hospital for two days and underwent a number of medical procedures, including reconstructive surgery to his ring and middle fingers and skin grafts.

16 Mr Shiels had not returned to work as at the date of the sentencing hearing on 17 September 2012. He was studying Human Resources at Liverpool TAFE and considering university studies.

The charges

17 In an amended application for order, the corporate defendant was charged with a breach of s 8(1) of the OHS Act, by failing to ensure that on 20 October 2009, at 10 Caroline Chisholm Drive, Camden in the State of New South Wales, the health, safety and welfare of all its employees, and in particular, Lance Shiels.

18 The particulars of the charge were:

(a) The 'risk' was the risk of employees being injured by coming into contact with an unguarded nip point on the KBA 142 Varimat printing press (Varimat).

(b) The corporation failed to instruct its employees or the host employer (Zac's Packs Pty Limited), or have in place some other procedure that prevented its employees from undertaking any work other than the work they were trained to perform, to notify it and seek its permission of any changes to the work to be performed by its employee before the employee commenced different or other work.

(c) The corporation failed to ensure that its employees did not work on the Varimat when any of the moving parts of the Varimat were unguarded, so that its employees could not come into contact with its moving parts.

As a result of the corporation's failures, Lance Shiels was exposed to the risk.

19 The personal defendant was charged by virtue of s 26(1) of the OHS Act of a breach of s 8(1) of the OHS Act in the same terms as the corporate defendant.

20 The particulars relied upon were identical to those relied upon in respect of the corporate defendant, with the addition of a particular that "the defendant was a director of the corporation".

21 As I have earlier observed, each defendant pleaded guilty to the offences charged in the amended applications for order. I am satisfied, on the evidence, that the defendants are guilty of the offences, as charged, and that it was appropriate for pleas of guilty to be entered. It follows, therefore, that this judgment is concerned only with the question of penalty.

Prosecutor's evidence

22 Mr A Casselden tendered an agreed statement of facts, which provided:

1. At all material times the Prosecutor was an Inspector duly appointed under Division 1 of Part 5 of the Occupational Health and Safety Act 2000 ("Act") and empowered under Section 106(1)(c) of the said Act to institute proceedings in the within matter.

2. At all material times Harry Schwarz Consulting Pty Limited [ACN 130 783 372] (HSC) was a corporation whose registered office was situated at 10 Caroline Chisholm Drive, Camden South in the State of New South Wales and was an employer. Background3. J.I.T. Offset Pty Limited (JIT Offset) was a corporation which undertook the business of lithographic box printing and manufacture. JIT Offset had approximately 35 direct employees working at the premises. It conducted the business at 5 Williamson Road, Ingleburn.

4. At all material times, Zac's Packs Pty. Limited (Zacs) was a corporation which undertook the business of paper and corrugated cardboard box manufacturing and printing. Zacs was registered with ASIC on 24 July 1992. Zacs employed approximately 20 people.

5. At all material times Zacs conducted its business at premises located at 5 Williamson Road, Ingleburn in the State of New South Wales and was an employer.

6. J.I.T. Box Pty. Limited (JIT Box) was a corporation affiliated with JIT Offset and Zacs and performed the management and administrative functions for Zacs and JIT Offset. JIT Box had approximately 20 employees.

7. Zacs is the ultimate holding company of JIT Offset and JIT Box. Mr Edward Zacaropoulos and Mr John Zacaropoulos are the directors of all three companies. All three companies were run as a single group, and they shared management. Management was responsible for the employees of all three companies.

8. The three companies operate from the same premises located at 5 Williamson Road, Ingleburn in the State of New South Wales. The premises are owned by Jobema Investments Pty Ltd [ACN 051 461 244] (Jobema). Zacs is owned by Jobema, of which Mr Edward Zacaropoulos owns 27 of 36 shares and Mr John Zacarapoulos 3 of 36 shares.

9. Mr Paul Manning Foran (Mr Paul Foran) was employed by JIT Box as the General Manager and was responsible for day to day management of the Zacs factory and J.I.T. Offset. Mr Paul Foran attended the factory 5 days per week.

10. Mr James Alexander Foran (Mr James Foran) was employed by JIT Box as the Operations Manager and was responsible for carrying out the practical operations of the company. Mr James Foran attended the factory 5 days per week.

11. Zacs and J.I.T. Offset are family run businesses. Mr Edward Zacaropoulos is the grandfather of Mr Paul Foran and Mr James Foran. Mr John Zacarapoulos is Mr Edward Zacaropoulos' son.

12. The Skulski Family Trust (Skulski Trust) is a discretionary trust established in 1995 and provided skilled labour to Zacs. There was no written contract with Zacs, and arrangements with Zacs were verbal.

13. The members of the Skulski Trust included members of the Skulski family, including Mr Paul Skulski (Mr Paul Skulski), Ms June Skulski (Ms June Skulski) and Mr Alexander Skulski (Mr Alex Skulski). Mr Paul Skulski and Ms June Skulski are the parents of Mr Alex Skulski. Ms June Skulski works at Zacs in payroll and on the switchboard.

14. Mr Paul Skulski is a qualified Printer Machinist and has been working as a contractor at Zacs for approximately 16 years. Mr Paul Skulski was the senior operator of the Varimat and was the direct supervisor of Mr Alex Skulski and Mr Lance Shiels (Mr Shiels).

15. Mr Alex Skulski was a 17 year old first year apprentice Printer Machinist employed by JIT Offset and was also attending Ultimo Tafe. Mr Skulski commenced his apprenticeship with JIT Offset in November 2008

16. Harry Schwarz Consulting Pty Ltd (HSC) was a labour hire company providing skilled and unskilled labour to commercial clients. HSC had approximately 8 employees, with 2 employees working at Zacs. Harry Schwarz was the sole director of Harry Schwarz Consulting.

17. Mr Shiels completed his Higher School Certificate at the end of 2008. In July 2009 he was employed by HSC. At that time he was 18 years old and had limited work experience.

18. Mr Shiels was engaged to work at Zac's as an unskilled factory process worker. Prior to working at Zac's Mr Shiels had been engaged for a short period of time as an unskilled process worker at another factory.

19. Harry Schwarz attended with Mr Shiels on the first day of his engagement at Zac's. Mr Shiels was engaged at Zac's to work at the end of a process machine stacking processed cardboard onto pallets.

20. HSC did not provide its own site-specific induction training to Mr Shiels. HSC worked off Zac's inductions. Mr Shiels received a basic induction from the Production Manager of JIT Box Pty Ltd, Peter Doherty. Copies of the induction records were available to Harry Schwarz.

21. Harry Schwarz would visit Mr Shiels at Zac's about once a week to see and ask him how he was going. He would also telephone him from time to time to enquire about his wages.

22. In early 2009 James Foran and Harry Schwarz discussed HSC finding a printers offsider.

23. Harry Schwarz was not informed by the Production Manager of JIT Box Pty Ltd, Peter Doherty that Mr Shiels had changed roles from process factory worker to a printers offsider.

24. HSC failed to instruct its employees (including Mr Shiels) or Zac's that its employees (including Mr Shiels) were prevented from undertaking any work at Zac's other than the work they were trained to perform. HSC did not have any procedure that prevented its employees (including Mr Shiels) from undertaking any work at Zac's other than the work they were trained to perform.

25. HSC did not have any procedure that required Zac's to notify and seek HSC's permission of any changes to the work to be performed by its employees (including Mr Shiels) before the employee commenced different or other work.

The Printing Press

26. At the premises there was a KBA 142 Varimat printing press; serial number 349217. The Varimat is a large format commercial offset printing press which produced a range of printed paper card finishes used in the manufacture of paper box products. The press prints external box decals and signage.

27. The Varimat range of presses was first manufactured in 1967 and the model ceased to be manufactured in 1995 when it was superseded by the 'Rapid' model printer. The press at the Zacs factory was manufactured in 1995 in Germany. Zacs purchased the press second hand from a German company, VossWinkle, specialising in the international sale of used industrial printing machinery. The press was imported into Australia in July 2004 by Finish and Binding Machines Pty Ltd, trading as Quigley Graphics.

28. The press and associated equipment was shipped to Australia in 9 shipping containers. A team of German technicians were contracted to come to Australia to install and commission the printer at the Zacs factory. The press was re-assembled in the same configuration as used in its previous location.

29. Mr Holzkamp, an employee of the previous owner of the press, had worked on the press for 9 years since it was purchased new by his employer. Mr Holzkamp travelled to Australia and spent 3 weeks providing training and instruction to employees at the Zacs factory.

30. The press works by loading cardboard into a vertical stacker that raises the cardboard as it is dispensed into the printer. The cardboard passes through a bank of up to 5 colour presses, depending on the job. After passing through the colour presses the cardboard goes into the coating unit, which provides a clear varnish coating. The cardboard then goes into the dryer and powder applicator to dry and set the ink.

31. A work order provides operators with detailed specifications for each print run. There can be up to 6 print runs each shift, depending on the size of each job. The machine operator checks for quality as the press is working, and sets up the press for each print run. The specifications are loaded into the press via the computerised panel, and the machine is also set up manually, including fitting colour plates, inks, paper and coating or varnish plates.

32. The press consists of a paper feed module, 5 printing towers, a coating unit and a counter/collector module. The printing towers and coating unit are mounted on a raised platform approximately 1.5 metres high. The coating unit has two rollers between the left and right sides of the unit, known as the varnish cylinder (or plate cylinder roller) and applicator roller (or coating roller). The varnish cylinder is located toward the front of the coating unit at floor level, and the coating roller is positioned above the varnish cylinder.

33. The coating unit has a varnish plate measuring 1430mm by 1170mm, and 1.4mm in thickness. The plate is fitted around the circumference of the varnish cylinder. The varnish cylinder is 1570mm long and 430mm in diameter, and is a 'C' shape rather than round, with a section of the circumference cut out. The cut out section of the cylinder has a pair of screw clamps located on either side, used to secure the varnish plate to the cylinder. The clamps operate in the opposite direction to one another so that when the varnish plate is fitted there is a gap between the two sets of clamps.

34. The applicator roller above the varnish cylinder is approximately 1440mm long by 265mm in diameter, with a gap between the varnish cylinder and the applicator roller, creating an in-running nip point. There is a two piece hinged Perspex cover on the front top and upper front of the coating unit known as the front flip cover, and a Perspex cover on the rear top and upper rear of the coating unit known as the rear flip cover. There is an interlock switch on the left hinge of the front and rear flip covers. There is plate cylinder guard consisting of a hinged metal cover on the lower front of the coating unit, with a plunger style safety switch on the left side of the plate cylinder guard. The metal guard can be lifted up and secured to allow access to the varnish cylinder.

35. To reach the nip point between the two rollers an object or body part would have to travel between 20 - 30cms around the top circumference of the varnish cylinder, also passing through a gap between the bottom edge of the Perspex cover guard on the applicator roller and the varnish cylinder that partially restricted the pathway to the nip point.

36. Opening the coating unit guard isolates the press and prevents it being operated. The isolation allows the varnish cylinder to be operated in 'inch' or 'crawl' mode so that the cylinder can be rotated at a reduced speed. The crawl mode is a slow continuous speed, while the inch mode rotates the cylinder a short distance before stopping. The varnish applicator roller, above the varnish cylinder, is not isolated by the lifting of the guard but rotates at slow speed on a default mode. The applicator rollers need to keep moving so as to ensure the aqueous varnish material remains in liquid form. Control buttons are located on either side of the coating unit for the crawl and inch functions of the varnish cylinder. When the control buttons are activated an audible alarm sounds, however if the inch button is pressed and then immediately pressed again, the cylinder will rotate without the alarm resounding. If there are a few seconds between pressing the inch button, the alarm will resound.

37. The process for loading a new varnish plate into the press is that varnish plate is laid out on the machine deck area in front of the varnish cylinder roller. The cylinder guard is removed, and the cylinder is rotated to expose the first set of plate clamps. The physical size of the plate means that two operators are required to support the plate on either side as it is slid into the clamp housing. The holding clamps are tightened with a specialist tool to secure the plate to the cylinder. The plate remains in a flat, horizontal position, projecting out from the coating unit, obstructing the cylinder, which means the persons replacing the plate must stand side on to the unit, on either side of the plate. The cylinder is then rotated to allow the plate to be wrapped around the circumference of the cylinder. One operator applies light pressure to the plate, with a hand, whilst it is being rotated to ensure the plate maintains tight contact with the cylinder. Once the plate is fully rotated around the cylinder, the operator feeds the leading edge of the varnish plate into the second set of clamps, which are then tightened to secure the plate to the cylinder. The guard is replaced and the coating unit is ready for operation.

The Incident

38. Printing operations at the premises usually commence around 6:00am and finish around 4:00pm. On Tuesday 20 October 2009 the factory was busy, and printing commenced at approximately 5:00am.

39. Mr Paul Skulski, Mr Alex Skulski and Mr Shiels were operating the press and had done two print runs that day. At approximately 11.00am Mr Alex Skulski and Mr Shiels were loading a new varnish plate onto the machine in preparation for the next print run. Mr Alex Skulski was instructing Mr Shiels in the process. Mr Paul Skulski attended to other work on the press, and left Mr Alex Skulski to supervise Mr Shiels. Mr Paul Skulski determined that the task was routine and repetitive and that Mr Alex Skulski was competent to work unsupervised. Mr Paul Skulski was performing another task on the printer, and could not see Mr Shiels and Mr Alex Skulski whilst they were changing the varnish plate. Mr Shiels had changed the varnish plate approximately 20 times since working with the press.

40. Mr Alex Skulski and Mr Shiels had clamped the plate to the cylinder via the first set of clamps. Mr Shiels was on the right side of the coating unit, adjacent to the walkway alongside the printer. Mr Alex Skulski was on the left side of the coating unit, the inner side, operating the control switches in order to rotate the cylinder so that the plate would wrap around it. The varnish plate did not fit correctly, and there appeared to be an air bubble between the varnish plate and the cylinder. Mr Alex Skulski rotated the cylinder again whilst he and Mr Shiels pushed against the plate.

41. Whilst the cylinder was being rotated, Mr Shiels' hand became entangled in the rollers. The plate was not entirely wrapped around the cylinder when Mr Shiels pulled his hand free. The details of how, and in which part of the press, Mr Shiels' hand became trapped are not certain.

42. Mr Shiels says that the cylinder had been entirely rotated and he was trying to fit the edge of the varnish plate into the second set of clamps. He was applying pressure to the plate with his left hand to force it into position and says the end of the plate was a little damaged and he was having difficulty getting it into the clamps. Mr Sheils' right hand was on the cylinder, above his left hand, applying pressure to the plate to ensure it stayed in position against the cylinder. Mr Shiels says it was at this moment the cylinder rotated inwards and his right pinkie and tips of his fingers became entangled between the varnish plate cylinder and the applicator roller.

43. Mr Skulski says that after securing the varnish plate into the first set of plate clamps he commenced rotating the varnish cylinder in order to wrap the varnish plate around the cylinder. Mr Shiels placed his hand over the edge of the second set of plate clamps and as the cylinder rotated his hand became entangled between the inrunning nip point between the applicator roller and the second set of clamps.

44. Mr Shiels' hand became entangled either in the nip point between the varnish cylinder and the applicator roller, or between the applicator roller and the plate clamps. In either case there was no guard in place at the time of the incident over the exposed nip point.

45. Mr Shiels pulled his hand away and saw exposed bone on his right pinkie finger and the tips of his middle finger and ring finger were crushed. He called to Mr Paul Skulski who was 10-15 metres away. Mr Paul Skulski assisted Mr Shiels to the first aid room and an ambulance was called.

46. Mr Alex Skulski and another printer, Mr Troy Young, were instructed to look for Mr Shiels pinkie finger in the press. They drained and removed the varnish tray at the rear of the machine in order to remove the severed part of Mr Shiels' pinkie, with the tendon still attached. The ambulance had already taken Mr Shiels to hospital, so Mr Troy Young drove the severed digit to the hospital.

Injuries

47. Mr Shiels suffered partial amputation of the small, or pinkie finger, and crush injuries to the tips of his ring and middle fingers on his right hand. Mr Shiels remained in hospital for two days and underwent a number of medical procedures. Mr Shiels underwent reconstructive surgery to his ring and middle fingers, including a skin grafts using skin from his upper thigh.

48. Since the incident Mr Shiels has not returned to work. He is studying Human Resources at Liverpool TAFE and considering university studies.

Systems of Work Prior to the Incident

49. J.I.T. Offset and Zacs permitted Mr Alex Skulski to work on the press without supervision in the task of changing the varnish plate, although he was only a first year apprentice. Zacs did not ensure that suitable and appropriate training was given to Mr Alex Skulski and relied on Mr Paul Skulski to train Mr Alex Skulski and assesses his competency for the task of changing the varnish plate. Mr Paul Skulski decided that Mr Alex Skulski was competent to change the varnish plate without direct supervision.

50. J.I.T. Offset and Zacs allowed Mr Alex Skulski, a first year apprentice, to directly instruct another inexperienced worker, Mr Shiels in the task of changing the varnish plate. Mr Shiels said that he did not understand the functions of the press, and had no clear knowledge or understanding of the audible alarm function on the press. Mr Alex Skulski, as a first year apprentice, was not in a position to determine the level and appropriateness of Mr Shiels' understanding of the functions of the press.

51. J.I.T. Offset and Zacs had a system for inducting new staff at the premises that consisted of an induction package with a selection of Zacs policies and procedures, and a walkthrough of the factory. The induction package contained different polices and procedure documents depending on the specific requirements of the inductee. There was no system in place to check that the inductee had read or understood the policies and procedures at the factory. There was no verification or assessment made of the inductee to affirm they had actually read and understood the documents provided to them.

52. J.I.T. Offset and Zacs had developed safe work instructions for particular activities or use of plant at the factory. The 4 page safe work instruction relating to the press was 'Safe Work Instruction 18", and consisted mostly of quality control issues rather than hazard identification and risk control measures.

53. J.I.T. Offset and Zacs relied on a system of on-the-job training to instruct workers at the factory. This approach relied on qualified and/or experienced workers instructing less experienced workers by a combination of instruction and demonstration. Mr Paul Skulski provided training to Mr Alex Skulski and Mr Shiels. There was no mechanism to check that task specific procedures had been completed and there was no documented assessment of Mr Shiels' competency on the press.

54. J.I.T. Offset and Zacs had workplace training instructions and checklists in place. However Mr Paul Skulski did not complete these documents in relation to the training of Mr Alex Skulski nor Mr Shiels.

55. When Mr Shiels commenced work on the press Mr Paul Skulski did not make any enquiry as to the level of training and instruction Mr Shiels had received in relation to the press or the safe work instruction. Mr Shiels was not provided with training in relation to safe work instruction 18 on the operation of the press before commencing work on the press. Zacs relied on Mr Paul Skulski to provide training and induction to Mr Shiels, and did not make any enquiries to ensure that training had taken place.

56. The press is manufactured with a guard over the coating unit nip point. However this guard was not supplied or installed with the press. Zacs had never fitted the guard to the press and were not aware there was a guard for this section of the press. It is unclear if the guard was fitted to the press when it was operating in Germany, or if it was lost or overlooked during the installation of the press at the Zacs factory. The English version of the operators' manual identified the guarding on page B2 at item 39 and page B6.

57. J.I.T. Offset and Zacs conducted two risk assessments on the press after it was installed at the factory. The first assessment on 16 January 2007, two years after the press was in production, fails to record who conducted the risk assessment and fails to identify any hazard in relation to unguarded nip points on the coating unit. The second risk assessment, on 11 February 2008, did not identify any concerns with the unprotected nip point in the coating unit. Neither risk assessment identified the need to guard the unprotected nip point.

23 An agreed statement of facts, in identical terms, was relied upon in respect of the charge brought against the personal defendant.

24 The prosecutor also tendered the following documents:

1. Factual Inspection Reports of Inspector David Young dated 13 November 2009.

2. WorkCover Photographs taken by Inspector David Young on 20 October 2009 and 13 November 2009 (21 pages). The photographs show the KBA Lithographic printing press, the "Coater Unit" showing the "Plate Cylinder Roller", rear hinged guard in the closed position and the front hinged guard in the open position.

3. 7 WorkCover Photographs taken by Inspector Stephen cooper on 24 February 2010. These are photographs taken by Inspector Cooper on 24 February 2009 showing a new Pivot Bar Guard having been installed on the printer between the lower Varnish Plate Roller and upper Application Roller.

4. Zac Pac Job Description - Process Worker.

5. Company Search of Harry Schwarz Consulting Pty Ltd (ACN 130 783 372) printed 12 September 2012.

6. Prior Conviction Report of Harry Schwarz Consulting Pty Ltd (ACN 130 783 372) printed 12 September 2012, showing no prior convictions.

7. Prior Conviction Report of Harry Schwarz printed 12 September 2012, showing no prior convictions.

8. Safety equipment and safety instruction booklet for KBA 142 Varimat printing press. Under the heading "safety equipment of machine" which sets out all of the individual components of the machine, component 39, which is directed to what would appear to be two rollers and a nip point provides:

39 Run-in guard in front of varnish application roller and blanket cylinder

- Machine stops at any operating mode

- Varnishing device motor stops at contact and if varnishing device guard (37) opened at the same time

25 Mr Casselden submitted that it was the run-in guard referred to in the booklet that was missing from the printing press.

The defendants' evidence

26 Mr Latham read an affidavit of the personal defendant, affirmed on 23 March 2012, who was not required for cross-examination on this affidavit, although he was later called to give evidence at the resumed sentencing hearing. The personal defendant is 54 years of age and the sole director of the corporate defendant, which was registered on 24 April 2008.

27 The personal defendant set out his work experience and qualifications which included specialising in human resources and recruitment operations. He has undertaken various courses including in 1992, an OHS Accredited Course for Workplace Committees; Risk Management/Safety for the Supervisor; Quality Assurance Auditor, Internal/External. In 1999, an OHS Accredited Course of Workplace committees, and Creating an Organisation Safety Culture; in 2000, a Workers Compensation Rehabilitation Co-ordinator's Course; in 2000/2001, a Certificate IV in Human Resources, and in 2007, an OHS Consultation Course.

28 The corporate defendant stated that throughout his years as a manager, he had always been involved in the training of employees and actively involved in the creation of various systems and procedures to support such training. He stated that both in his employment and in his own business he had always been diligent in maintaining high occupational health and safety standards. The personal defendant annexed five references from previous employers and current clients.

29 The personal defendant stated that the corporate defendant hires out labour on a casual basis, mainly as process workers. However, from time to time it also hires out qualified trades persons. It employs three fulltime employees, including the personal defendant as administration staff. It has 11 casual employees on fulltime hire. The number of casuals varies according to the needs of the corporate defendant's clients, as well as market demand. At the moment staff numbers are down and it was said that the corporate defendant was struggling to cover costs.

30 The personal defendant set out his circumstances, which included his parents divorcing when he was 24 and his brother who was then aged 14, going to live with him. He supported him until he was 18 years of age. His stepfather died in 2011, leaving his mother on her own. He divorced in 2009 with no children. He stated that since the divorce he has suffered anxiety, stress and depression and this, together with the accident to Mr Shiels, caused him to seek medical help for depression and continuing suicidal thoughts.

31 The personal defendant stated that he assists several members of his family financially and is the legal guardian of his father, who is aged 81 years of age and who is in a nursing home. He pays his pharmaceutical bills which are around $50 to $100 each month. He annexed copies of the pharmacy accounts. His mother also lives in a nursing home and has diabetes. He also helps her financially by providing her with money for basic necessities, such as food, toiletries, clothes and fuel. He also assists his brother financially who is on a disability pension after a serious motor vehicle accident.

32 The personal defendant detailed his financial status. He annexed copies of the corporate defendant's tax returns for the financial years 2008, 2009 and 2010. The corporate defendant's total income in 2008/2009 was $411,108 with total expenses being $365,425; for 2009/2010 total income was $569,179 with total deductions being $575,928, showing a taxable loss of $6749; for 2010/2011 total income was $702,181 with total deductions being $712,738, total loss was $10,557.

33 For the personal defendant in 2009, his total income was $55,891, with taxable income being $42,289. In 2010, his total income was $53,302, taxable income $52,562. In 2011 total income was $70,380.

34 The personal defendant's evidence was that the corporate defendant had a business bank account with the National Australia Bank which, as at 1 February 2012, was in debit in the sum of $20,321. A copy of the bank statement was annexed.

35 The personal defendant stated that he had mortgage repayments of $600 per week. He annexed a statement of his personal bank account as at 23 January 2012 showing a credit of $6730.

36 The personal defendant also has a personal credit card with the ANZ Bank with a credit limit of $17,000. As at 4 January 2012, the closing balance was $17,364. He also has a personal account with Bankstown City Credit Union which at 31 December 2011 showed a debit balance of $3843.

37 The personal defendant stated that he suffers from Type 1 diabetes and suffers from diabetic retinopathy. This is a condition which threatens his eyesight. He has had laser treatment to prevent blindness. He annexed a report from Dr J Barker-Whittle, General Surgeon dated 10 February 2012. He also annexed a report of Dr Audrey C Murguesan, Ophthalmologist dated 15 February 2012 which confirmed that he was suffering from retinopathy and bilateral clinically significant macular oedema which caused swelling at the back of his eyes that required laser surgery. Dr Murugesan stated that the worst case scenario for the personal defendant was that he would lose all sight in both eyes from his diabetes and goes completely blind.

38 The personal defendant also stated that he had suffered from depression and anxiety for many years. He annexed a report from Lynette Fane De Salis, Consulting Psychologist dated 21 February 2012 confirming this illness.

39 The personal defendant said that he had genuinely endeavoured, as a director, to keep himself fully aware of all occupational health and safety requirements and had made sure the corporate defendant had put in place all occupational health and safety requirements applicable to the circumstances. He stated that he felt "overwhelmed at the outcome of the circumstances I find myself in after honest and diligent fulfilment of my obligations. I can only ask that the regulatory authorities consider my circumstances and show the leniency that is within their discretion to show".

40 At the resumed sentencing hearing, Mr Latham called Mr Schwarz to give oral evidence in respect of the contact that he had with Mr Shiels after the accident and the current financial position of the corporate defendant. Mr Schwarz' evidence was that approximately three or four weeks after the accident, when he thought Mr Shiels had recovered sufficiently for Mr Schwarz to make contact with him, he would take him out to lunch and discuss with him his future. Mr Schwarz suggested that Mr Shiels should consider working in human resources. He thought he had taken up his suggestion. His evidence was that he had contact with Mr Shiels on several occasions. He met his girlfriend and invited her to lunch with her mother. He took the three of them to lunch on a number of occasions. He said this happened for "quite a while and, then, all of a sudden it stopped and I never heard from Lance again after that, or the girlfriend or the mother".

41 Mr Schwarz stated that in relation to the financial situation of the corporate defendant, when the matter was previously before the Court in 2012, it had an overdraft of approximately $200,000 to $215,000 with the National Australia Bank. It is no longer an overdraft. It has become a reducing loan which Mr Schwarz currently pays off at about $3300 per month. He now has debtor finance with a company known as Scottish Pacific, which he said "isn't going that great". He explained that Scottish Pacific had informed him that he was not taking full advantage of their system because he did not have enough debtors. His evidence was that he only had two major clients.

42 Mr Schwarz confirmed that the financial situation of the company remained in a similar state to what he had stated in his affidavit. From July of this year until approximately four weeks ago, he said he was making a small profit which was in the sum of hundreds of dollars, rather than thousands. However, in the last three weeks, these profits have evaporated because the clients no longer require casual labour. He stated that he had been unable to pay his current BAS that had fallen due several weeks ago. He has made an application to the Australian Taxation Office who have agreed to allow him to pay it off over the next 12 months at $3300 per month.

43 During cross-examination, Mr Schwarz stated that the corporate defendant's income taxation returns for the year ended 30 June 2012 had been lodged, together with his personal income taxation returns. He said that accounts had not been prepared for the year ended 30 June 2013. He said that his bookkeeper prepares the accounts for his accountant. They are prepared on MYOB software. Mr Schwarz agreed that he had not annexed the company's accounts for the years 2009, 2010 and 2011 to his affidavit.

44 Mr Latham sought a short adjournment to enable documents to be forwarded to the court updating the defendants' financial position.

45 Upon resumption, Mr Latham tendered the following documents:

(1) "Financial Report for the year ended 30 June 2012" for the corporate defendant prepared by Fitzpatrick Group, Accountants. The report stated that the revenue for the year ended 30 June 2012 was $694,433. Employee benefit expenses were $613,903. After taking into account other expenses and liabilities, including accountancy, advertising, and other expenses, the corporate defendant incurred a loss of $10,557. The report stated that retained earnings at the beginning of the financial year were $38,933 and the profit attributable to members of the company were $28,375.

Under the heading "Director's Declaration" which was not signed or dated, it stated that the Director had determined that the company was not a reporting entity and that the special purpose financial report should be prepared in accordance with accounting policies. Under the heading "Compilation Report" which was again unsigned and undated, Mr W A Fitzpatrick stated that he had compiled the accompany special purpose financial statements of the corporate defendant, which comprised the balance sheet as at 30 June 2012 and the income statement for the year then ended, a summary of significant accounting policies and other explanatory notes. Mr Fitzpatrick stated that the special purpose financial statements had been prepared on the basis of information provided to him by the Director.

(2) "Taxation Estimate for the year ended 30 June 2012" for the corporate defendant and the personal defendant for the year ended 30 June 2012.

(3) "Taxation Estimate for the year ended 30 June 2012" for the personal defendant which showed a taxable income of $77,887, with tax on taxable income or net income, amounting to $16,916. PAYG credits and other entitlements amounted to $18,928. The result of the estimate was a tax refund of $704.

46 This documentation was admitted over the objection of Mr Casselden, who contended that little or no weight could be given to the documents because they appeared to be drafts, were unsigned and undated, and the only evidence that such documents had been lodged with the ATO was given by the personal defendant which was confused. I accepted the tender subject to the weight which could be accorded the documents.

Relevant principles

47 The Full Bench in Morrison v Coal Operations Australia Ltd (No 2) [2005] NSWIRComm 96; (2005) 141 IR 465 succinctly summarised the principles to be applied in determining sentence for an offence under the OHS Act. Their Honours stated at [8] - [15]:

[8] The overall approach to be followed in relation to the determination of sentence is to be found in the first instance within the statutory provisions of the Crimes (Sentencing Procedure) Act 1999 and in particular, in relation to these proceedings, ss 3A Purposes of Sentencing and 21A Aggravating, mitigating and other factors in sentencing.

[9] In R v Way (2004) 60 NSWLR 168 it was emphasised that the provisions of the Crimes (Sentencing Procedure) Act referred to above are not to be construed as representing "a departure from settled principles of sentencing practice, or an abandonment of the discretion that is essential to any system calling for individualised justice". As was said at [59]:

'[I]t is clear that the legislative policy ... so far as that can be discerned from the legislation itself, was not to create a straight jacket for judges ... but rather [was] intended to provide "further guidance and structure to judicial discretion.'

[10] The starting point for consideration as to penalty is the objective seriousness of the offence. That is a well established sentencing principle and was conclusively affirmed in the Full Bench decision in Lawrenson Diecasting Pty Ltd v WorkCover Authority (NSW) (1999) 90 IR 464 at 474 as follows:

'[I]t is important to reiterate that the primary factor to be considered when a judicial officer is determining the appropriate sentence to impose is the objective seriousness of the offence charged. In case of prosecutions under the OH&S Act, this proposition has often been expressed by saying that the "true measure of penalty lies in the nature and quality of the offence" ...

[11] The principle of foreseeability as a factor in determining the objective seriousness of an offence as part of the sentencing process was considered in the Full Bench decision in Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) ("Capral") 49 NSWLR 610 at 646; 99 IR 29 at 62 as follows:

'The question of foreseeability is relevant to the assessment of the seriousness of the offence. We consider that the appropriate approach is that of Walton J, Vice President, in Department of Mineral Resources of NSW (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 at 27:

Whilst the reasonable foreseeability of an accident may not be relevant to the question of liability under the Act (see Drake Personnel Ltd t/a Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432), the degree of foreseeability is a significant factor to be taken into account when assessing the level of culpability of the defendant. The existence of a reasonably foreseeable risk to safety which is likely to result in serious injury or death is a factor which will be relevant to the assessment of the gravity of the offence.'

[12] On the issue of foreseeability, the Full Bench in Capral also stated at 646; 62 - 63:

'The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However, the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J, President, in Ferguson v Nelmac Pty Ltd [1999] 92 IR 188 (at 209 - 210) in these terms:

'... reliance on "hindsight" must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s 15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy. So much is clear from the structure and language of the section which is premised on the requirement to 'ensure ... health, safety and welfare at work' and the decided cases which make plain the nature of the obligation.'

[13] It is also necessary to consider the damage and injury suffered in the context of the evidence and "in light of the principles which have been laid down in relation to the relationship between the seriousness of injuries which have been suffered, or which may have been suffered, and the gravity of the offence" (Capral at 650; 66). On that point the Full Bench in Capral stated:

'We consider that the relevant principle can be stated in this way. The gravity of the consequences of an accident, such as the damage or injury, does not, of itself, dictate the seriousness of the offence or the amount of penalty. However, a breach where there was every prospect of serious consequences might be assessed on a different basis to a breach unlikely to have such consequences. The occurrence of death or serious injury may manifest the degree of seriousness of the relevant detriment to safety: Tyler v Sydney Electricity (1993) 47 IR 1 at 5, Inspector Hannah v Wonar Pty Ltd (1992) 34 AILR 377 at 378, Watson v Southern Asphalters Pty Ltd (1996) 83 IR 446 at 456, Wong v Melinda Group Pty Ltd (1998) 82 IR 118 at 131, WorkCover Authority of New South Wales v Albury City Council (1999) 90 IR 397 at 408 - 409, Lawrenson Diecasting Pty Ltd (at 476), WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd (at 428) and WorkCover Authority (NSW) v Walco Hoist Rentals Pty Ltd (No 2) (at [22]).'

[14] The principles of general and specific deterrence are also relevant in sentencing. The approach to be taken on that issue was also dealt with in some detail in Capral at 643 - 645; 59 - 62. Without detailing all that the Full Bench had to say we consider the approach to deterrence in the sentencing process is encapsulated in the following passage from the Full Bench in Capral at 644; 60 as follows:

'[B]oth aspects of deterrence 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) v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39; (2000) 99 IR 163 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.'

[15] In the context of the above well established sentencing principles it will also be necessary to have regard to those general matters going to aggravation, mitigation and other factors identified in s 21A of the Crimes (Sentencing Procedure) Act relevant to the respondents before the Full Bench. As was said in R v Way at [56]:

'[I]t is not to be overlooked that there is a well established body of principles that have been developed by the courts over a long period of time. By providing guidance in the form of a list of aggravating and mitigating factors in s 21A, the Parliament did not intend to overrule or disturb those principles or restrict their application. In so far as those principles refer to factors, whether objective or subjective, that affect the "relative seriousness" of the offence, they are expressly preserved by s 21A(1)(c).'

Consideration

48 The primary consideration, as set out in the above principles, requires a determination of the objective seriousness of the offence. This involves examining the nature and quality of the offences as set out in the agreed statement of facts and the evidence.

49 On the day of the incident, Mr Shiels was injured when the fingers on his right hand came into contact with an unguarded nip point on the KBA 142 Varimat printing press. The corporate defendant had provided Mr Shiels, as casual labour, to Zacs to stack processed cardboard onto pallets. Without the knowledge of the defendants, Mr Shiels' role was changed to that of a printer's offsider.

50 The risk to the health and safety of Mr Shiels occurred when he and Mr Skulski were changing the varnish plate on the printing press. Mr Shiels had changed the plate approximately 20 times since he assumed the role of printer's offsider. The manner in which the press operated is set out in the agreed statement of facts ("ASF") at [27] - [38]. It is to be noted that the applicator roller needs to keep moving so as to ensure that the aqueous varnish material remains in liquid form. Control buttons are located on either side of the coating unit which allows the varnish cylinder to be operated for the "inch or crawl" mode (ASF [37]).

51 The defendants' failure was to have a safe work system in place that firstly, prevented employees undertaking any work other than the work they were trained to perform. Secondly, before an employee commenced different or other work to that which he/she had been hired to perform, the employee or the host employer should have been required to obtain permission for any changes to the work to be performed by the employee from the corporate defendant. Thirdly, the defendants should have ensured employees would not come into contact with any moving unguarded parts of the printing press. It was obvious that a guard would have prevented access to the rollers whilst the machine was in operation.

52 The defendants' failure to implement a procedure whereby employees were prevented from undertaking any work other than the work they were trained to perform, posed a significant risk to the health and safety of its employees.

53 Mr Latham accepted that these were serious offences. However, he emphasised that the printing press had been imported from Germany by the corporate defendant and assembled by a team of German technicians, who came to Australia for that purpose. The printing press was reassembled in the same configuration as used at its previous location (ASF [27] - [29]). It followed, so it was submitted, that it was assembled without the safety bar and that neither the technicians from Germany, nor management of Zacs or JIT, had identified that the guard was missing. These companies had performed two risk assessments on the printing press after it had been installed. However, a labour hire company has the same duty under the OHS Act as the host employer.

54 In Drake Personnel Drake Personnel t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432 at 455 - 456, the majority, Wright J, President, Walton J, Vice-President in a joint judgment (Petersen J agreeing in a separate judgment), stated:

... The relationship created between a labour hire company and its employees is distinguishable on a number of grounds from that existing between traditional employers and their employees. A labour hire agency does not employ people to work for itself but to work for a client, it does not directly on a day to day basis supervise the tasks carried out by the employee and it is usually not in control of the workplace where the work is done. However, these circumstances do not obviate, or diminish, the obligation of the employer under s 15(1) of the OH&S Act to "ensure the health, safety and welfare at work of all the employer's employees." Indeed, in our view, an employer who sends its employees into another workplace over which they exercise limited control is, for that reason, under a particular positive obligation to ensure that those premises, or the work done, do not present a threat to the health, safety or welfare of those employees. Certainly, there is no basis to consider that such an employer has a lesser liability or obligation under s 15(1).

The obligations of a labour hire company under the OH&S Act have been considered on a number of previous occasions by this Commission and its predecessors. The judgment of Hungerford J in Petar Ankucic v Drake Personnel Ltd t/as Drake Industrial (No 1) (1997) 89 IR 374 concerned a prior prosecution of the appellant. That prosecution arose from an incident in which an employee of the appellant, Mr Douglas, sustained an injury whilst operating a woodworking machine at the premises of another company, Warman International Ltd. The appellant pleaded guilty in that case and was fined a total of $25,000. Considering the question of penalty, his Honour commented (at 382):

"The failure here to ensure the safety of Mr Douglas arose in a situation where he was directed by his employer, the defendant, to perform work for a third party, Warman, at that third party's premises. In such a situation, my view is that an employer has a special responsibility to ensure the health, safety and welfare of its employees at the other workplace for no reason other than that that workplace is removed from the employer's direct management and control and would usually be at a location foreign, or at least unfamiliar, to the employees concerned. The evidence established that the defendant did not satisfactorily attend to this aspect and it was not until Mr Davey was engaged that specially designed safety policies and procedures were implemented. But that was in July 1997, at least two years after the present offences were committed; Mr Douglas thereby suffered injury resulting in absence from employment for a period of at least two months and with a permanent deficit in the use of his right hand.

It is no answer, in my view, in reduction of penalty otherwise considered appropriate for the defendant to plead reliance on Warman as the client to take appropriate steps to ensure safety in the workplace for all persons engaged at its premises. True it may be that Warman itself may have offended against the Occupational Health and Safety Act, but that does not, it seems to me, lessen the seriousness of the offences committed here by the defendant as the employer. It is that feature of this case which gives to the assessment of penalty such a degree of importance as will encourage employers in a business similar to that of the defendant to implement appropriate steps to ensure the safety of their employees whose labour is hired to third parties and at the same time to deter employers for failing to take such steps."

See also Rodney Paul Dubois v Industry Staffing Services Pty Ltd t/as Action Workforce (1999) 89 IR 430.

The observations of Hungerford J set out above were made in the context of determining the appropriate penalty to be imposed following a plea of guilty. However, we consider that they are equally applicable when considering the liability of a labour hire company under the OH&S Act. A labour hire company cannot escape liability merely because the client to whom an employee is hired out is also under a duty to ensure that persons working at their workplace are not exposed to risks to their health and safety or because of some alleged implied obligation to inform the labour hire company of the work to be performed. In our view, a labour hire company is required by the OH&S Act to take positive steps to ensure that the premises to which its employees are sent to work do not present risks to health and safety. This obligation would, in appropriate circumstances, require it to ensure that its employees are not instructed to, and do not, carry out work in a manner which is unsafe.

55 The principle of foreseeability as a factor in determining the objective seriousness of an offence was considered in Capral Aluminium Ltd v WorkCover Authority of New South Wales [2000] NSWIRComm 71; 49 NSWLR 610; (2000) 99 IR 29 at [81]. It will be a serious offence where there was an obvious or foreseeable risk to safety against which appropriate measures were not taken, even though such measures were available and feasible. It was readily foreseeable, in my view, that an employee such as Mr Shiels could suffer an injury when undertaking work on a piece of machinery on which he had received little training. In addition, Mr Shiels commenced employment with the defendant in July 2009. At that time, he was 18 years of age and had limited work experience. He was engaged to work as an unskilled factory process worker.

56 I note that the personal defendant would visit Mr Shiels at his workplace about once a week to enquire how was going with his work.

57 The existence of simple and straightforward steps which could have been taken by the defendants to avoid the risk to safety, is relevant to assessing the seriousness of the offence. See Department of Mineral Resources of NSW (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 at 27. Having a system whereby its employees were prevented from undertaking any work other than the work they were trained to perform, would have avoided the risk to safety.

58 Whilst the consequences of an accident will not, of itself, dictate the seriousness of the offence, the occurrence of serious injury, as has occurred here, manifests the degree of seriousness of the risk to health and safety: Morrison v Powercoal Pty Ltd (2003) 130 IR 364 at [32] and the cases referred to therein. See also Maddaford v CSR Limited and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337.

59 It is necessary to assess the degree of culpability for the breach of the occupational health and safety that can properly be attributed to the acts or omissions of the defendants in order to determine the gravity of the offences to which the defendants have pleaded guilty. The failures here were systems failures where there were no procedures to prevent employees of the corporate defendant undertaking work other than that which they were trained to perform, or carry out other work without obtaining permission from the corporate defendant. The more difficult question in these matters is the culpability of the defendants. Haylen J, in sentencing Zacs and JIT Offset, found that Zacs should bear a higher level of responsibility and culpability than that of JIT Offset (see judgment at [34]).

60 Mr Casselden submitted the culpability of the corporate defendant should be comparable to that of JIT Offset. I will further consider and determine this issue when I deal with parity.

61 The seriousness of the risk, its foreseeability and the ease of removing that risk, renders this a very serious offence. There is also the particular aggravating factor of the serious injury to Mr Shiels: s 21A(2)(g) of the Crimes (Sentencing Procedure) Act 1999 ("the CSP Act").

General deterrence

62 In addition to the factors relating to the offence, the Court is required in fixing penalty, to consider the need to deter others from committing the same crime and to deter the offender from re-offending. In Capral Aluminium Ltd v WorkCover Authority of New South Wales at [71] - [80], the Full Bench recognised that in the industrial context, it would be rare that a sentencing court need not impose a sentence that includes an element of general deterrence. I consider it is appropriate to draw attention to the need for employers operating in the printing industry as labour hire companies to be aware of the risk of employees changing their roles and to be constantly vigilant of the need to ensure that workers are not exposed to risks to their health and safety. This is particularly important where young workers are employed. In WorkCover Authority of New South Wales (Insector Petar Ankucic) v McDonald's Australia Limited [2000] NSWIRComm 277; (2000) 95 IR 383, in dealing with this issue, Walton J observed at 452:

In my view, the existence of a risk to safety in a business which engages a large number of young, inexperienced and vulnerable workers, particularly where the business utilises dangerous equipment, must enhance the seriousness of the offence. Such a circumstance compels the imposition of a sentence which will attract the attention of other persons or corporations operating enterprises with similar features to the necessity of vigilantly ensuring the safety of young and inexperienced workers.

63 It is therefore appropriate that I give weight to the need for general deterrence in determining penalty.

Specific deterrence

64 In relation to specific deterrence, the attitude of the defendants to questions of workplace safety and any steps taken to improve safety following an incident are relevant, as is the propensity for the defendants to re-offend. Mr Latham submitted that there was no need for specific deterrence in this case, particularly because the effect upon the personal defendant has been catastrophic. He further submitted that he did not need to be further punished.

65 I accept that this is not a case which calls for the imposition of some additional specific punishment aimed at deterring the defendants from further offending against the OHS Act and/or for the purposes of compelling the defendants' attention to occupational health and safety issues so that persons are not exposed to risks to their health and safety. However, the Full Bench in Capral took the view that it was unlikely that the weight to be attached to specific deterrence could be reduced to zero in the case of offences under the OHS Act, particularly where the corporate defendant continues to conduct its business. This is particularly so when its employees are employed elsewhere and are no longer under the corporate defendant's direct supervision and control. I include an element in the penalty for specific deterrence.

Subjective factors

66 Mr Latham submitted that the mitigating factors under s 21A(3) of the CSP included:

(i) the offenders do not have any record of previous convictions: s 21A(3)(e);

(ii) the offenders were persons of good character: s 21A(3)(f).

(iii) assistance by the offenders to law enforcement authorities: s 21A(3)(m). The defendants have co-operated with WorkCover in its investigation.

(iv) remorse shown by the offenders for the offence: s 21A(3)(i);

(v) pleas of guilty by the offenders (as provided by s 22): s 21A(3)(k).

Plea of guilty

67 The relative subjective considerations therefore include pleas of guilty at the first available opportunity. I propose to allow discounts of 25 per cent for the pleas of guilty to the charges in accordance with the principles outlined in R v Thomson; R v Houlton (2000) 49 NSWLR 383.

Co-operation

68 I take into account that the defendants co-operated with the WorkCover Authority in its investigations of the incident, its increased emphasis on occupational health and safety since the offence and the evidence in respect of the health of the personal defendant, referred to earlier in this judgment.

Good industrial citizen

69 I also take into account the size and nature of the corporate defendant's business. The defendants can now demonstrate a strong commitment to occupational health and safety and are entitled to be regarded as having a good industrial safety record.

70 The personal defendant gave oral evidence that approximately three to four weeks after the accident, took Mr Shiels out to lunch and discussed with him his future. He stated that he suggested that he give consideration to a career in human resources, which he understands he commenced. The personal defendant continued to invite Mr Shiels to lunch and met his girlfriend and his mother, who he also invited to lunch on a number of occasions. This practice has now come to an end.

71 The Full Bench in Corinthian Industries (Sydney) Pty Ltd v WorkCover Authority of New South Wales (Inspector Wilson) [2000] NSWIRComm 46; (2000) 99 IR 159 stressed the importance of taking into account good industrial citizenship and the compassionate steps taken in respect of the injured worker. Their Honours observed at [17]:

We do not consider that the history of good industrial citizenship of the appellant, having regard to its prior record and the long period of operation of its business, was sufficiently taken into account. We also refer to the careful and compassionate steps taken by the appellant as to the welfare, rehabilitation and continuing employment of the injured worker. The reason we have made specific reference to that latter matter is that it does not seem to have been often referred to in other judgments in this area.

Parity

72 In this matter there is a connection between various defendants. The corporate defendant supplied labour. Zacs was a corporation which undertook the business of paper and corrugated cardboard box manufacturing and printing. JIT Offset undertook the business of lithographic box printing and manufacturer. JIT Box was affiliated with JIT Offset and Zacs and performed the management and administrative functions for Zacs and JIT Offset. Zacs was the ultimate holding company of JIT Offset and JIT Box. All three companies were run as a single group and they shared management who were responsible for the employees of all three companies. The three companies operate from the same premises. Mr Paul Foran was employed by JIT Box as the General Manager and was responsible for the day-to-day management of the Zacs factory and JIT Offset. It is not clear, in light of these arrangements, whether Zacs "on hired" Mr Shiels to JIT Offset.

73 Mr Casselden submitted after referring to the judgment of Haylen J:

The decision with respect is instructive having regard to the two matters presently before your Honour today and I apprehend my friend will submit that the benchmark in relation to these offences is comparative analysis to JIT Offset. There is some force in that submission given his Honour's findings in relation to Zac's Packs.

...

Having in mind those observations which have been followed in this Court on numerous occasions since, that elevates the objective seriousness and the culpability of these particular defendants into the area that Haylen J found appropriate for JIT Offset.

74 Mr Latham, after referring to Haylen J's judgment submitted:

Broadly put the submission of the defendants is that the appropriate defendant for comparison purposes is JIT, and that JIT should set the absolute maximum penalty taking into account that they have a previous conviction.

... We say the relative culpability of these defendants is very substantially lower than JIT and from that an appropriate penalty should be determined.

75 I do not agree with this submission. On one view, as Zacs was the host employer, then it is the appropriate defendant for comparison purposes. However, in any event, taking JIT Offset as the appropriate defendant for comparative purposes, and noting the observations of the Full Bench in Drake Personnel, the relative culpability of these defendants cannot be "very substantially lower" than the defendants sentenced by Haylen J.

76 Zacs pleaded guilty in an amended application for order to a breach of s 8(2) of the OHS Act. JIT Offset pleaded guilty in an amended application for order to a breach of s 8(1) of the OHS Act. In sentencing these defendants, Haylen J determined that Zacs should bear a higher level of responsibility and culpability for the risk and the accident that occurred as a result of the unguarded nip point. His Honour also observed that there was a difference in the criminal history of both defendants. JIT Offset had only one prior conviction, while Zacs had four convictions arising out of three separate incidents, which required different penalties in relation to the defendants at [34] of the judgment. The maximum penalty in respect of each of the defendants' breaches before Haylen J was $825,000. His Honour imposed a fine of $115,000 on Zacs and $90,000 on JIT Offset.

77 The Full Bench in Warman International Limited v WorkCover Authority of New South Wales (1998) 80 IR 326 at 341 held "that where defendants (not being co-offenders) are prosecuted under different sections of the OHS Act, the Court should, nonetheless, adopt 'an approach to sentencing which shows consistency and not disparity in punishment in the same way as discussed by Mason J in Lowe where common factual circumstances exist giving rise to the charges". It should be noted that the court considered parity in Warman in the context of a labour hire company and the defendant who utilised that labour.

78 The decision in Warman would require that the defendants, even though prosecuted under different sections of the Act, be treated consistently in accordance with the principles of parity as referred to in Lowe v The Queen (1984) 154 CLR 606. At 610 Mason J referred to the principle as follows:

Just as consistency in punishment - a reflection of the notion of equal justice - is a fundamental element in any rational and fair system of criminal justice, so inconsistency in punishment, because it is regarded as a badge of unfairness and unequal treatment under the law, is calculated to lead to an erosion of public confidence in the integrity of the administration of justice. It is for this reason that the avoidance and elimination of unjustifiable discrepancy in sentencing is a matter of abiding importance to the administration of justice and to the community.

79 I propose to apply the principle of parity or equal justice in the assessment of penalty in these matters.

Capacity to pay

80 Mr Latham pressed an application under s 6 of the Fines Act 1996, although he acknowledged that the corporate defendant was not impecunious. He pointed to the size of its operation and the evidence given by the personal defendant in respect of both the corporate defendant's financial position and his own financial position.

81 Mr Casselden submitted the defendants had not discharged the onus on them in respect of making any application under the Fines Act. Counsel pointed to the lack of company accounts being provided to the court for its assistance and that the material dealing with the 2012 financial returns was of little weight as it remained unsigned and undated. I agree with this submission.

82 The principles to be applied in respect of an application under s 6 of the Fines Act , were discussed by me in Inspector Beacham v J & L Marble Pty Ltd [2009] NSWIRComm 100 at [57] - [58]. In that matter, I referred to the judgment of Walton J, Vice-President in WorkCover Authority of New South Wales (Inspector Farrell) v Schrader, where his Honour observed:

[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. ...'

[85] 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.'

(See also WorkCover Authority (NSW) (Inspector Hopkins) v Michael Wheritt t/a M J Wherritt Concrete Pumping Services [2002] NSWIRComm 16 at pars 59-60.)

83 The Full Bench in WorkCover Authority of New South Wales (Inspector Robert Mayell) v D J Gleeson Pty Ltd [2006] NSWIRComm 363 considered various judgments where s 6 of the Fines Act was considered and observed at [35]:

[35] The relevant principles in relation to the application of s 6 of the Fines Act have been collected in a number of decisions in this jurisdiction. We adopt those principles in this judgment: Ferguson v Nelmac Pty Limited (1999) 92 IR 188 at 209; Department of Mineral Resources of NSW (Chief Inspector Terrey) v A M Hoipo & sons Pty Ltd (2000) 99 IR 137 at [48] - [51]; Manpac Industries Pty Ltd (formerly t/a Pacific Concrete & Quarries Pty Ltd) v WorkCover Authority of NSW (Inspector Glass) (2001) 106 IR 435 at [56] - [57], [67], [81] - [83]; Inspector Green v Camilleri Properties Pty Limited at [21]. Applying these principles, we do not consider that there is any proper basis for the application of s 6 of the Fines Act in this case.

84 In respect of the personal defendant, it was submitted, that he was under financial stress. In oral evidence, he stated that the corporate defendant had an overdraft of $200,000 - $215,000 which required repayments of approximately $3,300 a month. He stated that the corporate defendant had made a small profit which he defined as in the hundreds of dollars a week over the past few months. However, the clients who had produced this profit had now evaporated as they no longer required casuals. At the present time, the personal defendant's evidence was that the corporate defendant could not pay its BAS and had reached an agreement with the Taxation Department to pay it by instalments of $3300 per month.

85 In Inspector Fraser v Karabelas (No 2) [2011] NSWIRComm 153, the Full Bench in considering s 6 of the Fines Act stated at [17] - [22]:

[17] Section 6 of the Fines Act , therefore, operates on a broad basis: the Court is required to consider "such information regarding the means of the accused as is reasonably and practicably available to the court for consideration" and "such other matters as, in the opinion of the court, are relevant to the fixing of that amount." Those words do not suggest any narrow or confined consideration but they leave the court to assess the appropriateness and adequacy of the information according to the circumstances concerning each particular case. Individual directors and family companies may not be as well placed to provide extensive material or specialist opinions as other better resourced individuals or companies.

[18] The three breaches committed by the respondent, Mr Karabelas, are serious offences occurring in the context of a prior conviction for a similar breach. The offences have been found to be aggravated in each case and represent a continuing disregard for safety at a large building site. The penalty to be imposed must reflect that situation except for an assessment of the extent to which that penalty should be reduced because of the financial circumstances of the respondent.

[19] The evidence and submissions for the appellant/prosecutor highlight the inadequacy of the financial information provided by Mr Karabelas. The solicitor for the appellant/prosecutor drew to the attention of Mr Karabelas' legal representatives the inadequacy of the material provided in his affidavit and sought additional information and source documents. None have been forthcoming. No party has asked for an oral hearing and no objection has been raised to the Court receiving Mr Karabales' affidavit nor has he been required for cross-examination.

[20] While the Court accepts much of the criticism levelled by the appellant/prosecutor against the adequacy of the material provided, the absence of submissions and a more detailed response to the issues raised by the appellant/prosecutor may also be an indication of the straitened financial circumstances of Mr Karabelas. The present state of the evidence leaves the Court in a difficult position. Mr Karabelas has sworn to being in dire financial circumstances but the full extent of his financial circumstances is unclear. Bankruptcy notices were served in June 2010 and February 2011 but Mr Karabelas' affidavit does not state that bankruptcy proceedings have, in fact, been commenced.

[21] A further issue arises for consideration. The terms of Mr Karabelas' affidavit did not raise the question of costs but logically, any inability to fully pay fines must also apply to costs. As no submissions were filed for the respondent, this aspect has not been developed.

Costs have been recognised "as an important aspect" of punishment (see Environmental Protection Authority v Barnes [2006] NSWCCA 246; BC200606364) and as falling within the considerations required by the Fines Act (Inspector Jelley v Albright & Wilson (Australia) Ltd [2007] NSWIRComm 148; [2007] 164 IR 456). In the absence of precise figures or an estimate as to costs, this issue can only be taken into account in the broad exercise of discretion having regard to the fact that there have been two hearings, each occupying one day.

[22] Applying the spirit of s 6 of the Fines Act , the Court can accept that Mr Karabelas is facing financial difficulties but the extent of those difficulties has not been established. Importantly, Mr Karabelas has accepted a limited ability to pay increased fines rather than asserting a total inability to pay any fine. His position, so described, may be met by an application to the Registrar for time to pay and/or to pay by instalments. The Court will, therefore, proceed on the basis that there will be some modest reduction in the penalties to be imposed.

86 The position of the defendants in this matter is not dissimilar to those that confronted the court in Karabelas.

87 The personal defendant has given sworn evidence that he and the corporate defendant are under severe financial pressures. However, as I have already observed, it was submitted by Mr Latham that the defendants are not impecunious.

88 Applying the spirit of s 6 of the Fines Act 1996 ("Fines Act"), as the Full Bench did in Karabelas, I accept that the defendants are facing financial difficulties, but that the extent of such difficulties has not been fully established.

89 As Mr Casselden emphasised, the defendants had failed to produce audited accounts in respect of the corporate defendant's business.

90 As was recently observed by the Full Bench in Inspector Ankucic v Chalhoub [2013] NSWIRComm 93 at [105]:

... [It] is most important to maintain as a general principle that if defendants wish to rely on s 6 of the Fines Act that reliance will need to be underpinned by probative evidence. In the present case we are not prepared to discount to any substantial degree the amount of fine to be imposed on either respondent on the basis of incapacity to pay. However, in light of the circumstances as we have described them, including the approach the Magistrate took to the question of capacity to pay fines, we will "proceed on the basis that there will be some modest reduction in the penalties to be imposed": Karabelas (No 2) at [22].

91 Applying these principles to this matter, I propose to apply "some modest reduction in the penalties to be imposed", but decline to exercise my discretion pursuant to s 6 of the Fines Act.

Comparison of sentences

92 Mr Latham submitted that while there was always a danger in comparing different cases, the decision of the Full Bench in the GEO Group Australia Pty Ltd v WorkCover Authority of New South Wales (Inspector Hannah) (No 3) [2012] NSWIRComm 34 dealt with an appropriate penalty for the failure to guard a machine. In that case there was no guarding, no risk assessment and a partial amputation of the worker's thumb. The Full Bench found an appeal that the Chief Industrial Magistrate was in error in not reducing the fine from $65,000 to $55,000.

93 Counsel submitted that the circumstances of the offence in GEO Group Australia Pty Ltd v WorkCover Authority involved a much more serious contravention than those that are currently before the court.

94 Mr Latham further submitted that the penalty imposed by the Full Bench, which was reduced to $55,000 "would fit the average of penalties and that is a case of some five or six months ago".

95 It has been held on a number of occasions by this Court and the Supreme Court of New South Wales, Court of Criminal Appeal that comparisons with sentences passed in other cases is not helpful. In WorkCover Authority (NSW) (Inspector Mason) v Wild Geese Building and Maintenance Group Pty Ltd [2006] NSWIRComm 350; (2006) 157 IR 313, the Full Bench observed at [38]:

[38] Nothing in her Honour's judgment explains how this very serious offence resulted in a penalty of less than five per cent of the maximum available. While the appellant argued that the explanation must be that too much weight was given to subjective matters, that is not apparent from her Honour's judgment. We consider that there are real difficulties in comparing penalties imposed under the Occupational Health and Safety Act, even in cases where there is an essential common feature, such as a falling incident, crushing incident etc, because of the myriad of differing surrounding factual circumstances in the cases. Nevertheless, while we do not foreclose the outcome in any particular case, we find it difficult to conceive of any case involving a fall of over five metres, in the absence of any fall protection equipment, which results in serious injury or the potential for such injury, where a fine of the present magnitude could properly be the result (see, for example, Inspector Guillarte v Trustees of De La Salle Brothers [2004] NSWIRComm 49; WorkCover Authority of New South Wales (Insp Hopkins) v Red Lea Chickens Pty Ltd and Magg Transport and Packing Pty Limited [2003] NSWIRComm 71; Inspector Glass v B T Engineering Pty Ltd as Trustee of the Bruce Thomas Family Trust [2004] NSWIRComm 245; and Inspector Dubois v Masters Civil Pty Ltd and Anor [2006] NSWIRComm 180 - only the last of which was the subject of an appeal (which was unsuccessful: Masters Civil Pty Limited v Inspector Dubois [2006] NSWIRComm 332))

See also Nelmac Pty Ltd v Franke (Inspector) [2006] NSWIRComm 100; (2006) 151 IR 63; Inspector Jelley v Albright & Wilson (Australia) Limited [2007] NSWIRComm 148; (2007) 164 IR 456.

96 While comparisons on a case-by-case basis do not assist in the determination of penalty, the general principles stated in these cases are of some particular assistance, especially in respect of the objective seriousness of the offences and the importance of general deterrence. It is also often stated, with emphasis, that one important consideration is the available maximum penalty. In this case, given that the corporate defendant has no prior convictions, the maximum penalty is $550,000. The maximum penalty for the personal defendant is $55,000.

97 Mr Latham referred the court to the Full Bench decision in Haynes v C I & D Manufacturing Pty Ltd (No 2) (1995) 60 IR 455 at 457, where the Full Bench observed:

In a number of cases decided under the OHS Act where the corporate structure of the defendant has been shown to be little more than the means of distribution of earnings arising from personal exertion, or where, as a matter of corporate structure, the burden of any fine levied would fall on one person or one family group ownership, the Court has seen it appropriate to impose a fine substantially less than if the corporation was functioning as a company with assets of a substantial kind. (See Gordon v MIJO (NSW) Pty Ltd; Ford v Warrah Ridge Pastoral Co Pty Ltd (unreported, Bauer J, 23 September 1994, Matter No CT 1109 of 1993); Robins v CT Plumbing Pty Ltd (unreported, Fisher P, 16 December 1991, Matter No 522 of 1991) and Mauger v Kremar Engineering Pty Ltd (1993) 47 IR 359).

98 However, it is now also clear that the fact that a corporation may represent the alter ego of a person or family and that any penalty imposed on the corporation will consequently have a financial impact on that person or family does not, of itself, warrant a reduction in penalty: WorkCover Authority of New South Wales (Inspector Mansell) v Jian Chen and Obing Pty Ltd trading as Old But New [2004] NSWIRComm 247; Inspector Gregory Maddaford v Graham Gerard Coleman [2004] NSWIRComm 317.

99 I propose to approach sentencing the defendants on the basis that the corporate defendant is the alter ego of the personal defendant, noting the above principles.

100 It is well established that, notwithstanding the financial means of the defendant, the penalty must ultimately reflect the objective seriousness of the offence: Ferguson v Nelmac Pty Limited (1999) 92 IR 188 at 209; WorkCover Authority of New South Wales (Inspector Farrell) v Schrader (2002) 112 IR 284 at 308-309; Manpac Industries Pty Ltd v WorkCover Authority of New South Wales (2001) 106 IR 435.

Application pursuant to s 10 of the CSP Act

101 Mr Latham made an application for the court to exercise its discretion under s 10 or s 10A of the CSP Act in respect of the personal defendant. Section 10 and 10A of the CSP Act is in the following terms:

10 Dismissal of charges and conditional discharge of offender

(1) Without proceeding to conviction, a court that finds a person guilty of an offence may make any one of the following orders:

(a) an order directing that the relevant charge be dismissed,

(b) an order discharging the person on condition that the person enter into a good behaviour bond for a term not exceeding 2 years,

(c) an order discharging the person on condition that the person enter into an agreement to participate in an intervention program and to comply with any intervention plan arising out of the program.

(2) An order referred to in subsection (1) (b) may be made if the court is satisfied:

(a) that it is inexpedient to inflict any punishment (other than nominal punishment) on the person, or

(b) that it is expedient to release the person on a good behaviour bond.

(2A) An order referred to in subsection (1) (c) may be made if the court is satisfied that it would reduce the likelihood of the person committing further offences by promoting the treatment or rehabilitation of the person.

(2B) Subsection (1) (c) is subject to Part 8C.

(3) In deciding whether to make an order referred to in subsection (1), the court is to have regard to the following factors:

(a) the person's character, antecedents, age, health and mental condition,

(b) the trivial nature of the offence,

(c) the extenuating circumstances in which the offence was committed,

(d) any other matter that the court thinks proper to consider.

(4) An order under this section has the same effect as a conviction:

(a) for the purposes of any law with respect to the revesting or restoring of stolen property, and

(b) for the purpose of enabling a court to give directions for compensation under Part 4 of the Victims Compensation Act 1996, and

(c) for the purpose of enabling a court to give orders with respect to the restitution or delivery of property or the payment of money in connection with the restitution or delivery of property.

(5) A person with respect to whom an order under this section is made has the same right to appeal on the ground that the person is not guilty of the offence as the person would have had if the person had been convicted of the offence.

10A Conviction with no other penalty

(1) A court that convicts an offender may dispose of the proceedings without imposing any other penalty.

(2) Any such action is taken, for the purposes of the Crimes (Local Courts Appeal and Review) Act 2001 and the Criminal Appeal Act 1912, to be a sentence passed by the court on the conviction of the offender.

102 In support of this application, Mr Latham drew the court's attention to the following authorities where the Full Bench had considered applications for an order pursuant to s 10: Newcastle Wallsend Coal Company Pty Ltd v WorkCover Authority (NSW) (Inspector McMartin) [2006] NSWIRComm 339; (2006) 159 IR 121 at [618]; Morrison v Power Coal Pty Limited (No 3) [2005] NSWIRComm 61; (2005) 147 IR 117 at [132] - [134].

103 The application of this section has also been considered by Full Benches of this Court in the following cases: see WorkCover Authority of New South Wales (Inspector Hopkins) v Profab Industries Pty Ltd (2000) 100 IR 64; (2000) 49 NSWLR 700; Riley v Australian Grader Hire Pty Ltd; WorkCover Authority of New South Wales (Inspector Downie) v Menzies Property Services Pty Limited (2004) 136 IR 449; WorkCover Authority (NSW) (Inspector Shaw) v Du Pont (Australia) Pty Ltd (2006) 152 IR 68; T and M Industries (Aust) Pty Ltd v WorkCover Authority (NSW) (Inspector Sequeira) (2006) 151 IR 130.

104 These authorities provide that s 10 of the CSP Act will be available only in rare and limited circumstances in proceedings under the OHS Act. In Profab, for example, the Full Bench stated at [26]:

Nevertheless, in occupational health and safety offences before this Court the exercise of the discretion under s 556A (cf s 10 of the Crimes (Sentencing Procedure) Act 1999) must be considered as extraordinary and highly exceptional. When a defendant seeks its exercise cogent reasons must, in our view, be provided by the defendant for such exercise and also by the judge acceding to that submission. The obligation is increased rather then diminished in a situation, such as the present, where the exercise of the discretion is not sought by the defendant but raised by the Court.

105 Shortly stated, the defendant is required to advance extenuating circumstances in which the offence was committed. This may include evidence as to age, health, or mental condition, all being matters I am required to have regard to pursuant to s 10(3) of the CSP Act, in addition to antecedents and whether the offence was trivial, together with any other matters that the court may regard as relevant to consider.

106 In light of the objective seriousness of the offence and the lack of exceptional or extraordinary matters, there is no proper basis for the exercise of my discretion under s 10 or s 10A of the CSP Act.

107 I have agonised over the penalty that should be imposed for these occupational health and safety crime. This has led me to consider a number of earlier Full Bench judgments of this Court involving the failure to properly guard machines: WorkCover Authority of New South Wales (Inspector Lancaster) v Burnshaw Constructions Pty Ltd (2002) 121 IR 119; WorkCover Authority (NSW) (Inspector Batty) v Graincorp Operations Ltd [2002] NSWIRComm 49 and WorkCover Authority of New South Wales (Inspector Barber) v Gundagai Shire Council [2002] NSWIRComm 243; (2002) 118 IR 193 where the Full Bench stated:

[17] ... The nature of the crush injury suffered by Mr Jones when his right forearm became trapped in the identified nip point between the metal lip of the bin lifter on the metal cradle and the rear of the hopper of the compaction unit are objectively serious on any view. We accept without issue the force of the joint submissions on the requirement for guarding such dangerous machinery expressed in paragraph 8 in the following terms:

"The requirement for employers and other persons to identify and safely guard all dangerous parts of machinery used at work has been recognised for decades in decisions of the Commission and its predecessors, as well as in the Chief Industrial Magistrate's Court and Local Court."

[18] Given that view, with which we concur, the requirement of public interest is manifestly evident in the matter before us. As has been expressed by this Court repeatedly in like and similar terms, the Occupational Health and Safety Act and the obligations arising there from requires an employer to look ahead and to seek out and foresee dangers even when those dangers have not crystallised to an incident or accident...

108 I have also been mindful of the sentences imposed by Haylen J in the related matters and the application of the principles of parity.

Penalty

109 Taking into account the appropriate seriousness of the offences, the subjective factors referred to earlier, the financial position of the defendants and the additional matters to which I have referred, I have concluded that imposing a crushing penalty on the personal defendant would serve little purpose. I therefore impose a fine of $4000 on the personal defendant. I impose a fine of $70,000 on the corporate defendant.

110 The prosecutor seeks costs and a moiety of the fine, which I propose to grant.

111 I note that it is open to either of the defendants to apply to the Registrar of the court to pay the fines by instalments.

Orders

112 I make the following orders:

Matter No IRC 1621 of 2011

1. The offence is proven and a verdict of guilty is entered.

2. The personal defendant is convicted of the offence, as charged.

3. The personal defendant is fined an amount of $4000 with a moiety thereof to the prosecutor.

4. The personal defendant shall pay the prosecutor's costs of the proceedings as agreed, or if agreement cannot be reached, as assessed.

Matter No IRC 1623 of 2011

1. The offence is proven and a verdict of guilty is entered.

2. The corporate defendant is convicted of the offence, as charged.

3. The corporate defendant is fined an amount of $70,000 with a moiety thereof to the prosecutor.

4. The corporate defendant shall pay the prosecutor's costs of the proceedings as agreed, or if agreement cannot be reached, as assessed.

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Decision last updated: 08 January 2014