SafeWork NSW v Buildmark Developments Pty Ltd

[2024] NSWDC 439

District Court

New South Wales

Medium Neutral Citation:

SafeWork NSW v Buildmark Developments Pty Ltd [2024] NSWDC 439

Hearing dates:

30 August 2024

Date of orders:

20 September 2024

Decision date:

20 September 2024

Jurisdiction:

Criminal

Before:

Scotting DCJ

Decision:

1   Buildmark Developments Pty Ltd is convicted.

2   I impose a fine of $12,000.

3 I order that pursuant to s 122(2) Fines Act 1996 that 50% of the fine is to be paid to the prosecutor.

4   Mark John Khoury is convicted.

5   I order that on or before 15 August 2025 that Mr Khoury:

(a)   complete the Certificate IV in Work Health and Safety course provided by The Management Edge Pty Ltd trading as TME Training;

(b)   undertake the Work Health and Safety Due Diligence for CEOs, Directors and Managers training course provided by Coastal OHS Services Pty Ltd trading as Leading Safety Training; and

(c)   view the SafeWork NSW Webinar for Construction Site Supervisors.

6 I order that Mr Khoury enter into a WHS Undertaking pursuant to section 239 Work Health and Safety Act 2011.

7   Matter adjourned to 22 September 2025.

8   The offenders are to pay the prosecutor’s costs of the proceedings, as agreed or assessed.

Catchwords:

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

SENTENCING - objective seriousness - deterrence - aggravating factors - mitigating factors – capacity to pay a fine – Training Order – Work Health and Safety Undertaking

SENTENCING PRINCIPLES - no record of previous convictions – good character - good prospects of rehabilitation - remorse - plea of guilty - assistance to law enforcement authorities

Legislation Cited:

Crimes (Sentencing Procedure) Act 1999

Fines Act 1996

Work Health and Safety Act 2011 (NSW)

Cases Cited:

Bulga Underground Operations Pty Ltd v Nash [2016] NSWCCA 37

Jahandideh v R [2014] NSWCCA 178

R v Borkowski (2009) 195 A Crim R 1

R v Thomson & Houlton (2000) 49 NSWLR 383

Category:

Sentence

Parties:

SafeWork NSW (Prosecutor)
Buildmark Developments Pty Ltd (Defendant)
Mark Khoury (Defendant)

Representation:

Counsel:
K Curry (Prosecutor)
A Parsons (Defendants)

Solicitors:
Legal, Department of Customer Service (Prosecutor)
Macquarie Law Group (Defendants)

File Number(s):

2023/105175
2023/108190

Publication restriction:

None

JUDGMENT

1. Buildmark Developments Pty Ltd (Buildmark) appears for sentence after pleading guilty to an offence under s 32 of the Work Health and Safety Act 2011 (NSW) (the Act) in that it failed to ensure the health and safety of other persons while carrying out work in the business or undertaking, pursuant to s 19(2) of the Act and thereby exposed such persons to a risk of death or serious injury.

2. The maximum penalty for this offence is a fine of 17,315 penalty units ($1,782,579).

3. Mark John Khoury appears for sentence after pleading guilty to an offence that as an officer of Buildmark who had a duty under s 27(1) of the Act, he failed to exercise due diligence to ensure that the company complied with its health and safety duty under s 19(2) of the Act and thereby exposed other persons to a risk of death or serious injury contrary to s 32 of the Act.

4. The maximum penalty for this offence is a fine of 3,465 penalty units ($356,721).

Facts

5. The parties have presented an Agreed Statement of Facts. I have taken the entirety of this document into account in coming to an appropriate sentence. What follows is a brief summary of the facts relevant to the offender to permit an understanding of the sentence imposed.

Background

6. Buildmark conducted a business that involved construction project management and building works.

7. Mr Khoury was a director and officer of Buildmark. He was a person who made decisions that affected the whole or a substantial part of the business and was engaged as a site supervisor.

8. On or about 15 December 2020, Buildmark entered into a home building contract for the construction of two, two-storey semi-detached dwellings at 85 Hill Street, Leichhardt (the site).

9. Buildmark engaged Mr Khoury as Director and Site Manager, and Dillon Khoury as Foreman to perform the construction works at the site.

The excavation works

10. On or about 15 June 2021, Buildmark undertook excavation works at the site for the purpose of building foundations.

11. A trench measuring approximately 7.0m in length, between 450mm and 600mm in width and between 450mm and 600mm in depth was excavated directly adjacent to the external brick wall of the neighbouring property on the eastern side, 87 Hill Street, Leichhardt (the neighbouring property). The trench exposed the sandstone footing of the neighbouring property.

12. The works were performed by Mr Khoury and Mr Dillon Khoury.

The incident

13. After the trench was excavated at the site, the works were ceased due to consistent rainfall. The trench was not covered and collected rainwater.

14. On or about 29 June 2021, Mr Khoury attended the site for the purpose of collecting a delivery of steel.

15. On the morning of 1 July 2021, the tenants of the neighbouring property observed cracking in the wall adjacent to the trench. There were four tenants present at the neighbouring property on this day.

16. At approximately 11:30am, a large section of the brick wall adjacent to the trench collapsed. Debris from the collapsed wall landed on the site and fell into the neighbouring property.

17. No persons were present at the site at the time and the tenants of the neighbouring property were not injured.

18. Immediately after the incident, Cobden & Hayden Holdings Pty Ltd, the real estate agent for the neighbouring property, engaged structural engineers, Sydney Wide Engineers Pty Ltd (SWE) to attend the property and provide a report. The report determined the following:

1. The collapse of the wall of the neighbouring property was caused by the excavation works on the site.

2. The trench at the site was excavated approximately 600mm below the base of the sandstone footings.

3. The sandstone footings of the adjacent brick wall were not underpinned below the zone of influence of the excavation.

19. During this time, the owner of the neighbouring property contacted their insurance provider to “make safe” the property. The property was deemed uninhabitable.

Systems of work prior to the incident

20. Prior to the excavation work commencing at the site, Buildmark engaged Capital Engineering Consultants Pty Ltd (CEC) for structural engineering services in connection with the works.

21. On or about 15 December 2020, CEC provided Buildmark with structural engineering plans for the proposed development. The plans provided that for excavation below the base of a footing, “the side of the excavation shall be located away from the edge of the footing by the same distance that the excavation is below the footing base”. The plans also stated that CEC should be consulted if this cannot be achieved.

22. Buildmark did not engage a competent person to provide advice regarding the excavation of the trench, such as CEC, or notify a competent person when the excavated trench exposed the sandstone footings of the neighbouring property.

23. On or about 22 December, a property condition survey and dilapidation report on the neighbouring property was prepared by Childs Property Inspections Pty Ltd (Childs Property) and provided to Buildmark. This report was not provided to CEC prior to the works commencing. No monitoring of the adjacent wall, which the report highlighted had cracking prior to its collapse, occurred after receiving this report.

24. A Safe Work Method Statement (SWMS) dated 3 May 2021 was prepared and signed by Mr Khoury and Mr Dillon Khoury. The SWMS did not identify any risks or controls in relation to the structural integrity of open excavations. No risk assessments were conducted in relation to the excavation work or the impact on the neighbouring property.

25. No monitoring of the site or the trench was conducted by Buildmark after the excavation works to ensure the integrity of the trench and the neighbouring property. Water was not pumped out of the trench, and it was left open.

26. Mr Khoury was onsite daily. He was involved in the direct supervision of the works and carrying out the excavation works.

27. Mr Khoury did not ensure that Buildmark:

1. undertook a risk assessment;

2. engaged a competent person to provide advice relating to the excavation;

3. conducted regular inspections of the site; and

4. had in force a SWMS that appropriately identified the risks and control measures relating to structural integrity and open excavations.

Steps taken by Buildmark after the incident

28. After the incident, Buildmark engaged competent persons to stabilise the neighbouring property and assisted with insurance requirements by allowing for contractor access in reconstructing the collapsed wall.

29. Buildmark complied with a Prohibition Notice issued by SafeWork NSW requiring that all work be ceased until the site and neighbouring property were made safe.

The Offender’s Case on Sentence

30. Buildmark and Mr Khoury read and relied upon the affidavit of Mark Khoury sworn 26 August 2024. The following is a summary of his evidence.

Background

31. Mr Khoury is the director of Buildmark. He has held this position since Buildmark was established in July 2015, at times being a joint director with his brothers Dillon Khoury and Paul Khoury.

32. Mr Khoury has completed the relevant certifications in Carpentry at TAFE and prior to establishing Buildmark was employed as a carpenter and as a site foreman for various construction companies. He attained a Diploma in Construction and Certificate IV in Construction in or around 2015.

33. Mr Khoury invested his life savings into founding Buildmark on its inception.

34. Buildmark has constructed a number of dwellings since its establishment, including two double storey duplexes, townhouses, a unit block and factory units.

35. The company is currently undertaking three projects as follows:

1. construction of a double-storey duplex at Epping which is 90% complete;

2. construction of a double-storey duplex at Marrickville which is 65% complete; and

3. construction of a double-storey duplex at Denistone which is 10% complete.

36. Mr Khoury in his affidavit accepts on behalf of Buildmark that the company had prior work health and safety charges dealt with in January 2021 by the Local Court.

Offences before the Court

37. Mr Khoury in his affidavit accepts responsibility for the offences that both he personally, and on behalf of Buildmark, have pleaded guilty. He accepts that his actions put others at risk of death or serious injury.

38. Prior to commencing the construction, Buildmark engaged Blueprint Designs (Blueprint) as Architects for the purpose of obtaining architectural drawings, developmental approval and a construction certificate.

39. An agreement was reached with Blueprint which required them to liaise with all professionals required for the purpose of obtaining the relevant approvals. Blueprint engaged CEC and liaised with both CEC and Childs Property in relation to obtaining the relevant reports. Given Blueprint had engaged those services and obtained the reports, including information about the cracking on the wall of the neighbouring property, Mr Khoury understood that they would provide this to CEC.

40. Mr Khoury on behalf of Buildmark now appreciates that it was Buildmark’s responsibility to ensure all relevant professionals had the required documents as opposed to relying on others. Following the incident, Buildmark has ensured all documents relevant to the construction process are directly provided by the company to avoid this occurring again.

41. Buildmark had commenced the excavation on the site believing it had complied with all relevant safeguards and procedures. At the time of commencing excavations, Mr Khoury stated in his affidavit that it was intended that the steel be laid the following day and for concrete to be poured. Mr Khoury observed that the foundation was quite stiff and that there was no loose material or soil coming from underneath the neighbouring footing. However, Buildmark was forced to stop all work following the excavation due to heavy rainfall. Mr Khoury deposes that if he had any true understanding of the potential effect and strength of the rainfall, he would have acted immediately and put “whatever measure [he] could in place to prevent the wall collapsing”.

42. As part of usual practice, the Architect retained by Buildmark retained CEC for the purpose of providing a structural design for the project. The information provided by CEC to Buildmark indicated that the footing was located hard up against the boundary.

43. Mr Khoury accepts that he and Buildmark should have been more diligent and cautious following the rainfall and should have organised for the trench to be covered and had the water pumped out.

Financial capacity

44. Mr Khoury has operated Buildmark since its establishment and has been liable for all financial responsibilities associated with the business.

45. The COVID-19 pandemic resulted in Buildmark’s construction sites not being able to operate for significant periods of time and caused significant price increases for materials and labour. The jobs that were able to be completed during this time resulted in Buildmark being required to contribute financially to ensure it did not collapse.

46. Buildmark has been operating at a marginal loss since its inception, particularly as a result of the effects of the COVID-19 pandemic. The relevant losses are as follows:

1. 2018-2019 financial year, operated at a loss of $81,166;

2. 2019-2020 financial year, operated at a loss of $82,851;

3. 2020-2021 financial year, operated at a loss of $40,318;

4. 2021-2022 financial year, operated at a loss of $419,444;

5. 2022-2023 financial year, operated at a loss of $77,732; and

6. as at the date of Mr Khoury’s affidavit, Buildmark was operating at a loss of $705,542.

47. As a result of the circumstances associated with the COVID-19 pandemic, Mr Khoury personally injected funds into the business to allow it to continue to operate. He has exhausted all of his savings and has resolved to seeking loans from financial institutions, friends and family to keep the business operating.

Personal circumstances

48. Mr Khoury is 33 years of age. He resides with his wife and two young children aged one and a half and six-months respectively.

49. He is the sole financial contributor to his family household.

50. Mr Khoury is responsible for mortgage repayments of $8,000 per month on the family home and is required to contribute to all other expenses. In his affidavit he stated that this has become onerous and has taken a psychological toll.

51. Mr Khoury established Buildmark to build the foundations for he and his father to work together in meeting his father’s goal of establishing his own building company. The business has not met the heights Mr Khoury hoped it would reach.

52. Mr Khoury has struggled emotionally and psychologically since the incident, knowing that were was a likelihood of being prosecuted and thereafter as a result of the court proceedings.

53. In his affidavit Mr Khoury expressed remorse for his actions and on behalf of Buildmark.

54. Following the incident, Mr Khoury and Buildmark complied with the notice issued by SafeWork NSW and engaged a competent person to stabilise the neighbouring property.

Consideration

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

Objective seriousness - Buildmark

56. The risk of the damage to the neighbouring building as a result of the excavation at the site was an obvious risk to the offender and well known in the industry. The offender did not seek expert opinion on the risk and how to avoid it.

57. The likelihood of the risk coming home was moderate if appropriate precautions were not taken.

58. I accept that the intervention of heavy rainfall was a factor that contributed to the collapse of the brick wall.

59. The steps that could have been taken were simple and did not involve much inconvenience to Buildmark.

60. The risk included a risk of death. There were no workers on site and the occupants of the neighbouring property were not present. The damage to the neighbouring building was significant and the incident caused the residents to be seriously inconvenienced, but that is not the type of loss and damage that the Act is in place to prevent. In the circumstances, I am not satisfied beyond reasonable doubt that these losses are an aggravating feature of the offence.

61. I have taken into account the maximum penalty for the offence.

Objective seriousness – Mr Khoury

62. All of the matters I have recited concerning the objective seriousness of the offence committed by Buildmark are also relevant to the objective seriousness of the offence committed by Mr Khoury, and I will not repeat them.

63. Mr Khoury as the director of Buildmark was the person in a position to ensure that it complied with its s 19(2) duty, by taking the required steps. As a licensed builder, I am satisfied that Mr Khoury had actual knowledge of the risk involved with the excavation.

Deterrence

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

65. There is some need for specific deterrence in this case because Buildmark and Mr Khoury still operate a construction business that potentially exposes other persons to risks as a result of its operation. On the other hand, they have both made significant changes to the way that the business operates to ensure that they do not reoffend in the future.

Aggravating factors

66. There are no relevant aggravating factors.

Mitigating factors

67. Mr Khoury does not have any previous convictions: s 21A(3)(e) Crimes (Sentencing Procedure) Act 1999.

68. Mr Khoury is a person of good character: s 21A(3)(f) Crimes (Sentencing Procedure) Act 1999.

69. The offenders have good prospects of rehabilitation: s 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offenders have responded to their breach of the legislation by making positive steps to ensure the safe operation of the business in the future. I am satisfied that each has demonstrated that they have good prospects of rehabilitation.

70. The offenders have demonstrated remorse: s 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. Mr Khoury on his own behalf, and on behalf of Buildmark, has accepted responsibility for the offences and expressed remorse. Their pleas of guilty also indicate remorse.

71. The offenders co-operated with the investigation by SafeWork NSW: s 21A(3)(m) Crimes (Sentencing Procedure) Act 1999.

72. The offenders entered pleas of guilty: s 21A(3)(k) and s 22 Crimes (Sentencing Procedure) Act 1999. Each is entitled to a discount on penalty that reflects the utilitarian value of that plea: R v Thomson & Houlton (2000) 49 NSWLR 383 and R v Borkowski (2009) 195 A Crim R 1 at [32]. The plea also indicates remorse: Borkowski at [32]. The appropriate discount is 25%.

73. A court may make any of the other orders provided for by Division 2 of Part 13 of the Act, in addition to any other penalty imposed if the court finds a person guilty or convicts the person of an offence: ss 234 and 235 of the Act.

74. I raised with the parties the possibility of making a training order pursuant to section 241 of the Act in relation to Mr Khoury and linking that to a Work Health and Safety Undertaking pursuant to section 239 of the Act to ensure compliance with that order. Mr Khoury has proposed that he undertake the Certificate IV in Work Health and Safety course at a cost of $5,500, Work Health and Safety Due Diligence training at a cost of $297 and that he attends a Construction Site Supervisor webinar available online from SafeWork NSW at no cost to him. Mr Khoury has provided evidence that he has paid to attend the first two courses. I am satisfied that making an order for Mr Khoury to complete those courses as his punishment for the offences, properly serves the purposes of punishment in s3A Crimes (Sentencing Procedure) Act 1999 and promotes the objects of the Act set out in s 3.

Capacity to pay a fine

75. The Court is required to have regard to s 6 Fines Act 1996 before imposing a fine. Where an offender seeks to have a fine reduced on the basis of a limited capacity to pay, he or she 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.

76. Buildmark has and continues to be financially supported by Mr Khoury. Mr Khoury has committed all of his savings to operating capital for Buildmark and he stands to suffer financial ruin if a significant fine is imposed on either offender. It was not in dispute that Buildmark is running at a substantial loss. Mr Khoury supports a young family and is carrying a substantial mortgage.

77. I estimate that the costs of the proceedings will be substantial and that the defendants will find that sum difficult to pay.

Other matters

78. This is an appropriate case to make a training order for Mr Khoury to assist him to deal with the risks that are inherent in the industry.

Penalty

79. Buildmark Developments Pty Ltd is convicted.

80. The appropriate fine is one of $16,000 which will be reduced by 25% to reflect the discount for the plea of guilty.

81. I impose a fine of $12,000.

82. I order that pursuant to s 122(2) Fines Act 1996 that 50% of the fine is to be paid to the prosecutor.

83. Mark John Khoury is convicted.

84. I order that on or before 15 August 2025 that Mr Khoury:

1. complete the Certificate IV in Work Health and Safety course provided by The Management Edge Pty Ltd trading as TME Training;

2. undertake the Work Health and Safety Due Diligence for CEOs, Directors and Managers training course provided by Coastal OHS Services Pty Ltd trading as Leading Safety Training; and

3. view the SafeWork NSW Webinar for Construction Site Supervisors.

85. I order that Mr Khoury enter into a WHS Undertaking pursuant to section 239 Work Health and Safety Act 2011 on the following conditions:

1. The matter is adjourned to Monday 22 September 2025 and the offender is required to appear on that date, unless he provides evidence of the completion of the training order to SafeWork NSW on or before 4pm on Friday 15 August 2025, in which case he is excused from attendance.

2. The offender is to appear before the Court if called on to do so during the term of the adjournment.

3. The offender is not to commit any offence under the Work Health and Safety Act 2011 during the term of the adjournment.

4. The offender is to complete the Training Order set out in [85] above and to provide evidence of its completion to the Court and to SafeWork NSW on or before 5pm on 15 August 2025.

5. The offender is to notify the Registrar of the District Court at the Downing Centre of any change of address for service.

86. The offenders are to pay the prosecutor’s costs of the proceedings, as agreed or assessed.

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Decision last updated: 20 September 2024