Cth OHS Penalty Principles – Linfox fine $150,000

Comcare v Linfox Australia Pty Ltd (ACN 004 718 647) [2010] FCA 793

As we move towards a national OHS scheme it is useful to refresh the penalty principles used in hearings of breaches flowing from injuries to employees. In this instance, the employee sustained severe and extensive crush injuries to his left arm and both legs. The ultimate penalty imposed was a pecuniary penalty of $150,000.00, together with costs of $25,000.00.

MCKERRACHER J

40.

In Comcare v Commonwealth of Australia [2007] FCA 662; (2007) 163 FCR 207, Madgwick J considered (at [123]) that the following matters ‘provided useful and logical general guidance as to the approach to be taken in consideration of penalties under the OHS Act:

(i) the penalty must be such as to compel attention to occupational health and safety generally, to ensure that workers whilst at work will not be exposed to risks to their health and safety;
(ii) it is a significant aggravating factor that the risk of injury was foreseeable even if the precise cause or circumstances of exposure to the risk were not foreseeable;
(iii) the offence may be further aggravated if the risk of injury is not only foreseeable but actually foreseen and an adequate response to that risk is not taken by the employer;
(iv) the gravity of the consequences of an accident does not of itself dictate the seriousness of the offence or the amount of penalty. However the occurrence of death or serious injury may manifest the degree of the seriousness of the relevant detriment to safety;
(v) a systemic failure by an employer to appropriately address a known or foreseeable risk is likely to be viewed more seriously than a risk to which an employee was exposed because of a combination of inadvertence on the part of an employee and a momentary lapse of supervision;
(vi) general deterrence and specific deterrence are particularly relevant factors in light of the objects and terms of the Act;
(vii) employers are required to take all practicable precautions to ensure safety in the workplace. This implies constant vigilance. Employers must adopt an approach to safety which is proactive and not merely reactive. In view of the scope of those obligations, in most cases it will be necessary to have regard to the need to encourage a sufficient level of diligence by the employer in the future. This is particularly so where the employer conducts a large enterprise which involves inherent risks to safety;
(viii) regard should be had to the levels of maximum penalty set by the legislature as indicative of the seriousness of the breach under consideration;
(xi) the neglect of simple, well-known precautions to deal with an evident and great risk of injury, take a matter towards the worst case category;
(x) the objective seriousness of the offence, without more may call for the imposition of a very substantial penalty to vindicate the social and industrial policies of the legislation and its regime of penalties.

41.

The view taken by Madgwick J in that case (at [125]) was that the maximum penalty would be appropriate where there had been a ‘conscious decision to flout the law’. That approach was followed by North J in Comcare v Commonwealth [2009] FCA 700; (2009) 184 IR 441 (at [69]-[71]).

42.

Similarly in Comcare v John Holland Rail Pty Ltd [2009] FCA 771; (2009) 188 IR 415, Barker J said (at [135]-[136]) speaking of the OHS Act:

[135] Object (g) anticipates that where obligations are not met, effective remedies may be imposed through both the use of civil remedies and, in serious cases, criminal sanctions. To put the matter directly, the inclusion of Sch 2 in the OHS Act emphasises a legislative intention that contravention of the occupational, health and safety principles and duties created by the Act should be sanctioned, in appropriate cases, by civil or criminal orders.

[136] In the present case, the purpose of a civil pecuniary penalty, if imposed, is to deter the particular offender from offending again, as well as having the effect of generally deterring other employers from acting in a similar way. The imposition of a pecuniary penalty may be considered to have the advantage of reminding a particular employer of the importance of complying with the duties imposed on them by the OHS Act, as well as reminding other employers of the potential consequences should they fail to comply with the requirements of the Act. The imposition of an appropriate penalty is also calculated to give the community, and in particular relevant employees, confidence that the OHS Act is taken seriously.

43.

His Honour continued on the topic of assessing the quantity of a pecuniary penalty (at [137] and [141]-[143]) to say:

[137] When it comes to assessing what level of pecuniary penalty should be imposed, the courts have over a number of years, in a number of different regulatory settings, developed criteria that are considered relevant to the formulation of the quantum of a civil pecuniary penalty. Accordingly, in Comcare v Commonwealth [2007] FCA 662; (2007) 163 FCR 207, 162 IR 407, Madgwick J at [116] emphasised that the overriding principle in assessing penalty is that the amount of the penalty should reflect the Court’s view of the seriousness of the offending conduct in all the relevant circumstances.

[141] With respect, like North J, I agree with the observations of Magdwick J and consider these are all relevant criteria to the assessment of a civil pecuniary penalty under the OHS Act.

[142] However, I also concur with North J, in his emphasis of the overriding caution expressed by Flick J in Comcare v Post Logistics Australasia Pty Ltd [2008] FCA 1987; (2008) 178 IR 200, where His Honour said that care must be taken to ensure that any listing of potentially relevant considerations do not themselves become an impermissible substitute for considering the terms of the legislation in issue or an unnecessary constraint upon a discretion conferred in otherwise unconfined terms.

[143] I should also add that I consider it is relevant to the assessment of a pecuniary penalty to acknowledge, where it is the case, an admission of contravention and particularly an early admission by a respondent of its liability to the imposition of a remedy under the OHS Act. Where, for example, a respondent in a proceeding such as these early on acknowledges fault and willingness to accept a declaration of contravention, then the respondent will ordinarily be entitled to additional consideration in the assessment of the penalty. In some contexts this process is termed giving credit or “discount” on penalty. There is no statutory entitlements to such credit or a discount but it serves public policy in that it encourages a respondent to act responsibly, and may achieve a reduction in the public resources that would otherwise be required to prosecute the proceedings against the respondent.

44.

Finally, it is to be noted (as Barker J did) that Flick J observed in Post Logistics Australasia Pty Ltd (at [39]) that penalties are not imposed by reference to penalties in other cases being considered a benchmark. His Honour said:

[39] A final matter of principle should also be noted. It is inappropriate to fix a penalty simply by reference to the quantum of a penalty imposed in another case. It was thus understood to be common ground between the parties to the present proceeding that it was not appropriate to regard (in particular) the penalty of $198,000 in Comcare v Commonwealth as itself fixing a “benchmark” against which other penalties are to be determined in cases involving death. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285, Burchett and Kiefel JJ observed (at 295):

A hallmark of justice is equality before the law, and, other things being equal, corporations guilty of similar contraventions should incur similar penalties: Trade Practices Commission v Axive Pty Ltd [(1994) ATPR 41-368] (at 42,795). There should not be such an inequality as would suggest that the treatment meted out has not been even-handed: cf the criminal law case Lowe v The Queen [1984] HCA 46; (1984) 154 CLR 606. However, other things are rarely equal where contraventions of the Trade Practices Act are concerned. In the present case, differing circumstances, size, market power and responsibility for the contraventions, as well as other factors, complicate any attempt to compare the penalties imposed on the appellant with those imposed on the other corporations.

Another form of comparison is not appropriate. The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case. The point was well made by Spender J in Trade Practices Commission v Annand and Thompson Pty Ltd [(1987) ATPR 40-772] (at 48,394) when he said:

Each case must, of course, be viewed on its own facts and facts may be infinite in their variety.

It follows, as his Honour also said, that “[t]he quantum of penalties imposed in other cases can seldom be of very much direct assistance”.

A comparison of the facts in Comcare v Commonwealth and the facts in the present proceeding only serves to underline the point there being made by Burchett and Kiefell JJ (and by Spender J) — namely that the facts and circumstances of individual cases are infinitely diverse. The quantum of any penalty to be imposed must necessarily be fixed by reference to the peculiar facts arising in each case as and when they arise.

APPROPRIATENESS OF THE PENALTY

45.

I accept the joint submission of the parties that the agreed penalty of $150,000:

  1. would compel attention to occupational health and safety generally, and will provide general deterrence as well as specific deterrence;
  2. appropriately balances the aggravating factors in this case, including

2.1 the fact that, at the time of the incident, a formal hazard identification and risk assessment specific to the task that Mr Jacobs was undertaking had not been conducted;

2.2 the risk of injury associated with operating a fork truck with a raised load was foreseeable and generally known. The risks associated with the operation of a fork truck, particularly when carrying a raised load, had been identified and were well documented within the industry prior to the incident;

2.3 the fact that the risk of injury due to congestion in the container yard was identified but an adequate response was not taken to the risk by Linfox until after the incident. It is agreed that the risk created by the congestion was not adequately identified, assessed or controlled by Linfox prior to the incident;

2.4 the fact that there were reasonably practicable steps that Linfox could have taken which, if taken, would have enabled the maintenance of a safe working environment, including plant and systems of work, that were safe for its employees and without risk to their health;

2.5 the lack of adequate supervision, including the absence of appropriately skilled and qualified supervisors; and

2.6 the lack of a pro-active approach to risk identification and assessment at the yard prior to the incident, particularly given the generally know risks associated with operating fork trucks contributed to the seriousness of the incident;

with mitigating circumstances, including:

2.7 the early acceptance by Linfox of its liability in this matter, and their preparedness to agree to the relief sought by Comcare;

2.8 the steps taken by Linfox since the incident to address the inadequacy at the Site of the incident to ensure the health and safety of its employees;

  1. reflects the objective seriousness of the incident; and
  2. is consistent with the objects of the OHS Act.

 

Finally, the parties have agreed that the figure of $25,000 represents a fair assessment of Comcare’s party and party costs of the proceedings including disbursements and I see no reason to disagree with this assessment.

 

 

Brisbane Barrister – David Cormack

 

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