SafeWork NSW v Mercon Group Pty Ltd

[2021] NSWDC 378

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

SafeWork NSW v Mercon Group Pty Ltd [2021] NSWDC 378

Hearing dates:

30 July 2021

Date of orders:

05 August 2021

Decision date:

05 August 2021

Jurisdiction:

Criminal

Before:

Scotting DCJ

Decision:

1   Mercon Group Pty Ltd is convicted.

2   I impose a fine of $90,000.

3   The offender is to pay the prosecutor’s costs of the proceedings in the sum of $42,000.

4 I order 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 – worker injured

SENTENCING - objective seriousness - deterrence - aggravating factors - mitigating factors – appropriate penalty

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

Legislation Cited:

Crimes (Sentencing Procedure) Act 1999

Work Health and Safety Act 2011

Cases Cited:

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

R v Borkowski (2009) 195 A Crim R 1

R v Thomson & Houlton (2000) 49 NSWLR 383

R v Youkhana [2004] NSWCCA 412

Texts Cited:

Code of Practice – Demolition Works – September 2016

Code of Practice – Managing the Risk of Falls at Workplaces – April 2016

Category:

Sentence

Parties:

SafeWork NSW (Prosecutor)
Mercon Group Pty Ltd (Defendant)

Representation:

Counsel: C Magee (Prosecutor)
D Nagle (Defendant)

Solicitors: Legal, Department of Customer Service (Prosecutor)
Bartier Perry (Defendant)

File Number(s):

2019/27661

Publication restriction:

None

Judgment

Introduction

1. Mercon Group Pty Limited (the offender) appears for sentence after it pleaded guilty to an offence pursuant to s 32 Work Health and Safety Act 2011 (the Act) in that it failed to comply with the health and safety duty it owed pursuant to s 19(1) of the Act and thereby exposed Pierre Younan, Paul Raffoul and Giuseppe Ferro to a risk of death or serious injury.

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 operated a business in demolition and excavation. It was engaged as a sub-contractor by Growthbuilt Pty Limited (Growthbuilt) to undertake demolition work in a project involving the refurbishment of a heritage building located at 100-104 Reynolds Street, Balmain (the site). Growthbuilt was the Principal Contractor for the work.

5. George Merhi is the sole director of Mercon. Mr Merhi appointed Pierre Younan as the supervisor for the demolition work at the site. Mr Younan provided direction for the demolition work and was assisted by labourers, Giuseppe Ferro and Paul Raffoul. Keith Joseph was Growthbuilt’s on site manager.

6. As at 3 February 2017 the site had within the building a suspended concrete floor comprising of discrete sections (concrete slabs). Mercon was engaged by Growthbuilt to perform demolition work that included the removal of a number of the concrete slabs to create space for the installation of stairways and elevators (the work). Mercon’s initial quote to Growthbuilt included the provision and use of “catch decks” to be used in the course of cutting the concrete slabs so as to minimise the risks associated with concrete falling during cutting or after it was cut. The quote was not accepted by Growthbuilt. Instead of catch decks being installed, a system was agreed to that involved supporting the underside of the concrete slab to be cut using props and joists spaced at intervals and running perpendicular to the sections being cut. This system differed from the use of catch decks in that it did not provide a solid continuous surface to arrest falling concrete or people. The work method was not documented by a way of an amended quote or an applicable Safe Work Method Statement (SWMS) prepared by Mercon for the work.

7. The work being done by Mr Ferro, Mr Younan and Mr Raffoul required them to be physically present on or close to the concrete slabs being demolished and cutting them away from the parent structure using petrol-powered circular saws.

8. Mr Younan was suitably qualified to supervise the work. He had extensive demolition experience and had been tasked with overseeing the work. He was not present during the discussions between Mercon and Growthbuilt as to the agreed system of work. However, the propped section of concrete immediately adjacent to the concrete portion which fell during the incident, made it clear that the agreed system of work was understood by Mr Younan and the other workers.

The Incident

9. At about 12.40pm on 3 February 2017 Mr Younan, Mr Ferro and Mr Raffoul were in the process of cutting one of the concrete slabs. The slab on which they were working collapsed beneath them and fell approximately 2.85 metres to the ground below. Mr Younan and Mr Ferro were physically present on the slab and fell to the ground with it as it collapsed. Mr Raffoul had one leg on the slab and one on the other part of the structure. He began to fall as well but his clothing became caught on a piece of protruding metal and his fall was arrested. He was not injured. Mr Younan and Mr Ferro sustained serious injuries.

10. Mr Younan sustained a fracture to his left wrist, a fracture to his left foot, injury to his right shoulder, neck pain, hip pain and back pain. Mr Ferro sustained a fracture to his right ankle.

Systems of Work before the Incident

11. Growthbuilt engaged Mercon as its demolition sub-contractor due to its experience and expertise in relation to demolition work. Mercon had a documented SWMS for the work at the site. It was specific to the site and to the task of Level 1 slab-cutting. The SWMS had only one relevant control for the hazards associated with working at height, being the use of a fall prevention or fall arrest system. One of the controls identified in the SWMS included, “Before commencing a cut, the item to be cut is to be secured or chopped so as not to allow any movement whilst cutting or after cutting”.

12. The SWMS had been reviewed by Mr Merhi on 2 February 2017 and was signed on the day of the incident by Mr Younan, Mr Raffoul, Mr Ferro and also by Simon Younas who was employed as a spotter for the work and located on the ground floor of the site at the time of the incident.

13. The SafeWork NSW publication Code of Practice – Managing the Risk of Falls at Workplaces – April 2016 is an approved Code of Practice under s 274 of the Act (the Falls Code). Prior to the date of the incident, the Falls Code was published and available to Mercon. The Falls Code provided relevant information in relation to the use of catch platforms including that catch platforms are required to incorporate a fully planked out deck, should be of robust construction and designed to withstand maximum potential impact load and positioned as close as possible to the underside of the work area.

14. The SafeWork NSW publication Code of Practice – Demolition Works – September 2016 is also an approved Code of Practice under s 274 of the Act (the Demolition Code). Prior to the date of the incident, the Demolition Code was published and available to Mercon. The Demolition Code relevantly stated:

1. no matter what demolition method is used, the building or structure to be demolished and all of its components should be maintained in a safe and stable condition so as to prevent the unexpected collapse of part or all of the structure;

2. temporary braces, propping, shoring or guys may need to be added for stability.

15. At the time of the incident, Mercon did not comply with the relevant guidance material by not:

1. including in its SWMS specific measures to address the risks of the slab collapsing;

2. having a catch platform in place underneath the slab that was being cut at the time of the incident before the cutting work commenced;

3. having propping or shoring in place to prevent the unexpected collapse of the concrete slab;

4. ensuring that its SWMS was followed in relation to the concrete being cut at the time of the incident.

Systems of Work following the Incident

16. Growthbuilt engaged MYD Consulting Engineers Pty Ltd to revise the demolition methodology to enable the work to be completed. An engineer’s report was provided and recommended the using of plywood sheeting over the timber joists and bearers supported by cross-braced A frames. This methodology was consistent with the original work method proposed by Mercon using catch decks.

17. The remaining work was completed using a robotic concrete cutter by a trained operator. The cost of that work was $2,500. Had this method been engaged from the start, the entire work would have cost less than $3,000. The robotic concrete cutter was widely available through a number of providers.

Offender’s Case on Sentence

18. The offender relied on the following Statutory Declarations:

1. Nick Merianos sworn 28 July 2021;

2. George Merhi sworn 28 July 2021.

3. Robert Charbel Eid sworn 27 July 2021; and

4. Pierre Younan sworn 27 July 2021.

19. None of the declarants were required for cross-examination. Mr Merhi and Mr Younan participated in the sentence proceedings by audio-visual link.

Evidence of Nick Merianos

20. Mr Merianos’ evidence can be summarised as follows.

21. Mr Merianos is the principal of WHESQ Resources Pty Limited, a company engaged in the business of providing work health and safety consulting services. Mr Merianos has been a qualified WHS Consultant for about 10 years. Mr Merianos was brought in by the offender following the incident in late 2017 and briefed by the directors of the offender, George Merhi and Andrew Merhi, as to the circumstances of the incident.

22. Mr Merianos stated that the directors of the offender were deeply concerned and remorseful at the time of his initial consultation. He stated that the directors were committed to ensuring that an incident of similar nature was not repeated on one of their work sites. Mr Merianos stated that to his understanding, the offender was a small building/demolition company usually engaged in projects valued at between $50,000 and $500,000.

23. On his initial engagement, Mr Merianos formed the view that the offender was conversant in the most basic requirements of the Act. It had developed Safe Work Method Statements, site induction forms, incident forms and similar documents. That basic documentation was being used, but Mr Merianos formed the view that the directors required further education on the detailed requirements of the Act as well as practical advice and direction as to how to improve their safety systems.

24. Mr Merianos formed the view that the offender needed considerable assistance and recommended that it engage a full time safety officer. Mr Merianos was involved in developing the scope of duties for the full time safety officer and advising the offender on the role. Mr Merianos was involved in the employment of Mr Robert Eid as the company’s full time safety officer.

25. Mr Merianos was engaged to improve the offender’s management systems and safety systems and to seek quality assurance certification of both systems.

26. Mr Merianos undertook inspections at a number of the offender’s sites in the first six months of 2018. On 4 September 2018, Mr Merianos advised the directors of the offender of a number of concerns he had about the high risk work activities that were being undertaken by the offender at that time.

27. Mr Merianos assisted the offender to put in place a number of documentary procedures that formed the basis of the safety management system. Mr Merianos was involved in preparing management plans and methodologies required for demolition and excavation works for Blacktown City Council.

28. Mr Merianos performed a number of tool box talks on site and in the offender’s office, which were minuted by way of an example for the offender’s future tool box talks.

29. Mr Merianos conducted training with the offender’s staff on the integrated management system that was implemented.

30. By the end of 2019, the offender had spent about $23,000 on the consultancy services provided by Mr Merianos.

31. To Mr Merianos’ observation, the offender suffered a downtown in work during 2019 that seemed to improve by about late 2020.

32. Mr Merianos has met a number of the offender’s staff, including Mr Eid and Mr Younan. Mr Merianos described the offender’s staff as generally very interested and conversant with safety procedures and requirements and as having a high level of safety consciousness.

33. Mr Merianos has developed a plan for future improvements with the directors of the offender to update its safety systems. Mr Merianos has made recommendations for the next 18 months on how the offender’s safety systems can be improved by:

1. having a dedicated safety officer on key sites;

2. increasing the use of machinery and equipment;

3. engaging with SafeWork NSW to demonstrate pro-activeness in the industry; and

4. meeting with the directors on a quarterly basis to discuss safety issues.

Evidence of George Merhi

34. Mr Merhi has been a director of the offender since 2013. He has worked in the building industry since 1996 as a site supervisor. The offender was incorporated by Mr Merhi in 2004 and operates a business undertaking small to medium construction projects, often with a speciality in demolition work.

35. Mr Merhi stated that the work being performed at the site was under the direction of Growthbuilt as the principal contractor. Mr Merhi stated that the quote submitted by the offender to Growthbuilt was rejected because Growthbuilt was not willing to pay for a catch deck to be used. Harnesses were supplied and available but not used. The offender accepts that its system of enforcing safety measures was not adequate at the time of the incident.

36. On the day of the incident Mr Merhi was contacted by Andre Merhi and informed that people had been hurt on site. Mr Merhi immediately attended the site. Mr Merhi accepts that the scene was confronting and that the circumstances for the workers involved in the incident would have been traumatic.

37. Following the incident, the offender engaged an external WHS consultant, Mr Merianos, to assist it. Mr Merhi stated that since retaining Mr Merianos he has gained a much deeper understanding and insight into what it takes to ensure the health and safety of workers engaged by the offender. Mr Merhi accepts that where the original quotation was not accepted, he should have found another way to perform the job as safely as possible or otherwise not accept the work.

38. Mr Merhi stated that the injury to Mr Younan and Mr Ferro had a devastating personal impact on him for which he harbours significant guilt.

39. The offender has supported Mr Younan as best it could both financially and emotionally. Mr Merhi stated that the offender is a small company, that he knew the men well and that they were friends and not just employees. Mr Merhi and his fellow director, took Mr Younan to appointments or asked another employee to do so when that was necessary.

40. Following the incident the offender has spent in excess of $150,000 on improving its safety systems in addition to employing a full time safety officer, Mr Eid.

41. Part of Mr Eid’s role is to attend sites to conduct safety inspections and to ensure that the safety measures outlined in the offender’s Safe Work Method Statements are being strictly adhered to.

42. The offender provided support to Mr Younan to assist him with recovery including the provision of transport, payment of medical expenses and personal support. Mr Merhi and his co-director visited Mr Younan on a number of occasions and stayed in regular contact with him. The offender supported Mr Younan’s return to employment, initially on light duties. Mr Younan has returned to his full pre-accident duties. The offender also paid Mr Younan’s legal costs in respect of the prosecution commenced against him, which has been withdrawn.

43. The offender assists a number of charities and religious organisations. In October 2018 the offender undertook work at St Raymond’s Church in Auburn. In December 2019 the offender organised a donation of toys to the Westmead Children’s Hospital Christmas Appeal. The offender makes regular financial donations to other charitable causes.

44. Mr Merhi stated that he still feels significant guilt about the incident and the injuries that were sustained by the offender’s workers in 2017. He described himself as being truly sorry that the systems in place let them down and exposed them to harm. Mr Merhi accepted that the systems were not acceptable and that it was not right for any worker to suffer because of those types of failures. Mr Merhi undertook, on behalf of the offender, to continue working on its safety systems to ensure that a similar incident does not occur in the future.

Evidence of Mr Eid

45. Mr Eid commenced employment as the WHS Manager of the offender in January 2017.

46. Mr Eid became aware of the incident shortly after it had occurred. At that time he was training to take on the safety officer role. He described the incident as “disastrous” for the offender and he observed George Merhi and Andre Merhi to be very sad and remorseful about the incident.

47. After the incident Mr Eid worked closely with Mr Merianos in implementing additional safety protocols and procedures. Mr Eid participated in a number of safety inspections with Mr Merianos throughout 2018.

48. Mr Eid stated that in his view, the overall safety of the offender’s operation has improved significantly since his commencement in the safety officer role.

49. Mr Eid described 2019 as a reasonably quiet year for the offender, which gave him time to plan and implement better safety systems.

50. Mr Eid stated that together with the directors of the offender, he has put in place safety plans for the next six to 12 months and the next 18 months and beyond. Mr Eid stated that when he has requested safety equipment to be purchased, he has always received approval for those purchases.

Evidence of Mr Younan

51. Mr Younan commenced employment with the offender in January 2015 as a licensed builder.

52. On 3 February 2017 Mr Younan stated that he was standing on the first level of the building at the site. An exclusion zone had been set up and a concrete cutter was being used to cut the slab out. He was standing on the slab with others when he fell through it. Mr Younan stated that in hindsight, he should not have cut the slab without first having a catch deck in place. He has learnt from the incident not to stand on top of the slab whether it is supported or unsupported.

53. Mr Younan remembers very little of the day of the actual fall, apart from being carried to the ambulance on a stretcher.

54. Mr Younan stated that he suffered a rotator cuff fractured right shoulder, a broken left wrist, broken toes, disc bulging at L4/5, a crush fracture in the cervical spine and general bruising and lacerations. He was in Royal Prince Alfred Hospital for about 10 days and off work until June 2019 when he began to return to light duties. He underwent significant physiotherapy and faces the possibility of further surgery on his shoulder. When he was in hospital, George and Andre Merhi visited him regularly. Mr Younan stated that they showed a great deal of concern for him and were very sad that the incident had happened. They both told him to take as much time off as he needed to recover and that his position would remain open once he was fit to return to work. Mr Younan stated that they both drove him on regular occasions to specialist medical appointments. George and Andre Merhi also hired a motorised wheelchair for him to use at home when he was discharged from hospital. They also provided other items that were necessary for him to be allowed to be discharged from hospital. They both stayed in contact with him by telephone and would visit him and take him out to lunch during his time off work.

51. When he returned to work he commenced on light duties performing administrative tasks and going through drawings and co-ordinating construction documents. He was on light duties for about six to eight months. In or about early 2020 he returned to most of his normal duties apart from labouring work. His role has developed into a supervisory role because his shoulder prevents him from heavy lifting and physical work.

52. Mr Younan stated that George and Andre Merhi have always made him feel welcome and supported throughout his rehabilitation process. Mr Younan is still employed by the offender as a site manager and enjoys his work.

53. Since the incident Mr Younan described himself as becoming more safety conscious and that the incident has changed his outlook on working on building sites. He works with Mr Eid quite closely and they discuss site specific safety requirements and seek to eliminate the risk of any incidents in the future. Mr Younan met with Mr Merianos a number of times to discuss safety procedures. Mr Younan now considers himself as a safety spotter for all of the offender’s sites. He believes that his level of safety consciousness is heightened as a result of the incident.

54. A prosecution was commenced against Mr Younan which has subsequently been withdrawn. George and Andre Merhi paid Mr Younan’s legal costs of defending those proceedings.

55. Mr Younan opined that the offender has come a long way in terms of its WHS obligations. He described George and Andre Merhi as driving those changes and that he was proud to be involved with the offender in pursuing that direction.

56. Part of Mr Younan’s role is to put together site specific safety equipment lists which he forwards to Mr Eid. In his experience, none of those requests have been denied.

57. Mr Younan stated:

The level of empathy and support I have found from the Mercon directors is incredible. They foster a tight-knit family environment in the workplace, and I have felt like I have a supportive employer who stands by their staff even in the most difficult and trying of times.

Consideration

62. 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 Crimes (Sentencing Procedure) Act 1999.

Objective Seriousness

63. The offence is objectively serious for the reasons that follow.

64. The risk was known to the offender and anticipated by it. The offender specified in its quote for the work that it should have been performed using catch decks. The work was not performed that way because the principal contractor did not accept the quote that provided for the installation of catch decks at a cost of about $16,000.

65. The likelihood of the risk occurring was moderate to high taking into account the methodology that was adopted.

66. The potential consequences of the risk included a risk of death to more than one worker.

67. The steps that could have been taken to eliminate the risk were well known to the offender. The use of catch decks was declined by the principal contractor. By its plea, the offender accepts that it should have insisted on its proposed use of catch decks or found another way to do the work, for example, by using the robotic concrete cutter. The refusal of the principal contractor to accept the quote specifying the use of catch decks is a significant mitigating factor in assessing the objective seriousness of the offence committed by the offender.

68. The extent of the harm caused was substantial. Two workers suffered serious injury and the third avoided a similar fate by sheer luck.

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

Deterrence

70. 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].

71. The penalty imposed must also provide for specific deterrence. The offender continues to operate a business that poses a significant risk to the health and safety of its workers. I note that the offender has taken extensive steps to improve its safety systems since the incident. To its credit, the offender has seriously engaged with complying with its obligations imposed by the relevant legislation. It has done so as a result of recognising that its workers have suffered by reason of the offence and that they deserve protection from harm.

Aggravating Factors

72. The injury, harm and loss caused by the s 32 offences 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 only the creation of a risk. In this case, Mr Younan and Mr Ferro sustained serious injuries.

Mitigating Factors

73. The offender does not have any record of previous convictions s 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. The offender was incorporated in 2004.

74. The offender has good prospects of rehabilitation: s 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offender has demonstrated by its commitment to improving its safety systems since the incident, that it has good prospects of rehabilitation. The offender has engaged an external WHS consultant to develop and implement appropriate systems. It has subjected itself to inspections by Mr Merianos and has had its systems subjected to quality assurance processes. The evidence relied on by the offender involved full and frank admissions that its engagement with the relevant legislation before the incident was cursory and that the changes it has made after the incident have not been implemented perfectly. I note that the offender has invested a substantial sum in the steps it has taken to rehabilitate itself. Most importantly, I am satisfied on the evidence, that the offender has undertaken the changes it has because its directors were deeply concerned by the injury to its workers.

75. The offender has demonstrated remorse: s 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. Mr Merhi, on behalf of the offender, has accepted responsibility for the failings that led to the offence and expressed remorse. Further, the directors of the offender, by their actions in engaging Mr Merianos, employing a full-time safety officer and by assisting Mr Younan in various ways, have demonstrated the company is truly contrite.

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

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

78. The offender has demonstrated itself to be a good corporate citizen by its involvement in charitable and community causes.

79. I am satisfied that the offender has presented a compelling subjective case to justify the imposition of a substantially reduced penalty, even taking into account the objective seriousness of the offence and the need for the penalty imposed to reflect general deterrence.

Penalty

80. Mercon Group Pty Ltd is convicted.

81. The appropriate fine is one of $120,000 that will be reduced by 25% to give effect to the plea of guilty.

82. I impose a fine of $90,000.

83. The offender is to pay the prosecutor’s costs of the proceedings in the sum of $42,000.

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

**********

Amendments

05 August 2021 - Calculation error - Appropriate fine noted in [3] of the cover sheet and [82] has been changed to $90,000

05 August 2021 - Appropriate fine noted in [2] of the cover sheet changed to $90,000.

Decision last updated: 05 August 2021