SafeWork NSW v MHE-Demag Australia Pty Ltd

[2023] NSWDC 261

District Court

New South Wales

Medium Neutral Citation:

SafeWork NSW v MHE-Demag Australia Pty Ltd [2023] NSWDC 261

Hearing dates:

10 July 2023

Date of orders:

18 July 2023

Decision date:

18 July 2023

Jurisdiction:

Criminal

Before:

Scotting DCJ

Decision:

1   MHE-Demag Australia Pty Ltd is convicted.

2   I impose a fine of $525,000.

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

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 – death of worker

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

SENTENCING PRINCIPLES - no significant 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 (NSW)

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:

AS4801: Occupational Health and Safety Management Systems

MEM11022B Operate fixed/moveable load shifting equipment

Safety Health & Environmental Work Method Statement – Safe Use of Overhead Travelling Cranes & Underhook/Lifting Equipment

Category:

Sentence

Parties:

SafeWork NSW (Prosecutor)
MHE-Demag Australia Pty Ltd (Defendant)

Representation:

Counsel:
C Magee (Prosecutor)
P Barry (Defendant)

Solicitors:
Office of the Director of Public Prosecutions (Prosecutor)
K&L Gates (Defendant)

File Number(s):

2022/188967

Publication restriction:

None

JUDGMENT

1. MHE-Demag Australia 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 comply with the health and safety duty it owed pursuant to s 19(1) of the Act and thereby exposed Mishaal Prasad to a risk of death or serious injury.

2. The maximum penalty for the offence is a fine of $1,766,130.

Facts

3. At all material times, the offender conducted a business or undertaking that involved the design, manufacture and maintenance of a range of mechanical handling equipment including industrial cranes and hoists, lift trucks, dock levellers, building maintenance units, construction equipment and automated car parking systems.

4. The offender has been trading since 1972 and at the time of the incident, employed 145 workers in Australia.

5. At all material times, Option One Construction Pty Ltd (Option One) was engaged in the business of supplying labourers to host businesses. Option One employed six direct staff and approximately 100 indirect staff. It had one director, Matthew Lynch.

6. At all material times, Option One had a vendor supplier agreement with the offender. It placed four workers to work at the site, including three boilermakers and one electrician.

7. Mr Prasad was registered with Option One on 29 April 2019 and commenced a placement with the offender on 1 May 2019 as a boilermaker.

8. Mr Prasad had the following qualifications:    

1. New South Wales and Further Education Commission Australia, Certificate III in Engineering – Fabrication Trade (October 2008);

2. Craft Certificate – Completion of Engineering (Fabrication) Apprenticeship (October 2010);

3. Welder qualification (October 2019); and

4. Operate Fixed/Moveable Load Shifting Equipment from High Skill Training Pty Ltd (June 2020).

9. Option One informed the offender of Mr Prasad’s qualifications and experience prior to the commencement of his placement.

10. The work Mr Prasad was to undertake for the offender included, among other things, fabrication of steel structures.

11. At all material times, David Gilbert was a permanent employee of the offender. He was a qualified boilermaker with over 30 years’ experience. He had completed an external competency referred to as MEM11022B – ‘Operate Fixed/Moveable Load Shifting Equipment’.

The Incident

12. On 6 July 2020, Mr Prasad commenced work at approximately 7:00am at the site.

13. Between 10:00am and 11:00am, Mr Prasad was carrying out work on two boxed girders located in the workshop. He was tasked with the job of grinding the sharp edges off each girder, which was a necessary part of completing the fabrication of a girder.

14. Each girder was fabricated from a steel plate and was 29 metres in length, 1.3 metres in height, 0.4 metres wide in the lower flange and 0.7 metres wide in the upper flange. The weight of each girder was 8979 kilograms.

15. Before the incident, the girders were standing upright on the lower flange, side-by-side and less than 1 metre apart. The girders were raised above the floor by timber supports under their lower flange. They were held in place by gravity.

16. Mr Prasad completed grinding the edges off on one side of the girders and was about to commence grinding the edges off on the other side. Before this could be done, it was necessary to turn the grinders over.

17. Mr Gilbert assisted Mr Prasad to turn one of the girders over so that he could continue working on it.

18. The process of turning over a girder involved the following steps:

1. mark the correct position on either end of the girder to identify where to place the chains;

2. move the overhead crane to the correct position above one marked end of the girder;

3. lower the chain from the overhead crane to the correct side of the girder;

4. pass the chain under the girder and lift it up on the other side to hook it onto the chain, creating a loop around the girder;

5. repeat these steps for the other side of the girder;

6. lift the chain at a slow speed using the overhead crane;

7. as the girder begins to lift, move the crane downwards in the direction the girder is to turn; and

8. slowly lower the girder to the ground.

19. Mr Gilbert moved an overhead travelling crane to a position over one end of a girder. He was using a remote control to manoeuvre the crane and was located outside of the girders, which was the position to be in when undertaking that part of the task. Mr Gilbert fed a chain under one of the girders and Mr Prasad, being on the other side of the girder, hooked a chain around it, creating a loop. He then began to lift the girder in the sequence described above. However, while slinging the girder using the overhead crane to lift the chain, the hook of the chain shortener caught the edge of the girder, causing it to become unstable and move.

20. As this occurred, Mr Prasad was standing between the two girders. The contact from the hook on the first girder caused it to fall onto Mr Prasad. As the first girder fell, it contacted the second girder, causing it to also fall over.

21. Mr Gilbert attempted to use the overhead crane to move the girders off Mr Prasad but was unsuccessful.

22. Mr Prasad died at the scene, having sustained significant chest and leg injuries.

Systems of work prior to the incident

23. Prior to the incident, the offender had the following safety systems in place:

1. a Safe Work Method Statement (SWMS) relating to the following three operations:    

1. ‘Op 51 – Splice plates & weld web stiffeners’;

2. ‘Op 52 – Assemble, tack & weld box girder’;

3. ‘Op 53 – Straighten, taper & weld brackets’;

2. SH&E SWMS – ‘Safe use of overhead travelling cranes & underhooking/lifting equipment’;

3. hazard identification and risk assessment from WH-RM2 Issue 2, ‘Turning a large girder’;

4. a documented Safe Work Procedure on the ‘Selection, Use, Inspection and Maintenance of Lifting Equipment’. This procedure was “applicable to all tasks where the use of lifting equipment [was] required to move loads and/or objections”. This document included a risk assessment and guidance on safe lifting practices;

5. Accredited management/organisational system verified by internal and external audits to AS4801: Occupational Health and Safety Management Systems;

6. clearly defined organisation chart and documented position descriptions for all positions;

7. regular management meetings that included work health and safety issues at different levels of the organisation, including upper management, production and warehouse team and toolbox meetings;

8. procedure for consultation, communication and reporting;

9. register of legal and other requirements;

10. workers received training on how to operate fixed and moveable load shifting equipment (MEM11022B ‘Training – Operate fixed/moveable load shifting equipment’);

11. verification of competency system requiring workers to be in-house trained and assessed prior to operating plant;

12. training logs;

13. regular inspection, repair and documentation of plant equipment by appropriately qualified workers.

24. The offender did not have a separate, documented system of work in place at the time of the incident that related exclusively to the work that was being performed by Mr Prasad.

Steps taken after the incident

25. The offender complied with all notices issued by SafeWork NSW.

26. The offender undertook an investigation of the incident and carried out a risk assessment in relation to the task that was being performed. The offender reviewed and updated its existing safe work procedures, including the following:

1. Hazard Identification and Risk Assessment for Overhead Travelling Cranes – Underhook/Lifting Equipment; and

2. SH&E Work Method Statement for Safe Use of Overhead Travelling Cranes and Underhook/Lifting Equipment.

27. The offender consulted staff and developed and implemented a new Safe Work Procedure for Turning of Large Boxed Girders dated 17 August 2020.

28. Workers affected by changes were trained in these procedures in August and September 2020.

29. The offender also issued an internal safety alert, ‘Girder Topple Fatality Event’ and purchased handheld signed and temporary barriers for use in the workshop. The safety alert reminded workers to remain clear of any loads to be shifted or moved.

30. The offender delivered a PowerPoint presentation to workers and held a number of toolbox talks dealing with the risk.

31. As an interim measure, the offender mandated that only workers who held a high-risk licence in dogging were permitted to use lifting equipment and perform the task of turning large box girders.

Offender’s Case on Sentence

32. The offender tendered the affidavit of Vincenzo Di Constanzo sworn on 30 June 2023 which can be summarised as follows.

33. Mr Di Constanzo is currently employed by Konecranes and Demag Pty Ltd in the position of Country Director of Industrial Cranes and Products Australia.

34. At the time of the incident, he was the Managing Director of the offender. He is still a director of the offender.

35. The offender was established in Germany in 1972 and registered in Australia in 1999.

36. The offender served clients in a wide range of industries, from general manufacturing to aerospace, and operated in eight locations across Australia. There were approximately 145 workers across Australia workers, 75 of which were working at the Smithfield site.

37. In January 2021, the offender sold its assets and employees to Konecranes Pty Ltd (Konecranes). In the period from mid-2020 when negotiations for this sale were ongoing to January 2021, Konecranes and the offender continued to operate as separate legal entities. While there were interim arrangements in place between the two entities, these arrangements did not cover safety matters.

Safety systems before the incident

38. Prior to the incident, the offender had in place a ‘Register of Legal and Other Requirement’ that set out the duties and obligations that it was subject to under the applicable Work Health and Safety Acts and Regulations, Codes of Practice and Standards.

39. The offender employed a National QA/EHS Manager, Michael Mesic, who had been in this position for 28 years. Mr Mesic would undertake regular reviews of the offender’s operations across all of its production sites to ensure compliance with the obligations set out in the Register. The offender also implemented a clearly defined organisational chart and had documented position descriptions of all roles at the Smithfield Site.

40. The offender had a ‘Register of Objectives, Targets and Programmes’, which set out safety objectives and targets, applicable programs and the evaluation dates for each program.

41. The offender’s WHS policies and procedures were periodically reviewed and updated.

42. Hazards and risks were reported through an incident form. The information from these forms was collated and uploaded into a database. Further, Mr Mesic would review all incident report forms received and consider incidents, hazards and relevant risks, and advise on any action required to address them. Mr Mesic would provide this information to the offender’s directors at scheduled meetings and in one-on-one discussions.

43. Mr Di Constanzo and the Chief Financial Officer approved each annual budget for the offender. At the time of the incident, the offender spent $155,000 on safety items.

44. The offender trained all workers who did not have a High Risk Work Licence for Dogging in the safe operation of fixed moveable load shifting equipment, based on procedures set out in a document developed by the Australian Government called ‘MEM11022B Operate fixed/moveable load shifting equipment’. The offender’s Production Supervisor would also regularly communicate the applicable systems of work to relevant workers, including at toolbox meetings, and regularly observed workers when performing their tasks, assessing their competencies and discussing matters of concern on an individual basis. Further supervision was also undertaken at site by experienced workers in supervisory roles for tasks such as fitment of items onto cranes, use of splicing bench for the welding of plates and boxing of plates in cranes’ boxing portal.

45. In January 2015, the offender developed a ‘Procedure for Consultation, Communication and Reporting’ which was reviewed in January 2020 and applied to all the offender’s workers. This document set out procedures for the communication to, and consultation with, workers in relation to health and safety matters. The offender consulted with relevant workers through the Production Supervisor at toolbox meetings and on a day-to-day basis as required. The offender encouraged workers to express their views and contribute to decision-making processes on all safety matters. Consultative committee meetings were also arranged as an additional forum for workers to raise matters for management consideration. Workers from relevant areas of the production facility and members of the senior management team attended these meetings. Safety issues would also be discussed at regular management meetings.

Task of turning large boxed girders

46. Turning large boxed girders was a regular and routine task at the Site. At the time of the incident, there were a number of systems and procedures in place at the time that were considered by the offender to be sufficient to minimise the risks associated with this task. Mr Di Constanzo recognised that in hindsight, these systems fell short of what was required in the circumstances. The offender accepts that those systems did not specifically address the pleaded risk arising from the task, but rather addressed operations involving activities performed on a girder, use and maintenance of lifting equipment and non-routine crane lifts.

47. There was a SWMS for ‘Splice plates and weld web stiffeners’, ‘Assemble, tack & weld box girder’ and ‘Straighten, taper and weld brackets’. The SWMS identified the risks associated with these tasks and set out control measures to address these risks. In relation to the task of “use overhead crane, spreader beam and/or chains sling load and remove bottom flange plates from steel rack & place onto bed”, the SWMS identified the risk of “injury or death if unauthorised personnel in area whilst moving load”. The control measure identified was to “[e]nsure that there are no personnel in the vicinity. Barricades or signs maybe used. Stay clear of load”. In relation to performing the same task with the upper flange, the relevant hazard was identified as [l]oad falling”. The control measure in relation to the hazard was “[e]nsure load is slung/clamped/secured correctly” and “[e]nsure that there are no personnel in the vicinity. Barricades or signs maybe used. Stay clear of the load”. At the time of the incident, the offender believed that these control measures were sufficient to minimise the identified risks.

48. The SH&E Work Method Statement for the activity of ‘Safe Use of Overhead Travelling Cranes & Lifting Equipment’ prescribed control measures in relation to the risks caused by activities involving the use of overhead cranes. The risks identified as arising from this task were “[i]njury or death if unauthorised personnel in area whilst lifting & moving load” and “[l]oad falling”. The control measures included “[e]nsure that there are no personnel in the vicinity during setting up, lifting and travel”, “[a]lways keep well clear of load – Operator & other personnel” and “always maintain good communication & vision with other personnel”. The offender believed that this procedure minimised similar-type risks arising from tasks such as that being performed on the day of the incident.

49. The Safe Work Procedure for ‘Selection, Use, Inspection and Maintenance of Lifting Equipment’ addressed maintenance of lifting equipment, appropriate use of lifting equipment, selection of sling and accessories and safe lifting practices and inspection of lifting equipment. This procedure was applicable to all tasks where the use of lifting equipment was required to move loads. With respect to the procedures when lifting loads, it stated “check the tension on the sling. Raise the load a few inches, stop, and check for proper balance and that all items are clear of the path of travel” and “keep all personnel clear while the load is being raised, moved or lowered”.

50. An external company carried out annual inspections of chain links used at the Site. In addition, all MHE-Demag workers were required to undertake a visual inspection of all equipment prior to use, to identify any damage, check whether the safety load tag was correctly applied and to confirm the date of the last external inspection. Workers conducting this inspection had completed the MEM11022B course or had a High Risk Work Licence for Dogging. If a defect was identified, the relevant equipment would be quarantined and either repaired or replaced.

51. The ‘Critical Lift Plan for Overhead Cranes’ introduced control measures to mitigate risks associated with the tasks of lifting and swinging load during “critical lifts”; that is, non-routine crane lifts requiring advanced planning and addition or unusual safety precautions. This would have applied to the task being performed by Mr Gilbert and Mr Prasad on the day of the incident.

52. Mr Prasad commenced working for the offender as a boilermaker on 1 May 2019. Mr Prasad completed the ‘Site Safety Induction Program’ on 1 May 2019. Mr Prasad was assigned a “buddy” when he commenced working at the site and also worked closely with Mr Fenech, an experienced supervisor. Mr Fenech held the following qualifications:

1. Certificate of Proficiency as a Boilermaker & Welder (1^st class) obtained 28 April 1993; and

2. National Licence to Perform High Risk Work.

53. On the day of the incident, Mr Prasad was being supervised by Mr Gilbert, who was one of the most experienced boilermakers at the site, with approximately 30 years’ experience. Mr Gilbert performed the task of turning large boxed girders on many occasions during his four years of employment with the offender. He had obtained a MEM11022B and was a qualified welder. He had also previously held a High Risk Work Licence for Dogging.

53. The offender accepted that these systems did not minimise the pleaded risk associated with the task of turning large boxed girders so far as reasonably practicable.

Systems of work after the incident

55. Immediately after the incident, the offender implemented interim measures such that only workers who held a High Risk Work Licence for Dogging could use lifting equipment.

56. A Konecranes safety alert was distributed to MHE-Demag workers in relation to the incident, reminding workers to remain clear of any load to be shifted or moved. The offender purchased hand-held temporary signs and barriers to be used at the site. The offender conducted a risk assessment specifically in relation to the task of turning large boxed girders.

57. In consultation with workers, the offender developed and implemented a ‘Safe Work Procedure for Turning Large Boxed Girders’ which set out safety precautions to be undertaken when performing this task. The offender provided training to its workers on this document.

58. The offender also reviewed and improved its procedures in relation to the task of turning large boxed girders and use of overhead cranes generally. At a team meeting held on 10 July 2020, workers were told not to perform a task if they felt unsafe. Further, a Konecranes presentation was provided to workers regarding life-saving practices to adopt when lifting and rigging loads. A ‘SH&E Work Method Statement – Safe Use of Overhead Travelling Cranes & Underhook/Lifting Equipment’ was developed and a training session was held on both this document and the ‘Safe Work Procedure – Selection, Use, Inspection and Maintenance of Lifting Equipment’.

59. The offender complied with all notices issued by SafeWork NSW. The offender also cooperated with and assisted SafeWork NSW during its investigation by ensuring that its workers were made available to attend interviews and providing facilities at the site for those interviews.

60. The offender has a prior conviction from 2000.

61. At the request of Mr Prasad’s mother, Karun Evans, the offender organised a morning tea on site before Mr Prasad’s funeral. All workshop personnel who knew and worked with Mr Prasad were in attendance and met with Ms Evans, and Mr Prasad’s wife and brothers. The offender offered to pay Mr Prasad’s funeral costs. The offender held a mass on site on the first anniversary of Mr Prasad’s death. A park bench with a plaque dedicated to Mr Prasad has been placed in a prominent spot in front of the main manufacturing workshop.

62. All employees were offered counselling by the offender.

Remorse

63. The offender expressed remorse for its offending and for Mr Prasad’s death.

Consideration

64. 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

65. The risk posed to the workers by the boxed girders was obvious and well known to the offender. The offender had in place a number of SWMSs that dealt with the risks involved in the task of turning large boxed girders but did not have a specific procedure in place for a process that posed such a significant risk.

66. The likelihood of the risk coming home was moderate. The steps taken prior to the incident were not sufficient to prevent it.

67. The consequences of the risk included the risk of death to potentially more than one worker.

68. By its plea of guilty the offender accepts that it failed to:

1. Develop and implement a safe work procedure specific to the task of turning large boxed girders; and

2. Train its staff on the required safe work procedure.

69. The identified steps were relatively inexpensive and could have been implemented with minimal inconvenience to the offender.

70. The death of Mr Prasad is an aggravating factor.

71. I have taken into account the maximum penalty for the offence. I note that there was an increase in the maximum penalty, from a fine of $1.5 million to a fine of 17,315 penalty units, for offences occurring after 10 June 2020. A penalty unit was valued at $102 in the 2021 financial year.

Deterrence

72. 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].

73. There is little need for specific deterrence. The offender has effectively ceased trading. Its assets and employees have been transferred to a new entity. Prior to the transfer, the offender took comprehensive and timely steps to improve its safety systems.

Aggravating factors

74. The injury, harm and loss caused by the s 32 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 only the creation of a risk. In this case, the death of Mr Prasad is sufficient to establish the aggravating factor.

Mitigating factors

75. The offender did not have a significant record of prior convictions: s 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. The offender has been operating in Australia since 1999. It has one prior conviction for a safety breach under s 15(1) Occupational Health and Safety Act 1983, that occurred on 9 June 2000 for which it was fined $5,000. I am satisfied that its prior good record still entitles the offender to significant leniency.

76. The offender is unlikely to re-offend: s 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. The offender has effectively ceased trading and is thereby unlikely to re-offend.

77. The offender has good prospects of rehabilitation: s 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The offender had significant safety systems in place prior to the incident, that were capable of controlling the risks inherent in the task of turning large boxed girders. However, after the incident it has realised that it could take further steps and its response has been timely and comprehensive. It has trained its workforce on the hazards and the lessons learned from the incident. The offender has demonstrated by reference to the steps taken, that it has good prospects of rehabilitation.

78. The offender has demonstrated remorse: s 21A(3)(i) Crimes (Sentencing Procedure) Act 1999. Mr Di Constanzo, on behalf of the offender, accepted responsibility for its actions and expressed remorse for its failings. The offender took steps to support Mr Prasad’s family and its workers after the incident. The offender has a memorial dedicated to Mr Prasad at the site and conducts annual memorial gatherings in honour of Mr Prasad. I am also satisfied that the incident has deeply impacted the offender’s workers, including Mr Di Constanzo and the management team.

79. 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%.

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

81. The offender is a good corporate citizen. The offender had in place significant safety systems prior to the incident, which I accept were in place to protect its workers. It has demonstrated a willingness to take further steps to provide for the welfare of its work force. I also note that the offender has retained cash to fund the anticipated fine to be imposed and costs of the proceedings.

Penalty

82. MHE-Demag Australia Pty Ltd is convicted.

83. I have taken into account the Victim Impact Statement prepared by the victim’s mother, Karun Evans. Pursuant to s 30E Crimes Sentencing Procedure Act 1999, I have taken into account that the harmful impacts of Mr Prasad’s death endured by his family as evidence of harm to the community. I am satisfied that it is appropriate to take into account Ms Evan’s VIS in determining the appropriate penalty to be imposed.

84. Ms Evan’s VIS was concise, but powerfully conveyed her sense of loss and the ongoing grief caused by the incident.

85. The appropriate fine is one of $700,000 which will be reduced by 25% to reflect the plea of guilty.

86. I impose a fine of $525,000.

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

88. I order 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: 18 July 2023