SafeWork NSW v Chess Engineering Pty Ltd

[2020] NSWDC 638

District Court

New South Wales

Medium Neutral Citation:

SafeWork NSW v Chess Engineering Pty Ltd [2020] NSWDC 638

Hearing dates:

25 September 2020

Date of orders:

23 October 2020

Decision date:

23 October 2020

Jurisdiction:

Criminal

Before:

Scotting DCJ

Decision:

1   Chess Engineering Pty Ltd is convicted.

2   I impose a fine of $45,000.

3   The offender is to pay the prosecutor’s costs agreed in the sum of $55,000.

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

Catchwords:

CRIME – prosecution – work health and safety – duty of persons undertaking business – duty of employers – risk of death or serious injury – worker injured

SENTENCING – aggravating factors – mitigating factors – objective seriousness – deterrence – no record of previous convictions – good prospects of rehabilitation – plea of guilty – remorse

Legislation Cited:

Crimes (Sentencing Procedure) Act 1999

Cases Cited:

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

Jahandideh v R [2014] NSWCCA 178

R v Thomson & Houlton (2000) 49 NSWLR 383

R v Youkhana [2004] NSWCCA 412

Category:

Sentence

Parties:

SafeWork NSW (Prosecutor)
Chess Engineering Pty Ltd (Defendant)

Representation:

Counsel: M Cahill (Prosecutor)
R Coffey (Defendant)

Solicitors: Department of Customer Service (Prosecutor)
Sparke Helmore (Defendant)

File Number(s):

2019/46654

Publication restriction:

None

Judgment

Introduction

1. Chess Engineering Pty Ltd (the offender) has pleaded guilty to a charge that as a person who had a health and safety duty under section 19(1) Work Health and Safety Act 2011 (the Act), it failed to comply with that duty and thereby exposed Ngoc Kim Truong to a risk of death or serious injury contrary to section 32 of the Act.

2. The maximum penalty for the offence is a fine of $1.5 million.

Facts

3. The parties tendered an Agreed Statement of Facts that can be summarised as follows.

4. The offender operates a business providing general engineering services, including design, metal fabrication, fitting and machining. The offender operates from premises in Padstow.

5. From about 14 February 2014, the offender had contracted with Labourforce Impex Personnel Pty Ltd (Labourforce) to provide labour hire workers.

6. One of the machines owned and operated by the offender was an Italian manufactured conventional metal turning lathe, known as “machine asset no. 220” (Lathe no. 220). It was a known risk that whilst operating a conventional metal turning lathe than an operator’s hands or arms could become entangled or entrapped in rotating parts of the machine and/or rotating work pieces. This known risk was increased if the operator was wearing gloves.

7. Prior to the incident, each of the metal turning lathes located in the offender’s fitting shop including Lathe no. 220 had attached to it a documented Safe Working Procedure (SWP). The SWP that was issued on 19 August 2014 included a direction “HAND PROTECTION MUST BE WORN in this AREA”.

8. As at 13 February 2017, the defendant’s operating procedures had not been reviewed or updated since 19 August 2014, even after the introduction of new jobs or tasks such as the task of cleaning and polishing or “linishing”, by hand metal rollers from the luggage conveyor system at Sydney Airport (the metal rollers). This job was first undertaken by the offender in or about mid to late 2016 and had been performed by fitters and machinists at the offender’s premises on or about four occasions.

9. The offender had provided its fitters and machinists with verbal instructions that they were not to wear gloves whilst working on a lathe that was in operation.

10. Mr Truong was employed by Labourforce. He was a qualified fitter and machinist with 20 years post-trade experience and had obtained a number of Certificates of Proficiency in fitting and machining, manufacturing and engineering.

11. Mr Truong commenced working for the offender on or about 12 August 2016 and was inducted onto the site by the offender’s Human Resources Manager on that day. Whilst working as a fitter and machinist in the fitting shop Mr Truong was supervised by the offender’s Foreman, Mr Aneesh Vepuri. Mr Vepuri was responsible for assessing fitters and machinists as competent in the use and operation of the metal turning lathes at the offender’s premises. Mr Vepuri had not been assessed by the offender as competent to train or assess other workers in the use of its metal turning lathes. Mr Truong was assessed as competent to operate Lathe no. 220 by Mr Vepuri.

12. In or about February 2017 the offender received 36 metal rollers for reconditioning. On 13 February 2017 Mr Vepuri assigned Mr Truong the task of reconditioning 10 of the metal rollers that measured 800mm in length and approximately 350mm in diameter. The task of reconditioning a metal roller required the metal rollers to be cleaned and then polished or linished by hand using a strip of emery cloth and by employing the “overhand underhand” method.

13. As at 13 February 2017 the offender had not conducted a risk assessment in relation to this task. The offender knew or should have known that the overhand underhand method involved a risk of entanglement of the operator’s hands and arms in the rotating parts of the lathe, regardless of the operator’s level of experience. The offender had not properly considered or assessed the use of devices or tools to keep the operator’s hands away from rotating parts of the lathe.

14. Practicable alternative methods included the use of an air-powered belt finisher or a lathe sanding belt holding device such as the Prismont Sanding Belt Holder.

15. On or about 13 February 2017 Mr Vepuri demonstrated the method to be used by Mr Truong in hand polishing or linishing the metal rollers using a strip of emery cloth. This involved fitting and fixing the metal roller to the lathe, passing the strip of emery cloth around the rear of the machine and around the roller and holding each end of the strip of emery cloth between the thumb and first finger of the operator’s hands. The operator was required to maintain a gap of about 300mm between his upper hand and lower hand whilst polishing the metal roller.

16. Mr Truong stated that prior to the incident he had not been told when to wear gloves during the task and when not to wear gloves.

17. Mr Vepuri stated that he told Mr Truong to wear gloves when loading the metal rollers onto the lathe and to remove them when operating the lathe particularly when using the overhand and underhand method.

18. As at 13 February 2017 the offender did not have a documented safe work procedure (SWP) for this task and the offender had not assessed Mr Truong as competent to undertake the task.

19. Mr Truong proceeded to polish about eight of the metal rollers by hand without incident.

20. At about 11am on 13 February 2017 Mr Truong was using the overhand underhand method and was wearing gloves. He had his hands close together near the front of his chest. Whilst polishing the metal roller his hands and arms became entangled in the moving parts of the lathe. The exact manner in which Mr Truong’s hands were drawn into the machine is unknown.

21. As a consequence, Mr Truong sustained serious personal injury in the form of severe crush injuries to both arms and hands including an open fracture of the right distal ulna requiring open reduction and internal fixation, a closed fracture of the right distal radius requiring open reduction and internal fixation and a closed fracture of the right distal ulna requiring open reduction and internal fixation.

22. After the incident the offender reconditioned the rollers by sandblasting them.

23. The offender reviewed and amended its SWP applicable to its conventional metal turning lathes including Lathe no. 220.

24. The SWP that existed as at 13 February 2017 was inappropriate in that it did not direct workers not to wear hand protection when operating the lathe. The offender carried out retraining of its fitters and machinists in relation to the revised SWP and reinforced the directive that gloves were not to be worn when operating conventional metal turning lathes.

25. A significant volume of guidance material existed prior to 17 February 2017 warning of the risk of entanglement of an operator’s hands and arms in moving parts of a lathe that was particularly exacerbated by the entanglement of clothing and/or gloves.

The Offender’s Case on Sentence

26. The offender relied on an affidavit of Stephen Facer affirmed 14 September 2020. Mr Facer was present in Court during the sentence hearing but was not required for cross-examination.

27. Mr Facer is the Chief Executive Officer of the offender. The offender is a small to medium sized enterprise that provides metal fabrication services to a range of different industries. It also maintains premises in Western Australia. It competes in a number of different markets including rail, food, infrastructure, flameproof and general engineering.

28. The offender was founded approximately 53 years ago commencing operations in a factory in Alexandria. In December 2002, Mr Facer purchased the company from other shareholders and at that time inherited approximately 55 employees. Since that time the business has been gradually built and is known as a high quality Australian engineering company. As at 7 September 2020 Chess employs 117 people in Sydney and in Perth. Seven of those workers are labour hire workers.

29. Mr Facer deposed that since March 2020 the number of workers employed has fallen to about 70. The offender had been receiving Job Keeper payments for its workers but its business had shrunk by more than 30%. Its revenue has fallen significantly compared to the same period 12 months ago. Its current monthly revenue is about two thirds of what it was before the COVID-19 pandemic. Since March 2020 Mr Facer estimates that the offender has lost approximately $4m in revenue as the number of new construction projects being commenced has slowed significantly. The offender has reduced its productivity, but managed to retain a significant part of its workforce, although they are not working at full capacity and some of them are undertaking alternative tasks.

30. Prior to commencing with the offender, Mr Facer held senior management positions in scientific research companies. Upon commencing his role as CEO in 2002 he turned his attention to making the operation safer. Mr Facer deposed that he never wanted anyone to be hurt and he has always believed that there is a direct correlation between safety and quality. Mr Facer instigated OHS committee meetings and began to progress safety matters expediently and as a priority.

31. The offender operates on four values, the first of which is safety. The offender has not been involved in any prior incident relating to health and safety at any of its premises over its 50 years of operation. Mr Facer deposed that the offender has received two improvement notices which were complied with but it has never been issued with a prohibition notice.

32. Before the incident the offender had a written safety management plan setting out various WHS standards for the premises. The offender employs workers from different backgrounds and with different levels of literacy and written material was complimented by verbal training, practical demonstration and supervision. The relatively small size of the workforce meant that verbal communication and consultation was largely efficient and effective.

33. The offender employed on-the-job training to ensure worker competency. The WHS policy statement underpinned all of the procedures requiring SWPs for all tasks undertaken by workers on the premises, including the use of the lathe. Mr Facer deposed that on his understanding of the overhand/underhand method that the operator was required to maintain a gap of about 300mm between his upper hand and lower hand whilst polishing each metal roller. As far as Mr Facer was aware at the time of the incident, it was a method commonly used in engineering firms. The guidance material referred to identified that the emery cloth should not be wrapped around a worker’s fingers but the guidance material did not suggest that the pinching method, that is where the emery cloth is held between the index finger and the thumb, was inappropriate or unsafe.

34. Mr Facer accepted that the SWP in force at the time of the incident was inadequate. Prior to the incident the offender did have in place its own internal Chess Improvement Program (CHIP) that encouraged workers to identify risks and trained them on how to control those risks. Any risks identified by workers were discussed amongst work teams at daily CHIP meetings for action and follow up.

35. In addition, the offender conducted tool box meetings to discuss topics that were relevant to the work to be undertaken on any given day. Prior to the incident weekly safety walks were conducted by one or two staff members who were responsible for identifying and recording any risks and hazards observed and taking action on them.

36. Prior to the incident workers had been provided with a “Stop, Think, Identify, Plan, Proceed” booklet and an employee handbook identifying the relevant procedures. The offender also maintained a risk register, mandatory inductions and training.

37. Immediately after the incident, Mr Facer went to the factory floor and observed that the first aid officer was attending to Mr Truong. The following day Mr Facer commenced an internal investigation into the incident identifying the problem with the SWP. The offender called workers into the tool box meeting to discuss the incident.

38. The offender has installed 48 new red emergency stop buttons on plant operating within the workplace. Improvements were made to the Stop, Think, Identify, Plan, Proceed booklet for it to be condensed into a simple one page document. Amended competency recording processes were also introduced. After consultation with SafeWork and a similar business, the offender identified an alternative method of linishing by purchasing a lathe sanding belt holder for this purpose.

39. To raise awareness and the profile of safety in the workplace, Mr Facer introduced a safety competition where $1000 was given by the company to the team that could come up with the best overall safety improvement. Mr Facer received 47 suggestions, nearly all of which were implemented at the premises. Mr Facer has encouraged workers to talk more openly about safety and has observed that they are doing so and feel more empowered to raise safety concerns. Mr Facer is confident that the changes introduced after the incident will avoid further incidents in the future.

40. Immediately after the incident the job was finished by sandblasting, which was not acceptable to the client as the finish of the metal rollers was significant because they are effectively on display at the airport carousels. The offender advised the client that it did not wish to take any more of that work.

41. The offender has provided support to Mr Truong by visiting him in hospital and its employees made individual donations to him. Mr Truong has been invited to return to work for the offender but he has declined this offer.

42. Mr Facer gave evidence that the offender has co-operated with SafeWork after the incident.

43. The offender is also a good corporate citizen. It actively seeks to engage younger members of the community to provide them with work experience in appropriate roles. Mr Facer has been the Executive Chairman of a not-for-profit volunteer organisation seeking to engage young people who are at risk of disengaging from society. The offender has participated in the program where possible and provided young people with work experience in appropriate roles. The offender tries to employ two or more apprentices at any one time in order to give younger members of the community a chance to obtain trade work.

44. On behalf of the company, its senior managers and workers, Mr Facer expressed the deep regret for the circumstances resulting in the incident and the injuries suffered by Mr Truong.

45. The offender acknowledges that it exposed Mr Truong to a risk and that as a manifestation of that risk he suffered substantial injuries. Mr Facer acknowledged on behalf of the company, its directors and management that the offender had a responsibility to ensure the health and safety of workers and sincerely apologised to the employees of Chess, the Court and the community. The incident had reinforced that the offender must be continually vigilant with regards to matters affecting health and safety.

Consideration

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

Objective Seriousness

47. The offence is one of some objective gravity.

48. The risk of a workers hands and arms becoming entangled in the moving parts of a lathe was well known in the industry and to the offender. The SWP increased that risk by inappropriately directing the use of gloves making it unclear when they should be worn.

49. There was some guidance material available about the over hand under hand method from which the offender should have known that it presented a risk of injury. The offender’s systems with regard to assessing the competency of workers to perform the task were also inadequate.

50. The likelihood of the risk occurring was moderate.

51. The risk involved the risk of serious personal injury as was occasioned to Mr Truong.

52. The steps that could have been taken to avoid the risk should have been known to the offender and became apparent to it after it investigated the incident. If a risk assessment had been undertaken at the time that the task was first performed, I am satisfied that the offender should have ascertained the steps to be taken.

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

Deterrence

54. 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 Ltd v Nash [2016] NSWCCA 37 at [180].

55. There is some need for specific deterrence because the offender continues to operate in an industry that poses considerable risk to workers and other persons. However, the offender has demonstrated that it had a commendable attitude to safety before the incident and that it has taken considerable steps since the incident to improve its safety systems.

Aggravating Factors

56. The injury, harm and loss caused by the section 32 offences were substantial: section 21A(2)(g) Crimes (Sentencing Procedure) Act 1999. In order for the aggravating factor to be established I must be satisfied beyond reasonable doubt that the harm was greater or more deleterious than may ordinarily be expected for the offence in question: R v Youkhana [2004] NSWCCA 412 at [26]. The offence does not require an injury to be sustained but only the creation of a risk. The injuries sustained by Mr Truong are sufficient to establish the aggravating factor. I am satisfied beyond reasonable doubt that the injury, harm and loss caused by the offence was substantial.

Mitigating Factors

57. The offender does not have any previous convictions: section 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. The offender has been in operation for more than 50 years and during that time has employed a large number of workers in its engineering business operating various items of machinery that can pose risks to their health and safety. This is an exceptional record in these types of matters.

58. The offender has good prospects of rehabilitation: section 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offender had a serious attitude towards safety before the incident that was demonstrated by its WHS systems that were in place. I was very impressed with Mr Facer’s approach to safety and his involvement of the workers into the safety culture of the offender. It is apparent that the offender does rate safety of its operations as one of its primary goals. The offender has demonstrated by the steps that it has taken to improve those systems after the incident that it has good prospects of rehabilitation.

57. The offender has demonstrated remorse: section 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. Mr Facer, on behalf of the offender, has accepted responsibility for the incident and expressed remorse. I am satisfied that the offender has shown genuine remorse and contrition for the failures of its systems that resulted in the injury to Mr Truong.

58. The offender entered a plea of guilty: 21A(3)(k) and section 22 Crimes (Sentencing Procedure) Act 1999. An offender is entitled to a discount on penalty that reflects the utilitarian value of that plea. The primary consideration in determining where in the range a particular case should fall is the timing of the plea, so that the earlier the plea the greater the discount: 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%.

59. The offender co-operated with the SafeWork investigation: section 21A(3)(m) Crimes (Sentencing Procedure) Act 1999.

60. The offender is a good corporate citizen. The offender has in place a number of initiatives to encourage young local workers into apprenticeships and provides other support for charitable causes.

61. Overall, the offender presented a well organised and compelling subjective case that entitles it to significant leniency, but the sentence must still reflect the objective seriousness of the offence and the need for general deterrence.

Capacity to Pay a Fine

64. The Court is required to have regard to section 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, 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.

65. The offender did not submit that it had a limited capacity to pay an appropriate fine, however its business has suffered significantly as a result of the COVID-19 pandemic.

Penalty

66. Chess Engineering Pty Ltd is convicted.

67. The appropriate fine is $60,000 that will be reduced by 25% to give effect to the plea of guilty.

68. I impose a fine of $45,000.

69. The offender is to pay the prosecutor’s costs agreed in the sum of $55,000.

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

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Decision last updated: 26 October 2020