Department of Labour v Street Smart Limited HC Hamilton CRI-2008-419-000026

[2008] NZHC 2487

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CRI-2008-419-000026

BETWEEN  DEPARTMENT OF LABOUR Appellant

ANDSTREET SMART LIMITED Respondent

Hearing:         18 July 2008

Appearances: B M Stanaway and N P Chisnall for the Appellant

N A Beadle for the Respondent

Judgment:      8 August 2008

JUDGMENT OF DUFFY J

This judgment was delivered by Justice Duffy on 8 August 2008 at 11.30 am, pursuant to

r 540(4) of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:   Crown Law P O Box 2858 Wellington 6140 for the Appellant

DLA  Phillips  Fox  P  O  Box  160  Shortland  Street  Auckland  1140  for  the

Respondent

DEPARTMENT OF LABOUR V STREET SMART LTD HC HAM CRI-2008-419-000026  8 August 2008

[1]      The Department of Labour has appealed against the sentence imposed in the District Court at Thames on 18 February 2008 following the respondent company’s conviction on one charge laid under ss 15 and 50(1)(a) of the Health and Safety in Employment Act 1992.   The respondent was sentenced to a fine of $55,000 and ordered to pay reparation of $60,000.  The appellant contends that a fine of $55,000 was a manifestly inadequate sentence, given the circumstances that led to the conviction.

Facts

[2]      The respondent is in the business of collecting and managing refuse and recyclable rubbish.  It was contracted to undertake kerbside refuse collection in the Thames, Coromandel and Hauraki Districts.   The summary of facts discloses that, since 2005, the respondent was aware of the safety implications of truck and trailer units used for rubbish collection and for recycling, including the hazard a poorly designed rubbish collection truck presented to workers attempting to load it whilst it was in motion.

[3]      In December 2006, the respondent purchased a truck that was designed for recycling collection, rather than rubbish collection.  Unlike an ordinary rear-loading rubbish truck, the truck was loaded from the side, where there were steps leading up to an alcove behind the cab.  The steps did not cover the full width of the alcove, and were positioned in line with the rear wheel of the truck.  The bottom step was a 430 millimetre wide platform, creating a footboard on which a person could comfortably stand.  There was a single handrail on the side of the steps nearest to the front of the truck.  These features made the truck unsafe for use other than as a recycling truck operated by a sole driver operator.  When used by a sole driver operator there was no risk of the operator being run over by the truck, as the vehicle was always stationary when the operator mounted the steps to load it.  But, if used as a rubbish collection truck with additional workers acting as runners and loading the waste whilst the truck was in motion, it lacked the necessary safety features to protect those workers from being run over, should they stumble or fall under the truck’s wheels.

[4]      The respondent had planned to modify the truck to make it safe for use as a rubbish collection truck loaded by runners.  But over the busy Christmas/New Year period, the respondent chose to use the truck for rubbish collection involving runners without first modifying the truck to make it safe for this use.  The driver of this truck was Mr Dallas Houia.

[5]      Mr Houia had signed a code of conduct which stipulated that non-employees were not permitted to travel in his employer’s operating fleet at any time.   On

10 January 2007, one of the respondent’s managers had learned that Mr Houia’s

13 year old son, Sommers Lee-Houia, was accompanying Mr Houia on the truck and carrying out a runner’s tasks.  The manager contacted Mr Houia the same day and informed him that Sommers was not allowed to work on the truck.  Another manager of the respondent repeated the direction the next day.

[6]      On 19 January 2007, Mr Houia was driving the truck on a rubbish collection round in Paeroa.  Two other employees were acting as “runners”.  One runner would collect the rubbish bags from the street and throw them to the second runner, who would stand in the truck’s canopy and place them into the compactor in the rear of the truck.  Despite the directions given to Mr Houia, Sommers was riding in the cab with his father that day.   Despite his father’s protests, he decided to assist the runners.  After grabbing a rubbish bag, Sommers attempted to jump onto the step, just as the truck jerked forward.  He was unable to maintain his grip on the handrail, and fell into the gap adjacent to the step.  He was run over by the rear wheel and suffered fatal injuries.

[7]      The appellant’s investigation revealed that the truck’s platform, grab handles and steps did not provide a safe working platform on which runners could safely stand.  Furthermore, there was no railing or barrier to prevent the runners from going under the truck’s wheels should they inadvertently slip off the step.  As it was, the truck was hazardous for the use to which it was being put.

[8]      The respondent was charged with and pleaded guilty to the offence of failing to ensure, as an employer, that another person was not harmed by the action of its

employee.   The respondent’s failure had, in this case, resulted in the death of the other person.

The District Court judgment

[9]      The  District  Court  Judge  came  to  the  conclusion  that  the  respondent’s culpability was at the higher end of culpability.  At [8] of the judgment he put the culpability at a level of 7.5 on a scale of one to ten.  Two factors influenced him in this regard.   They were: first, the respondent had knowingly put on the road a defective  vehicle  in  a  dangerous  condition  for  the  use  of  its  employees;  and secondly, it had turned a blind eye to Sommers being in the vehicle and his carrying out the task of a runner.  Here, the Judge noted the need for the Courts to act to deter employees  from  permitting  their  children  to  be  in  dangerous  vehicles  and  in inherently dangerous work place activities.

[10]     The respondent had submitted to the Judge that Mr Houia should share part of the blame for Sommers’ fatal injury.  The submission was rejected on the ground that part of the legislation’s purpose was to protect employees from their own stupidity and wilful neglect.    The respondent had known Sommers was accompanying his father on the truck; it could have acted to stop its employee from disobeying company directives.

[11]     The   respondent   and   Sommers’   parents   attended   a   restorative   justice conference.    It  was  agreed  that,  subject  to  the  Court’s  approval,  reparation  of

$60,000 would be paid.  The Court subsequently approved the amount.  It was then a matter of setting the appropriate fine.  The respondent had pleaded guilty, expressed remorse, and modified the truck.   It had a previous conviction, from some two or three years earlier, resulting from an employee’s injury.

[12]     The Judge considered his choice of starting point should recognise that he was presented with “the worst scenario possible”.  The mitigating features were: the guilty plea; attendance at the restorative justice conference; and the offer to pay reparation of $60,000.  The Judge also recognised that the reparation payment would be paid by the respondent’s insurers and that this would diminish the deterrent aspect

of the payment.  At [25] and [26] of his judgment he recorded his concerns about the need to set an appropriate starting point that reflected the gravity of the respondent’s offending.  He also recorded his reservations at the level of seriousness (seven on a scale of one to ten) for which the informant contended.

[13]     The earlier reference the Judge made to the culpability being at 7.5 gives the impression he considered the seriousness of the offending to be higher than the informant did.  Nonetheless, the Judge accepted the informant’s level of seven.

[14]     The Judge then turned to determining the level of discount for a guilty plea. He again recorded his reservations that the informant had consented to a level that had  the  practical  effect  of  reducing  the  fine  by  $60,000  (being  a  34  per  cent discount).  In this regard, the Judge pointed out that the respondent had little defence and a significant discount for a guilty plea was usually given when a defence was available but was not pursued.  Nonetheless, he adopted the level of discount counsel had agreed upon.

[15]     The Judge then had to determine the extent to which the reparation payment would influence the amount of the fine.  At [27] he expressed his reservations about a dollar for dollar reduction.   But again he ultimately applied the figure that had initially given rise to his reservations.   The result was a further $60,000 discount, which brought the finishing point of the fine to $55,000.

Grounds of appeal

[16]     The appellant does not challenge the starting point of $175,000 taken by the Judge.  However, the fine imposed is said to be inadequate as a result of two errors. First, the Judge gave an excessive discount, amounting to 68 per cent of the starting point.  The aspect of the discount that the appellant is most concerned with is the deduction in full of the amount paid by Street Smart in reparation.  Secondly, despite considering that the company was highly culpable, the Judge imposed a penalty that was only 32 per cent of the starting point of the fine as well as being only 22 per cent of the maximum available fine of $250,000.

[17]     The respondent submits that the penalty was not manifestly inadequate.   It says that the starting point was too high, but the overall penalty was acceptable. Taking into account the reparation of $60,000, the fine was at the high end of what was an appropriate fine in this case.

Appeal principles

[18]     The Court of Appeal in R v Wilson [2004] 3 NZLR 606 at [41] noted:

Whether a sentence can be said to be manifestly inadequate turns firstly on the maximum sentence for the particular offence; then on a consideration of comparable sentences, to the extent that those are considered to be appropriate; and above all, the focus is required to be on the totality of the offending and the culpability of the offender in the particular case.

[19]     The Court is more reluctant to increase than it is to reduce a sentence, and will not do so in a borderline case: R v Wihapi [1976] 1 NZLR 422 (CA); R v Muavae [2000] 3 NZLR 483 (CA). “[The] legitimate scope [of a Crown appeal] is confined to cases where there is solid ground for treating a sentence as manifestly inadequate or inappropriate”: R v Cargill [1990] 2 NZLR 138 (CA), at 140.

[20]     Where the Court finds that a sentence should be increased on the grounds of manifest inadequacy, the increase will not be to the level that would have been imposed were the appellate Court the original sentencing Court.  Rather, it is to the minimum extent required to remedy the manifest inadequacy: Sipa v R (2006) 22

CRNZ 978 (SC) at [9].

[21]     These principles are derived from Crown appeals against sentences imposed for Crimes Act 1961 offences and are equally applicable to regulatory offences.

Discussion

[22]     The appellant criticises the Judge’s approach of deducting in full the $60,000 reparation payment from the starting point of the fine.   Apart from expressing reservations about a reduction of $60,000 to take account of the reparation payment, the Judge gave no reasons as to why he was ultimately prepared to apply a dollar for dollar discount.   Since he had reservations about doing so, it would have been

helpful to know what those reservations were and what it was that overrode those reservations.

[23]     The importance of reasons was stated in Lewis v Wilson & Horton Ltd [2000]

3 NZLR 546 at [76], [80] and [82]. Delivering the judgment of the Court of Appeal, Elias CJ said:

[76]      There are three main reasons why the provision of reasons by Judges is desirable. Others are identified in Singh v Chief Executive Officer, Department of Labour [1999] NZAR 258 at pp 262 – 263. Most importantly, the provision of reasons by a Judge is an important part of openness in the administration of justice. …

…

[80]      The second main reason why it said Judges must give reasons is that failure to do so means that the lawfulness of what is done cannot be assessed by a Court exercising supervisory jurisdiction. Those who exercise power must keep within the limits imposed by law. They must address the right questions and they must correctly apply the law. The assurance that they will do so is provided by the supervisory and appellate Courts. …

…

[82]      The  third  main  basis  for  giving  reasons  is  that  they  provide  a discipline  for  the  Judge  which  is  the  best  protection  against  wrong  or arbitrary decisions and inconsistent delivery of justice. In the present case it is hard to believe that the Judge would have granted the order if he had formally marshalled his reasons for doing so.

[24]     There is an additional reason why it is important for a Judge in a sentencing judgment to give reasons.  In M v Police HC AK CRI 2004-404-440 10 December

2004, Heath J observed at [43] to [45]:

[43]      A significant feature of the Sentencing Act 2002 is the provision of a framework for analysis for Judges who sentence offenders.  The framework emphasises the general desirability of consistency in sentencing: s 8(e) Sentencing Act 2002.

[44]      Offenders and victims may feel a sense of grievance if a Judge fails to deal appropriately with factors requiring attention and an appellate Court simply endorses the Judge’s end result on the basis that a reasonable Judge could have come to that conclusion using a proper methodology.

[45]      In my view, the correct approach on appeal is to consider the process by which the Judge reached the end sentence.  If there were material errors in the Judge’s approach the appellate Court should treat the sentencing process as having miscarried and sentence afresh.   I adopt, in that regard, what was said in R v Finau (2003) 20 CRNZ 333 (CA) at 337.

[25]     The observations of Heath J were made in the context of a prisoner’s appeal against sentence; however, I consider that the observations are equally applicable to an informant’s appeal against sentence.  The enactment of the Sentencing Act 2002 has  imposed  a  more  rigid  framework  on  the  sentencing  process.    A  failure  to conform to the requirements of the Sentencing Act can lead to a sentence that is wrong in principle and, therefore, one that is inappropriate in terms of s 121(3)(b) of the Summary Proceedings Act 1957.  A sentence that is wrong in principle can also lead to a sentence that is manifestly disproportionate either in terms of its excessiveness or its inadequacy.

[26]     Though it is the “finishing point” rather than the starting point that matters, where a sentence is challenged as manifestly inadequate, an appellate Court must try to ascertain how the sentencing Judge reached his or her final conclusion: see Department of Labour v Fletcher Concrete and Infrastructure Ltd t/a Golden Bay Cement  (2007)  8  NZELC  99,001  (HC)  at  [19].    Even  though  the  appellant’s challenge in this appeal is mainly directed at the level of discounting of the fine to take account of the reparation payment, I consider that this appeal is best approached by considering the entire sentencing process.  This will reveal any errors of principle along the way, as well establishing if the result arrived at is so different from the Judge’s  finishing point  that  the  fine  he  imposed  can  be regarded  as  manifestly inadequate.

[27]     I will start, therefore, by considering the starting point the Judge adopted.  It is immediately clear that the process he followed does not accord with accepted sentencing principles.  At [26] the Judge referred to the respondent’s acceptance of responsibility for the fatal injury and other mitigating factors and then said that “taking into account those matters in mitigation, I believe this falls about 7”.

[28]     It seems that the Judge’s decision to place the culpability at seven on a scale of one to ten, (rather than at his preferred level of 7.5), was influenced by the informant’s estimate being no higher than seven, as well as the Judge considering that once the mitigating factors were taken into account, the culpability rested at seven.  However, mitigating factors relating to the offender should never form part of the determination of a starting point.   The influence they have on a sentence

comes later in the process; they take the form of deductions to be made from the starting point.   If mitigating factors are allowed to influence the choice of starting point and are then given separate recognition as discounting factors, there will be a double counting.  This is contrary to accepted sentencing principles.  By allowing his choice of starting point level to be influenced by mitigating factors and then using them again as a discount, the Judge has gone wrong in principle.

[29]     The respondent challenges the Judge’s starting point as being too high, rather than supporting the $60,000 discount for the reparation payment.   The maximum fine is now $250,000.  The Judge placed culpability at seven on a one to ten point scale.  He also described what had occurred as a “very bad case of negligence”.  I concur with the Judge’s view in that regard.  The facts speak for themselves.  The respondent knew the truck was a hazard to runners working on the truck when it was used for rubbish collection and the respondent knew that, contrary to its directives, its employee was permitting his 13 year old son to ride in the truck and to act as a runner.  The respondent pointed to the carelessness of Mr Houia’s actions; however, the law clearly places responsibility on the employer to act to ensure its employees’ carelessness  does  not  cause  harm  to  others:  see  Linework  Ltd  v  Department  of Labour [2001] 2 NZLR 639 at [38]. Mr Houia’s actions cannot reduce the respondent’s culpability in any way.

[30]     An  aggravating  factor,  which  could  influence  the  starting point,  was  the previous conviction the respondent had incurred under the Health and Safety in Employment Act in November 2003.

[31]     Given  the  circumstances  of  this  case,  I  do  not  think  the  Judge  can  be criticised for adopting too high a starting point.   $175,000 is 70 per cent of the maximum fine available.  When I stand back and look at the relevant circumstances of the offending, I am left to conclude that a starting point of $175,000 fits with the level of seriousness of the offending.  It also accords with the principles in ss 7 to 8 of the Sentencing Act, as well as s 51A of the Health and Safety in Employment Act.

[32]     I now turn to the reduction for mitigating factors.   The Judge had already allowed his starting point to be wrongly influenced by mitigating factors, including

the respondent’s acceptance of responsibility for the fatal injury.  To follow that with a 34 per cent discount for a guilty plea was to cause a double counting of those factors.  This too is an error of principle.

[33]     Section 51A(2)(e) of the Health and Safety in Employment Act sets out the relevant criteria for credit reductions, the criteria in s 51A(2)(a) to (d) being relevant to the fixing of the starting point.   The  appellant  submitted  that  the criteria in s 51A(2)(e) do not require conjunctive credits.  I agree with that view.  The section sets out a number of factors to be considered.  The influence of any of those factors in a given case and their weighting is at the discretion of the sentencing Judge.

[34]     The  principle  in  R  v  Sipa  requires  that  in  an  informant’s  appeal  any interference with the original sentence should be to the minimum extent required to remedy the manifest inadequacy.  I consider that I should bear this principle in mind as I work through the various stages of the sentencing process.

[35]     In this case, the respondent was given a 34 per cent credit for the guilty plea. The discount is on the high side.   A discount at that level should reflect all the ameliorating conduct of the respondent in response to the harm caused by its offending.  I consider, therefore, that the other factors in s 51A(2)(e), all of which were applicable in this case, are also properly reflected in the 34 per cent discount for the guilty plea.

[36]     I now turn to the discount for the reparation payment.  It is this aspect of the sentencing judgment that has come under strong attack in this appeal.  It is difficult to see why the Judge applied a dollar for dollar reduction of the reparation from the quantum of the fine.  The concerns he had expressed earlier in his judgment that the appellant had conceded too much in relation to the level of seriousness of the offending and the discount for a guilty plea are at odds with the dollar for dollar discount he applied.  With those concerns, one might expect reluctance to apply a dollar for dollar discount to account for the reparation payment.  Although the Judge expressed reservations about the adoption of a dollar for dollar discount, that is what he did.  The lack of reasons makes it difficult to ascertain if there is a proper basis to support the finishing point.

[37]     Under s 40(4) of the Sentencing Act, the Court must, in setting the sentence of a fine, take into account the amount payable in reparation.  The parties accept that the sentencing process is a two-step analysis:

a)       The Judge must fix the amount of reparation on a stand alone basis solely by reference to the amount that is properly payable out of the offender’s means;

b)The Judge must then determine whether any additional penalty by way of a fine should be imposed, taking into account the amount of reparation: Department of Labour v Ferrier Woolscours (Canterbury) Ltd [2005] DCR 356; affirmed in Department of Labour v Fletcher Concrete and Infrastructure Ltd t/a Golden Bay Cement at [8]-[9].

[38]     Since I have found that a starting point of $175,000 with a 34 per cent discount for mitigating factors is appropriate, the key focus of the appeal must now be on the appropriateness of the reduction allowed for the reparation payment.

[39]     The appellant argues that a discount for reparation should only be given where the Court considers that the defendant will be unable to meet its reparation obligations if the quantum of the fine is not reduced.  Accordingly, it submits that little or no discount should be given from the starting point for the reparation in this case.  The respondent argues that it is implicit in the Sentencing Act that a defendant must be given credit for reparation paid or ordered when a fine is being fixed.

[40]     Section  40(4)  of  the  Sentencing  Act  requires  any  payment  by  way  of reparation to be taken into account by the Judge in fixing a fine.  However, taking it into account does not necessarily mean deducting its full value from any additional fine imposed.  It is enough if a Judge gives consideration to any reparation payment that has been made.  This is of course subject to the consideration being reasonable and in accordance with the scheme and purpose of the Health and Safety in Employment Act, the Sentencing Act and relevant common law principles of sentencing.

[41]     The case law reveals a divergent approach to the application of the totality principle in considering the effect of reparation payments on the amount of fine imposed.     Harrison   J   in   Police   v   Ferrier   HC   AK   CRI  2003-404-000195

18 November 2003 stated at [15]:

In submitting that the Judge erred, [counsel] places reliance upon the Court’s obligation to take into account the amount payable by way of reparation when imposing and quantifying a fine in addition to a sentence of reparation (s 40(4)). Critically, there is no reciprocal or corresponding requirement when fixing the amount of reparation. Accordingly, in my judgment there is no scope to apply a totality principle. Its place is elsewhere, namely where the offender is liable for terms of imprisonment on a series of charges (s 85). The reason, with respect, is obvious. A fine is essentially punitive; it is a pecuniary penalty imposed by and for the state. By contrast, an order for reparation is compensatory in nature, designed to recompense an individual or her family for financial loss or emotional harm suffered as a result of another’s offending (s 32(1)). The two are conceptually different and serve disparate purposes.

[42]     However, a different conclusion on totality was reached by Priestley J in

Department of Labour v Areva T & D New Zealand Ltd HC ROT CRI-2005-463-42

9 November 2005 at [36]:

If, having regard to the relevant criteria, the court imposes a reparation sentence, then obviously, as a next step, whether or not to impose a fine and if  so  the  quantum  of  the  fine,  must  be  considered  in  the  light  of  all Sentencing Act criteria and in particular the totality principle and the overall appropriateness of sentences and orders imposed.

[43]   Likewise, Gendall J in Department of Labour v Fletcher Concrete and Infrastructure Ltd  t/a  Golden  Bay Cement  dealt  with  reparation  and  fines  on  a totality basis.  At [21] he held that:

On that basis, a total sanction, including reparations of $22,000, as an absolute minimum was necessary.   Viewed in that light a total penalty of

$6,000 reparation and $4,000 fine was manifestly inadequate … A fine of no

less that $16,000 was necessary.  (my emphasis)

[44]     Whilst I agree with Harrison J in Police v Ferrier that an order for reparation and a fine serve disparate purposes, each of those purposes is provided for within the Sentencing Act.  Parliament must have intended that both purposes play a role in the sentencing of offenders.   I consider, therefore, that the overall outcome for a sentenced person, howsoever arrived at, would need to accord with the totality principle.  Although it was dealing with another aspect of sentencing, the Court of

Appeal in R v Xie [2007] 2 NZLR 240 at [18] confirmed the continued importance of the totality principle and described the Sentencing Act as endorsing it:

Those principles survive the enactment of the Sentencing Act and, indeed, are endorsed by it.  The guidelines [in the Sentencing Act’s provisions] do not have the effect of trumping the central principle of sentencing … that the total sentence must represent the overall criminality of the offending and the offender.

[45]     To the extent that there is a difference of view in Ferrier in contrast with the views taken in Areva T & D New Zealand and in Fletcher Concrete and Infrastructure t/a Golden Bay Cement, I prefer the views expressed in the latter two judgments.  I also consider that the view I have taken is consistent with the approach taken by Pankhurst J in Canterbury Regional Council v Steelbro New Zealand Ltd HC  CHCH  CRI  2006-409-232  28  February  2007.    It  follows  that  orders  for reparation are to be viewed as part of the total sentencing package.  The impact of reparation on a fine will depend on the circumstances, with the totality of the combined penalty of reparation and the fine being the guiding principle.  The issue, then, on a sentence appeal of this nature, is the adequacy of the overall sentence.

[46]     Section 14(2) of the Sentencing Act provides that where a Court considers it appropriate to impose a sentence of reparation and a fine, but the offender does not have the means to pay both, the Court must sentence the offender to make reparation. This indicates that for this possible combination of sentences, Parliament wanted the emphasis to be on the sentence of reparation as the first step in arriving at a total sentencing package.

[47]     Under s 32(6), when imposing a sentence of reparation a Court must take into account any offer or agreement as described in s 10 to make amends, including financial amends.  A Court is not necessarily bound to adopt the agreed or offered amount.   However, it would seem contrary to the scheme and purpose of the Sentencing Act for a Court to set reparation at a lower level than what is offered or agreed on so as to avoid the effect of s 14(2).

[48]     Section 40(4) makes the amount payable under the sentence of reparation a mandatory  relevant  consideration  in  fixing  the  amount  of  the  fine.    However,

Parliament has left the weighting to be given to this consideration to the Court, subject to the usual constraint of “reasonableness”.

[49]     The requirement to consider any reparation ordered in fixing a fine is placed in the context of s 40.  This provision requires the Court to consider the offender’s financial capacity to pay a fine.  This placement signals Parliament’s intent to treat the requirement as a particular aspect of an offender’s financial capacity, to which a Court must give specific consideration.

[50]     I consider that the approach for a Court to follow is first for reparation to be set at an appropriate level, which, when there is agreement between the parties, will be the agreed amount.  The Court then fixes the amount of the fine.  This should be done in a principled way which outlines the various considerations.  Where the fine is fixed at a low amount due to the offender’s financial capacity, this factor should be separately identified after the general principles relating to fixing a fine are identified and considered.  The offender’s financial capacity should not, for example, influence the choice of starting point.  The principles should be applied in a way that arrives at a fine that is generally appropriate for the level of offending and which takes account of any aggravating and/or mitigating circumstances of the offender.  I consider that the emotional aspects of making  reparation  (being a  reflection  of  an  offender’s remorse and desire to make amends to his or her victim) should be included in the discount given for mitigating factors.   The figure then arrived at needs to be considered in terms of s 40(1) to (4) and altered, either up or down, to the extent that the offender’s financial capacity to pay the fine is taken into account in fixing the final amount.  This is the time to take into account the effect, if any, on the fine of an order for reparation.

[51]     It follows that I agree with the views Pankhurst J expressed in Steelbro that it is wrong in principle to fix a starting point on the high side and then, after consideration of mitigating factors, effect a dollar for dollar reduction of the fine to take into account the reparation orders made.  Such an approach distorts the general principles of sentencing.

[52]     In sentencing for offences under the Health and Safety in Employment Act, there is the somewhat unusual factor that often an offender will have insured against the risk of a reparation order.  This raises the question of the extent, if any, to which regard should be had to the presence of an insurer standing behind an offender.

[53]     The appellant submits that the presence of an insurer standing behind the offender is a relevant consideration when a Court comes to weigh the extent to which, under s 40(4), the reparation order will affect the amount of the fine.

[54]     By expressly prohibiting insurance against fines  in  the health  and  safety context (s 56I, Health and Safety in Employment Act) but leaving open the ability to insure against the cost of reparation orders, Parliament has deliberately permitted employers to insure against reparation orders.  This is an indication that Parliament does not disapprove of such insurance.

[55]     The respondent argues that employers should be encouraged to insure against workplace accidents.  Hence, when it comes to the imposition of a fine, any failure to give full weight to a reparation order on the ground the insurer would be paying for it would only discourage employers from insuring against such eventualities.   The corollary of this argument is that unless fines reflect reparation covered by insurance, employers will refrain from incurring the cost of insurance premiums in order to be able to meet the cost of fines imposed should a workplace injury to an employee or other person occur.  Since a reparation order has the effect of providing the injured person with additional compensation for injuries suffered, anything that might lower the level of reparation payments should be avoided.

[56]     However, the scenario referred to in the respondent’s arguments would not necessarily see a reduction in levels of reparation payments.   Whilst the fact reparation was to be met by an insurer could limit the extent to which it was taken into account when fixing a fine, knowledge that an employer had no such insurance, when it was legally and commercially available to the employer, would not necessarily tell in favour of reducing the amount of a fine.  It follows that I am not persuaded by the respondent’s argument on this point.

[57]     Section 10(1)(a) of the Sentencing Act permits financial offers of amends to be made by or on behalf of an offender.   When someone other than the offender makes the offer and assumes responsibility for paying the offered sum, the financial impact of any consequential reparation order on the offender will be diminished. Section 10(1)(a) permits this result.   Furthermore, it is practically relevant to any assessment under s 40(4).  Parliament cannot have intended that something permitted under s 10(1)(a) which has a practical impact on the financial burden imposed on an offender should not be legally relevant to an assessment under s 40(4).   It follows that  it  is  something  that  should  be  taken  into  account  as  part  of  the  s  40(4) assessment.

[58]     In s 51A(2)(b) of the Health and Safety in Employment Act, Parliament has directed the Court to consider the requirements of ss 35 and 40 of the Sentencing Act relating to the financial capacity of a person to pay any fine or sentence of reparation imposed.   Section 40(1) of the Sentencing Act requires a Court to consider the financial capacity of the offender, and s 40(2) provides that s 40(1) applies whether it has the effect of increasing or decreasing the amount of the fine.   Obviously, whenever a third party assumes financial responsibility for payment, this will have the effect of diminishing the financial impact of the reparation order on the offender. This must, therefore, also affect the amount of any fine imposed.   I consider that where the offender’s financial capacity to pay a fine is unaffected by a reparation order, through an insurer meeting the payment, that is a fact that may be taken into account in fixing the fine.

[59]     Workplace accidents are a cost to and burden on the community.  The effect of accident compensation and the inability to sue for injuries suffered as a result of employers’ carelessness means that the community carries the cost of those injuries. The principles in s 7(a), (b) (e) (f) and (g) of the Sentencing Act are especially important and applicable here.   The seriousness with which Parliament views this type of offending can be seen from the fivefold increase in the 2003 amendment in the amount of the maximum fine.  The clear purpose of the Act, as was recognised in Areva at [39], is “to promote and enforce workplace safety”.  There are good policy reasons, which accord with the purpose and scheme of the Health and Safety in Employment Act, for ensuring that where employers infringe, penalties must bite,

and not be at a “licence fee” level.  It is important, therefore, that any reduction to the amount of a fine to reflect a reparation payment is viewed in the context of the offender’s financial capacity to pay the fine and not treated as simply a mitigating factor justifying a reduction.

[60]     There is nothing in the sentencing judgment to suggest the respondent lacked the financial capacity to pay a fine.   It is, therefore, a matter of determining the appropriate discount level, if any, to reflect a reparation payment that was to be borne by an insurer.

[61]     The fact that the respondent’s insurance company will meet the reparation payment is a relevant matter to be taken into account when determining the total appropriate sentence.  Since this is an informant’s appeal, I also take into account the principle in R v Sipa.   I consider, therefore, that an appropriate reflection of the amount of reparation payable, when fixing the fine in this case, would be to reduce the starting point by a further 16 per cent.   This, when added to the 34 per cent reduction for the other mitigating factors, would reduce the starting point by 50 per cent.  A total deduction of 50 per cent fits with the total discount given in Areva, which at [49] is described as being “slightly in excess of 50 per cent”.  I consider a total discount of 50 per cent to be generous, but consistent with the principle expressed in R v Sipa.  Were I sentencing at first hand, the discount figure may have been less (and the increase in sentence correspondingly more).  The effect of the 50 per cent discount is to increase the amount of the fine to $87,500.

[62]     I now turn to consider the total effect of the sentences.  The reparation order of $60,000 and the fine of $87,500 impose a financial burden of $147,500 on the appellant.  This comes to no more than 59 per cent of the maximum fine.  In view of the gravity of the offending in this case, a total sentencing package that imposes a financial burden on the respondent that equates to 59 per cent of the maximum fine is proportionate to the criminality of the offending.  This is especially so when it is considered that approximately 41 per cent of the total package will be paid by a third party, the insurer.  Once it is recognised that the respondent will not bear the cost of the reparation order, the impact of that order on the respondent in terms of the totality principle is reduced considerably.

[63]     The sentencing Judge applied a total discount of 68 per cent, which caused him to fix a fine that was 32 per cent of his starting point.  It is difficult to see how such a high level of discount could be applied.   No reasons were given for his adopting such a high level.  It was reached through the dollar for dollar approach that the Judge took.  I can find no basis for taking such an approach.  None was identified in the judgment.   The result was a fine that was no more than 22 per cent of the maximum fine available.  I consider that on a proper principled approach, the result is a fine that is 35 per cent of the maximum.  The two outcomes are so far apart that one must be wrong.   When the process followed and the outcome reached by the Judge is compared to the analysis I have carried out, it is clear that he has gone wrong in principle.  There were errors of principle at the outset when there was a double counting of mitigating factors.   The errors were later compounded by the dollar for dollar discount given for the reparation payment.  This has resulted in him reaching a sentence that is manifestly inadequate.  It follows that the appeal should be allowed and the fine substituted for a fine of $87,500.

Result

[64]     The  appeal  against  sentence  is  allowed.     The   fine   imposed   in   the

District Court is substituted with a fine of $87,500.

Duffy J