SafeWork NSW v Aptec Constructions Pty Limited

[2019] NSWDC 229

District Court

New South Wales

Medium Neutral Citation:

SafeWork NSW v Aptec Constructions Pty Limited [2019] NSWDC 229

Hearing dates:

17 May 2019

Date of orders:

07 June 2019

Decision date:

07 June 2019

Jurisdiction:

Criminal

Before:

Russell SC DCJ

Decision:

(1)   The offender is convicted.
(2)   The appropriate fine is $240,000 but that will be reduced to $160,000 by reason of capacity to pay and further by 25% to reflect the plea of guilty.
(3)   Order the offender to pay a fine of $120,000.
(4) Order pursuant to Section 122(2) of the Fines Act 1996 that 50% of the fine is to be paid to the prosecutor.
(5)   Order the offender to pay the prosecutor’s costs agreed in the amount of $21,500.

Catchwords:

CRIMINAL LAW – prosecution – work health and safety – duty of persons undertaking business – risk of death or serious injury

 

SENTENCE – objective seriousness – mitigating factors – aggravating factors – plea of guilty – general deterrence – specific deterrence – appropriate penalty

 

COSTS - prosecution costs

  OTHER – fall from height – no edge protection or fall prevention device

Legislation Cited:

Corporations Act 2001 (C’th)
Crimes (Sentencing Procedure) Act 1999 (NSW)
Fines Act 1996 (NSW)
Work Health and Safety Act 2011 (NSW)

Cases Cited:

Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96; 93 NSWLR 338
Baumer v R (1998) 166 CLR 51
Bulga Underground Operations Pty Limited v Nash (2016) NSWCCA 37
BW v R [2011] NSWCCA 176
Capral Aluminium Limited v WorkCover Authority of New South Wales (2000) 49 NSWLR 610
DPP v Gregory [2011] VSCA 145
Green v R [2011] HCA 49
Inspector Howard v Baulderstone Hornibrook Pty Limited [2009] NSWIR Comm 92; (2009) 187 IR 125
Jahandideh v R [2014] NSWCCA 178
Jimmy v R (2010) 77 NSWLR 540
Markarian v R (2005) 228 CLR 357
Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120
R v McNaughton (2006) 66 NSWLR 566
R v Wilkinson (No. 5) [2009] NSWSC 432
Safework NSW v Ru Dong Li [2018] NSWDC 189
Sandell v Porter [1966] HCA 28; (1996) 115 CLR 666
Unity Pty Limited v SafeWork NSW [2018] NSWCCA 266
Veen v R (No. 2) (1998) 164 CLR 465
WorkCover Authority of NSW (Inspector Carmody) v Consolidated Constructions Pty Limited [2001] NSWIR Comm 263; (2001) 109 IR 316

Category:

Sentence

Parties:

SafeWork NSW (Prosecutor)
Aptec Constructions Pty Limited (Defendant)

Representation:

Counsel:
D Nagle (Prosecutor)
T Epstein (Defendant)

  Solicitors:
SafeWork NSW (Prosecutor)
Clyde & Co (Defendant)

File Number(s):

2017/350287

Judgment

1. Aptec Constructions Pty Limited (Aptec) (the offender) has pleaded guilty to an offence that as a person who had a work health and safety duty pursuant to s 19 of the Work Health and Safety Act 2011 (NSW) (the Act) it failed to comply with that duty and thereby exposed Mr David Liston-Smith to a risk of death or serious injury contrary to s 32 of the Act.

2. The maximum penalty for the offence is a fine of $1,500,000.

Background

3. The parties presented an Agreed Statement of Facts and this material is summarised below.

4. Aptec was and is in the business of building and construction work.

5. Mr Owen Aoun (Mr Aoun) was and is the sole director of Aptec. He was responsible for the general management of the business including work health and safety policies and procedures.

6. Aptec was engaged by a developer Tesmar Projects Pty Ltd (Tesmar) to be the principal contractor for the construction of an apartment complex located at 6 – 16 Hargraves Street, Gosford NSW (the worksite).

7. Aptec was responsible for supervision of the worksite and construction management. Mr Aoun was in control of the worksite as the supervisor and director of Aptec.

8. Aptec subcontracted to Hunter Valley Concrete Pumping Service Pty Ltd (HV Concrete) the concrete pumping services on the worksite.

9. Mr Liston-Smith was employed by HV Concrete as a concrete pump operator/linesman since 2010. Mr Liston-Smith held a high-risk work licence for the use of a concrete placing boom. Mr Scott Mead was employed by HV Concrete as a concrete pump operator/linesman since June 2015. Mr Mead also had a high-risk work licence for the use of a concrete placing boom and had 26 years experience in the use of concrete pumps.

10. The role of Mr Liston-Smith and Mr Mead at the worksite was to complete a pour of concrete for a concrete slab on level 4 of the worksite. The slab was approximately 100 metres long.

11. On the morning of 30 November 2015 Mr Aoun discussed with Mr Liston-Smith and Mr Mead at the worksite how the concrete pour was to be completed. The concrete was to be pumped from a truck with a 43 metre placement boom. When the work begun the delivery hose attached to the boom was 40 metres long. The original plan for the concrete pour involved the concrete being pumped through a series of steel pipes and an 8.9 cm diameter hose.

12. The concrete slab contained a substantial number of reinforced vertical steel starter bars, which did not have caps on them. The starter bars made it difficult to manoeuvre the hose and there was a risk that the hose would be impaled by the bars due to the absence of caps.

13. As a result, Mr Liston-Smith and Mr Mead abandoned the original plan for the concrete pour. Instead, they decided to use a smaller 6.35 cm diameter hose, which would reduce some of the difficulty of manoeuvring a hose around the starter bars. Mr Liston-Smith and Mr Mead also decided to reduce the thickness of the concrete which would allow the concrete to pass through the hose more easily.

14. At times during the concrete pour, the concrete was to be sprayed from a greater distance than usual. This reduced the need for the length of hose ordinarily required but meant that the pump had to be operated at a higher speed to generate higher pressure. Operation of the pump at higher speeds resulted in jerking along the hose, which needed to be controlled by Mr Liston-Smith.

15. On 29 November 2015 Mr Aoun became aware that there would be no edge protection available on a section of the fourth floor during the concrete pour. Mr Aoun ordered extra scaffolding but was told it would not be available until 3 or 4 December.

16. Despite this, on 30 November 2015, Mr Aoun instructed Mr Liston-Smith and Mr Mead to commence and complete the concrete pour without the scaffolding. Mr Aoun instructed Mr Liston-Smith and Mr Mead to keep away from the edges of the platform during the concrete pour. Mr Aoun did not direct workers not to access the fourth floor during the concrete pour.

17. At approximately 11.30 am, Mr Liston-Smith and Mr Mead were nearing completion of the concrete pour. They were at the northern end of the platform and had poured approximately 25 to 30 cubic metres of concrete.

18. As the concrete pour progressed, the delivery hose attached to the boom was reduced from 40 to 15 metres. Mr Liston-Smith was standing on steel mesh approximately 1 metre from the northern edge of the platform and Mr Mead was approximately 3 metres from Mr Liston-Smith. Another worker from another concrete company requested Mr Mead to pour the concrete on a particular part of the remaining area. However, there were a significant number of steel bars where Mr Liston-Smith was standing and in the area where Mr Mead was requested to pour additional concrete. The presence of the steel bars made it difficult to re-locate the hose.

19. To counteract this difficulty Mr Mead increased the speed of the pump and as a result the hose pumped the concrete with greater force and propelled the concrete a greater distance. The force with which the concrete was pumped was sufficient to propel the concrete a distance of approximately 6 metres.

20. Due to the increased speed of the pump, there was additional jerking along the hose. Mr Liston-Smith was unable to keep control of the hose and lost his footing on the steel mesh and fell over the starter bar at the edge of the platform to the next level approximately 3.6 metres below.

21. Mr Liston-Smith sustained a broken femur, a skull fracture and a traumatic brain injury.

22. At the time of the incident, Aptec had a legal obligation under Clause 34 of the Work Health and Safety Regulation 2011 NSW (the Regulation) to identify reasonably foreseeable hazards that could give rise to risks to health and safety. Aptec also had an obligation under clause 35 of the Regulation to eliminate risks to health and safety so far as was reasonably practicable, and if it was not reasonably practicable to eliminate risks to health and safety, to minimise those risks so far as was reasonably practicable.

23. Clause 79(3) of the Regulation provides:

“The person provides adequate protection against the risk if the person provides and maintains a safe system of work, including by:

(a)    providing a fall prevention device if it is reasonably practicable to do so, or

(b)   if it is not reasonably practicable to provide a fall prevention device, providing a work positioning system, or

(c)   if it is not reasonably practicable to comply with either paragraph (a) or (b), providing a fall arrest system, so far as is reasonably practicable.”

24. At the time of the incident there were readily accessible guidance materials providing advice regarding any work involving the risk of a fall. Such materials included:

1. National Code of Practice for the Prevention of Falls in General Construction (National Code of Practice). This provides practical guidance material and advice on ways to eliminate and minimise the risk of falls from height in general construction work and prescribes circumstances in which physical fall prevention measures are required, so far as is reasonably practicable. The National Code of Practice specifically provides guidance on risk assessment processes, preparation of Safe Work Method Statements (SWMS) and examples of physical fall prevention measures that are required when working at heights of 2 metres and above, so far as is reasonably practicable.

2. Code of Practice: Managing the Risk of Falls at Workplaces (Code of Practice). The Code of Practice states that a person conducting a business or undertaking has specific obligations at law to manage the risk of a fall by a person from one level to another, including requirements to ensure, so far as is reasonably practicable, that any work involving the risk of a fall is carried out on a solid construction and/or by providing a fall prevention device to minimise the risk of falls so far as is reasonably practicable. The Code of Practice also outlines a number of systems to eliminate or minimise the risks of a fall so far as is reasonably practicable, including fall prevention devices.

3. AS/NZS 4994.1:2009 Temporary edge protection – General (the Standard). The Standard provides requirements and guidance for designers of equipment for roof edge protection, to prevent workers falling from roofs or other edges of buildings under construction while performing any work or carrying out any inspection on roofs on all types of buildings. The Standard states that it also applies to temporary protection of the edges of all roofs as well as other exposed edges, prior to the installation of the permanent walling materials. It is important that the structure to which the temporary edge protection is to be attached can support the forces that may be applied when the edge protection restrains a person from falling from the edge being protected. Temporary edge protection shall be designed to contain or prevent any person from falling from the roof edge, the platform edge or other edges to which the temporary protection is attached.

25. No guardrail, scaffolding or other fall prevention measure was installed at the northern edge of the platform. Limited scaffolding had been installed at the southern end of the platform and was installed a metre below the level of the platform and acted as a means of access, rather than fall protection.

26. The only barrier around the edge of the platform was in the form of steel reinforcement bars. The steel bars ranged from 600 mm to 1000 mm in height and are not a form of fall protection as they do not meet the requirements of the Standard.

27. Aptec installed multi-level scaffolding around the entire perimeter edge of the platform after the incident.

28. The concrete pour was completed approximately a week later with compliant scaffolding in place and with caps installed on the steel starter bars.

29. After the incident, Aptec created a Work Health & Safety Management Plan (the Plan). The plan dealt with working at heights and required all workers to obtain a current general safety induction card, with a SWMS to be prepared before any high-risk construction work is conducted.   

The offender’s evidence

30. Mr Aoun affirmed an affidavit on 2 May 2019 and was cross-examined.

31. Mr Aoun said that Aptec has been in business since 2012. It currently has six full-time employees, of whom four are apprentices. Aptec was building at the work site for Tesmar. The affidavit gave no information about Tesmar. Cross-examination revealed that Mr Aoun is the sole director of Tesmar, as well as of six other companies.

32. In paragraph 19 of his affidavit Mr Aoun said that he was aware that there was no scaffolding around the perimeter of the structure where the concrete pour was to take place. He knew this two days before the accident. Mr Aoun gave no explanation as to why he allowed the concrete pour to go ahead, when there was no edge protection for the two concretors, or indeed for other workers who were on level 4 when the pour was taking place. There was no evidence as to whether edge protection had been in place when the steelwork on level 4 was done.

33. Mr Aoun said that prior to the incident Aptec had in place a general Work Health & Safety Management Plan, but a copy cannot be found.

34. On 30 November 2015 Mr Aoun held a toolbox meeting on site with Mr Liston-Smith and told him where he should stand to stay away from the unprotected edge. This was another recognition by Mr Aoun that level 4 had no edge protection of any kind.

35. Mr Aoun said that Aptec has improved its Work Health and Safety System since the accident. The WHS Management Plan was updated in December 2015. In April 2018 (over two years after the accident) Aptec reviewed its WHS Policy. On 8 April 2019 (approximately three and half years after the accident and only one month before the sentence hearing) Aptec updated its SWMS for working at height. Mr Aoun did not explain in his affidavit why those steps were not taken straight away after the accident.

36. In May 2018 Aptec employed a full-time safety officer for its construction work. Mr Aoun now conducts daily “walk overs” on site, which include reviewing the site for potential health and safety hazards. Of course, the risk created by the unprotected edge was known to Mr Aoun on the day of the accident, and for several days before. He did not need to conduct a walk over to see the problem. He already knew of it.

Consideration

37. I have had regard to the objects in s 3 of the Act and the purposes of sentencing set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 (NSW).

Objective seriousness of the offence

38. The proportionality principle requires that a sentence should neither exceed nor be less than the gravity of the crime having regard to the objective circumstances: Veen v R (No. 2) (1998) 164 CLR 465 at 472, 485-6, 490-1 and 496. At common law, the term “objective circumstances” was used to describe the circumstances of the crime. The gravity of the offence was assessed by reference to its objective seriousness: R v McNaughton (2006) 66 NSWLR 566 at [15].

39. The task requires the court to consider where in the range of conduct covered by the offence the conduct of the offender falls: Baumer v R (1998) 166 CLR 51 at 57. This assessment will generally indicate the appropriate range of sentences available which will reflect the objective seriousness of the offence committed, and set the limits within which a sentence proportional to the criminality of the offender will lie: BW v R [2011] NSWCCA 176 at [70].

40. The sentencing judge should take into account not only the conduct which actually constitutes the crime, but also such of the surrounding circumstances as are directly related to that crime and are properly regarded as circumstances of aggravation or mitigation: R v Wilkinson(No. 5) [2009] NSWSC 432 at [61].

41. The existence of a reasonably foreseeable risk to safety that is likely to result in serious injury or death is a factor relative to the gravity of the offence: Capral Aluminium Limited v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at [89]. The question of foreseeability of the risk is to be determined objectively.

42. The court must identify all the factors that are relevant to the sentence, discuss their significance and then make a value judgment as to what is the appropriate sentence given all the factors of the case: Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120. This approach to sentencing, known as the “instinctive synthesis” approach, involves the making of a global judgment without any attempt to state precisely how any given factor has influenced the judgment.

43. The Court of Criminal Appeal has recently examined the sentencing process with regard to the Work Health and Safety Act 2011 in the matter of Nash v Silver City Drilling (NSW) Pty Limited; Attorney General for NSW v Silver City Drilling (NSW) Pty Limited [2017] NSWCCA 96; 93 NSWLR 338. His Honour Justice Basten at paragraph 34, under the heading ‘Assessment of Risk’ said:

“The sentencing judge commenced his consideration with the proposition that ‘greater culpability attaches to the failure to guard against an event the occurrence of which is probable rather than an event the occurrence of which is extremely unlikely’. However the truth of that proposition depends upon other considerations including:

(a)   the potential consequences of the risk, which may be mild or catastrophic;

(b)   the availability of steps to lessen, minimise or remove the risk; and

(c)   whether such steps are complex and burdensome or only mildly inconvenient. Relative culpability depends on assessment of all those factors.”

44. Further at paragraph 42 his Honour continued:

“The culpability of the Respondent is not necessarily to be determined by the remoteness of the risk occurring, nor by a step‑by‑step assessment of the various elements. Culpability will turn upon an overall evaluation of various factors, which may pull in different directions. Culpability in this case is reasonably high because, even if the pressure event of the force which occurred might not be expected to occur often, the seriousness of the foreseeable resultant harm is extreme and the steps to be taken to avoid it, were not even assessed, were straightforward and involved only minor inconvenience and little, if any, costs.”

45. At paragraph 53 his Honour dealt with the proper approach to considering the objective seriousness of offences under the Act, saying:

“It is important to note that the risk to be assessed is not the risk of the consequence, to the extent that a worker is in fact injured, but is the risk arising from the failure to take reasonably practicable steps to avoid the injury occurring. To discount the seriousness of the risk by reference to the unlikelihood of injury resulting is apt to lead to error. The conduct in question is the failure to respond to a risk of injury, conduct which will be more serious, the more serious the potential injuries, whether or not they are likely to materialize. The objective seriousness of the conduct will also be affected by the ease with which mitigating steps could have been taken.”

46. My findings about the offender’s level of culpability are based upon the following:

1. There was a foreseeable risk to safety;

2. The risk was not just foreseeable, but it was a clear and obvious risk.

3. The risk was one known to and identified by the offender;

1. Measures such as edge protection were available and feasible;

2. There was considerable guidance material publicly available relating to the risk of falls from height at workplaces;

3. No temporary edge protection was installed on level 4 at the time of the incident;

4. The offender through Mr Aoun told Mr Liston-Smith to go up to level 4 and conduct the concrete pour, which involved working in the vicinity of the unprotected edge.

47. I find that the offender’s level of culpability is in the high end of the mid-range.

Deterrence

48. The penalty imposed in relation to this offence must provide for general deterrence. Employers must take the obligations imposed by the Act very seriously. The community is entitled to expect that both small and large employers will comply with safety requirements. General deterrence is a significant factor when safety obligations are breached: Bulga Underground Operations Pty Limited v Nash (2016) NSWCCA 37 at [180].

49. In my decision in Safework NSW v Ru Dong Li [2018] NSWDC 189 I listed 22 judgments of this court, delivered since the start of 2016, which involved a fall from height. Further research, and more recent cases added to that list, show that since the start of 2016, the District Court has delivered sentence in 37 cases involving a fall from height. I repeat what I said at paragraph [47] of my previous decision:

“In the light of that troubling litany of death and serious injury, general deterrence is a very important factor in this case.”

50. Many of the sentences delivered in cases which involve a fall from height involve a traumatic brain injury, often to a young worker. Such injuries are completely preventable. The court must place appropriate emphasis upon general deterrence in cases involving falls from heights.

51. Part of the sentencing process, and one of the objects of sentencing, is to prevent crime by deterring the offender and other persons from committing similar offences – s 3A(b) Crimes (Sentencing Procedure) Act 1999. The District Court publishes on Caselaw each and every sentencing judgment under the Act. Thus the industrial community is informed of the significant penalties imposed for offences under the Act, which in theory should have a deterrent effect on persons other than the offender. Further, additional purposes of sentencing include to denounce the conduct of the offender, and to recognise the harm done to the victim of the crime and the community – s 3A(f) and (g) Crimes (Sentencing Procedure) Act 1999. (Emphasis added)

52. The penalty must also reflect the need for specific deterrence. The offender is still conducting a construction business. Its operations continue to involve working at heights and the obvious need for edge protection.

Aggravating factors

53. The injury, emotional harm, loss or damage caused by the offence was substantial: s 21A(2)(g) Crimes (Sentencing Procedure) Act 1999. No evidence was presented regarding the current state of Mr Liston-Smith.

Mitigating factors

54. The offender has no previous convictions: s 21A(3)(e) of the Crimes (Sentencing Procedure) Act 1999.

55. The offender is otherwise of good character: s 21A(3)(f) of the Crimes (Sentencing Procedure) Act 1999. The steps which the offender took after the incident demonstrate this. The offender has been in business since 2012.

56. The offender is unlikely to re-offend: s 21A(3)(g) of the Crimes (Sentencing Procedure) Act 1999.

57. The offender has good prospects of rehabilitation: s 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offender has taken positive steps to guard against the risk of an incident such as this ever happening again. The offender has brought its documentation and its procedures into line with those which, on all the evidence, should have been in place before this accident occurred.

58. The offender has shown remorse for the offence: s 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. The offender has provided evidence that it has accepted responsibility for its actions and has acknowledged that the injury to Mr Liston-Smith was caused by its actions.

59. The offender entered a plea of guilty: s 21A(3)(k) Crimes (Sentencing Procedure) Act 1999. The court must take into account the fact that the offender has pleaded guilty, when the offender pleaded guilty, and the circumstances in which the offender indicated an intention to plead guilty: s 22(1) Crimes (Sentencing Procedure) Act 1999. It is appropriate to give the offender a 25% discount for an early plea.

60. The offender gave assistance to law enforcement authorities: s 21A(3)(m) Crimes (Sentencing Procedure) Act 1999. The offender co-operated at all times with the prosecutor and provided all documents requested in a prompt fashion.

Capacity to pay a fine

61. I am required to have regard to s 6 of the Fines Act 1996 (NSW) before imposing a fine. Where an offender seeks to have a fine reduced on the basis of a limited capacity to pay, it bears the evidentiary onus of convincing the court that it should exercise its discretion to limit the amount of the fine. The offender’s capacity to pay is relevant but not decisive: Jahandideh v R [2014] NSWCCA 178 at [16]. A substantial fine may still be warranted as a result of the seriousness of the offence and the need for general deterrence.

62. In Unity Pty Limited v SafeWork NSW [2018] NSWCCA 266 the Court of Criminal Appeal said:

“First, and more generally, questions of specific deterrence should take into account the size and scope of the operations of the defendant; a fine which may be crippling to a small business may have virtually no impact on the financial operations of a large corporation. The maximum penalty for the offence is undoubtedly set having regard to such a factor. Secondly, the Court is required to have regard to ‘the means’ of the defendant, pursuant to s 6 of the Fines Act 1996.”

63. As part of his affidavit Mr Aoun provided some financial documentation relating to Aptec. He said that the financial statements had been prepared by Aptec’s accountants “on the basis of accurate financial information provided by me”.

64. In financial year 2017 the profit before tax made by Aptec was $33,761. In that year Mr Aoun was not paid a salary from Aptec.

65. In financial year 2018 the financial statements for Aptec showed a profit before tax of $31,766. A copy of the 2018 tax return showed that tax of $1,827.90 was paid. Again, Mr Aoun was not paid a salary from Aptec.

66. A copy of the interim financial statement for Aptec for the period 1 July 2018 to 28 February 2019 was tendered. This showed a profit before tax for those eight months of $46,393.

67. In paragraph 51 of his affidavit, Mr Aoun said:

“In the event of Aptec Constructions being given a fine by the Court in this matter, which it is unable to pay, the company would become insolvent. Aptec Constructions would be forced to cease trading. The current six employees would be made redundant.”

68. There was nothing in the affidavit to explain what would happen to the control which Mr Aoun exercises over eight corporations, of which Aptec is one and Tesmar is one, if Aptec became insolvent at a time when Mr Aoun was the sole director.

69. Mr Aoun was asked in the witness box how he was financially rewarded, if Aptec did not pay him a salary. He said that he received income from dividends. When asked, he was unable to explain how Aptec had sufficient funds to pay him any dividends, and did not recall how much he was paid in dividends.

70. It was pointed out to Mr Aoun, while he was in the witness box, that a loan made by his wife Ms Reema Aoun to Aptec was reduced from $168,021 on 30 June 2018 to $126,010 as at 28 February 2019. Mr Aoun had no explanation as to how a $42,000 reduction in that loan had been achieved, given the level of income and profitability of Aptec.

71. The loan from Mr Aoun’s wife was the only non-current liability of Aptec as at 28 February 2019. The only current liabilities of Aptec were PAYG withheld, superannuation payable, trade creditors, and provision for GST. Aptec owed no money to any bank. Apart from the loan from Ms Aoun, as at 28 February 2019 Aptec had an excess of assets over liabilities of $154,092.

72. No information was provided to the court concerning the financial position of the seven other companies of which Mr Aoun was the sole director. Of course, it is only Aptec which is being sentenced in the present proceedings. None of those other companies have any liability, or indeed any obligation to assist Aptec in paying the fine which will be imposed. Nevertheless, there was no evidence that Aptec had no other source of funds, apart from income as a builder. A more complete picture of the financial strength or weakness of Aptec could have been presented, by evidence concerning any inter-relationship between those other companies and Aptec, and by evidence concerning any transfers of funds between the eight companies of which Mr Aoun is the sole director. A company is not insolvent within the meaning of s 95A of the Corporations Act 2001 (C’th) merely because it cannot meet an obligation out of cash flow. Regard may be had to monies which a debtor can raise from other sources – Sandell v Porter [1966] HCA 28; (1996) 115 CLR 666.

73. Aptec appears to be in a different position to a small single family company, where a significant fine would without doubt have a devastating impact.

74. For the offender, counsel submitted that there was no evidence about the financial position of the other companies in the group, and if Aptec were liquidated, the liquidator would not have access to the assets of other companies in the group. Counsel submitted that there was no evidence of any re-arranging of company financial affairs. Counsel also submitted that Mr Aoun’s own financial position (as to which there was no evidence) is irrelevant. There was no evidence of any diversion of money from the company to Mr Aoun, or his family, or the other companies. Further, there was no evidence as to Aptec’s ability to raise funds from any other source. All of those submissions are accepted.

75. I propose to mitigate the fine which I would otherwise impose, but I do so very reluctantly, given the limited disclosure made by the offender and by Mr Aoun to the court. In spite of the offender’s apparent financial position, I find that a substantial fine is still warranted as a result of the seriousness of the offence and the need for general deterrence.

Costs

76. The parties have agreed to an order that the offender is to pay the prosecutor’s costs agreed in the amount of $21,500.

Penalty

77. My orders are:

1. The offender is convicted.

2. The appropriate fine is $240,000 but that will be reduced to $160,000 by reason of capacity to pay and further by 25% to reflect the plea of guilty.

3. Order the offender to pay a fine of $120,000.

4. Order pursuant to Section 122(2) of the Fines Act 1996 that 50% of the fine is to be paid to the prosecutor.

5. Order the offender to pay the prosecutor’s costs agreed in the amount of $21,500.

**********

Decision last updated: 07 June 2019