Citation: Work Cover Authority of NSW v Fer-Aim Pty Ltd [2014] NSWDC 367
Court: District Court of NSW
Date: 23 October 2014
Judge(s): Curtis J
Background
Fer-Aim Pty Ltd was a subcontractor engaged to perform excavation works at Kogarah for underground cabling, working beneath Diona Pty Ltd, which had contracted with Ausgrid. On the morning of 5 June 2010, Fer-Aim's contracted scope of work was complete. However, Ausgrid's on-site contract inspector directed the operator of Fer-Aim's trenching machine, Mr Fullen, to excavate an additional trench abutting a nearby building. Another contractor had already refused the same request on safety grounds.
Mr Fullen, believing he was contractually obliged to follow the inspector's directions, proceeded with the excavation despite having been instructed at a toolbox meeting that further works required a safety assessment and notification to the principals of both Fer-Aim and Diona. The building was undermined and partially collapsed as a result.
WorkCover Authority prosecuted Fer-Aim under section 8(1) of the Occupational Health and Safety Act 2000 for failing to ensure the health and safety of its employees. Fer-Aim pleaded guilty. The sentencing proceeding focused on the appropriate penalty, and in particular whether a dismissal without conviction under section 10 of the Crimes (Sentencing Procedure) Act 1999 was warranted.
Legal Issues
- How corporate criminal responsibility is attributed under the Occupational Health and Safety Act 2000, where the relevant conduct was that of an employee rather than a principal
- Whether the culpability of Fer-Aim was sufficiently serious to warrant a conviction and penalty, given the conduct of the Ausgrid inspector and the circumstances in which Mr Fullen acted
- Whether the charge should be dismissed without conviction under section 10 of the Crimes (Sentencing Procedure) Act 1999, having regard to the defendant's character, the extenuating circumstances, and parity with the related Diona prosecution
Decision
Issue 1: Corporate attribution and the identification of culpable conduct
Curtis J applied the principle drawn from Meridian Global Funds Management that a corporation's culpability is assessed by identifying the natural person who bore the relevant legal responsibility and weighing that person's conduct against the standard of a reasonable person in the same position (at [7]-[8]). In this case, the sole director of Fer-Aim, Mr Maskelly, could not be faulted: the prosecution identified no failing on his part, and the company's OHS training systems were adequate (at [9]-[10]). The culpable conduct lay entirely with Mr Fullen, who was treated as the legal embodiment of Fer-Aim for the purposes of the statute (at [10]).
Issue 2: The gravity of Mr Fullen's failing in context
The court found that Mr Fullen's particular failing was his omission to ensure that a qualified engineer assessed the safety of the additional excavation before proceeding (at [11]). However, the court weighed this against significant contextual factors: Mr Fullen had reason to believe he was contractually bound to follow the inspector's instructions, he was not himself a trained engineer, and he had grounds to assume the inspector could assess the associated risks (at [13]-[14]). Curtis J characterised the real cause of the accident as the irresponsible and bullying conduct of the Ausgrid inspector, who was not himself charged, and noted that imposing a penalty on Fer-Aim in those circumstances offended principles of fairness and proportionality (at [15]).
Issue 3: Section 10 dismissal without conviction
Consistent with the approach taken in the related Diona prosecution, Curtis J found that a section 10 dismissal was appropriate (at [16], [20]). The court noted Fer-Aim's good character, its absence of prior convictions, the seriousness with which it had treated its OHS obligations, and the fact that the failing was not one of senior management but of an employee of lower standing in the company hierarchy who disobeyed his instructions (at [18]-[19]). Parity with the Diona outcome, the extenuating circumstances, and Fer-Aim's agreement to pay the prosecution's costs of $16,450 (treated as carrying both general and specific deterrent weight) all supported the dismissal (at [20]-[21]).
Orders Made
- The court found Fer-Aim Pty Ltd guilty of the offence charged in both matters 2012/174902 and 2012/174931
- Without proceeding to conviction, the charges were dismissed pursuant to section 10 of the Crimes (Sentencing Procedure) Act 1999
- Fer-Aim Pty Ltd was ordered to pay the prosecutor's costs in the sum of $16,450
Key Takeaways
- A corporation's culpability under the Occupational Health and Safety Act 2000 is assessed by identifying the natural person who bore the relevant legal duty on behalf of the company and measuring that person's conduct against a reasonable person standard, following the Meridian attribution principle (at [7]-[8]).
- Where the culpable conduct is that of a lower-level employee acting contrary to employer instructions, and no failing is attributable to the company's principals or its safety systems, that diminished corporate culpability is a significant factor in sentencing (at [9]-[10], [18]-[19]).
- Section 10 of the Crimes (Sentencing Procedure) Act 1999 is available to corporate defendants in OHS prosecutions, and a dismissal without conviction may be ordered where the defendant is of good character, the offence arose from extenuating circumstances, and parity with co-defendants supports that outcome (at [17]-[20]).
- The District Court treated an agreement to pay prosecution costs as carrying deterrent weight capable of supporting a section 10 dismissal in lieu of a more punitive outcome (at [21]).
- Significant mitigating weight attached to the fact that the proximate cause of the incident was the conduct of a third-party site inspector who was not himself prosecuted, with the court noting the unfairness of penalising a company that was effectively a victim of that conduct (at [15]).
Legislation and Cases Referenced
Legislation
- Occupational Health and Safety Act 2000
- Crimes (Sentencing Procedure) Act (1999)
Cases
- Meridian Gloval Funds Management Pty Limited v Securities Commission (1953) 3 AER 918