SafeWork NSW v Laggner Constructions Pty Ltd

[2024] NSWDC 204

District Court

New South Wales

Medium Neutral Citation:

SafeWork NSW v Laggner Constructions Pty Ltd [2024] NSWDC 204

Hearing dates:

29 May 2024

Date of orders:

03 June 2024

Decision date:

03 June 2024

Jurisdiction:

Criminal

Before:

Scotting DCJ

Decision:

1   Laggner Constructions Pty Ltd is convicted.

2   I impose a fine of $75,000.

3   The offender is to pay the prosecutor’s costs of the proceedings, as agreed or assessed.

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

Catchwords:

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

SENTENCING - objective seriousness - deterrence - aggravating factors - mitigating factors – capacity to pay a fine - appropriate penalty

SENTENCING PRINCIPLES - no record of previous convictions – good corporate citizen - good prospects of rehabilitation - remorse - plea of guilty

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

R v Youkhana [2004] NSWCCA 412

Category:

Sentence

Parties:

SafeWork NSW (Prosecutor)
Laggner Constructions Pty Ltd (Offender)

Representation:

Counsel:
S McGee (Prosecutor)
B Rauf (Offender)

Solicitors:
Legal, Department of Customer Service (Prosecutor)
Sparke Helmore Lawyers (Offender)

File Number(s):

2023/168140

Publication restriction:

None

JUDGMENT

1. Laggner Constructions Pty Ltd (the offender) 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 workers at work in the business or undertaking, pursuant to s 19(1) of the Act and thereby exposed Taejun Park to a risk of death or serious injury.

2. The maximum penalty for the offence is a fine of 17,315 penalty units ($1,904,650).

Facts

3. 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

4. The offender was a registered corporation which undertook building and construction of residential homes and commercial buildings.

5. Stephen Laggner was the sole director and company secretary of the offender. He was also responsible for supervising, coordinating trades, office duties and trade work on site.

6. On 26 September 2020, the offender entered into a contract with the owners of a residential property in Murrumbateman, New South Wales (the site) to build an upper floor extension to their existing home (the project). The value of the contract was $133,609.00. The scope of the works included the construction of a spiral metal staircase, wall framings, roof works, plaster lining works and painting.

7. On 26 August 2021, Mr Laggner, in communications with Bum Dae (Ben) Han, engaged Dong Mi Kim trading as Gfriends (Gfriends) to undertake painting works at the site. Mr Han was employed as a painting manager and also carried out painting work on sites.

8. In addition to Mr Han, sole traders, including Mr Park and Kicheol Kim were engaged by Gfriends to undertake the painting work.

9. On 12 October 2021, Mr Laggner and Andrew Laggner, another employee of the offender, created a stairway void within a newly constructed rumpus room, on the second level of the house. The void measured 1.8m x 1.8m.

10. Mr Laggner and Mr Andrew Laggner covered the void with two structural plywood sheets measuring 2.4m x 1.2m x 7mm. These sheets were not securely fixed nor were they strong enough to hold the weight of a person.

11. Over the plywood, Mr Laggner and Mr Andrew Laggner placed a stepladder, two red bricks, three pieces of timber, and a black steel balustrade. No signage, barricades or temporary edge protection systems were put in place.

12. Mr Laggner told SafeWork investigators that the reason for placing the plywood sheets across the void was to prevent people from falling through the void and to prevent heat loss from the downstairs area. He was aware that it would not have been safe to walk on the plywood. At the time of creating the void, Mr Laggner did not expect any other person to be entering the upstairs area. The owners had access to the two locked doors to the rumpus room but were informed by Mr Laggner of the void and warned verbally not to stand on the plywood sheets.

13. On the same day as the void was created, Mr Laggner instructed Mr Andrew Laggner to keep clear of the area for his safety. They discussed blocking off the opening to prevent falls and resolved to block off the opening before any other tradespersons came on to the site.

Meeting with Mr Han on site – 18 October 2021

14. At around 8:00am on 18 October 2021, Mr Han and Mr Laggner attended the site together to discuss the painting works to be completed by Gfriends. Both men told investigators that it was agreed the painting was to take place both inside and outside of the windows above the void on the second level.

15. Mr Laggner told SafeWork investigators that he had informed Mr Han of the existence of, and the hazards posed by, the void and instructed Mr Han that no one was to access the second level of the house until after he had made the area safe the next day. Mr Han told investigators that Mr Laggner did not mention any void and did not instruct him not to access the second level.

The incident – 19 October 2021

16. At around 7:30am on 19 October 2021, Mr Han, Mr Park and Mr Kim attended the site to commence the painting work.

17. Mr Han assessed the risk and determined that Mr Park, as a larger man, would be better suited to do the painting from the inside of the house, as the external paint work carried some risk due to the narrow external scaffolding. Mr Han instructed Mr Park to commence sanding and painting the windows from the inside of the house, whilst he and Mr Kim pained the windows externally from the scaffolding.

18. Mr Park and Mr Kim were not aware of the void on the second floor at any time prior to the incident.

19. Mr Park entered the house and made his way up to the second level via the existing external stairway. There was nothing physically preventing him from accessing the inside of the house and the second level. At around 7:50am, Mr Park stepped on one of the plywood sheets which gave way under him, and he fell through the void, approximately 2.7m, to the ground floor below.

Injuries

20. Mr Park sustained a left tibial plateau facture and a T-12 burst fracture as a result of the fall.

System of work before the incident

21. The offender had in place for the project a Safe Work Method Statement (SWMS) dated 3 April 2020.

22. The SWMS was not signed by any worker who attended the site and was not provided to Gfriends.

23. The SWMS identified “the risk of a person falling 2.0m or more” as high-risk construction work associated with the SWMS. It also identified the hazards of “slips, trips, falls” and “working at height, edge protection”.

24. Page 11 of the SWMS identified the potential hazard of “uncontrolled fall through a framed structure” when working near a void. The control measures listed to deal with this included “floor sheeting, barricades, signage, no go zones, edge protection” and prohibiting walking on top of the cover sheet. Page 13 of the SWMS also identified the potential hazard of “falling” when working around stair voids. The control measures listed to deal with this hazard included “scaffolding, edge protection [and] void covering” that was secured and adequate for anticipated loads.

25. These control measures were not implemented and enforced in respect of the void at the site.

26. On 10 May 2021 Mr Laggner completed a Site Establishment/Pre-Commencement Checklist for the project. In the box for “is there a process in place for monitoring contractor’s safety performance and requirements?”, Mr Laggner marked “NO”. He noted the items “site specific docs, site safety audits and monitor contractors’ safety performance” required action. These actions were not marked as completed at the time of the incident. Mr Laggner also marked that he had assessed public assess and protection requirements and had assessed first aid needs as well as having made available first aid kits on the site.

27. Workplace specific Induction Checklist forms for the project were signed by Mr Laggner and Mr Andrew Laggner on 17 May 2021. The induction checklist form was only signed by two other people after the incident, on 22 October 2021.

28. There was no reference on any signed form to any specific hazards or high-risk work. On each signed form, Mr Laggner was recorded as performing the induction.

Systems of work following the incident

29. Following the incident and in response to a Prohibition Notice, the offender: ceased all work on the second floor of the house; installed a secure, structural cover over the void; installed a secure timber handrail surrounding the void; and installed a visual warning sign on one side of the void.

The Offender’s Case on Sentence

30. The offender relied on the affidavit of Kellie Laggner sworn 10 May 2024 and the affidavit of Stephen Martin Laggner sworn 22 May 2024. The following is a summary of this evidence.

31. Mr Laggner is the sole director and secretary of the offender. He has been a director since May 2010 and is responsible for overseeing all operations of the offender, including work health and safety and financial performance. Mr Laggner has over 33 years’ experience in the construction industry and holds numerous licences and qualifications including a Bachelor’s Degree in Construction Management and Economics from the University of Canberra and an individual Class A Builders Licence in the ACT.

32. Ms Laggner is the Business Manager/WHS Officer of the offender. She has been in this position since June 2022 and is responsible for overseeing the accounts, document and file management and administration of the company.

33. The offender is a small family owned and operated company. The company was initially started by Mr Laggner’s parents with Mr Laggner taking over operations once his parents retired in 1960.

34. The offender employees five employees who are all direct family members and engages approximately 20 to 35 subcontractors in any given year.

35. The offender has been a member of the Housing Industry Association (HIA), Australia’s peak residential building and construction body since 2014.

36. The offender has never been prosecuted under the work health and safety legislation or had any enforcement action taken against it. Prior to the incident, the offender had never been issued with any improvement or prohibition notices.

37. Mr Laggner has been directly involved in most of the initiatives and steps taken by the offender and he states in his affidavit that he takes a “great deal of pride” in the offender’s safe working history in a high-risk industry and until the incident, its unblemished safety and environmental record.

The project

38. The offender has engaged Gfriends previously on a number of occasions prior to the incident. Mr Laggner initially engaged Gfriends based on a referral from another subcontractor and has since had a good working relationship with Gfriends. He was not aware of any safety issues with Gfriends.

39. In relation to the project, Mr Laggner relied on Mr Han to communicate with the other workers from Gfriends, including informing them of the painting work to be undertaken and instructing them in relation to the work, as they had poor English-speaking ability. Mr Laggner acknowledges in his affidavit that he should have taken steps to communicate directly with the workers from Gfriends as well.

Systems of work before the incident

40. Prior to the incident, the offender engaged a WHS consultant, HIA Safety Services, to assist in developing its WHS management system including the provision of a suite of safety documents.

41. Prior to the commencement of each project and once a client formally retains the offender to undertake work, Mr Laggner undertakes a detailed site inspection. As part of this process he completes a WHS Workplace Inspection Checklist, Pre Start Checklist and Dilapidation Report.

42. The offender will not take on the job if Mr Laggner is not satisfied that the project can be completed safely. He has refused various such jobs since the incident.

43. For newly engaged subcontractors the offender provides as a matter of practice both a general induction and site-specific induction. These inductions were verbally provided by Mr Laggner himself.

44. The offender’s subcontractors are usually supervised by Mr Laggner being physical on the site. He attends the site every day and ensures he is contactable by phone if he is not on site. Any updates or information regarding any new safety matters are typically communicated by Mr Laggner verbally to the subcontractors. While there is normally only a small number of subcontractors involved in the offender’s projects Mr Laggner, in his affidavit, states that this approach has been amended to require that steps are documented and retained on file.

45. Prior to commencing the works on the site, the offender had also prepared the documents described in the facts.

After the incident

46. Mr Laggner attended the site immediately after he had heard about the incident. The offender notified the safety regulator, stopped work immediately and secured the site.

47. At the first possible opportunity, Mr Laggner ensured that the offender installed a secure structural cover over the void, a secure timber handrail surrounding the void and a visual warning sign at the site by 21 October 2021.

48. The offender only recommenced work on the site after receiving approval from SafeWork NSW.

49. After the incident the offender undertook a safety audit and gap analysis of their WHS systems and procedures. As part of this audit the offender undertook the following:

1. implemented and enforced the requirement for a general and site-specific induction to be completed by each subcontractor;

2. ensured that compliance with SWMS was enforced at all sites; and

3. reviewed and updated safety policies and procedures including among others, the offender’s Work Health and Safety Policy and Risk and Hazard Management Policy.

50. At a broader level, the offender has also invested in a number of safety initiatives, including WHS planning days, development of a construction risk register, development of a WHS subcontractor database, engagement of Ms Laggner as the WHS Officer, subscription to updates and notifications from SafeWork ACT and SafeWork NSW and undertaking of WHS training.

Support to Mr Park

51. For several months after the incident, Mr Laggner regularly communicated with Gfriends to ask about Mr Park’s health and recovery from the incident and to offer any support that he may require.

Cooperation with SafeWork NSW

52. On behalf of the offender, Mr Laggner took every available opportunity to comply with the investigation of SafeWork NSW including:

1. Complying with the statutory notices issued by SafeWork NSW in a meaningful and timely manner.

2. Engaging openly and honestly with SafeWork.

3. Entering a plea of guilty at the earliest possible opportunity.

Contrition and remorse

53. Mr Laggner, in his affidavit, acknowledges that the offender had a responsibility to ensure the safety of all workers on its sites and that it failed in that responsibility with respect to the incident.

54. On behalf of the offender Mr Laggner, in his affidavit, expresses his regret and remorse for the incident and the injuries to Mr Park and states that the safety of his workers, subcontractors and customers is his number one priority.

Financial performance

55. The offender operates its business through a discretionary trust, the Laggner Discretionary Trust (Trust). The offender acts as corporate trustee for the Trust.

56. Ms Laggner, in her affidavit, outlines the offender’s financial performance.

57. The offender’s accounts are managed by its accountant, George Diamond of PKF Canberra. PKF Canberra has been responsible for preparing the offender’s tax returns and financial statements since approximately 2005.

58. The offender has been making a net loss for the past two financial years. The offender’s annual profit for the past three financial years is as follows:

1. 2020/2021 financial year:  $18,307;

2. 2021/2022 financial year:  annual loss of $12,911; and

3. 2022/2023 financial year:  annual loss of $17,085.

59. In relation to this financial year (2023/2024), the financial statements for the nine months to 31 March 2024 indicate that the offender’s net profit is $10,267.87.

60. The offender’s total financial liabilities exceeded its total assets for the past two financial years.

61. The offender’s net assets for the past three financial years are as follows:

1. 2020/2021 financial year:  $10;

2. 2021/2022 financial year:  outstanding liability of $12,901; and

3. 2022/2023 financial year:  outstanding liability of $17,075.

62. Since 2022, the offender has experienced difficulties with obtaining building materials as a result of the effects of the COVID-19 pandemic and as a result has been unable to complete a number of projects.

63. In an attempt to keep the company afloat, during the 2023 financial year, Ms Laggner states in her affidavit, that she and Mr Laggner injected $50,000 of their own personal savings into the company by way of an unsecured loan from Mr Laggner to the offender.

64. Ms Laggner deposed that in or around October/November 2023 she and Mr Laggner also took out an extension on their personal home loan so that a further $50,000 could be injected into the company to keep it afloat. This money was used to pay subcontractors and to purchase building materials for the company’s projects.

65. The Laggner family’s livelihood depends heavily on the continuity of the offender as a company. Mr Andrew Laggner has intellectual disability and working for the offender provides an opportunity for him to gain employment.

Consideration

66. 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

67. The risk posed to workers and other persons of falling from height through the void was obvious and known to the offender. He had taken steps to warn the homeowners of the danger. A makeshift cover had been put in place over the void the day prior to the incident. Whilst it can be accepted that the offender took some steps to alleviate the risk, those steps were inadequate. The offender should have installed a cover that could have supported the weight of a person, rather than the makeshift cover, and thereby eliminated the risk.

68. The likelihood of the risk coming home was moderate because the offender had arranged for other trades to start work at the property and should have been aware that they needed to access the area adjacent to the void to complete their work.

69. By its plea, the offender accepts that it should have installed an appropriate cover or barricaded the void, prevented the workers from working in the area, provided adequate communication as to the existence of the void and the risks presented by it, required Gfriends to provide a SWMS for the work and provided adequate supervision until the void was properly secured. These steps that could have been taken by the offender to eliminate the risk were known to it, simple and convenient.

70. This risk included a risk of death.

71. The injuries sustained by Mr Park were serious.

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

Deterrence

73. 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].

73. There is some need for specific deterrence in this case because the offender still operates a construction business that potentially exposes workers and other persons to risks as a result of its operation. Conversely, the offender has taken significant steps to improve its safety systems as a result of the incident.

Aggravating factors

75. The injury harm and loss caused by the offence was substantial: s 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 merely the creation of a risk of death or serious injury. The serious injuries sustained by Mr Park are sufficient to establish the aggravating factor.

Mitigating factors

76. The offender does not have any previous convictions: ss 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. The offender is a family-owned company that has been in operation since 2010.

77. The offender was a good corporate citizen. The offender has a reputation of being a reliable and competent builder of small residential projects. Mr Laggner, the guiding mind of the corporation, volunteers his time for a number of community-based activities.

78. The offender has good prospects of rehabilitation: s 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offender has demonstrated by reference to the steps that it has taken to address the failures involved in this case, has good prospects of rehabilitation.

79. The offender has demonstrated remorse: s 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. Mr Laggner, on behalf of the company, has accepted responsibility for its failings and expressed remorse for the incident. Mr Laggner also enquired after the welfare of Mr Park for an extended period following the incident.

80. The offender entered a plea of guilty:  s 21A(3)(k) and s 22 Crimes (Sentencing Procedure) Act 1999. He 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%.

81. Notwithstanding that the point was conceded by the prosecution, I am not satisfied on the balance of probabilities that the offender is unlikely to reoffend. The offender operates a business in an industry that poses multiple risks to workers. The Act and the Regulations contain a myriad of strict liability offences and unexpected events, can and do occur. I accept that the offender has a renewed perspective on matters of safety as a result of the incident and that it will do its best not to reoffend.

Capacity to pay a fine

82. 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.

83. The offender is a small family-based company that undertakes small residential building projects. The offender has returned relatively small profits over recent years. There is no obvious source of company funds from which a large fine could be met. I am satisfied that the offender has demonstrated that it has a limited capacity to pay a fine.

Penalty

84. Laggner Constructions Pty Ltd is convicted.

85. The appropriate fine is one of $100,000 which will be reduced by 25% to reflect the discount for the plea of guilty.

86. I impose a fine of $75,000.

87. The offender is to pay the prosecutor’s costs of the proceedings, as agreed or assessed.

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

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Decision last updated: 05 June 2024