Inco Ships Pty Ltd v Barber

[2009] TASSC 55

[2009] TASSC 55

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Inco Ships Pty Ltd v Barber [2009] TASSC 55

PARTIES:  INCO SHIPS PTY LTD
  v
  BARBER, Christopher John

FILE NO/S:  402/2009
DELIVERED ON:  31 July 2009
DELIVERED AT:  Hobart
HEARING DATE:  20 July 2009
JUDGMENT OF:  Blow J

CATCHWORDS:

Criminal Law – Sentence – Sentencing orders – Fines – Amount – Corporation fined under Commonwealth law – Increased maximum fine for corporation.

Crimes Act 1914 (Cth), s4B(3).
Aust Dig Criminal Law [3413]

REPRESENTATION:

Counsel:
             Applicant:  D J Barclay
             Respondent:  I M Arendt
Solicitors:
             Applicant:  Page Seager
             Respondent:  Director of Public Prosecutions (Commonwealth)

Judgment Number:  [2009] TASSC 55
Number of paragraphs:  19

Serial No 55/2009
File No 402/2009

INCO SHIPS PTY LTD v CHRISTOPHER BARBER

REASONS FOR JUDGMENT  BLOW J

31 July 2009

1. This is a motion for the review of an order of a magistrate by which the applicant company was fined $100,000.  The applicant contends that the fine was manifestly excessive. 

1. The applicant company is the operator of an Australian-registered container vessel named the ANL Bass Trader.  In June 2007 the company was replacing a heavy wire rope that was used in connection with one of that vessel's cranes.  The old rope was attached to a new rope by means of two stainless steel cable socks, and was being used to pull the new rope into position.  On two occasions, the socks parted and the end of one rope fell from a great height to the wharf below.  On the first occasion, the falling wire rope narrowly missed an employee of the applicant who was working on the wharf.  On the second occasion, two employees and a contractor were working on the wharf, performing duties associated with the replacement of the old wire rope, when the cable socks parted.  They were all in danger of being struck by the falling wire rope, but only one of the three men, an employee of the company, was hit by it.  His left arm was injured.  It had to be amputated at the shoulder as a result. 

1. The company pleaded guilty to three charges relating to the second incident — two charges of failing to take reasonable steps to protect the health and safety of an employee, and one charge of failing to take reasonable steps to protect the health and safety of a contractor.  Those charges were laid under the Occupational Health and Safety (Maritime Industry) Act 1993 (Cth), ss11(1) and 13(1). Those subsections read as follows:

"11(1)   An operator of a prescribed ship or prescribed unit must take all reasonable steps to protect the health and safety at work of employees.

Penalty:  1,000 penalty units."

"13(1)   The obligations of an operator of a prescribed ship or prescribed unit in respect of employees employed on the ship or unit that are set out in subsections 11(1) to (6) also apply in respect of persons who are contractors on that ship or unit to the extent set out in this section, and not otherwise."

1. A penalty unit is $110: Crimes Act 1914 (Cth), s4AA. The maximum penalty prescribed for contraventions of ss11(1) and 13(1) is therefore $110,000. However the Crimes Act, s4B(3), empowers a sentencing magistrate to fine a corporation a sum up to five times that prescribed as the maximum penalty for an offence. That subsection reads as follows:

"(3)   Where a body corporate is convicted of an offence against a law of the Commonwealth, the court may, if the contrary intention does not appear and the court thinks fit, impose a pecuniary penalty not exceeding an amount equal to 5 times the amount of the maximum pecuniary penalty that could be imposed by the court on a natural person convicted of the same offence."

There is no suggestion that any relevant "contrary intention" appeared in the legislation.

1. The principal contentions of counsel for the applicant can be summarised as follows:

· Section 4B(3) confers a discretion to "uplift" the maximum penalty, but the learned magistrate did not exercise that discretion.

·     The maximum penalty for each of the three relevant offences was therefore $110,000.

·     Since all three offences related to the same breach of duty, the learned magistrate should have proceeded as if a fine of $110,000 was the maximum global penalty permitted by the legislation.

·     The fine of $100,000 was so close to the maximum penalty of $110,000 that it was manifestly excessive, particularly in the light of the relevant mitigating factors including the absence of prior convictions, and the fact that the company had pleaded guilty. 

1. In my view the submissions of counsel for the applicant as to s4B(3) were misconceived. His submissions suggested that a magistrate thinking of fining a corporation has to go through a two-stage process whereby (1) he or she must first decide whether the case is so serious that he or she should proceed on the basis that the maximum penalty is five times the ordinary maximum, and (2) after deciding which maximum penalty to use as a starting point, he or she must then determine the appropriate fine. However I do not think there is anything in the language of s4B(3) to warrant such an approach. When that subsection applies, all that it does is to make the maximum fine for a corporation five times the maximum fine for a natural person. There is nothing in the language of s4B(3) to suggest that Parliament intended sentencing magistrates and judges to adopt a two-stage approach when sentencing corporate offenders. Such an approach would be cumbersome, would serve no purpose, and could have anomalous results. For example, magistrates sentencing corporations for similar offences might impose very different fines as the result of differing preliminary decisions as to whether their cases fell on the "serious" side or the "not so serious" side of an undefined borderline. In my view Parliament intended to promote compliance with Commonwealth laws by large corporations simply by exposing them to fines up to five times those faced by individuals.

1. Counsel have been unable to find anything relevant to the proper interpretation of s4B(3) in the second reading speech relating to the Crimes Legislation Amendment Bill 1987, by which that subsection was introduced. However the explanatory memorandum relating to that Bill contains the following (at 11):

"Sub-section (3) provides for a similar scheme in respect of offences committed by bodies corporate.  It provides that bodies corporate are subject to pecuniary penalties equal to five times the amount applicable to natural persons convicted of the same offence, irrespective of whether the pecuniary penalty for the natural person is found in the law creating the indictable offence or whether the pecuniary penalty is derived pursuant to proposed sub-section 4B(2)."

1. In my view that passage confirms that the meaning of s4B(3) is the ordinary meaning conveyed by its text, taking into account its context in the Crimes Act and the purposes or objects underlying the Crimes Act.  I am therefore taking that passage into account pursuant to the Acts Interpretation Act 1901 (Cth), s15AB(1)(a).

1. The maximum fine for each of the offences charged, when committed by a corporation, was $550,000.  The question whether the fine of $100,000 was manifestly excessive must be considered with that in mind.

1. It is of course appropriate to take into account the fact that the three offences for which the applicant was fined all involved the same breach of duty: Pearce v R (1998) 194 CLR 610; Johnson v R (2004) 78 ALJR 616. The single breach of duty resulted in three offences being committed, not one, only because the safety of three individuals was put at risk. Whilst the common factual basis for the three charges is relevant, there is no rule that the total amount that an offender may be fined in such a situation, either by way of a global penalty or by way of a series of separate penalties, should not exceed the maximum fine for a single offence.

1. If the maximum fine for a single offence in this case had been $110,000, I might very well have concluded that a global penalty of $100,000 for the three offences was so close to the maximum for a single offence that it was manifestly excessive. However, because s4B(3) made the maximum penalty for a single offence $550,000, there is no basis for arguing that the fine of $100,000 was too close to the maximum.

1. When considering whether a penalty in a case like this is manifestly excessive, the most important factor to look at is the objective seriousness of the offending: WorkCover Authority of New South Wales v Profab Industries Pty Ltd (2000) 49 NSWLR 700 at 714; Director of Public Prosecutions v Amcor Packaging Australia Pty Ltd (2005) 11 VR 557 at 565. Each metre of the wire rope weighed 5.78 kilograms. The end of the rope fell from such a great height that it could have killed anyone whom it hit to the head. The risk of death or serious injury must have been obvious after the first failure of the cable socks. Despite the obvious risk, three men were required to work in dangerous positions on the wharf. Nothing was done to provide them with protective cages or any other form of protection.

1. The undisputed facts, as outlined by counsel to the learned magistrate, were as follows.  There was nothing inherently unsafe, unsatisfactory or unacceptable about the method used to replace the wire rope, namely attaching it to the new rope by means of cable socks and using it to pull the new rope into position.  There were alternative methods, but all methods had their advantages and disadvantages.  The applicant engaged a crane hire company to assist in the replacement of the wire rope.  It had used that company for such a procedure on five previous occasions.  The crane hire company obtained a hazardous operations permit which identified the hazard of falling objects.  The permit contained a requirement to "sign post and barricade the area".  The vessel's chief engineer, an employee of the applicant, was in charge of the operation on the day.  No one from the crane hire company told him of the requirement in the hazardous operations permit that the area be signposted and barricaded.  No such steps were taken.  Workers were required to work in that area, greasing the new rope as the operation proceeded.  There was a risk that the new rope could become fouled or trapped.  A hoist winch was being used to pull the ropes.  If the old rope became fouled or trapped, and the hoist winch was not quickly stopped, the connection between the two ropes would fail.  That was because the breaking strength of that connection was much less than the breaking strength of either wire rope.  On the first occasion that the connection failed, the winch hoist was not stopped in time.  After the first incident, the chief engineer inspected the cable socks, and a meeting was held to discuss how to prevent the connection from failing again.  It was decided that there needed to be better or faster communication with the crane operator who controlled the hoist winch.  Three crew members were positioned for the purpose of relaying instructions from the chief engineer to the crane operator.  The operation resumed, with three workers working in the area where the wire rope could fall.  Once again, the new wire rope became caught, the operator did not stop the hoist winch in time, the cable socks parted, and the end of one of the wire ropes fell to the wharf. 

1. The learned magistrate made a number of very appropriate comments as to the seriousness of the offending by the applicant company, including the following:

·     "It was not enough to attempt to ensure the cables did not part — this was very much a case of 'But what if they do?'  The answer is, move the men or protect them."

·     "Everybody had a duty to make sure if they could that the cable did not part, but if it did, they needed to have precautions in place to avoid injury to employees.  So this was, in my opinion, what I might rather understatedly call a rather serious oversight."

·     "Whatever way this is viewed, it seems to me to be a case of a surprising failure to adopt an obvious safeguard."

1. The learned magistrate was required to take into account any injury resulting from the offences: Crimes Act, s16A(2)(e). He was provided with a report from a rehabilitation consultant. That report revealed the following about the injured man:

·     He was considered permanently unfit to return to his work as a seaman.

·     He had lost his left arm, but his right arm was his dominant arm.

·     As at February 2009 he was receiving two hours of domestic assistance per week.

·     He had obtained a driver's licence and was able to safely drive again.

·     He was fit to do light work for 12 to 15 hours per week.

·     There might be times when he was feeling better and able to apply himself for longer periods, but there would also be times when he would suffer pain and a decrease in his ability to work.

1. It was not suggested to the learned magistrate that anyone had suffered any psychiatric or psychological symptoms as a result of the incident in question.  It is well known that such symptoms can be experienced not only by those who suffer physical injury, but also by those who come close to being killed or seriously injured, and by those who witness such an event.  It is also well known that the onset of such symptoms might not occur until years after such an incident.  In the present context, it is appropriate to take those possibilities into account when evaluating the seriousness of the offending.

1. A number of powerful points were made to the learned magistrate on behalf of the applicant by its then counsel, Mr Cassidy.  They included the following:

·     The applicant pleaded guilty.  As a result, the Commonwealth was spared the cost and inconvenience of a lengthy defended hearing.  The prosecutor had proposed calling 19 witnesses.

·     The applicant had no prior convictions.  This was particularly significant because of the size of the company and the period that it has been in business.  It has been trading since about 1996.  It operates 11 vessels.  It has about 20 office staff and about 350 crew members on the 11 vessels.

·     For many years the company has devoted extensive resources to the investigation of safety issues, the compiling of safety manuals, and the provision of safety-oriented training courses.

1. Mr Cassidy also provided some information to the learned magistrate as to the applicant company's financial position.  He disclosed the company's net annual profits for the years ending 30 June 2007 and 2008, and its anticipated net profits for 2009.  It was appropriate for Mr Cassidy to say a little about the financial circumstances of the company because a magistrate has a duty not to impose a fine that is disproportionate to the means of an offender: Broughton v Lowe [1979] Tas R 309 (NC 7), 20/1979; Devlyn v Lowe 31/1980; Kaye v Vagg (No 2) (1984) 11 A Crim R 127; Maynard v White A108/1994, [1994] TASSC 169; R v McNamara (1978) 2 Crim LJ 170; Young v Geddie (1978) 45 FLR 400; Reeves v Ranson [1999] TASSC 52 at par18; Venn v White [2003] TASSC 115. The fine of $100,000 was not disproportionate to the company's capacity to pay.

1. In the light of the company's size, its history, its previously unblemished record, and the steps taken by it to promote safety, I do not think the need to deter it from re-offending was particularly significant in this case.  However the company unnecessarily exposed three men to a very obvious risk of death or very serious injury, and one of them lost his complete left arm.  Having regard to the seriousness of the negligence on the day, its serious consequences, and the need to impose penalties that will encourage other employers to promote industrial safety, I think that a very substantial fine was the only appropriate penalty in this case.  I am not persuaded that the fine of $100,000 was manifestly excessive.  The motion to review is dismissed.