Worksafe New Zealand v Meycov Foods Limited t/a Rutherford & Meyer

[2015] NZHC 1180

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CRI 2014-485-100 [2015] NZHC 1180

BETWEEN

WORKSAFE NEW ZEALAND

Appellant

AND

MEYCOV FOODS LIMITED TRADING AS RUTHERFORD & MEYER Respondent

Hearing:	19 May 2015
Counsel:	I R Murray and D M Brabant for Appellant G Gallaway for Respondent
Judgment:	29 May 2015

JUDGMENT OF SIMON FRANCE J

[1]      The respondent company owns a biscuit making business.  An employee was badly injured whilst cleaning a machine.  A charge was laid under the Health and Safety in Employment Act 1992, and the respondent pleaded guilty.  Judge Davidson ordered the respondent to pay $45,000 in reparation and a fine of $12,500.   The informant, WorkSafe New Zealand, appeals pursuant to s 246(1) of the Criminal Procedure Act 2011.  The appeal is to be allowed if I am satisfied there is an error in

the sentence imposed, and that a different sentence should be imposed.1

Facts

[2]      On  10 January 2014  an  employee  was  seriously  harmed  when  her  arm became trapped in a biscuit baking machine.  An unfortunate aspect of the incident was that it took 40 minutes to free her arm, which was trapped between a conveyor belt and a fixed part of the machine.  It is estimated that at times the temperature of

the machine would have been as high as 85 degrees Celsius.

1      Criminal Procedure Act 2011, s 250.

WORKSAFE NZ v MEYCOV FOODS LTD TRADING AS RUTHERFORD & MEYER [2015] NZHC 1180 [29 May 2015]

[3]      As one would expect, the employee suffered both physical and emotional consequences.  Physically, three operations have been performed on her arm, which suffered significant tissue and muscle damage.  Major skin grafting work has been required,  and  more operations  are needed.   There is  doubt  that  she will  regain complete normal function in the arm.

[4]      The incident has had financial and emotional consequences for the victim who has young children.   She is less able to assist them, and there has been the inevitable  family  disruption.    The  victim  is  frustrated  by  this,  and  experiences periods of anger or depression.  She is worried about her future.

[5]      Turning to the incident itself, at the end of the shift the victim was cleaning the machine.   She saw some waste and sought to clean it, but the sleeve of her overalls became caught in the moving baking plate conveyor.  This led to her arm becoming trapped between the plate and another part of the machinery.

[6]      The incident could not have occurred if fitted guards were locked in place as they should have been.  The victim herself was not following the correct cleaning procedure which involved use of a compressed air gun and leaving the debris until the next shift when the machine would be cool.   However, the key factor in the incident is the failure to ensure moving machinery was appropriately guarded.  This is a well-established hazard, concerning which steps should always be taken.

[7]      In terms of mitigation, there was no evidence that the method used by the victim on this occasion was regular practice or known to the employer.  The foreman said he had not seen it being done by anyone previously.  In response to the incident, the respondent’s actions were all that one might expect.  Steps were taken to fix the particular issue; a safety expert was brought in to review the machine and safety practices generally.  Appropriate steps were taken to assist the victim.  The remedial action in the factory required production to be ceased for almost a month, resulting in a significant decline in sales. The respondent has no previous convictions.

Judgment under appeal

[8]      Since 2008, sentencing in relation to such offending has been guided by the decision of a full Court of the High Court in Department of Labour v Hanham

& Philp  Contractors  Ltd.2      There  the  Court  identified  a  three  stage  approach,

requiring first the fixing of reparation, then assessing the appropriate level of any fine, and finally making an overall assessment of the combined total in proportion to the particular incident and its outcomes.

[9]      In relation to the level of fine, the Court identified three bands:3

low culpability:	a fine of up to $50,000
medium culpability:	a fine of between $50,000 and $100,000
high culpability:	a fine of between $100,000 and $175,000

[10]     Turning to the present case Judge Davidson identified both the relevant facts and the fault aspects, as earlier described. A reparation figure of $45,000 was settled upon, it being noted that it was a substantial sum of money for a small company whose trading profitability was in a downturn phase.

[11]     Looking  then  at  the  fine,  a  starting  point  of  $70,000  was  identified. Mitigating factors reduced that by half (a not uncommon outcome where there is a prompt guilty plea and appropriate steps have been taken in response to the incident) to $35,000.  The Judge then looked at the total package and considered the company could not realistically meet a package of $80,000. Accordingly, the fine was reduced

to $12,500.

2      Department of Labour v Hanham & Philp Contractors Ltd (2008) 6 NZELR 79 (HC) at [57].

3      The High Court review of sentencing was prompted by a fivefold increase in the available maximum fine, which has been increased from $50,000 to $250,000.

Appeal grounds

[12]     The informant’s position was modified in its oral submissions, but as initially presented each phase of the sentencing was challenged.   It was submitted that the reparation was manifestly inadequate and out of line with other authority, the starting point for the fine was too low, there was insufficient evidence before the Court to justify the reduction of the fine for financial viability reasons, and the overall penalty was manifestly inadequate.  In oral submissions the main focus was on the fine – its starting point and the legitimacy of the financial viability reduction.  Finally, it was submitted the punishment imposed by the packages was too low.

[13]     It is not necessary to dwell on the reparation aspect.  Although the appellant had identified some decisions to support is position, other cases proffered by the respondent made it very difficult to sustain a challenge to a figure of $45,000, and Mr Murray did not press the point.  Indeed, in my view the case relied upon by the appellant, WorkSafe New Zealand v BR and SL Porter,4  was as much supportive of the level of reparation imposed here as it was against it.

[14]     In Porter the reparation award was $55,000.  Both cases involve significant burn damage to the victim, but as best one can gauge that case was moderately more serious.  Further, it was not and did not purport to be any sort of benchmark case. Nothing in the material present suggested that $45,000 in this case was anything other than an available assessment.

Level of fine

[15]     I  consider  the  starting  point  of  $70,000  to  be  at  the  lower  end  of  the appropriate range, but not markedly out of kilter.  The appellant placed reliance on the full Court decision in Hanham & Philp Contractors Ltd.  That case had involved consideration of three separate prosecutions, one of which concerned a business known as Cookie Time.  There were significant similarities to what happened in the present case with an employee being caught in a biscuit making machine whilst

cleaning it.

4      WorkSafe   New Zealand   v   BR   and   SL   Porter   DC   Tauranga   CRI-2014-070-001606,

5 August 2014.

[16]     The victim in Cookie Time did not suffer burn injuries, but her arm was badly damaged.   She was hospitalised for a week, required several operations and was unlikely to recover full use.  The appropriate starting point for the fine was identified as $100,000.

[17]     Focussing on the fault aspects in the present case, the most obvious one is that the guard was there in place able to be used, but was not locked on.  It was a wholly avoidable incident, and to state the obvious, the guard was there for a reason. The need for guards is a well-known, well-publicised obligation.  Further, although it appears the employee’s actions were unexpected, there was no clear unambiguous cleaning procedure identified in relation to the machine.   Cleaning seems to have been something learned rather than clearly prescribed in advance.

[18]     Each of the parties provided a list of other cases.  The appellant’s identified a range of $85,000 to $110,000 for what it said were broadly comparable cases.  Its submission was that $90,000 was the correct starting point here.  For the respondent Mr Gallaway identified other similar cases where starting points of around $70,000 were taken.

[19]     My sense is that there is merit in both propositions.   I do not consider, by reference to the cases identified by Mr Gallaway, that $70,000 is out of kilter with fines that are being imposed.5   However, other cases such as those identified by the respondent show a higher range.6    In my view the latter group are more consistent with the decision in Hanham & Philp Contractors Ltd.  It is to be recalled that the

purpose of that case was to review sentence levels consequent upon the change in statutory maximums, and to provide consistency through the identification of bands

that properly reflected the underlying legislative intent.  There is no basis to retreat

5      Department  of  Labour  v  Insulpro  Manufacturing  Ltd  DC  Dunedin  CRI-2009-012-7301,

27 April 2010;   WorkSafe   New Zealand   v   Consolidated  Alloys   (NZ)   Ltd   DC  Auckland CRI-2014-004-1692,  26 June 2014;   Department  of   Labour  v   The   Lines   Company  Ltd DC Wellington CRI-2009-073-000487, 22 April 2010; and Department of Labour v Silver Fern Farms Ltd DC Wanganui CRN10083500699, 10 February 2011.

6      WorkSafe New Zealand v ALSCO NZ [2015] NZDC 773; WorkSafe New Zealand v Keep it Clean

Ltd   DC   Dunedin   CRI-2014-012-002055,  26 November 2014;   WorkSafe   New Zealand   v Riverlands Eltham Ltd DC New Plymouth CRI-2014-021-000349, 17 October 2014; Ministry of Business   Innovation   and    Employment    v    SRS    New Zealand    Ltd    DC    Christchurch CRI-2012-009-013123, 7 May 2013, Department of Labour v Fonterra Co-operative Group Ltd DC Hawera CRI-2011-021-001101, 7 March 2012; and  Arbor Reman Ltd  v  Department of Labour HC Auckland CRI-2010-404-000101, 9 November 2010.

from those bands, nor from the indicative applications provided by the actual decisions made in that case.

[20]     It is for this reason that I consider $70,000 here to be at the bottom of the available range or arguably below it, if one were to compare this case only to Cookie Time.   However, the starting point here is not out of line with some other recent decisions, but they should not be seen as reflective of any justified slippage.  The middle band of Hanham & Philp Contractors Ltd, with its top figure of $100,000, is for moderate seriousness, and the full range should be used.

Financial viability

[21]     The appellant contends that the financial information available to the Court was insufficient in detail to support a claim of financial difficulty, and on its face did not merit any reduction.

[22]     The Court had before it a report from the company’s accountants.  It was a specifically prepared two page report, rather than being an extract from existing accounts.  The material provided was the company performance for the six month period  covering  the  accident  compared  to  the  company  performance  for  the equivalent six  month period in the preceding year.   An outline of the financial position  of  the  company  for  the  six  month  periods  ending  March 2014  and September 2014 was also provided.

[23]     Both sets of figures showed a decline in the period covered by the incident. This was to be expected given the operation was shut for almost a month to enable a safety assessment and then the necessary response to that assessment.  A criticism made by the appellant is that there needed to be more information about past performance  and  anticipated  future  performance,  rather  than  the  focus  on  an abnormal period.

[24]     There is some merit in that point, although it can be observed the equivalent six month period for the preceding year shows the company’s unaffected net profit figures are not particularly substantial, especially when measured against sales and assets.

[25]     The Judge was entitled to have regard to three aspects of the Notes provided by the accountants:

(a)       due primarily to the shut down, sales were down by over $300,000; (b)         the company was trading at its overdraft limit;

(c)       the shareholders had been required to advance personal funds and re-negotiate bank support to keep trading.

[26]     The Judge was cognisant that this was a small company that was presently struggling.  It employed 20 staff, and regard needed to be had to the overall situation. I am in agreement with the Judge’s approach and do not consider this aspect of the appeal has merit.   I accept more information could have been sought using the provisions of s 42 of the Sentencing Act, but that remains an assessment for the sentencing Judge.

Was the total penalty inadequate?

[27]     I consider the appropriate initial measure here is the total figure that would have been imposed without the financial viability adjustment.  Here that is $80,000, the  same  figure  as  in  Porter  on  which  the  appellant  had  placed  reliance.    In Cookie Time the fine was higher at $50,000, but was imposed against a “barely adequate” reparation figure of $5,000.  Looked at from this starting point, no error is discernible.

[28]     The appellant contended that the correct approach was to assess whether the actual total amount was manifestly inadequate.  I consider that such an assessment would have limited merit.  If the outcome of a reduction for financial viability is that the total package is manifestly too low, then perhaps a harder look at the financial viability issue may be merited.  But beyond that, it is not a fruitful inquiry since the assessment has been made that the company cannot sustain a higher level.

[29]     In Hanham & Philp Contractors Ltd, the first of the appeals concerned a mining accident.   The company was no longer trading but held mining rights and other consents of indeterminate value.  A fine of $20,000 was imposed, the Court noting it would have been significantly higher if the company had been able to meet a  proper  fine.    There  is  nothing  in  this  last  observation  to  suggest  the  Court considered that the adjusted figure was subject to this totality inquiry.  It seems to me that is for the obvious reason that it is an artificial total dictated not by what is appropriate, but by what is possible.

Conclusion

[30]     I consider there was some merit in the contention that the starting point for the fine was too low, but otherwise reject the grounds advanced in support of the

appeal. The appeal is dismissed.

Simon France J

Solicitors:

Luke Cunningham & Clere, Crown Solicitors, Wellington

Chapman Tripp, Wellington