OHS: Madgwick factors & guilty plea discount

Comcare v John Holland Pty Ltd [2014] FCA 1191

Siopis J helpfully analysed the competing interests when dealing with a guilty plea under OHS legislation which imposes a ‘civil penalty’ by reference to comparative practices in criminal law matters. His Honour noted some comparative issues, but also distinguishing features.

As to the practice of agreed ranges His Honour distinguished the High Court decision of Barbaro v The Queen [2014] HCA 2; (2014) 305 ALR 323 (Barbaro), and agreed with the views expressed by Middleton J in Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336, and adopted also by Barker J in Australian Competition and Consumer Commission v Safe Breast Imaging Pty Ltd (No 2) [2014] FCA 998.

His Honour, whilst noting the utility of the Madgwick factors (below) cautioned against their inflexible use. Similarly, in relation to the criminal law practice of 25% discount for an early plea and a further 10% – 15% for additional factors.

His Honour preferred the approach in Comcare v Post Logistics Australasia Pty Ltd [2008] FCA 1987; (2008) 178 IR 200 and Barker J in Comcare v Transpacific Industries Pty Ltd [2012] FCA 90; (2012) 129 ALD 486 (Transpacific) at [38]:

I do not disagree with observations recently made by Buchanan J in Comcare v Post Logistics Australasia Pty Limited [2011] FCA 1422 (Post Logistics 2011), where his Honour expressed his concerns about adopting an automatic application of a checklist drawn from criminal law sentencing principles, as suggested in Trooper Lawrence. I agree there is a danger in any ritual incantation of a set of considerations in deciding what penalty is appropriate in a particular case. In the present case, the fundamental need to impose a penalty that highlights the importance of compliance with occupational health and safety law in order to ensure the safety of employees at work must always be kept at the forefront of the penalty assessment process. That is not to say that notions of “deterrence”, either specific or general, are irrelevant, for, in my view, they plainly are closely allied to this primary objective of ensuring the objects of the OHS Act are met. It is important that a particular respondent who admits contravention of the OHS Act or is found guilty of contravening the OHS Act should suffer a sufficient penalty, having regard to the seriousness of the contravention, so as to remind them of the significance of their responsibilities under the OHS Act. It is also important to remind employers more generally of the significance of their responsibilities under the OHS Act. No doubt the concept of “deterrence” can be expressed in different ways; but so long as the penalty is assessed with the importance of meeting the occupational health and safety obligations under the OHS Act are steadfastly borne in mind — not mere punishment or retribution against a contravener — then, in my view, the penalty assessment process will be properly undertaken.

 

In the end, His Honour imposed $180,000.00 penalty on the first and third respondents:

[100] However, I do not accept the respondents’ contention that I should apply a 25% discount in respect of the “early plea” and an additional 10% to 15% discount in respect of the other factors, to a penalty I might otherwise have applied. As I have said, in my view, such an approach would be antithetical to the flexible approach to the imposition of penalties endorsed by the Full Court in the Post Logistics appeal.

[101] The task of the Court is to impose a penalty which reflects the objective seriousness of the contravention, gives effect to objects of the Act and which will maintain the public confidence in the Act as a means of regulating workplace health and safety.

[104] Each of the parties contended that the objective seriousness of the fatal incident did not warrant the imposition at the highest end of the range of civil penalty. I agree. However, in my view, the facts in this case demonstrate that there were serious defects in the structure and implementation of the first and third respondents’ safety systems for the manufacture and operation of hi-rail vehicles. The contraventions in this case are serious, and the penalty should reflect this finding. As I have also mentioned, I do recognise and give weight to the considerations to which I have referred at [98] and [99] above. These factors mediate to some extent the matters to which I referred when discussing specific deterrence. But, notwithstanding that mediation, a penalty should be imposed at a high level in order to serve the purpose of reminding the first and third respondents, conscientious as they may be, of the need for constant vigilance when it comes to workplace health and safety, to warn other employers to the same effect and to encourage the public and employees to maintain confidence in the operation of the Act as a means of protecting the health and safety of employees whilst at work.

[104] Taking all of the factors into account and applying an “instinctive synthesis”, I have come to the view that each of the first and third respondents should pay a penalty of $180,000.

“Madgwick factors”Comcare v Commonwealth [2007] FCA 662; (2007) 163 FCR 207 (Trooper Lawrence) at [120]:

 

(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; (ix) 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.

 

David Cormack – Brisbane Barrister & Mediator


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