Huge increase in maximum fines

Whereas organisations with no prior convictions generally faced fines of up to $550,000 (for a first offence) and $825,000 (for a second or subsequent offence) under the OHS Act, this has sky-rocketed to a maximum fine of $1.5 million for a Category 2 offence under the WHS Act.

Similarly while director fines under the OHS Act were generally up to $55,000 (for a first offence) and $82,500 (if the director had a prior conviction) they are now 3 to 6 times higher under the WHS Act, being up to $300,000 for a Category 2 offence.

Impact on sentencing

The maximum fine reflects what Parliament considers to be the seriousness of the offence, and is therefore one of the factors taken into account by the Courts at a sentencing hearing.

Judge Kearns of the District Court of New South Wales (District Court) has stated that a figure of $1.5 million is 'for a case of the most extreme kind, possibly one where the defendant has no systems at all in place and is completely reckless and has no care for the safety of its employees' (WorkCover Authority of NSW v Sarjame Storage Pty Ltd [2015] NSWDC 151, paragraph 44).

However, the impact of higher maximum fines is clearly being felt - as Judge Curtis of the District Court of New South Wales observed in a 2014 case (WorkCover Authority of NSW v OCS Fun Pty Ltd [2014] NSWDC 375, paragraph 23):

'While this penalty [$72,500 after discounts] is relatively high compared to similar cases to which I have been referred it is significant that the legislature has seen fit to increase the maximum penalty to $1.5 million.'

Other relevant factors

Besides the maximum fine, other objective factors that help the Courts to determine penalty include the nature and quality of the offence, which goes to issues such as whether there was a risk of death or serious injury, whether there were simple steps that could have been taken to prevent the risk, and the culpability of the defendant. The Courts can also consider whether the risk was foreseeable and the number (if any) of prior convictions.

Then there are subjective factors, which are secondary to the objective seriousness of the offence but include the defendant's plea, remorse, the nature of the company, capacity to pay, whether the defendant has a good safety management system and safety record, and whether the defendant contributes to the community.

An early plea of guilty is particularly relevant because it attracts a discount on the fine of up to 25%.

Recent cases

Despite the huge increase in maximum penalties under the WHS Act this is not reflected in a doubling or tripling of fines in District Court cases generally. This is no doubt due to the fact that the maximum fine is only one of the many factors taken into account on sentencing. However, there are some exceptions.

Romanous

In SafeWork NSW v Romanous Contractors Pty Ltd and John Romanous [2016] NSWDC 48 (8 April 2016), Judge Scotting imposed a fine of half a million dollars (before discounts) on a company whose offence fell 'slightly above the middle range of objective seriousness'.

The case arose out of the death of a contractor at a construction site who fell through unsecured planks that covered a 5.1 metre penetration to the level below.

The fine was reduced from $500,000 to $425,000 after a 15% discount for the company's late guilty plea.

Although Romanous Contractors was no longer trading at the time of sentencing it was legally represented at the hearing, distinguishing it from cases where a heavy fine can sometimes reflect a no-show at Court by a company facing administration or liquidation.

Mr Romanous, as the sole director and Site Manager, was fined $90,000 before discounts ($85,500 after discounts). Mr Romanous was said to be devastated by the death of the contractor, however, the system he adopted was found to be 'ad hoc, unplanned and wholly inadequate'.

The fines meted out in Romanous are significantly higher than the fines that the defendants, who had no prior convictions, would have faced under the OHS Act.

Visy Paper

In WorkCover v Visy Paper Pty Ltd [2015] NSWDC 284 (4 September 2015), Judge Scotting imposed a fine before discounts of $550,000 on Visy Paper.

The case arose out of the death of a worker employed by Visy Paper for 25 years as a forklift operator and traffic controller. The employee was struck by a reversing front end loader whilst helping to unload a semitrailer. Judge Scotting found that 'the objective seriousness of the offence is significant'. The defendant's fine could have been higher but for Visy Paper's prompt remedial steps, its 'significant commitment to workplace safety' before the incident and the fact that it accepted responsibility for its failings (a factor missing in Romanous) and expressed an apology, remorse and contrition.

The fine was reduced to $412,500 due to the Judge applying the full discount of 25% for the defendant entering an early plea of guilty.

Unlike Romanous, Visy Paper had a record of prior convictions, however, the fine was nevertheless significantly higher than what the company could have expected to receive had the matter been prosecuted under the OHS Act.

Conclusion

While these cases are at the higher end of the likely range of outcomes for a Category 2 offence they demonstrate the potential exposure of large companies, small companies and directors. While all of these defendants had a care and concern for safety, when tragedy strikes this is not enough to prevent a significant fine before discounts of half a million dollars or more, or $90,000 for a director.