Director of Public Prosecutions v Phelpsys Constructions
[2018] VCC 394
•21 February 2018
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| IN THE COUNTY COURT OF VICTORIA | Revised Not restricted Suitable for Publication |
AT MELBOURNE
CRIMINAL DIVISION
Case No CR-17-00451
Indictment No G11194953
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| PHELPSYS CONSTRUCTIONS |
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JUDGE: | HIS HONOUR JUDGE TINNEY | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 February 2018 | |
DATE OF SENTENCE: | 21 February 2018 | |
CASE MAY BE CITED AS: | DPP v Phelpsys Constructions | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 394 | |
REASONS FOR SENTENCE
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Catchwords: Failure to ensure safe workplace. Toyota skid loader left at residential premises.
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr Daniel Gurvich QC and Nadia Kaddeche | Office of Public Prosecutions |
| For the Accused | Mr Kozlowski | Emma Turnbull Lawyers |
HIS HONOUR:
The company Phelpsys Constructions Pty Ltd has, through its authorised representative, a Director, Mr Eric Krepp, pleaded guilty to a single charge laid under section 26 (1) of the Occupational Health and Safety Act 2004. (Hereafter OH&S Act).
The indictment sets out the nature and the particulars of the charge. As that indictment and the agreed summary makes clear, the company had to an extent the management and control of a ‘workplace’ being the residential premises they were doing earthmoving and landscape works at. These were private premises owned by Godwin and Eugenia Fava. The work had started on 1 June 2015 and was due to be completed on 11 or 12 June of that year. A Toyota skid steer loader, which for ease of reference I shall refer to generically as a bobcat or plant, had been purchased by Eric Krepp and leased to the Brian Krepp in his capacity as site supervisor with the company.
The equipment had been purchased in December 2014 and had never been professionally inspected or serviced. There was not even an operator’s manual coming with the machine and none was obtained by the company. There was a repair manual that was obtained at a later stage but that did not spell out the many safety features or the nature of the periodic checks required. Those sorts of things are spelt out in the operator’s manual which, as I say, had never even been obtained by the company.
At the end of work on 9th June 2015 the bobcat was left by the company representatives in the garage at those premises. As I have said, this piece of equipment had not been periodically inspected or maintained in accordance with the manufacturer's recommendations. The operator’s manual which had never been obtained by the company recommended daily and weekly checks of the plant. The pedal lock function of the plant was listed as an inspection item in the pre-start checklist and in the periodic maintenance list. The standards applicable to the machine were clear enough and understandably they dictated that the controls should be arranged, de-activated or guarded so that they could not be operated unintentionally, in particular when getting in and out of the plant. See opening paragraph 19.
That was a critical safety feature and it was simply not working on this machine and would not have been operative from the day of purchase. Any person using it was exposed to risk of serious injury and death. That was as a result of the critical safety features being inoperative or disabled. The machine should not have been able to operate without a person being in the seat, being belted in and with the seat bar down in place. Most regrettably the pedal lock system was defective, in that the rear seat bar switch had been actually bypassed. There is no suggestion of course that the company had done that. The cable to the pedal lock operated by the seat bar was broken. As I say, these were critical safety features and they were just not functioning.
Julian Fava used the machine on the day of his death. He wanted to level out a portion of the nature strip at the front of the house. The company had declined to do this as it would have required council permits. As there were works being conducted by the company at those residential premises, this was at the relevant time a ‘workplace’. That was the position despite the work finishing for the day on 9th June. On that day the ‘bob cat’ was parked in the garage with the key. In any event, on 11 June in the morning, Julian Fava who was 37 years old at the time was trying to help out his father. His mother and sister left the premises and went to some local shops. His father remained inside. Julian Fava was found by his father slumped in the plant operator's seat bleeding from a head injury. The machine was operating and that was despite the safety bar being raised. There was nothing his father could do. His son had died and was pronounced dead at the scene by paramedics. His death would undoubtedly have been very swift given the nature of the injuries.
There was a subsequent Worksafe examination of the machine by a Toyota expert and it had numerous defects. It is common ground that these defects would have been obvious to any experienced service operator in the industry. It had never been serviced. Had the safety features been working this tragedy would not and could not have occurred. Any competent service provider would upon examination have found these serious defects. They could have been easily detected and rectified. It is no answer at all to raise questions as to why Julian Fava was on the equipment. He was, but anyone could have met the same fate and that would include even an experienced operator employed by the company.
The machine was emblazoned with cautions as to the danger of serious injury or death. As it happens the person using it on the 11th June was the son of the property owner and not someone connected to the company. The company however had an obligation in terms of the management and control of the ‘workplace’. This bobcat had not been legitimately inspected by an appropriately trained person, was seriously defective, posed risks to health and safety at the workplace and the keys were left in it.
The company has no prior findings of guilt. The maximum penalty is 9000 penalty units and at the time of offence that translates into a maximum of $1,328,490.
Now so much for my very broad summary of the facts. That is all it is. The prosecutor, Mr Gurvich, opened this matter to me in accordance with a written prosecution opening. That was an agreed summary and was marked as exhibit A. He also filed some sentencing submissions and spoke to those submissions as well. See Exhibit D.
As to the written opening, it was a comprehensive document and went into much greater detail than I have gone into. No issue has been taken with any aspect of the opening and I have already very broadly summarised the matter. My summary of the summary, and that is all it is, should be read in light of the full written document. The particular breaches are specified in the indictment. As Exhibit A was an agreed summary, I do not see any need to further describe the full factual setting in these my reasons. I will not stray beyond the agreed facts. In addition to reading the opening, the prosecutor also placed before me a selection of photographs. See Exhibit C.
Impact
Two victim impact statements were filed over the objection of Mr Kozlowski who appeared for the company. See Exhibit B.
Now I want to make one thing very, very plain. At the end of these reasons I will be imposing a monetary penalty. It will be a fine. I do not want anyone to think or feel that I am in, selecting that fine, in some way endeavouring to assign some monetary worth to the life of Julian Fava. Of course I am not. We all know that a life is priceless and simply irreplaceable.
I have to pass sentence and the only sentence available to me in this case is a fine. Nor is the sentence that I impose designed to deal with the tragic outcomes of the Occupational Health and Safety Act breach. I am not punishing the company for the death. I am dealing with an offence laid under the relevant provisions of that Act. That offence does not require proof of any injury or death at all. Neither of those things is in any way an element. That is because this is a risk based provision, not an outcome based provision.
The fact is, as the authorities make plain enough, a very minor breach of the Act can in fact result in death or serious injury whilst a very serious breach may lead only to minor injury or even no injury at all. See the case of Orbit Drilling. What is important is the assessment of the breach, not the outcome or consequences of it.
Of course as a Sentencing Judge, I am also required to take into account any impact flowing to victims from the direct result of the offence. So in that sense impact can be a relevant factor but the key factor will always, be an assessment of the gravity of the breach and that is never driven by the consequences. I have to look at the nature and the gravity of the breach and that, as strange as it may sound, is not informed by the outcome on the day, as tragic as it obviously was in this case. The fact of death or a serious injury arising can only ever have very limited relevance in this area.
Now here Mr Kozlowski who appears on behalf of the company says it should have no relevance at all to my task, that it is disconnected from the actual offence charged. His submission was that as tragic as the outcome was, that I should pay no regard at all to the death as it was not as a direct result of the offence. He took me to the case of FRH [2010] VSCA 18. Even if I accepted that argument, and I do not, it would not change for one moment the disastrous consequences experienced by this family. However, I do not accept for one moment Mr Kozlowski’s argument.
I note that interestingly he said he would not be even pressing that style of submission had the accident befallen an employee and one authorised or directed to use this piece of equipment. Well the offence concerns the workplace which was to an extent managed and/or controlled by the company and the failure to ensure the safety of that workplace. It is broader than a duty to employees. That workplace was also a private residence.
The case of FRH to which I was taken had a very different factual setting and one which provided a disconnection as between the alleged breach and the death. There were written instructions in that case. Here we are dealing with the failure to maintain the safety of the ‘workplace’ in the way alleged. That workplace, as I have said, happened also to be residential premises.
The failure related to this bobcat and the risks posed by it. The risk was not dependent on someone acting with authority. Mr Fava had none. The dangers posed by the alleged breach materialised, as it happens, with Mr Fava using what was an inherently unsafe piece of equipment kept at his residence which was also the company's workplace in this instance.
The omissions alleged in the indictment charge are as far I am concerned directly connected to the death of this man in the way that this phrase is to be interpreted. He would not have died but for those omissions. The evidence is clear in that respect. I am satisfied beyond reasonable doubt that the death is a direct result of the offending as alleged. Undoubtedly then, his family are victims in the terms of the Sentencing Act. Again I emphasize that this offence relates to the company's failure to ensure a safe and risk free workplace, that the offence does not depend upon a death or injury as an element. It is a risk based not outcome based offence. See Vibrophile.
Still of course here as a direct result of the failure there was a death and I am required by law to take into account the impact of the offence. This does not drive the sentencing process. I am not here to act emotionally or to seek to punish for the outcome. The nature of the breach not the outcome is what is pivotal and the assessment process is as described in the cases to which I have been referred, including Frewstal and Vibrophile. I will turn to that process soon enough but firstly I turn to the impact.
Having said all that, I turn now to the two victim impact statements. One from Julian Fava’s mother, one from one of his sister, Vanessa. They were read on the plea. I have read them again since. They make for sad reading indeed.
The impact has been vast. I suppose I could say that and go no further, but I will not. I will say a little bit more. The Fava family were thrown into turmoil on this day. The father, Godwin, discovered his only son dead at the wheel of this device. One sister receiving an awful phone call from her father, then had to relate that dreadful news to her own mother. The mother and daughter rushing home but to no avail. It is obvious that there has been great trauma on the day and equally as obvious, lasting grief produced by these events.
A much loved family member has died and is sorely and deeply missed by all who loved him. Godwin Fava experienced bouts of ill health and died in April of last year. I certainly cannot find that his death has been hastened by these events that took place in June 2015 or that his ill health and deterioration was somehow provoked by the event. That would be no more than pure speculation and I cannot engage in that. What is not speculative is that many of his remaining days were lived by him with a deep sense of grief as to the loss of his son. He kept saying “I want to be with my son”.
The mother Eugenia’s life obviously has changed significantly. She also lost her son and then not too much later her husband. She moved house. Wherever she lived there was a mood of grief hovering about the house, no doubt occasioned by these twin losses by that point. She says that ‘words can’t describe the impact of this loss’ and who would doubt that. She worries about one of her daughters and the impact upon her. She takes it seems to me justifiable pride and maybe there is even some tiny speck of solace in her son’s decision, a decision that had been conveyed to her by him, of his wish to be an organ donor. He was.
One of the sisters, the older one, Vanessa, has made a victim impact statement. She was very close to her brother. The whole family went through understandable grief. This was a hard death for any of them to bear. There had been others in the family, they had a pretty awful 18 months by the sounds of the two impact statements, but this was not an elderly person dying at a ripe old age. It was her young brother, with his life ahead of him, dying very suddenly. The whole family has been deeply affected. I take into account, as I am required to, the impact of this crime. It has been profound.
By the way, though here there was a legal objection taken by Mr Kozlowski to the receipt of the impact statements, that should not in any way convey any heartlessness or uncaring attitude on the part of the Directors. It was a legal objection taken by counsel on a legal basis. That is all. The Directors, especially Brian Krepp, were also deeply upset by the events of 11 June. They would and do recognise the way in which the Fava family’s life has changed forever and for the worse. I note that Brian Krepp even attended the funeral. They were not adopting some flippant or uncaring attitude. Quite the opposite. It was a tragedy and they know it. They feel also a sense of responsibility as well.
Mitigation
Your counsel Mr Kozlowski raised a number of matters in mitigation on behalf of the company. He relied chiefly upon:
· The company's guilty plea;
· The presence of remorse;
· The absence of any prior history;
· The small size of the company and limited financial means to pay a fine;
· The high likelihood that any fine would result in the company's liquidation.
Your counsel conceded the seriousness of the offending but had some submissions to make as to the assessment process as described in the cases such as Vibro-Phile as well as Frewster. He suggested that in considering the extent of the risk of death or serious injury which might result from the breach that one should then go back and consider the fact of the past deliberate bypass of the safety system and the probabilities of that having occurred or improbabilities in reality. With respect, that cannot be right.
The breach lay in the failure to inspect and maintain the bobcat by a qualified person and keeping it in a safe condition. A very simple exercise. As the indictment particulars recite, that failure exposed persons to the risk of serious injury or death, something which actually eventuated on 11th June. The pedal lock system was bypassed.
Mr Kozlowski placed before me financial information about the company, it's deteriorating position since that fateful day in June 2015 as well as the favourable way it had been viewed and reviewed by customers including even by Godwin Fava prior to this day in question.
Prosecution
Mr Gurvich who appeared on behalf of the Director with Ms Kaddeche, made submissions as to the seriousness of the offending. His written submissions took me to many uncontroversial matters of principle and he argued that this was a serious offence owing to the gravity of the breach. It was a serious breach he argued involving a sizeable departure from the statutory duty and it carried with it a very real and sizeable risk of death or serious injury.
The company, he argued, did not even have the operator’s manual. They were seemingly unaware of many of the key safety features. The equipment had never been professionally examined. The likelihood he said of the occurrence of an event such as occurred was high, the systems existed after all to disable the pedals and to render foolproof the machine. Had the machine been serviced or looked at by any competent examiner, the faults and defects would have been easily and immediately detected and the machine either rectified or taken out of service. There, he argued, was a high likelihood of the hazard eventuating.
It was unsafe to a non-employee and was unsafe even to an experienced operator. The potential gravity of outcome he argued was a given owing to the nature of the piece of equipment. It in fact resulted directly in the death of Julian Fava. He argued that had the appropriate steps been taken Mr Fava would not have been killed. So the argument advanced on behalf of the Director was that the breach was significant, the departure from statutory duty high. It was common ground between the parties that general deterrence was a very powerful sentencing purpose in this sort of case.
The Director took me to one case from one of my sister Judges. See Lilford Farms , a decision of Judge Harbison on 20 April 2016 . It had some similarities and I can see that there are some similarities, but there are also many differences including the nature of the breach asserted in that case relating as it did to the leaving of the forklift with keys amongst three unsupervised 15 year olds. So there was a failure to ensure it was not used by anyone not authorised, a failure to ensure that it was used only for the designated roles and in a safe and appropriate manner. In any event, each party has correctly submitted that only limited assistance could be gleaned from other sentencing outcomes. So much has been said repeatedly in the Court of Appeal, including in the case of Vibro-Phile.
I have put some of the key submissions made by each party to this point in my reasons.
I accept the prosecution submissions as to the gravity of this offence and will discuss this again in one moment.
Background
Mr Kozlowski placed before me some information as to the company. The written submissions are marked as Exhibit 1 and I see no need to restate them all. I accept the historical background placed before me. The company though had only been operating for a short time prior to these events. It follows that whilst it has credit for no past history before the courts, it cannot point to decades of offence free existence, as some companies can and do.
The company was registered in September 2014. The bobcat was purchased in October 2014 and the offence occurred in June 2015. The company has no criminal record. It is as companies go a small enough concern. It started out with two brothers, one, Eric Krepp based in Queensland, the other Brian Krepp on the ground in Melbourne. The plan was as I understand it to operate doing concreting works in Victoria and the two brothers were going to test out the viability of the business over a few years to see if it was a going concern and profitable.
The company would engage contractors, including Brian. Brian Krepp by the way is now a director. Both directors were present at court the other day. The company initially advertised and picked up some work through the advertisements and then no doubt was pushed along by the favourable reviews dealing with the work quality, some of which are before me. It looked like a promising start and it probably was. The brothers had high hopes which were dashed on 11 June 2015 and thereafter. The financial figures are before me and point to profitability plummeting, but it was more than that, it was also the morale that was sapped by this awful event. I am prepared to find that the incident on 11 June 2015 was devastating for these directors and for the company. The company has it would seem a net worth of about $21,500
Guilty plea
I turn then to consider some of the other submissions made before me, including of course the submissions made on behalf of the company.
Firstly I turn to the guilty plea. The company has pleaded guilty. It was not at the earliest stage. A committal was conducted in March 2017 only involving the calling of the expert and the matter was listed for trial in this court. A defence response was filed. The matter was moving on to trial which was listed on 12 February 2018. That was the position until the case settled on 22 January 2018. The plea went ahead on what would have been day one of the trial. So it was obviously a late plea. I am required though to take into account the fact of the plea. I am also required to take into account the stage of the plea.
As late as it was, the plea is still a significant mitigatory matter. The company has facilitated the course of justice and taken responsibility. There is a utilitarian benefit. Witnesses have been spared the experience of coming to court and giving evidence. That would not have been a pleasant task for any family member who happened to be called to give evidence in a case such as this, and that has been averted. The community has also been saved the time, cost and effort that are associated with the conduct of a criminal trial in this court. So I must reward the company for its decision to plead guilty. I must pass a lesser sentence upon it than I would have imposed had it been found guilty by a jury and I will.
Remorse
As to remorse I am dealing with a company here. Ultimately the directors of the company have seen some sense here. The company has pleaded guilty. A guilty plea is ordinarily indicative of some remorse. As I say, I am dealing with a corporate entity but the plea is authorised by its authorised representatives. I certainly am prepared to find the company representatives do feel remorse here and I take that into account in mitigation.
Prospects
I expect that these tragic events would have driven home to the directors the critical nature of periodic inspections and maintenance of this style of equipment. Cutting corners may seem the cheap and easy way to go but it is a false economy and can produce real tragedies such as this one. Specialist equipment requires specialist knowledge and servicing and maintenance. I would hope and trust that they never engage in such conduct again.
Now I am told that liquidation is virtually certain and that this should reduce the weight to be given to specific deterrence. I am not so sure about that. There is something of a fiction in seeking to deter a company. I suppose in reality one is seeking to deter those responsible for the running of the company. The company has pleaded guilty through one of its directors. The authorised officers are now the brothers. They are both directors and are experienced in this area, that is the area they were working in.
I cannot know for certain if the company will cease to exist, but even if it does the directors will continue on in life as individuals. Will they operate in this area again? Will there be a corporate structure again? Whether there is or not, will they employ others? Will they manage or have any control over workplaces? The potential liquidation, and that is all it is at this point, does not permit me to ignore the need to deter specifically. I still believe some weight must be given to specific deterrence given the gravity of this offence. I reduce the weight given to that purpose, owing to my conclusions as to remorse and my sense that the directors do feel a strong sense of responsibility and would be at pains to avoid having any future tragedy unfold on their watch.
The Offence
As to the offence I accept the prosecution submissions as to the gravity of the offence. This was a serious breach indeed. As I have explained earlier in these reasons, not because of the death. Rather, because of the nature of the breach. Obvious defects to any competent authorised examiner, totally deficient servicing and instead a rudimentary inspection by representatives who did not even seemingly understand the safety features required, and in the face of clear signage as to the obvious dangers of such a piece of equipment operating with defects.
The departure from the statutory duty was very high here in my view. So too the extent of the risk of death or serious injury. The stakes were also very high, being the risk of death or serious injury. It was readily foreseeable. There was a high likelihood of potential harm. That potential gravity by way of outcome was, as I say, high. The pedal lock was a key safety feature, was disabled and there was only one way in and out of the cabin.
That high risk existed and it eventuated. It is exactly what occurred and I am entitled to take into account that direct impact. In this case it does in fact serve to demonstrate the degree of seriousness of the relevant threat to health or safety resulting from the breach. As I have said repeatedly the seriousness of the offence is not in any way dependent upon such a tragic event unfolding, for as I have said a number of times this is a risk based, not outcome based, offence. Here quite independent of the death this was a very serious offence. I am though required to consider the impact of the offending upon victims, and that has been profound.
In my judgment the company failed dismally in terms of engaging practicable measures to eliminate this risk. They should have been discovered with a simple professional inspection or service and the faults were easily discovered and eliminated, if only the company had complied. Had there been any such prudent inspection or maintenance of this Toyota plant, quite simply we would not be here in court discussing this sad and tragic event.
Purposes
I have to consider a number of purposes of sentencing. I am required to punish. That is a significant sentencing purpose here. I must also denounce the company's conduct and I do. That is an important matter as well. This was, as I have said, a serious breach of the Act. There are other purposes of sentencing. One such purpose is the need for this court to seek to deter the company from offending in the future. I have already dealt with that concept earlier in these reasons. I cannot ignore that purpose.
What is obvious from all of the jurisprudence in this area is the need to give strong regard to the principle of general deterrence. The Occupational Health and Safety Act has its principles set out at s.4 of the Act They recognise the importance of health and safety of employees, other persons at work and members of the public. There is statutory recognition in the purposes, and later in the Act itself, as to the importance of elimination of risks. That duty is cast upon those who control or manage matters giving rise to risk.
General deterrence is a very weighty consideration in this field. The courts must send a loud cautionary message to other companies and to other employers, to those many others who have control or management of “workplaces” and the message is to re-enforce the need to ensure as far as is practicable the reduction of risk and the safety of that workplace.
The sentences imposed by the Courts in this area must draw attention to the importance of workplace safety and send the strong message to employers that failure to eliminate or mitigate safety risks will attract significant punishment, penalties reflecting the nature and the seriousness of the breach in the given case. The maximum penalties are not placed into the Act accidentally. They reflect the seriousness of the offence generally. Safety is fundamental. Invest in it. Do not use false economy or be a jack of all trades and master of none. Do not cut corners or take shortcuts for if you do the message must be made and sent from these courts, very large fines will await.
I take into account current sentencing practice. Of course even in some of the cases to which I was referred for matters of principle, in those cases, there were also a number of examples of other sentences imposed by other courts. Each case is very different and I must pass an appropriate sentence in this case. I do take into account the company's financial position. I pay regard to it but there are a number of sentencing purposes here. General deterrence is the paramount purpose of sentencing.
I cannot shy away from my task owing to the suggestion that the company will be liquidated. I do not believe any real weight is to be given in this case to community protection given the absence of history, the guilty plea and my sense that the directors are taking the matter very seriously.
I have taken into account all of the materials placed before me and the submissions made by counsel.
Sentence
On Charge 1, that is the charge before me, a charge of breach of section 26 (1) of the Occupational Health and Safety Act 2004, I convict and sentence the company to pay a fine in the sum of $350,000.
6AAA
Had the company pleaded not guilty and been found guilty of this matter following a jury trial, I would have imposed a greater penalty, namely a conviction and fine of $600,000. That is to be noted in the records of the court. Are there any other matters that I need to deal with at all?
MR GURVICH: No, Your Honour, if the court pleases.
HIS HONOUR: Mr Kozlowski, are you seeking a stay at all or not?
MR KOZLOWSKI: May I just seek some instructions, Your Honour?
HIS HONOUR: Yes.
MR KOZLOWSKI: Your Honour, as anticipated it is a fine that has a devastating effect financially on the company and consequently I am instructed to seek as long as the court is prepared to grant in terms of a stay and I cannot really take that any further.
HIS HONOUR: The company has probably got the same rights in terms of making applications downstairs in terms of instalments and the like, aren't they? But anyway I am not going to - there is a limit to the extent of the stay available. I will grant at this stage an initial stay of four months.
MR KOZLOWSKI: As Your Honour pleases.
HIS HONOUR: No other orders I need to make?
MR GURVICH: No, Your Honour.
HIS HONOUR: Thank you very much each of you for your assistance
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