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District Court 2 December 2024

SafeWork NSW v Modco Homes Pty Ltd

[2024] NSWDC 565

Other
CRIMINAL LAW PROSECUTION WORK HEALTH AND SAFETY DUTY OF PERSONS UNDERTAKING BUSINESS RISK OF DEATH OR SERIOUS INJURY MAXIMUM PENALTY SENTENCE

Citation: SafeWork NSW v Modco Homes Pty Ltd [2024] NSWDC 565
Court: District Court of New South Wales
Date: 2 December 2024
Judge: Strathdee DCJ

Background

A Wollongong-based building company was the principal contractor engaged to construct a multi-storey building in the CBD. As part of that work, the company operated a tower crane on site through a qualified employee with roughly four years' experience, and had engaged a specialist scaffolding subcontractor. The company had approximately 16 employees and had in place a range of safe work method statements and work health and safety procedures.

On 12 and 13 July 2021, three separate safety incidents occurred in quick succession. First, the crane operator left the tower crane and its remote control unattended without properly securing the equipment, causing the crane to slew and strike the building facade. Later the same day, the company allowed the crane to resume use without a competent-person inspection; the hoist rope failed and skip bins fell five storeys. The following day, a worker stood on an unprotected balcony edge without fall protection while recovering equipment from the fallen load.

Critically, no workers were physically injured in any of the three incidents. However, each incident exposed workers and others to a risk of death or serious injury. SafeWork NSW instituted proceedings in June 2023 alleging eight contraventions of the Work Health and Safety Act 2011 (NSW). Two charges were dismissed at an earlier hearing; the company ultimately pleaded guilty to the remaining six.

  • Whether the company, as a person conducting a business or undertaking (PCBU), breached its duty under s 19(1) of the WHS Act to ensure, so far as reasonably practicable, the health and safety of workers in relation to each of the three incidents
  • Whether the company failed to notify the regulator of notifiable incidents as required under s 38(1) of the WHS Act (relating to the second incident)
  • Whether the company failed to preserve the incident sites as required under s 39(1) of the WHS Act (relating to the first and second incidents)
  • What penalty was appropriate across the six contraventions, having regard to objective seriousness, mitigating and aggravating factors, and the guilty plea
  • Whether the prosecutor was entitled to its costs

Decision

The court convicted the company on all six counts. On the three primary duty offences under s 19(1) (each prosecuted as a Category 2 offence under s 32 of the WHS Act, carrying a maximum fine of $1.5 million for a corporation), the court assessed the objective seriousness of each at a low-to-moderate level. While the risks created were serious and the consequences could have been fatal, no one was injured, the incidents arose partly from individual worker non-compliance with existing procedures, and the company had relevant systems in place even if those systems were not followed or enforced adequately.

On the notification and site-preservation offences under ss 38 and 39, the court similarly assessed objective seriousness at a relatively low level. The company had notified the regulator, albeit belatedly, and the failure to preserve the scene, while a breach, was not accompanied by evidence of deliberate concealment.

In assessing penalty, the court identified a number of mitigating factors: no prior WHS convictions, genuine remorse and contrition, cooperation with the investigation, post-incident remediation of procedures and equipment, and a guilty plea (entered at a relatively early stage). The court applied a 25% discount to each fine to reflect the utilitarian value of the guilty plea. The court also took into account the need for general and specific deterrence and noted that, while the company was a small business operating at a low profit margin, that did not excuse the failures.

The court applied the totality principle to ensure the aggregate of fines was not crushing or disproportionate for a company of this size. Prosecutor's costs were ordered in each matter, and 50% of each fine was directed to the prosecutor pursuant to the Fines Act 1996 (NSW).

Orders Made

  • Modco Homes Pty Ltd convicted in each of the six proceedings
  • Fine of $60,000 for the s 19(1) offence relating to the first incident (pre-discount: $80,000; 25% discount applied)
  • Fine of $60,000 for the s 19(1) offence relating to the second incident (pre-discount: $80,000; 25% discount applied)
  • Fine of $60,000 for the s 19(1) offence relating to the third incident (pre-discount: $80,000; 25% discount applied)
  • Fine of $15,000 for the s 38(1) failure-to-notify offence relating to the second incident (pre-discount: $20,000; 25% discount applied)
  • Fine of $15,000 for the s 39(1) site-preservation offence relating to the first incident (pre-discount: $20,000; 25% discount applied)
  • Fine of $15,000 for the s 39(1) site-preservation offence relating to the second incident (pre-discount: $20,000; 25% discount applied)
  • Total fines: $225,000
  • Defendant to pay prosecutor's costs in each matter, as agreed or assessed
  • 50% of each fine to be paid to the prosecutor under s 122(2) of the Fines Act 1996 (NSW)

Key Takeaways

  • Having written safe work procedures in place is a relevant mitigating consideration, but it does not shield a PCBU from liability where those procedures were not followed and the company had not taken adequate steps to enforce compliance.
  • A 25% guilty plea discount was applied across all six offences, reflecting the utilitarian value of the plea and the fact that it was entered at a relatively early stage of proceedings.
  • Under the WHS Act, the absence of physical injury does not eliminate criminal liability: it is the exposure of workers to a risk of death or serious injury that constitutes the offence under s 32, and the court treated lack of injury as a mitigating factor going to objective seriousness rather than a complete answer to the charge.
  • A small company's limited financial capacity may be taken into account in the sentencing exercise, but the District Court confirmed it does not, of itself, reduce the appropriate penalty to a nominal amount where the offending is real and deterrence considerations are significant.
  • Failures to notify the regulator and to preserve an incident site under ss 38 and 39 of the WHS Act are discrete criminal offences, assessed and penalised separately from the underlying duty-of-care breaches, even where they arise from the same factual circumstances.

Legislation and Cases Referenced

Legislation:
- Work Health and Safety Act 2011 (NSW), ss 3, 19, 31, 32, 35, 37, 38, 39
- Crimes (Sentencing Procedure) Act 1999 (NSW), ss 3A, 21A, 22
- Fines Act 1996 (NSW), s 122
- Criminal Procedure Act 1986 (NSW), s 257B

Cases:
- Bulga Underground Operations Pty Ltd v Nash (2016) 93 NSWLR 338; [2016] NSWCCA 37
- Capral Aluminium Ltd v WorkCover Authority (NSW) (2000) 49 NSWLR 610; [2000] NSWIRComm 71
- Environmental Protection Authority v Barnes [2006] NSWCCA 246
- Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534
- Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25
- Morrison v Powercoal Pty Ltd (No 3) (2005) 147 IR 117; [2005] NSWIRComm 61
- Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39
- Nash v Silver City Drilling (NSW) Pty Ltd [2017] NSWCCA 96
- R v Thomson; R v Houlton (2000) 49 NSWLR 383; [2000] NSWCCA 309
- SafeWork NSW v HCM Building Pty Ltd [2019] NSWDC 632
- SafeWork NSW v Grandcity Constructions Pty Ltd; SafeWork NSW v C