Citation: Safe Work New South Wales v Waycon Bulk Pty Ltd [2015] NSWDC 254
Court: District Court of New South Wales
Date: 10 September 2015
Judge: Judge AC Scotting
Background
The defendant company operated a firewood production and bulk haulage business. In early 2013, it took delivery of a custom-built wood splitting machine fitted with a two-hand control safety device, designed so that a ram and blade would only descend if both of an operator's hands pressed two buttons simultaneously. This mechanism was specifically intended to prevent the operator's hands and arms from entering the machine's danger zone.
The company's sole director authorised a modification to the machine that allowed the ram and blade to be activated by pressing just one button. The stated reason was to allow operators to protect their faces and chests from pieces of wood that could fly out during splitting. That modification brought the machine into non-compliance with the relevant Australian Standard (AS 4024.2601-2008), which required two-hand simultaneous activation.
On 15 April 2013, an employee operating the machine leaned across the work table to reposition a block of wood that was not sitting correctly. As he leaned over, his thigh inadvertently pressed the single activation button, causing the blade to descend and sever his right hand above the wrist. The company also failed to notify WorkCover NSW of the incident, which was instead reported to the regulator by police two days later.
Legal Issues
- Whether the company had breached its health and safety duty under section 19(1) of the Work Health and Safety Act 2011 (NSW) by exposing the employee to a risk of death or serious injury, contrary to section 32 of that Act
- What penalty was appropriate for that offence, having regard to objective seriousness, mitigating and aggravating factors, general and specific deterrence, and the company's capacity to pay
- Whether the company had failed to notify the WorkCover Authority of a notifiable incident contrary to section 38 of the Act, and what penalty was appropriate for that offence
- Whether the financial assets of the company (held through a discretionary trust structure) were available to satisfy a fine, and whether imposing a fine would be futile given the trust arrangement
Decision
The company pleaded guilty to both offences. The court accepted the agreed facts and proceeded to sentence. The modification of the machine to single-button activation removed the core safety mechanism that the two-hand control device provided, and no guarding was placed over the buttons to prevent inadvertent activation. Video footage taken by the WorkCover Inspector demonstrated that operators regularly moved close to the activation buttons during normal machine operation, making inadvertent activation a foreseeable risk.
On the section 32 offence, the court assessed the objective seriousness of the conduct as significant. An employee lost his hand as a direct result of a deliberate modification that stripped away a key protective device, without any assessment of the risks that modification introduced. The absence of documented procedures for machine operation was also a relevant failure.
On the trust structure argument, the company contended that a fine would be futile because the business assets were held in a discretionary trust and the trustee could choose not to apply them to satisfy any penalty. The court rejected this submission. It found that the trust deed's definition of the trust fund and its indemnity clause were broad enough to cover the relevant assets. The court also noted that if the trustee exercised its discretion to avoid paying a lawfully imposed fine, the prosecutor could seek Supreme Court intervention to have the trustee removed or to direct the exercise of trust powers accordingly.
Taking into account the early guilty plea, which attracted a 25% discount, the court imposed fines of $187,500 on the section 32 offence (down from $250,000) and $7,500 on the section 38 offence (down from $10,000). The court ordered that 50% of each fine be paid to the prosecutor, as provided under section 122(2) of the Fines Act 1996.
Orders Made
- The defendant was convicted of both the section 32 and section 38 offences under the Work Health and Safety Act 2011 (NSW)
- A fine of $187,500 was imposed for the section 32 offence (after a 25% early plea discount from $250,000)
- A fine of $7,500 was imposed for the section 38 offence (after a 25% early plea discount from $10,000)
- 50% of each fine to be paid to the prosecutor pursuant to section 122(2) of the Fines Act 1996
- The defendant to pay the prosecutor's costs as agreed or assessed
Key Takeaways
- A company that deliberately modifies safety-critical equipment to remove a protective mechanism, without adequately assessing the risks introduced by that modification, may be exposed to significant fines under section 32 of the Work Health and Safety Act 2011 even where the modification was motivated by a genuine (if mistaken) safety rationale.
- Under section 38 of the Act, the obligation to notify the regulator of a notifiable incident rests on the person conducting the business or undertaking, not on anyone else who may separately inform the regulator.
- Where a defendant business operates through a discretionary trust structure, the District Court held that the broad terms of a trust deed (including indemnity provisions) may encompass trust assets as available to meet a fine, and that the argument that payment would be "futile" is not automatically accepted.
- A 25% discount for an early guilty plea applied to both offences, consistent with the general principle that early pleas warrant recognition at the sentencing stage.
- The court considered a victim impact statement in the sentencing exercise, confirming that such statements are a relevant sentencing consideration even in corporate prosecutions for work health and safety offences.
Legislation and Cases Referenced
Legislation
- Work Health and Safety Act 2011 (NSW), ss 19(1), 32, 38, 155(2)
- Crimes Act 1900 (NSW), s 21A
- Fines Act 1996 (NSW), ss 6, 122(2)
- Trustee Act 1925 (NSW)
- Australian Standard AS 4024.2601-2008 (two-hand control devices)
Cases
- Veen v R (No 2) (1988) 164 CLR 465
- Baumer v R (1988) 166 CLR 51
- Capral Aluminium Limited v WorkCover Authority of New South Wales (2000) 49 NSWLR 610
- R v Thomson & Houlton (2000) 49 NSWLR 383
- R v McNaughton (2006) 66 NSWLR 566
- R v Wilkinson (No 5) [2009] NSWSC 432
- R v Borkowski (2009) 195 A Crim R 1
- BW v R [2011] NSWCCA 176
- Jahandideh v R [2014] NSWCCA 178