FEDERAL COURT OF AUSTRALIA

Comcare v Post Logistics Australasia Pty Limited [2012] FCAFC 168

THE COURT ORDERS THAT:

1.    The appeal be allowed in part.

2.    Order 4 made by the primary judge on 13 December 2011 be set aside and in lieu thereof it be ordered that:

“4.    The respondent is to pay a pecuniary penalty of $120,000 to the Commonwealth on or before 7 December 2012."

3.    The parties confer as to whether either seeks an order for costs and if so each party, file and serve on or before 7 December 2012 brief written outlines of submissions on costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Contents

Introduction

1    This appeal raises certain issues concerning the Occupational Health and Safety Act 1991 (Cth) (“the OH&S Act”). The central issue, however, is whether the primary judge erred in holding that it was unnecessary to refer to deterrence when imposing and fixing a civil pecuniary penalty on a person for a breach of that Act. Two incidental matters might be noted at the outset. First, on 1 January 2012, the OH&S Act was repealed by Schedule 2 of the Work Health & Safety (Transitional and Consequential Provisions) Act 2011 (Cth) (“the Transitional and Consequential Provisions Act”). Since 1 January 2012, the OH&S Act has been replaced by the Work Health and Safety Act 2011 (Cth). However, Schedule 2 of the Transitional and Consequential Provisions Act has the effect that the OH&S Act continues to apply to breaches that occurred before 1 January 2012. The events which give rise to this appeal occurred on 31 March 2008, hence the OH&S Act still applies here. Secondly, and notwithstanding the significance of the OH&S Act to Commonwealth employment (as is partly reflected in the number of cases which have come before the Court at first instance), this appears to be the first appeal concerning the OH&S Act which has been determined by the Full Court.

2    The appellant appeals against the decision of the primary judge in respect of an incident in which an employee of the respondent, Ms Roslyn Mary Borg (née Piscopo), was injured in an accident involving a forklift being operated by a contractor, Mr Cox. His Honour made a declaratory order to the effect that the respondent had contravened cl 2(1) of Schedule 2, Part 1 of the OH&S Act by reason of it having breached s 16(1) of that Act. The primary judge also ordered the respondent to pay a pecuniary penalty of $80,000 to the Commonwealth in relation to that breach.

3    The primary issues raised in the appeal may broadly be summarised as follows:

(a)    the relevance of deterrence in determining civil pecuniary penalties under the OH&S Act both generally and in the particular circumstances of this case;

(b)    whether the primary judge erred in his assessment of the foreseeability of the risk of injury and the relevance to that assessment of the respondent’s earlier breach of the OH&S Act (see Comcare v Post Logistics Australasia Pty Ltd (2008) 178 IR 200 (“Lapidario”)); and

(c)    whether the primary judge erred in not acting upon the respondent’s admission that it failed to provide adequate supervision to Mr Cox or Ms Borg.

The grounds of appeal also raise further additional issues which are dealt with below.

Background

4    The respondent did not dispute liability for the incident. It admitted that the appellant was entitled to the declaratory relief sought by it, but the parties disagreed on the amount of a civil pecuniary penalty. The proceedings were conducted in part below on the basis of a statement of agreed facts, as well as some additional evidence filed on behalf of the respondent. For the purposes of this appeal it is unnecessary to set out all that material, but the following relevant and undisputed facts should be noted.

The incident

5    Since 31 March 2005, Australia Post has held a majority shareholding in the respondent. It was common ground that the respondent is a Commonwealth authority within the meaning of s 5 of the OH&S Act, with the consequence that the OH&S Act applies to it. At the time of the relevant incident, the respondent carried on the business of logistics and warehousing at eleven warehouses around Australia, including Warehouse 9 situated at 23 Wonderland Drive, Eastern Creek in New South Wales (“the Site”), where the incident occurred. It was agreed between the parties that moving pallets of goods around each of the respondent’s warehouses with the aid of forklifts of various kinds was an integral part of the respondent’s business. Furthermore, at the hearing below the parties agreed that daily forklift movements at Warehouse 9 would have numbered in the hundreds. The primary judge extrapolated from that agreed position that “tens of thousands of movements occurred every year at Warehouse 9, and many more nationally”.

6    The respondent had a contractual arrangement with a company called Landmark Industrial Recruitment Pty Limited (“Landmark”) to supply labour to the respondent. At the time of the relevant incident, Mr Cox was an employee of Landmark and was working at the Site as a contractor in the position of store person and forklift driver. At the same time, Ms Borg was employed by the respondent as a store person whose duties were restricted to “picking and packing” on the floor of the Site. Like Mr Cox, Ms Borg also happened to be a certified high reach forklift driver.

7    On the day of the relevant incident, Mr Cox was operating a forklift at the Site. At approximately 8.00 am Ms Borg was in the process of manually wrapping cartons of a product with shrink wrapping material. The cartons were on a pallet that was stacked on another pallet. As it was too high for Ms Borg to reach all the way to the top of the cartons, she requested Mr Cox to use the forklift to move the top pallet onto the ground so she could finish the wrapping. Mr Cox did so. But instead of cutting the shrink wrap from the partly wrapped pallet, or placing the shrink wrap roll on top of the cartons, Ms Borg rolled out a length of the shrink wrap and continued to hold the shrink wrapping roll that was attached to the pallet while walking alongside the forklift being driven by Mr Cox and carrying the pallet. Ms Borg was initially standing approximately one metre away from the forklift being operated by Mr Cox as she walked alongside. Just as Mr Cox went to put the pallet down with the forklift, the forklift ran over Ms Borg’s right foot, fracturing the small toe.

The relevant pleadings and the agreed facts

8    The agreed facts also included certain matters concerning the nature and adequacy of the respondent’s traffic and pedestrian management system, instruction and training given to both Mr Cox and Ms Borg, as well as supervision of their work. It was common ground that, although the respondent had prior to the incident commenced a review of traffic management arrangements at the Site, those plans were still being finalised and had not been implemented prior to the incident occurring. It was a further agreed fact that the instruction and training given to Mr Cox did not include adequate training or instruction regarding proper pedestrian behaviour on or around forklifts or pedestrians and forklift traffic management arrangements at the Site.

9    It was similarly agreed between the parties that the respondent had not provided any formal induction training at the Site to Ms Borg, nor any formal instruction or training to her regarding the pedestrian exclusion zones around any working forklift, nor provided her with any instruction or training in relation to what was described as “the Mandatory Exclusion Rule”. It was also agreed that, at the time of the incident, there was no supervisor present in the particular area of the Site where the incident occurred.

10    Many of the matters the subject of agreement as set out in the agreed statement of facts were also the subject of admissions by the respondent in the pleadings. Relevantly, in its amended defence, the respondent admitted all the following matters pleaded by the appellant in paragraph 36 of the amended statement of claim (including, it should be noted, paragraph 36(d):

36.    In or about March 2008 and in particular on 31 March 2008, Post Logistics breached its duty under sections 16(1) and 16(4) of the OH&S Act to take all reasonably practicable steps to protect the health and safety at work of its employee Roslyn Mary Piscopo and its contractor, Kevin Cox, in that it:

    (a)    failed to provide adequate training or instruction to Mr Cox so as to ensure that he did not engage in the conduct pleaded at paragraph 17 of this Statement of Claim;

    (b)    failed to provide adequate training or instruction to Ms Piscopo so as to ensure that she did not engage in the conduct pleaded at paragraph 17 of this Statement of Claim;

    (c)    failed to ensure that there was an adequate traffic management system in place to prevent or reduce the risk of Ms Piscopo coming into contact with a moving forklift; and

    (d)    failed to provide adequate supervision to Mr Cox or Ms Piscopo so as to ensure that they did not engage in the conduct pleaded at paragraph 17.

11    Paragraph 17 of the amended statement of claim described the relevant conduct summarised above.

17.    On 31 March 2008, Ms Piscopo was struck by the Forklift and was injured during the impact at the Site (the Incident).

    Particulars

    (a)    On 31 March 2008, Mr Cox had been assigned to the Proline work area adjacent to the eastern wall of the Site to assist on the day, in light of the absence of Ms Wilma Randall who was a permanent employee in the Proline area.

    (b)    At all material times, both Mr Cox and Ms Piscopo were certified reach [forklift] truck drivers.

    (c)    At approximately 8 am on 31 March 2008, Ms Piscopo was in the process of manually wrapping cartons of Proline product with shrink wrapping material. The cartons were on a pallet that was stacked on another pallet. As it was too high for Ms Piscopo to reach all the way to the top of the cartons, she requested Mr Cox to move the top pallet onto the ground with the Forklift so she could finish the wrapping.

    (d)    Mr Cox got on the Forklift and used the tines to lift the top pallet.

    (e)    Instead of cutting the shrink wrap from the partly wrapped pallet, or placing the shrink wrap roll on top of the cartons, Ms Piscopo rolled out a length of the shrink wrap and continued to hold the shrink wrapping roll that was attached to the pallet and walked alongside the Forklift while Mr Cox was manoeuvring it and driving with the pallet.

    (f)    Ms Piscopo was standing approximately one metre away from the Forklift being operated by Mr Cox as she walked alongside the Forklift.

    (g)    Just as Mr Cox went to put the pallet down with the Forklift, the Forklift ran over Ms Piscopo’s right foot.

    (h)    Ms Piscopo’s small toe on her right foot was fractured.

    (i)    Ms Piscopo was assisted by first aiders at the Site and subsequently by paramedics, who transported her to hospital.

The OH&S Act

12    A key objective of the OH&S Act was to promote the occupational health and safety of inter alia persons employed by the Commonwealth. That was reflected not only in the express terms of the long title to the OH&S Act (“An Act to promote the occupational health and safety of persons employed by the Commonwealth, Commonwealth authorities and certain licensed corporations, and for related purposes”), but also in s 3 of the OH&S Act. Because of the importance of some of those objects to the disposition of the appeal (particularly the objects described in paragraphs (a), (b), (d), (f) and (g) of s 3), it is convenient to set out the paragraph in its entirety:

3.    Objects

    The objects of this Act are:

    (a)    to secure the health, safety and welfare at work of employees of the Commonwealth, of Commonwealth authorities and of non-Commonwealth licensees; and

    (b)    to protect persons at or near workplaces from risks to health and safety arising out of the activities of such employees at work; and

    (c)    to ensure that expert advice is available on occupational health and safety matters affecting employers, employees and contractors; and

    (d)    to promote an occupational environment for such employees at work that is adapted to their needs relating to health and safety; and

    (e)    to foster a co-operative consultative relationship between employers and employees on the health, safety and welfare of such employees at work; and

    (f)    to encourage and assist employers, employees and other persons on whom obligations are imposed under the Act to observe those obligations; and

    (g)    to provide for effective remedies if obligations are not met, through the use of civil remedies and, in serious cases, criminal sanctions.

13    As noted above, the respondent admitted liability concerning the alleged breaches of ss 16(1) and (4). Those sub-sections relevantly provided as follows:

16    (1)    An employer must take all reasonably practicable steps to protect the health and safety at work of the employer’s employees.

        Note: An employer who breaches subsection (1) may be subject to civil action or a criminal prosecution (see Schedule 2).

…

(4)    The obligations of an employer in respect of the employer’s employees that are set out in subsections (1) and (2) apply also in respect of persons who are contractors of that employer but only in relation to:

    (a)    matters over which the employer has control; or

    (b)    matters over which the employer would have had control but for an express provision in an agreement made by the employer with such a contractor to the contrary, being matters over which the employer would, in the circumstances, usually be expected to have had control.

14    Relevant employers were not the only persons who had a statutory duty imposed on them by the OH&S Act to take reasonably practicable steps to protect employees. Similar obligations were also imposed upon manufacturers and suppliers of plant and substances, persons erecting or installing plant in a workplace, as well as employees themselves (see ss 18, 19, 20 and 21 respectively of the OH&S Act).

The 2004 Amendments to the OH&S Act

15    It is convenient at this point to say a little about some significant amendments to the OH&S Act made in 2004, which introduced for the first time a range of civil remedies, including civil pecuniary penalties. Prior to those amendments, the OH&S Act provided only for criminal prosecutions.

16    The following relevant features of the Occupational Health and Safety (Commonwealth Employment) Amendment (Employee Involvement and Compliance) Act 2004 (Cth) (“the 2004 Amendment Act”) may be noted:

(a)    Schedule 2 was inserted in the OH&S Act. It introduced a range of civil remedies as alternatives to criminal sanctions. The civil remedies included:

    -    declarations of contravention (Schedule 2, cl 2);

-    civil pecuniary penalty orders (Schedule 2, cl 4);

    -    injunctions (both prohibitory and mandatory) which could be sought by Comcare or an investigator (Schedule 2, cl 14);

    -    remedial and consequential orders (Schedule 2, cl 15);

    -    enforceable undertakings in favour of Comcare (Schedule 2, cl 16); and

(b)    maximum penalties under the Act were substantially increased from the previous maximum of $100,000 for a criminal offence to $242,000 in the case of a civil pecuniary penalty and $495,000 for a criminal offence.

17    The amendments made in 2004 reflected a desire on the part of the Parliament to introduce greater flexibility in enforcing the legislative scheme by providing a range of remedies, both civil and criminal. That more flexible approach to enforcement was modelled on the Commonwealth Authorities and Companies Act 1997 (Cth), whose enforcement provisions were themselves modelled on the then Corporations Law.

18    The initial Explanatory Memorandum to the Occupational Health & Safety (Commonwealth Employment) Amendment (Employee Involvement and Compliance) Bill 2002 (“the 2002 Bill”), which Bill first proposed the insertion of Schedule 2, contained the following statements concerning the proposal to introduce sanctions of both a criminal and civil nature:

1.180    This item inserts a new schedule, ‘Schedule 2 – Civil proceedings and criminal prosecutions in respect of breaches of the Act’. The Act presently provides only for criminal prosecutions, requiring proof beyond reasonable doubt, and providing sanctions with a deterrent effect but limited capacity for remedial orders. New Schedule 2 will provide for civil penalties, requiring proof only to a civil standard, enabling remedial orders, and encouraging voluntary compliance through provision for enforceable undertakings. It will retain provision for criminal penalties, in more serious cases, and in cases which are more appropriately dealt with in the criminal justice system (such as contempt of the Safety, Rehabilitation and Compensation Commission). The Schedule will also make provision for maximum penalties significantly higher than the maximum penalties currently provided, consistent with current Commonwealth criminal law policy. The Schedule will also explain the interaction between civil proceedings and criminal prosecutions and the procedures for instigating civil proceedings.

1.181    New Schedule 2 is modelled in large part on the enforcement approach of the Commonwealth Authorities and Companies Act 1997, which is in turn modelled on the Corporations Law.

19    During the course of the Parliamentary debates on the 2002 Bill, the Government proposed further amendments to the Bill as originally introduced. They were dealt with in a Supplementary Explanatory Memorandum. That document reinforced that a key aspect of the proposed reforms to the OH&S Act was to create a new civil and criminal penalty regime with a view to improving enforcement of the obligations imposed by the primary Act. The Outline to that Supplementary Explanatory Memorandum contained the following relevant statements:

The new civil and criminal penalty regime proposed in the 2002 Bill will be retained to improve enforcement under the Act. The new enforcement regime will:

•    Provide for civil penalties as far as possible, reserving criminal penalties for more serious breaches of the Act where there has been a death or serious bodily harm. Criminal penalties are also being retained for offences which are more appropriately dealt with in the criminal justice system, such as contempt of the Commission or failing to attend before the Commission as a witness;

•    …

•    Provide for a wider range of penalties under the Act to ensure more effective protection of the health and safety of Commonwealth employees at work, namely:

o    Injunctions, both prohibitory and mandatory to achieve compliance with the Act;

o    Remedial orders to enable effective action to be taken to remedy the effect of a breach of the Act; and

o    Enforceable undertakings …; and

•    Substantially increase levels of penalties. For example, currently the maximum penalty under the Act is $100,000 for a breach of the employer’s duty of care. This is to be increased to 2,200 penalty units ($242,000) for a civil breach and 4,500 penalty units ($495,000) for a criminal breach.

20    It is also to be noted that, while the 2004 Amendment Act introduced a regime involving both civil and criminal penalties, the effect of s 11 of the OH&S Act was that only a Government business enterprise (and not the Commonwealth or a Commonwealth authority as defined in s 5 of the OH&S Act) was liable to be prosecuted for a criminal offence. Accordingly, while a breach of the OH&S Act by a Government business enterprise could attract either civil or criminal penalties (and, in limited circumstances, both), neither the Commonwealth nor a Commonwealth authority was liable to be prosecuted for an offence under the OH&S Act. Thus, because the respondent is not a Government business enterprise, it could not be prosecuted for the relevant incident. But it was liable to the civil penalty regime.

21    Under the OH&S Act, only Comcare or an investigator were empowered to apply for a declaration of contravention or a pecuniary penalty order (cl 5 of Schedule 2). Moreover, in any proceedings brought by Comcare or an investigator for a declaration of contravention or a pecuniary penalty order, the Act obliged the Court to apply the rules of evidence and procedure for civil matters (see cl 8 of Schedule 2 and also s 140 of the Evidence Act 1995 (Cth)). Further, cl 11 of Schedule 2 of the OH&S Act provided that, while criminal proceedings could be commenced in respect of conduct that was substantially the same as conduct constituting a contravention of cl 2(1) of Schedule 2, there was no power for a court to make a declaration of contravention or a pecuniary penalty order against a person for a contravention if the person had already been convicted of an offence constituted by conduct which was substantially the same as the conduct constituting the contravention (see cl 9 of Schedule 2).

The reasons of the primary judge

22    It is convenient to first summarise the primary judge’s reasons for making the declaratory order in the terms that he did, before summarising his Honour’s reasons for imposing a civil pecuniary penalty in the amount of $80,000.

Declaratory order

23    In the amended statement of claim, the appellant sought a declaration in the following terms:

A declaration that the Respondent contravened sub-clause 2(1) of Schedule 2, Part 1 of the OH&S Act in that in or about March 2008 and in particular on 31 March 2008 the Respondent breached sections 16(1) and 16(4) of the OH&S Act. (Emphasis added).

24    As noted above, the alleged breach of the OH&S Act was pleaded in paragraph 36 of the amended statement of claim and, in its amended defence, the respondent admitted that paragraph in its entirety.

25    The primary judge declined to make a declaration in the terms sought by the appellant notwithstanding that the respondent admitted the alleged breaches particularised in paragraph 36 of the amended statement of claim. The declaratory order made by his Honour differed from those sought by the appellant in the following three respects. First, the primary judge declined to make any declaratory order referring to a breach of s 16(4) of the OH&S Act on the basis that, on its proper construction, that provision did not establish any duty additional to that imposed by s 16(1). Secondly, the primary judge declined to make a declaratory order which made reference to a breach of duty in respect of the respondent’s contractor, Mr Cox, on the basis that his Honour was not satisfied that there was a sufficient factual foundation to support a finding that there had been a failure to protect the health and safety of Mr Cox (as opposed to Ms Borg). Accordingly, his Honour limited the declaratory order to record a finding to the effect that the respondent had breached its duty under s16(1) of the OH&S Act in respect of Ms Borg. The appellant makes no complaint about these two particular modifications to the declaratory order sought by it.

26    The third modification made by the primary judge (which modification is the subject of appeal), concerns his Honour’s reformulation of the terms of the declaratory order so as to exclude the allegation in paragraph 36(d) of the amended statement claim. As noted above, that allegation was admitted by the respondent. The admitted allegation was to the effect that there had been a breach of s 16(1) because of the respondent’s failure “to provide adequate supervision to Mr Cox or [Ms Borg] so as to ensure that they did not engage in the conduct pleaded at paragraph 17” of the amended statement of claim.

27    The primary judge’s reasons for not including paragraph 36(d) in the declaratory order made by him are set out in [29] of his Honour’s reasons for judgment:

… I give no weight to the fact that at the exact time that Ms Borg and Mr Cox embarked on their flawed approach to Ms Borg’s shrink wrap task, there was no supervisor present to immediately intervene. It was not suggested that constant supervision of this kind was practical, necessary or even appropriate. Ms Borg and Mr Cox were not children to be constantly and closely watched, and scolded. In the absence of constant, intrusive, surveillance there would obviously be times when a supervisor was not in the immediate vicinity. I bear in mind an admission by Post Logistics that supervision was not fully adequate but there is force in the submission that Post Logistics was certainly not culpable by failing altogether with respect to supervision or, for that matter, in any other suggested respect. Despite the admission, the contention that lack of supervision played, in any practical sense, a part in the incident was speculative. The applicant could not identify a practical step which might have been taken to remedy the alleged lack of supervision which would probably have prevented the incident occurring.

28    The appellant contends that the primary judge erred in rejecting the respondent’s admission that it contravened s 16(1) of the OH&S Act by failing to provide adequate supervision to Mr Cox or Ms Borg in circumstances where it is said that:

(a)    during oral argument, his Honour had indicated that he would not go behind the admission;

(b)    his Honour did not advise either party that he was considering rejecting the respondent’s admission on this matter and did not allow the parties an opportunity to put on further evidence in support of the admission; and

(c)    his Honour failed to give proper reasons for rejecting the admission.

Pecuniary penalty

29    Before the primary judge, the appellant described the respondent’s contravention as warranting a penalty which was in the “high range” (noting that the maximum pecuniary penalty was $242,000) and it suggested a penalty of not less than $180,000. At the hearing, the respondent submitted that the contravention was in the mid-range and it suggested that an appropriate penalty would be in the range of $120,000-$140,000. As noted above, his Honour disagreed with both parties’ assessments concerning the appropriate quantum. His Honour was not satisfied that the breach was in the “high range” and he imposed a penalty of $80,000.

30    The primary judge approached the task of determining the question of an appropriate pecuniary penalty by reference to the objective seriousness of the respondent’s breach. His Honour saw such an approach as assisting his assessment of the level of the respondent’s culpability and whether it fell within a low, middle or high range. His Honour’s approach in this regard is consistent with authority and the appellant does not challenge its correctness, at least when it is stated at that high level of generality. Rather, this aspect of the appeal focused on the primary judge’s identification of whether particular considerations were either relevant or irrelevant to the overall task of assessing the objective seriousness of the breach.

31    The primary judge’s reasons for arriving at a pecuniary penalty of $80,000 may be summarised as follows (noting again, however, that some, but not all, of those reasons are challenged by the appellant):

(a)    an allegation of the failure to protect health and safety will generally need to be tested against the circumstances of the incident which led to the proceedings, rather than in the abstract. In other words, the circumstances of the particular relevant incident will generally be “highly significant” in determining whether there has been any such failure;

(b)    it is necessary to identify what steps should have been taken to avoid an alleged failure to protect health and safety which, in most cases, has to be tested by reference to the incident in question;

(c)    while forklift operations at a warehouse, which also accommodated pedestrians, called for management of the movement of both forklifts and pedestrians, some allowance also needed to be made for the fact that people can normally be expected to take some care for themselves and others in such an environment;

(d)    in assessing the seriousness of the respondent’s admitted breach, the following two matters were of particular significance:

(i)    neither Ms Borg nor Mr Cox had been given clear instructions about the need to always maintain a minimum three metre exclusion zone around any operating forklift, even though it was said that such instructions were provided as part of normal site induction to both employees and contractors; and

(ii)    it was not until after the relevant incident that clearly marked, separate, areas for forklifts and pedestrians were set out in the ordinary way on the floor of Warehouse 9. The primary judge added that there was little excuse for an organisation such as the respondent not to act earlier than it did on this matter;

(e)    while those two matters were of some significance, they should not be overstated because, although each matter was clearly practicable and easily achieved, neither matter could operate as a guarantee against the injury which occurred;

(f)    the implementation of removable bollards or chains to prevent forklifts entering an area where someone was working (as implemented by the respondent after the relevant incident) would have provided a form of reminder of an already obvious danger, but may not have had any probable impact on the particular incident;

(g)    no weight should be given to the fact that, at the time of the relevant incident, there was no supervisor present to immediately intervene because it was not suggested that such constant supervision was practical, necessary or even appropriate. While acknowledging the respondent’s admission that supervision was not fully adequate, no finding was made by his Honour that the respondent was culpable by failing altogether to provide supervision (or, indeed, in any other suggested respect);

(h)    little or no weight should be given to the fact that the respondent had been ordered to pay a pecuniary penalty of $165,000 arising from a death involving a forklift at another of its warehouses (see Lapidario). That case was distinguishable on the basis that the fatality there involved horseplay; and

(i)    while noting the respondent’s admission that the training and induction given to Ms Borg and Mr Cox were inadequate, the primary judge also took into account the fact that the respondent had initiated a system of daily safety briefings at Warehouse 9. Having regard to his Honour’s finding that there was not a total failure of training or of supervision, but rather this was a case where it was admitted that not enough was done, the primary judge concluded that the appellant had not proved culpability to a high level.

32    At this point in his reasons for judgment, the primary judge expressed strong reservations concerning the relevance of principles of sentencing in criminal law cases in fixing a pecuniary penalty in civil proceedings. His Honour’s reasoning on this subject may be summarised as follows (noting that this reasoning is the focus of the first three grounds of appeal):

(a)    no reduction should be made to any pecuniary penalty otherwise appropriate merely because the respondent had disposed of its warehouse business by the time of the hearing. This issue arose because of a submission to the effect that no “specific deterrence” was necessary. This led the primary judge to discuss more generally the topic of the relevance of concepts from the criminal law in determining the quantum of a civil pecuniary penalty;

(b)    because of their significance to the appeal (and despite their length), it is appropriate to set out in full the following paragraphs of the primary judge’s reasons dealing with transposing criminal law sentencing principles (including deterrence), into a civil penalty regime:

34.    Fixation of a penalty for breach of the OHS Act (whether admitted or found) stands as a statement by a court of “the seriousness of the offending conduct in all the relevant circumstances” (see Coochey v Commonwealth (2005) 149 FCR 312 at [73]). Obviously, a penalty, even a civil penalty, operates also as a punishment. However, in my view it is inappropriate to draw too freely on concepts from the criminal law, which are related to punishment of crimes, for this purpose.

35.    There can be no doubt that it is expected by the legislature that courts will, by their decisions, sufficiently support the legislative scheme in the OHS Act. It is inevitable that, in part, notions of punishment for a breach of the statutory duty are involved, as are notions of culpability, but they are clearly not the only objectives and it is debatable whether they are the most important objectives of the OHS Act. It is a sufficient recognition of such matters (punishment and culpability), in my view, to identify so far as possible the objective seriousness of the failure and to fix a penalty which takes that into account, without becoming unduly distracted by efforts to apply borrowed concepts from the criminal law. An area as important as workplace health and safety should be accompanied by the greatest level of practicality which can be brought to bear on the ultimate task of providing a safe working environment. Nobody sets out to create an unsafe workplace. I entertain great doubt whether concepts of deterrence are appropriate in the context of a case such as the present. What is involved is the necessity to reinforce a positive obligation of protection rather than to emphasise an obligation not to commit a civil wrong. It is unnecessary, in my view, for the Court, when giving effect to the statutory objectives in the OHS Act, or when fixing a punishment for a particular breach, to do so by reference to “deterring” somebody from such a breach. Adoption of a concept such as this from the criminal law risks becoming a ritual incantation deflecting attention from what is a practical issue – namely, how to provide appropriate incentive and encouragement (as well as punishment) to enhance workplace safety.

36.    There are other canons of the criminal law sentencing process that are also not readily applied in a practical manner in a case such as the present. The notion that an “early plea of guilty” aids in the administration of justice is less readily applied than in the criminal justice system. So is the notion of “contrition”, which is bound up with the idea that intent is an element of the commission of most criminal offences. Admission of responsibility in the case of a workplace accident is not necessarily a straightforward matter of confessing guilty conduct, much less guilty intent. That is not to say that the Court would have much patience with an irresponsible refusal to admit a failure to comply with obligations to protect safety, or a failure to take prompt remedial action. But matters of that kind may be readily assessed when consideration is given to the overall seriousness of an admitted or proven breach. It is not necessary in cases such as the present, when active intention to breach a duty of protection will usually be absent, to apply formulae which were developed to guide a range of inferior criminal courts in a large variety of matters with a view to ensuring reasonable consistency of sentencing practice. (Emphasis added);

(c)    other criminal law concepts, such as the significance of an early plea of guilty and the notion of “contrition”, were not readily applied in such a case as the present and the primary judge also found that recognition had to be given to positive efforts by the respondent to enhance safety;

(d)    reference was also made to Madgwick J’s decision in Comcare v Commonwealth (2007) 163 FCR 207 (“Trooper Lawrence”) and to a list of factors at [116]-[120] (the so-called “Madgwick factors”), which were distilled by Madgwick J from decisions of the Industrial Court of New South Wales in cases involving criminal sanctions under that State’s workplace health and safety legislation. The primary judge reiterated his reservations about applying a criminal law approach to cases under the OH&S Act, as well as expressing more general reservations on related matters, as is reflected in the following paragraphs from his Honour’s reasons for judgment:

39.    In some cases in this Court agreement has been expressed with the observations by Madgwick J in Comcare v Commonwealth (2007) 163 FCR 207 where (at [120]–[123]) his Honour found useful a list of factors to be taken into account in assessing penalty which he distilled from the approach taken by the Industrial Court of New South Wales in cases under the workplace health and safety legislation in that State. Those NSW cases involved criminal sanctions. The principles developed by the Industrial Court of NSW drew heavily on sentencing principles in criminal cases. I have already expressed my reservations about that approach to cases under the OHS Act.

40.    More recently in this Court, general agreement has been expressed with the observations of Flick J in Comcare v Post Logistics Australasia, where his Honour said (at [38]):

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.

41.    Cases in which this observation has been endorsed include Comcare v Commonwealth of Australia [2009] FCA 700; (2009) 110 ALD 252; (2009) 257 ALR 462, Comcare v John Holland Rail Pty Ltd [2009] FCA 771; (2009) 188 IR 415 and Comcare v Australian Postal Corporation [2011] FCA 530. I also share those reservations. It will be apparent that my reservations are even more profound, so far as the use of sentencing principles for criminal conduct is concerned. Those reservations extend to the use of principles concerning the imposition of civil penalties under different statutory regimes. As I have already indicated, I see a significant difference between the assessment of culpability for conduct which intentionally or actively breaches a legislative standard and inactivity which is, in the vast majority of cases, only revealed as significant by an accident or incident. As I said earlier, it is important not to be too wise after the event; and

(e)    the primary judge saw the chief importance of imposing a pecuniary penalty in a case such as the present as drawing “attention to the importance of workplace safety in a way which provides a useful stimulus for practical and meaningful efforts and endeavours to enhance it”. He reiterated the need to avoid generalised and abstract assertions about the need for more training, closer supervision or more paper work and said that such matters should be expressed with sufficient particularity to identify concrete initiatives that could and should have been taken.

33    Weighing all these matters together, the primary judge concluded that he was not satisfied that the respondent’s default was in the high range nor did it involve “a truly serious breach”. His Honour concluded that, having regard to all the matters he had mentioned, including the parties’ agreed position on the facts and liability, a pecuniary penalty of $80,000 was sufficient to indicate the seriousness of the respondent’s breach.

Appeal and notice of contention

34    The judgment below was initially challenged on the following 10 grounds:

    failure to apply or adequately apply the “principle of deterrence” in determining an appropriate remedy;

    erroneously distinguishing between the approach to be taken in criminal and civil matters in determining penalty;

    failure to consider the proper impact of the “Madgwick factors”;

    denial of natural justice by not notifying the parties that his Honour did not intend to apply the “Madgwick factors”;

    failure to take into account, or proper account, the respondent’s breach as dealt with in Lapidario;

    failure to take into account the foreseeable risk of injury by collision between a pedestrian and a forklift in circumstances where there were no adequate traffic management systems at Warehouse 9;

    erroneously rejecting the respondent’s admissions of breach of s 16(1) of the OH&S Act by failing to provide adequate supervision to Mr Cox or Ms Borg;

    failure to notify the parties that his Honour was considering rejecting both their suggested penalty ranges and imposing a significantly lower penalty of only $80,000;

    failure to give sufficient reasons why his Honour rejected the respondent’s concession that the penalty ought to be in the order of $120,000 to $140,000; and

    manifest inadequacy of the penalty amount of $80,000.

35    The appellant indicated at the hearing that it did not press the fourth ground of appeal (relating to natural justice and the Madgwick factors). As will be seen below, when we address the remaining nine grounds of appeal, we have found it convenient to do so by reference to relevant categories.

36    The respondent also filed a notice of contention directed to upholding the primary judge’s pecuniary penalty amount of $80,000 on the basis that, even if any of the grounds of appeal were established, a penalty in the amount of $80,000 was appropriate and/or within the range of discretion having regard to the objective seriousness of the contravention.

37    Before addressing the grounds of appeal and notice of contention it is convenient to say something about the nature of these appeal proceedings.

Nature of a sentencing appeal

38    The proceedings involve an appeal against the primary judge’s orders granting declaratory relief and fixing a civil pecuniary penalty. Both those orders involve the exercise of discretion on the part of the primary judge. The proceedings are in the nature of a sentencing appeal.

39    The relevant principles guiding the nature and scope of a sentencing appeal (absent relevant statutory provisions) are now well settled. They may be summarised as follows:

(a)    an appeal against sentence is an appeal against the exercise of discretion (namely the sentencing discretion). Its scope is governed by established principles or categories of cases, which include House v The King (1936) 55 CLR 499 at 504-505; Carroll v The Queen (2009) 254 ALR 379 at [7] and Dinsdale v The Queen (2000) 202 CLR 321 at [3]-[4];

(b)    the types of error in a primary sentencing judgment which may warrant appellate correction include such errors as:

-    acting upon a wrong principle;

-    allowing extraneous or irrelevant matters to guide or affect the primary judgment;

-    mistake as to a material fact;

-    failure to take into account a material consideration; and

-    the sentence being manifestly inadequate or manifestly excessive, even though no specific error is alleged;

(c)    an alleged manifestly excessive or inadequate sentence is not demonstrated merely because the appellate court disagrees with the sentence actually imposed (Griffiths v The Queen (1997) 137 CLR 293 at 310; Dinsdale at [6] and Carroll at [7]); and

(d)    a sentencing appeal is not a rehearing. An allegation that the sentencing judge did not give sufficient weight to a particular matter in the exercise of the sentencing discretion is not the kind of error which attracts appellate intervention in a sentencing appeal (House at 504-505).

Consideration of grounds of appeal

40    As foreshadowed above, it is convenient to deal with the nine individual grounds of appeal in the following categories:

(a)    the relevance of deterrence in assessing OH&S Act civil pecuniary penalties (grounds 1-3);

(b)    foreseeability of the risk of injury and the relevance of the respondent’s prior breach in Lapidario (grounds 5 and 6);

(c)    issues arising from the primary judge’s response to an admission by the respondent (ground 7);

(d)    the alleged failure of the primary judge to notify the parties of his proposed rejection of their suggested penalty ranges (grounds 8 and 9); and

(e)    manifest inadequacy of the penalty amount of $80,000 (ground 10).

(a)    The relevance of deterrence in assessing OH&S Act civil pecuniary penalties     (grounds 1-3)

41    The first three grounds of the notice of appeal raise for direct consideration the approach to be taken when assessing civil pecuniary penalties under the OH&S Act. The appellant argued that the primary judge totally rejected any concept of deterrence as being appropriate in assessing an appropriate civil pecuniary penalty in the present case. The appellant submitted that the primary judge was required to consider the application of both specific and general deterrence and that his Honour erred by failing to do so. The appellant also contended that the primary judge rejected the relevance of the Madgwick factors and that he erred in doing so.

42    The respondent’s submissions may be summarised as follows:

(a)    a sentencing judge has a very broad discretion in assessing the appropriate penalty for a breach of the OH&S Act;

(b)    that in order to demonstrate a need for appellate intervention, the appellant must demonstrate error of the type found in House at 504-505;

(c)    while the primary judge expressed reservations about the appropriateness of importing criminal law concepts of deterrence into civil prosecutions under the OH&S Act, he did not reject altogether the notion of deterrence;

(d)    even if the primary judge did not use the explicit language of “deterrence”, he nevertheless proceeded on the basis that the pecuniary penalty needed to provide an appropriate incentive, encouragement and punishment with the objective of enhancing workplace safety, thus essentially accommodating by different language the same or similar purpose as the criminal law concepts of general and specific deterrence. In support of that proposition, the respondent cited Barker J’s recent observations in Comcare v Transpacific Industries Pty Ltd [2012] FCA 90 at [38]:

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 healthy and safety obligations under the [OH&S Act] are steadfastly borne in mind – not mere punishment or retribution against contravener – then, in my view, the penalty assessment process will be properly undertaken;

(e)    the primary judge’s reference to providing appropriate incentive and encouragement to enhance workplace safety evidenced his Honour’s consideration of general deterrence as a relevant factor in assessing the penalty, and it was immaterial that his Honour did not specifically use the phrase ‘general deterrence’;

(f)    the primary judge clearly identified that interaction between forklifts and pedestrians obviously posed a foreseeable risk of injury. Furthermore, his Honour identified the relevant shortcomings of the respondent in responding to this risk but nevertheless considered that the procedures in place at the time of the incident were not wholly or seriously inadequate; and

(g)    the primary judge’s observations about “deterrence” were specifically directed to the notion of “specific deterrence”, for an understandable reason. That was because his Honour was dealing with a particular submission put on behalf of the respondent below to the effect that specific deterrence was irrelevant in circumstances where the respondent was no longer conducting any warehouse business and had disposed of its relevant warehouse assets.

43    In our opinion the primary judge erred in his consideration of the role of the deterrence in fixing a civil pecuniary penalty under the OH&S Act. Deterrence, both general and specific, is a fundamental purpose of the role of civil pecuniary penalties. First, the object in s 3(g) of the OH&S Act evinced a legislative intention to provide for effective remedies where the obligations imposed by s 16 on an employer, such as the respondent, were not met. The remedy of a civil pecuniary penalty was the only form of penalty available to punish a Commonwealth authority such as the respondent in the circumstances. Thus, it was the only way in which a court could mark the seriousness of a contravention of the Act of the kind here for all employers bound by it, whether or not any particular employer was also amenable to criminal sanctions.

44    Secondly, the breach of s 16(1) found by the primary judge was of a kind that employers should realise will attract substantive punishment by way of a civil pecuniary penalty. That will assist in encouraging a general approach in the community that employers must meet the obligations imposed on them by s 16(1), and hence aid the achievement of the objects in s 3(a)-(f) of the OH&S Act.

Deterrence in criminal law

45    In sentencing for breaches of the criminal law, the concept of deterrence (both specific and general) is a fundamental element. In R v Radich [1954] NZLR 86 at 87, Fair J of the New Zealand Court of Appeal stated that one of the main purposes of punishment is:

…to protect the public from the commission of such crimes by making it clear to the offender and to other persons with similar impulses that, if they yield to them, they will meet with severe punishment. In all civilized countries, in all ages, that has been the main purpose of punishment, and it still continues so. The fact that punishment does not entirely prevent all similar crimes should not obscure the cogent fact that the fear of severe punishment does, and will, prevent the commission of many that would have been committed if it was thought that the offender could escape without punishment, or with only a light punishment. If a Court is weakly merciful, and does not impose a sentence commensurate with the seriousness of the crime, it fails in its duty to see that the sentences are such as to operate as a powerful factor to prevent the commission of such offences.

46    This statement has frequently been approved in Australia: see, for example, R v Rushby [1977] 1 NSWLR 594 at 597-598; R v Harrison (1997) 93 A Crim R 314; R v Hamieh [2010] NSWCCA 189 at [64] and York v R (2005) 225 CLR 466 at [21] per McHugh J. In Harrison, public deterrence was described as the main purpose of punishment in criminal law proceedings and the Court observed at 320-321:

… the subjective considerations relating to the particular prisoner (however persuasive) are necessarily subsidiary to the duty of the courts to see that the sentence which is imposed will operate as a powerful factor in preventing the commission of similar crimes by those who may otherwise be tempted by the prospect that only light punishment will imposed.

47    In R v Porter (1933) 55 CLR 182, a criminal trial held in the original jurisdiction of the High Court, Dixon J in his summing up to the jury stated at 186:

The purpose of the law in punishing people is to prevent others from committing a like crime or crimes. Its prime purpose is to deter people from committing offences.

48    With the exception of atypical cases, such as those involving an offender with a mental disorder or abnormality such as in Muldrock v The Queen (2011) 244 CLR 120 and R v Scognamiglio (1991) 56 A Crim R 81, general deterrence is a relevant and important factor in sentencing for criminal offences. Where a sentencing judge is silent on the principle of general deterrence in circumstances which call for it to be considered, there is an error in sentencing: R v Romanic [2000] NSWCCA 524 at [21].

Deterrence in the civil law

49    Is deterrence (both specific and general) also a purpose or relevant matter in assessing civil pecuniary penalties under the OH&S Act?

50    As is evident from the passages we have set out in [32] above from the primary judge’s reasons for judgment, his Honour approached the question whether deterrence is a relevant matter in determining an appropriate civil pecuniary penalty in the case before him substantially on the basis of distinguishing between sentencing principles in criminal law and the imposition of civil penalties. For our part, and with great respect to his Honour, we do not consider that the matter should be approached that way. There is a danger that such an approach deflects attention from the fundamental question, namely whether on a proper construction of the legislation empowering the imposition of a civil pecuniary penalty, deterrence is a relevant purpose or matter to be taken into account.

51    As the Full Court observed in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 at [21], there is “something less than a bright line that divides the terms “civil” and “criminal” in relation to the nature of proceedings or the process by which persons are brought before courts”. To similar effect, in Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [32] the High Court (albeit in a different context) observed that:

… more fundamentally, the supposed distinction between “punitive” and “protective” proceedings or orders suffers the same difficulties as attempting to classify all proceedings as either civil or criminal. At best, the distinction between “punitive” and “protective” is elusive. That point is readily illustrated when it is recalled that, as McColl JA pointed out, account must be taken in sentencing a criminal offender of the need to protect society, deter both the offender and others, to exact retribution and to promote reform.

52    The setting of a civil pecuniary penalty can have a function of serving both specific and general deterrence. That is partly because, as North J pointed out in Comcare v Commonwealth of Australia (2009) 184 IR 441 (“Cadet Francis”) at [104]:

The setting of a pecuniary penalty amount does however have a function as a general deterrent. No doubt the amount of the pecuniary penalty will be noted by those bound by the Act and also those bound by State equivalents. In this respect the amount of pecuniary penalty serves a valuable purpose in advancing awareness of the need for compliance with legislative health and safety standards.

53    In our view, several of the express objects of the OH&S Act are served if deterrence is regarded as a relevant matter in determining a pecuniary penalty under cl 4 of Schedule 2. In particular, fixing an appropriate civil pecuniary penalty by reference inter alia to specific and general deterrence helps:

(a)    secure the health, safety and welfare at work of relevant employees (s 3(a));

(b)    protect persons at or near workplaces from risks to health and safety (s 3(b));

(c)    promote an occupational environment for such employees (s 3(d));

(d)    encourage and assist employers and others to whom obligations apply under the OH&S Act to observe those obligations (s 3(f)); and

(e)    contribute to providing effective remedies where obligations are not met (s 3(g)).

54    The disutility of individuals and corporations being forced to pay fines and comply with other penalties is offset by the reduction in the occurrence of that behaviour and thus the reduced negative externalities generated by that behaviour. The concept of deterrence in civil law is sometimes framed in economic terms. Karen Yeung in ‘Quantifying Regulatory Penalties: Australian Competition Law Penalties in Perspective’ (1999) 23 Melbourne University Law Review 440 at 446, describes how conduct which violates the law can be viewed as a commodity that is ‘purchased’ by requiring the offender to pay a penalty for breaking the law. In other words, in deciding whether to violate the law a prospective offender weighs up the benefits of its actions against the potential cost. If the offender determines that it is more advantageous to break the law, they will do so. Deterrence in assessing civil penalties amounts to increasing the cost of lawbreaking, so that persons are deterred from breaking the law.

55    In Community and Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228, Finkelstein J gave judicial voice to this concept: His Honour stated at [9]:

On the other hand, the basic objective of punishment should be to enhance social welfare by minimising the net social cost of wrongdoing. This is achieved by deterrence. Here I speak not only of specific deterrence but also general deterrence. In a case such as the present, that may be of some importance. The reason is that Telstra submits that there is no need to impose any penalty because it will not offend again. That may be true. But even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law's disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct: R v Thompson (1975) 11 SASR 217. It is also important to remember that proscribed conduct is often engaged in because it is profitable, or will enhance the profitability of the company. To deter conduct engaged in with that purpose, any penalty imposed must have the potential to render the conduct unprofitable. The achievement of that object is subject to the limitations placed upon the court's power by the legislation in question.

56    Several decisions provide general guidance on matters which may be relevant to the imposition of pecuniary penalties for breach of obligations under civil statutes. For example, in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 (‘CSR’), French J (as his Honour then was) made the following observations in the context of assessing a civil penalty under s 76(1) of the Trade Practices Act 1975 (Cth) (at 52,152 – 52,153):

The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following:

1.    The nature and extent of the contravening conduct.

2.    The amount of loss or damage caused.

3.    The circumstances in which the conduct took place.

4.    The size of the contravening company.

5.    The degree of power it has, as evidenced by its market share and ease of entry into the market.

6.    The deliberateness of the contravention and the period over which it extended.

7.    Whether the contravention arose out of the conduct of senior management or at a lower level.

8.    Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.

9.    Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.

57    The non-exhaustive factors described by French J were all directed to the task of determining a pecuniary penalty which was of “appropriate deterrent value”. His Honour clearly regarded deterrence as a relevant purpose in setting an appropriate civil pecuniary penalty in the context of the Trade Practices Act.

58    A similar approach has been taken in determining civil pecuniary penalties in other Commonwealth statutory contexts. In particular, deterrence has been regarded as an important purpose in setting such pecuniary penalties in such Commonwealth legislative settings as: regulation of petroleum retailing sites (Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993; superannuation (see Australian Prudential Regulation Authority v Derstepanian (2005) 60 ATR 518); environmental harm (Minister for the Environment and Heritage v Greentree (No 3) (2004) 136 LGERA 89 and, on appeal, (2005) 144 FCR 388 at [51]-[57]); therapeutic goods (Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 (“Pagasa”)); broadcasting (Australian Communications and Media Authority v Radio 2UE Sydney Pty Ltd (No 2) (2009) 178 FCR 199 at [31] ff); and industrial laws (Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 177 IR 243 at [37] and [61]; Draffin v Construction, Forestry, Mining and Energy Union (2009) 189 IR 145 at [89] and Fair Work Ombudsman v Wongtas Pty Ltd (No 2) [2012] FCA 30 at [54])).

59    It has also been recognised that, while the approach taken by French J in CSR provides general guidance to the task of determining appropriate pecuniary penalties in other statutory contexts, some modification may be required in the light of a specific legislative context. Accordingly, primacy must be given to the relevant terms of the particular Commonwealth legislation which empowers the imposition of a civil pecuniary penalty. This fundamental requirement was well expressed by Sackville J (at first instance) in Greentree (No 3) at [58]:

The principles formulated in the context of s 76(1) of the TP Act provide guidance in proceedings for pecuniary penalties under the EPBC Act, although they cannot be transferred uncritically into the rather different context of proceedings seeking the imposition of penalties for environmental damage to protected sites. Obviously enough, for example, the degree of market power is a consideration likely to be highly relevant to a penalty for a contravention of Part IV of the TP Act, but is not likely to be relevant to the imposition of a penalty under the EPBC Act. Similarly, the question of a corporate culture may not necessarily have relevance to proceedings under the EPBC Act, although whether a contravener has taken remedial action to minimise environmental damage may be significant on the question of penalty. On the other hand, there may be circumstances relevant to proceedings under the EPBC Act that have no relevance to proceedings under the TP Act. In the end, while the statutory criteria must of course be taken into account, each case must depend upon its own unique circumstances.

60    We also note that, in Pagasa, after helpfully reviewing many cases involving civil penalties under a range of Commonwealth statutes, Flick J made the same point regarding the paramountcy of the particular statutory context. His Honour observed at [27]:

Although the form of words set forth in other legislative provisions may be the same or comparable to those employed in the 1989 Act, the legislative mandate that the Court “must have regard to all relevant matters” in s 42Y(3) assumes obvious importance. It is that mandate which directs attention to those more specific matters which can only be discerned from an analysis of the 1989 Act itself. Of central importance in identifying those matters which are “relevant” — and which must therefore be taken into account — are the objects and purposes of the 1989 Act. (Original emphasis).

61    We respectfully agree with those observations.

Deterrence in OH&S Act civil contraventions

62    There is a long line of decisions at first instance in this Court which accept that, as a general proposition, specific and general deterrence are relevant matters in fixing a civil pecuniary penalty under the OH&S Act (see, for example, Trooper Lawrence at [116]-[120]; Cadet Francis at [101]-[104]; Comcare v National Gallery of Australia (2007) 98 ALD 67 at [5]; Comcare v John Holland Rail Pty Ltd (2009) 188 IR 415 (“John Holland”) at [135]-[136]; Comcare v Australian Postal Corporation [2011] FCA 530 at [57]; Comcare v Subsee Explorer Pty Ltd (2011) 210 IR 322 at [50] and Comcare v John Holland Pty Ltd [2012] FCA 449 at [45]). We respectfully agree with that approach, particularly having regard to its consistency with several of the express objects set out in s 3 of the OH&S Act, as discussed above in [53].

63    Acknowledgment at a level of general principle of the relevance of general and specific deterrence in determining civil pecuniary penalties under the OH&S Act should, however, be qualified in the following two respects. First, because of the individual nature of specific deterrence, there may be good reason why that concept has no or little relevance in the circumstances of a particular case. For example, at first blush it may be difficult to see any meaningful role for specific deterrence to play in a case where the Commonwealth is the party which has contravened the OH&S Act and any pecuniary penalty must be paid to the Commonwealth, presumably into the Consolidated Revenue Fund (see, for example, Cadet Francis at [102]). However, it may be important to appreciate that the individual officer or officers of the Commonwealth with general or particular responsibility for the conduct will ordinarily be publicly associated with the penalty imposed, he or she will have to allocate scarce public funds that were not appropriated to pay such a penalty, and thus cause a reduction in what the Commonwealth department, authority or agency involved can now provide. That is, the imposition of the penalty will have an impact on the department’s, authority’s or agency’s capacity to perform its role, even if the sum is small in its overall budget. And, most importantly, the department, authority or agency will have to account to the Parliament and the public as to why it had had to pay a penalty and not use the money appropriated to it for the purposes that the Parliament intended. The impact of the penalty may vary depending on whether there is any evidence demonstrating the practical effect on internal budget allocations within the Commonwealth if the particular Commonwealth department, authority or agency is ordered to pay a civil pecuniary penalty.

64    The second qualification relates to the need to ensure that any list of relevant considerations guiding the exercise of a discretion to impose a civil pecuniary penalty not be permitted to fetter the proper exercise of the discretion which is expressed in relatively unconfined terms in the OH&S Act. The importance of this consideration was emphasised in Lapidario where, after referring to the Madgwick factors and the guidance provided by French J in CSR, Flick J stated at [37]–[38]:

These considerations may also be applied to the task of assessing the penalty to be imposed under the current legislation. To some extent the considerations set forth by Madgwick J overlap with those set forth by French J; to some extent they do not.

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. But the attempts that have been made by both Madgwick and French JJ (in particular) provide a useful touchstone of those matters that may be taken into account when assessing the penalty to be imposed. Those considerations set forth by Madgwick J are obviously more directed to the specific statutory context of ensuring the health and safety of workers than the more generally expressed considerations set forth by French J. But both, it is considered, are relevant to the present assessment of penalty.

65    To similar effect, in John Holland at [142], Barker J stated:

However, I also concur with North J, in his emphasis of the overriding caution expressed by Flick J in [Lapidario], 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.

66    It is to be noted at this juncture that the primary judge below expressly associated himself with the reservations expressed in those cases regarding the utility of the Madgwick factors. Indeed, his Honour went further than that, stating that his reservations were “even more profound” in respect of the use of sentencing principles in imposing civil penalties under different statutory regimes.

67    For convenience, we set out immediately below the Madgwick factors:

(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.

68    We agree with the reservations expressed by Flick and Barker JJ concerning the Madgwick factors. If a court applied the Madgwick factors dogmatically or inflexibly, there is a significant chance an error would be committed in the reasoning process. As Mahoney JA stated in Kable v Director of Public Prosecutions (1995) 36 NSWLR 374 at 394, “If justice is not individual, it is nothing”. The various factors for consideration in assessing a penalty for breach of the OH&S Act may have greater or lesser importance in any given case, depending on the various objective and subjective elements of the breach. The penalty assessment process cannot be reduced to an inflexible set of criteria.

69    That being said, we consider that the Madgwick factors provide a useful foundation or starting point for an assessment of a civil pecuniary penalty. They are consistent with the body of authority from this Court and other courts. Furthermore, they are consistent with the theoretical principles concerning the role of deterrence considered above. In our view they properly recognise that deterrence is a relevant matter to be taken into account in assessing a civil pecuniary penalty under the OH&S Act. Although a court is not required to specifically refer to these factors, in most cases it would be prudent to do so. Having regard to the fact that, since 1 January 2012, the OH&S Act has been replaced by the Work Health and Safety Act 2011 (Cth) (subject to the Transitional and Consequential Provisions Act), the Court sees little or no advantage in reformulating either the Madgwick factors or any of the other factors which have been identified in the caselaw as having a potential relevance to the determination of a pecuniary penalty under the OH&S Act. The position may need to be revisited if and when an appropriate occasion arises in respect of the new legislation.

70    A critical issue raised by this appeal is whether the primary judge took into account the concept of deterrence in determining what was an appropriate civil pecuniary penalty in the particular circumstances here. If, on a proper reading of his Honour’s reasons for judgment, the concept of deterrence was rejected as an irrelevant matter, the question then arises whether that involves an appellable error. We now turn to address those questions.

71    The essence of the primary judge’s reasoning on this matter is to be found in [34] to [36] of his Honour’s reasons, which we have set out in [32] above. Those paragraphs contain a detailed discussion by the primary judge of the inappropriateness, as his Honour described it, of drawing too freely on concepts from the criminal law in setting a civil penalty. Despite his Honour’s strong reservations about applying concepts and canons of criminal law sentencing in that civil context, it is to be noted that his Honour recognised and accepted that notions of punishment and culpability are to be included among the objectives to be considered in determining an appropriate penalty for the purposes of the OH&S Act. In our view, however, a fair reading of [35] of his Honour’s reasons indicates that his Honour regarded the concept of deterrence – both specific and general – as inappropriate and irrelevant in fixing a civil penalty, both under the OH&S Act generally and, more specifically, in the present case.

72    With great respect to the primary judge, we find it difficult to see the distinction drawn in [35] of his Honour’s reasons between avoiding a breach of the Act and upholding positive obligations of protection of workplace health and safety. The stated objectives of the OH&S Act include securing the health, safety and welfare of employees and protecting persons at or near workplaces from risks to health and safety arising out of the activities of such employees at work. Another important and relevant stated objective is to provide for effective remedies if obligations are not met, through the use of civil remedies and, in serious cases, criminal sanctions.

73    In our view, general deterrence is an important consideration in fixing an appropriate pecuniary penalty for a contravention of the OH&S Act if that remedy is to be effective and if other relevant statutory objects are to be served. The Act encourages positive steps to be taken to achieve these objectives by, inter alia, providing for civil and criminal penalties to be imposed in cases where these positive obligations are not observed. The OH&S Act reinforces the positive obligations contained in s 16 and elsewhere by emphasising the obligation not to commit the civil wrongs that are stated in the Act. The two concepts are inextricably linked. Moreover, as noted above, we consider that the fixing of an amount of pecuniary penalty serves a valuable purpose in raising awareness on the part of both the particular contravenor and others who are bound by the OH&S Act of the need for compliance with statutory occupational health and safety standards.

74    It appears from the reasoning of the primary judge that no weight was given to deterrence because of his Honour’s views that:

(a)    no further practical steps could have been taken by the respondent to prevent the incident from occurring. The minor shortcomings that his Honour identified were taken into account in assessing the penalty; and

(b)    adopting the concept of deterrence from the criminal law risked introducing a “ritual incantation” which would divert attention from the relevant practical issue of giving effect to the statutory objectives of the OH&S Act, namely how to provide appropriate incentive and encouragement (as well as punishment) to enhance workplace safety.

75    With great respect to his Honour, we consider that that reasoning reflects too narrow a view of the role of deterrence in fixing an appropriate civil pecuniary penalty. A penalty has the consequence of providing a salutary reminder of the importance of observing the obligations specified in the Act to both the contravenor and other potential contravenors (see, for example, Subsee Explorer at [50]). The imposition of a penalty shifts the economic calculus in favour of taking necessary steps to ameliorate the risk of OH&S incidents generally.

76    The views we have expressed above do not mean that we disagree with the primary judge’s concerns about the need to avoid using concepts in this area which carry the risk of becoming “a ritual incantation”. But acceptance of that proposition does not mean that the concept of deterrence (both specific and general) is irrelevant. We respectfully agree with the following observations of Barker J in Transpacific Industries 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.

77    Furthermore, in our view, to say that deterrence has no relevance because no practical measures could have been taken to prevent this particular incident is too narrow a view. Incidents involving forklifts and pedestrians in a warehouse or other place of employment can manifest themselves in myriad ways. A description of the incident, a declaration that the employer was at fault and an appropriate penalty are all factors that the wider community will take into account in analysing their own procedures regarding forklift-pedestrian interactions. Even though safety mechanisms in a particular place of business may prevent this particular iteration of a forklift accident from being replicated, a penalty has the capacity to provide impetus to persons and to organisations who are the subject of duties under the Act to ensure that all aspects of forklift safety are optimally designed.

78    The discussion above has largely focused on general deterrence but, in our view, it is also evident that the primary judge viewed specific deterrence as an irrelevant concept in setting an appropriate pecuniary penalty. In [33] of his reasons for judgment, his Honour said that he saw no reason for reducing an otherwise appropriate penalty because the respondent had disposed of its warehouse business. This issue arose, as the primary judge pointed out, because a submission had been made to that effect relying on the concept of “specific deterrence”. In explaining why he rejected that submission, the primary judge then proceeded to express his reservations concerning the transposition of criminal law concepts into this civil penalty context. In our view, it is evident that the rationale for his Honour’s rejection of the submission concerning “specific deterrence” was tied to his Honour’s view that the concept of deterrence – whether general or specific – was simply irrelevant.

79    It follows that, in our view, the primary judge erred in taking too narrow a view of the role of deterrence. This amounts to his Honour acting upon a wrong principle and thus the discretion to impose a pecuniary penalty under cl 4 of Schedule 2 of the OH&S Act miscarried.

(b)    Foreseeability of the risk of injury and relevance of Lapidario (grounds 5 and 6)

80    It is convenient to deal with these two grounds together as they both relate to challenges to the primary judge’s consideration of the foreseeability of the risk of injury. The appellant contends that the primary judge erred in not taking into account the respondent’s prior contravention of the OH&S Act (which was the subject of the proceedings in Lapidario). It argued that the Lapidario incident was relevant to the foreseeability of risk and reflected on the objective seriousness of the contravention. The appellant further argued that the primary judge erred in not taking into account the fact that the penalty imposed in Lapidario (for breach of what was alleged to be of “an identical nature”) had not operated as a sufficient deterrent in the case of the respondent.

81    At [30] of his reasons, the primary judge stated:

The applicant also relied on the fact that, in [Lapidario], Flick J imposed a penalty of $165,000 on Post Logistics arising from a death involving a forklift at another warehouse, suggesting that this imposed some heightened obligation on Post Logistics, including at Warehouse 9. As the judgment makes clear, that fatality involved horseplay. That is not this case. The fatal injury which occurred in that case did not lead to a higher or different level of responsibility to protect the health and safety of employees at Warehouse 9. Nor did it identify a new measure which should have been taken at Warehouse 9 to achieve that objective. I could not impose a penalty in this case simply because there had been an earlier fatality at a different warehouse arising from different circumstances. As counsel for Post Logistics submitted, I must deal with the present case, and only the present case.

82    In Lapidario, Flick J found that the respondent “failed to ensure that there was an adequate traffic management system in place to prevent or reduce the risk of Mr Lapidario coming into contact with a moving forklift”. In the present matter the primary judge reached a similar conclusion at [26] and [28] of his Honour’s decision. However, his Honour found that the adoption of a traffic management system involving the use of bollards and chains would not have had a probable impact on the incident in question.

83    The factual conclusion by the primary judge that the traffic management system would not have had a probable impact on the incident in question diminished the weight that his Honour gave to Lapidario. Because his Honour came to this conclusion, his Honour decided that Lapidario did not provide any assistance.

84    Furthermore, the appellant submitted that his Honour was required to give consideration to the fact that the respondent had previously been found to have breached the OH&S Act in Lapidario in circumstances which also involved an incident between a forklift and an employee. The appellant submitted that the respondent had failed to take necessary precautions arising out of that incident and that this was a relevant consideration for his Honour in assessing a penalty.

85    In our view, the appellant’s contentions should not be accepted for the following reasons. First, it is evident that the primary judge found that there was an obviously foreseeable risk of injury arising from the potential of contact between forklifts and pedestrians, as is reflected in the following statements in [22] and [31] of his Honour’s reasons for judgment:

Forklift operations at a warehouse where people are also moving about obviously calls for management of the movement of both forklifts and pedestrians to avoid contact between them. Obviously also, the consequences of such contact could be very serious, even fatal.

[There was an] obvious need for separation between forklift operations and pedestrians…

86    Furthermore, it is evident the primary judge found that the respondent had failed to “take obvious and easy steps” to address that foreseeable risk by not:

(a)    providing Ms Borg and Mr Cox with clear instructions about the need to always maintain a minimum three metre “exclusion zone” around any operating forklift (at [24] and [31]); or

(b)    arranging for clearly marked and separate areas for forklifts and pedestrians ([24] and [31]).

87    Having regard to these findings, which all relate to his Honour’s conclusion that there was a highly foreseeable risk of injury arising from contact between forklifts and pedestrians, the Lapidario incident added nothing to the question of foreseeability or, indeed, to the objective seriousness of the contravention the subject of these later proceedings.

88    Secondly, while accepting that the House principles permit appellate intervention where it can be demonstrated that the primary judge has made a mistake as to material facts, we do not consider that the appellant has demonstrated any such error in respect of the primary judge’s findings relating to foreseeability of risk of injury and the relevance of Lapidario.

89    Thirdly, in our view the primary judge was correct in his conclusion that a higher penalty could not be imposed on the respondent “simply because there had been an earlier fatality at a different warehouse arising from different circumstances”. As his Honour pointed out, his task was to “deal with the present case, and only the present case”. A similar approach had been taken by Flick J who held in Lapidario that it would be inappropriate to increase the respondent’s penalty by reason of two earlier contraventions (albeit of State workplace health and safety legislation).

90    Finally, in our opinion, the primary judge was correct in distinguishing Lapidario on its facts. That case involved a fatality when a contractor working on the respondent’s premises was fatally injured while engaging in “horseplay”. The contractor had climbed onto a forklift being operated by another worker, Mr Tran, placing his hands on Mr Tran, and causing Mr Tran accidentally to engage the reverse pedal and collide with Mr Lapidario. In our view, those circumstances are far removed from the circumstances surrounding the incident involving Mr Cox and Ms Borg. The primary judge was correct to distinguish Lapidario.

91    For all these reasons, we consider that grounds 5 and 6 should be rejected.

(c)    Issues arising from the primary judge’s rejection of an admission by the respondent (ground 7)

92    By ground 7, the appellant challenges the primary judge’s rejection of the respondent’s admission that it had failed adequately to supervise Mr Cox or Ms Borg. As noted above the respondent admitted that part of the appellant’s pleading which claimed that the respondent had failed to provide adequate supervision to Mr Cox or Ms Borg so as to ensure that they did not engage in the conduct which caused the incident. Notwithstanding that admission, the primary judge found at [16] and [29] of his reasons for judgment that he was not satisfied that lack of supervision played any part in the incident. His Honour plainly had in mind the respondent’s admission but held that, despite the admission, the appellant’s claim that lack of supervision played, in any practical sense, a part in the incident was “speculative”. His Honour added that the appellant was unable to identify any practical step which might have been taken to remedy the alleged lack of supervision and which would have prevented the incident (see [29]).

93    For the following reasons, we consider that those findings were open on the evidence and that no appellable error has been established in respect of his Honour’s findings and reasons.

94    First, the precise terms of the admission are significant. The respondent admitted that it had failed to provide “adequate supervision” to Mr Cox and Ms Borg so as to ensure that they did not engage in the relevant conduct. It did not admit that it provided no supervision at all to those persons. On the contrary, there was unchallenged evidence in the Court below concerning the following relevant matters:

(a)    Ms Borg had received some instructions about maintaining safe distances from pedestrians when she was engaged in the “logbook” training process;

(b)    Ms Borg gave unchallenged evidence to the effect that, when employees came too close to a forklift, she observed team leaders and supervisors saying “stay away”;

(c)    similarly, Ms Borg said that where such incidents occurred, team leaders and supervisors had called group meetings and gave instructions to avoid getting too close to forklifts;

(d)    Ms Borg gave evidence that her supervisor often came into the area where the incident occurred to check on her and others working in that area; and

(e)    she also gave evidence that she was given training and instruction in the course of her obtaining her own forklift licence about the need to stay at least two metres away from pedestrians and to keep away from forklifts when they were moving.

95    Furthermore, when regard is had to the precise terms of the respondent’s admission, we consider that the appellant’s argument is not strengthened by the fact that the primary judge indicated that he would not “go behind the admission”. In our view, his Honour did not go behind the admission but, rather, he accepted the admission in the terms that it was made but then proceeded to assess the respondent’s culpability. The respondent’s admission went to liability, not culpability. It was open to the primary judge to go beyond the respondent’s admission as to liability in assessing its culpability having regard to the overall circumstances of the case, including the appellant’s acceptance of the proposition that the relevant incident may not have been avoided even if there was full supervision.

96    Secondly, as noted above, the primary judge found that there was no supervisor present on the day of the incident but the appellant never suggested that constant supervision was practical, necessary or even appropriate. As his Honour observed in [29], Ms Borg and Mr Cox “were not children to be constantly and closely watched, and scolded” and, absent constant surveillance, “there would obviously be times when a supervisor was not in the immediate vicinity”. Again, we consider that this finding was open to be made by the primary judge, not the least because during argument below the appellant’s counsel conceded that neither Mr Cox nor Ms Borg required constant visual surveillance to perform their type of work.

97    Thirdly, we do not accept the underlying implication in the appellant’s argument to the effect that the primary judge was bound by the respondent’s admission. It was ultimately a matter for the Court to determine the quantum of an appropriate civil pecuniary penalty. As his Honour made clear in [29] of his reasons, he took into account the respondent’s admission, but accorded it little or no weight because of his other findings regarding the immateriality of the lack of supervision as contributing to the incident. As we have explained above, these matters went to culpability, not just liability.

(d)    Primary judge’s failure to notify parties of his proposed rejection of their suggested penalty ranges (grounds 8 and 9)

98    In ground 8, the appellant claimed that procedural fairness requirements obliged the primary judge to notify the parties of his proposed rejection of their respective penalty ranges. The appellant’s ninth ground of appeal concerned the allegation that the primary judge failed to give reasons (or sufficient reasons) as to why he rejected the respondent’s “concession” that the penalty ought to be in the range $120,000 to $140,000.

99    We have approached ground 8 on the basis that the appellant is complaining of a denial of procedural fairness to itself. The appellant cannot complain of a denial of procedural fairness to someone else (see, for example, Durayappah v Fernando [1967] 2 AC 337 at 354-355 and Aronson, Dyer and Groves, Judicial Review of Administrative Action, 4th ed, at p 625 n779). On that basis we consider that that contention must be rejected having regard to the following relevant matters which occurred during the course of the hearing below. Those factors are also relevant to the ninth ground.

100    First, the primary judge put both parties on notice during the course of oral argument that he might not be satisfied with their respective positions regarding penalty. For example, his Honour made clear to the appellant’s counsel that he was “struggling with the idea that [the contravention] is a high range offence” as claimed by the appellant. Secondly, his Honour indicated to the parties that he would not exclude the possibility of an amount outside of the mid-range. Thirdly, his Honour indicated that, although he did not exclude something outside of a “mid range”, he “would not be instinctively uncomfortable within the mid range”. Finally, in circumstances where the parties were unable to agree on an appropriate proposed penalty and they each put forward their own preferred range, each of the parties must have been aware that there was a possibility that its proposed range would not be accepted.

101    Having regard to these matters, we consider that the appellant’s complaint of procedural unfairness lacks any proper factual foundation and must be rejected. Likewise, because the imposition of a penalty was a matter for his Honour, it was not necessary in the circumstances for him to have discussed any particular figure put forward, even as a concession. His Honour gave sufficient reasons why he considered the penalty he arrived at was appropriate. However, as we have found, his Honour erred in his approach to the role of deterrence and for this reason we will have to reassess penalty.

(e)    Manifest inadequacy of the penalty amount of $80,000 (ground 10)

102    The appellant contended that a penalty of $80,000 was manifestly inadequate having regard to the objective seriousness of the contravention, the circumstances in which it occurred and the safety measures which were said to be readily available and were not adopted by the respondent.

103    As the appellant correctly pointed out in its written submissions, manifest inadequacy does not depend upon the identification of a specific sentencing error in the reasoning of the primary judge (see Dinsdale at [6] per Gleeson CJ and Hayne J and at [59] per Kirby J, with whom Gaudron and Gummow JJ agreed). A similar approach has been adopted in the context of an appeal against a civil penalty (see Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [105] per Buchanan J).

104    In view of our conclusion above that the primary judge erred in discarding deterrence as a relevant purpose or matter in fixing the appropriate level of the civil pecuniary penalty, his Honour’s assessment cannot stand. It is not necessary to consider separately the appellant’s contention that a penalty of $80,000 was manifestly inadequate. That claim was effectively advanced in the alternative to the other grounds of appeal.

Notice of contention

105    As noted above, the respondent’s notice of contention advances the proposition that, if any of the errors alleged in the notice of appeal was established, the primary judge’s penalty figure of $80,000 was appropriate or within the available range of discretion. For the following reasons, we consider that the civil penalty that is appropriate is $120,000. Accordingly, the notice of contention must be dismissed.

Reassessment of penalty

106    During the course of argument, the Court raised the issue whether the matter should be remitted to the primary judge for the reassessment of penalty in the event that the Court concluded that his Honour’s discretion miscarried in determining an appropriate pecuniary penalty. The parties were invited to make whatever submissions they wished in the event that the Court determined that it should proceed to exercise the discretion for itself. The parties each indicated that they relied on all the material and submissions before the primary judge in support of their respective positions concerning an appropriate level of penalty.

107    We see no reason why the Court should remit the matter to the primary judge for a reassessment of penalty in circumstances where the Court is in as good a position as the primary judge to redetermine that matter. Moreover, we consider that the resources of both the Court and the parties would be spared if the Court was to determine the matter for itself, rather than order its remittal.

108    With the exception of that part of the primary judge’s reasons for judgment dealing with deterrence, we consider that his Honour properly weighed the relevant primary mitigating and aggravating factors bearing upon the issue of appropriate penalty. In our view, however, an additional allowance has to be made in this case for both specific and general deterrence. As to the former, evidence was given below on behalf of the respondent to the effect that the majority of the assets used to carry on its warehouse business were transferred to a third party on 1 October 2011. There was also evidence, however, that the respondent, which is a wholly-owned subsidiary of Australia Post, still had at the time of the hearing below “a small number of employees carrying on administrative duties (for example, collecting outstanding revenue, paying creditors and preparing final accounts)”. Furthermore, those employees were working from an office located in the office/administration area of Warehouse 9. In our view, notwithstanding the sale of the respondent’s warehouse business, a modest allowance should be made for specific deterrence to reinforce to the respondent the need for it to comply with its obligations generally under the OH&S Act. In our view, this is appropriate in circumstances where, at least at the time of the proceedings below, the respondent continued to carry those statutory obligations in respect of its significantly reduced workforce and notwithstanding that it had ceased to carry on its warehouse business.

109    We also consider that an upwards adjustment needs to be made to the level of the pecuniary penalty to serve the function of general deterrence, in the sense of sending a clear message to other entities bound by the OH&S Act about the need for compliance with their relevant statutory obligations under that Act.

110    In our view, having regard to all these matters, an appropriate pecuniary penalty is $120,000.

Conclusion

111    Accordingly, for these reasons, we will allow the appeal, in part, and fix a penalty of $120,000. Given that each side had a measure of success, we have not made, at this stage, any order as to costs. If either party wishes to apply for costs, it should notify the other within 7 days and the parties should file and exchange written submissions on the issue of costs within 14 days.

Associate:

Dated:    23 November 2012