Falling from Heights – Courts consider imposing fines which might crush business viability


In recent years, District Court Judges have dramatically increased the penalties that businesses, their staff and owners (officers) face for Workplace Health and Safety (WHS) breaches. Firmly within their sights has been matters of workers falling from heights - and arguably rightfully so.

Despite this, the recent involvement of Hicksons Lawyers in a fall from heights prosecution delivered a verdict that demonstrated that the Courts are not aimlessly imposing crushing fines with the sole purpose of destroying the culprit business. Rather, subject to the circumstances, the Courts are still willing to exercise their discretion to significantly reduce the penalty imposed.
Reviewing the specifics of this case provides insight for employers about the Court's current approach.

What happened on the day?
The circumstances involved an all-too-common fall from height where there were little in the way of protective measures in place.
SafeWork NSW’s reaction

A prosecution was commenced by SafeWork NSW against both the Company (the employing business) and the director of the Company. After a successful negotiation period, charges against the director of the Company were dropped by SafeWork NSW.

Despite this, objectively the facts of the case indicated that a sizeable fine was likely unavoidable. The impact of a large fine would be crushing for the defendant as a small business, with the potential to impact future business viability.

A surprise from the Judge

Interestingly, in her judgement Her Honour exercised her discretion to give considerable weight to the mitigating circumstances. This resulted in the fine imposed being significantly reduced. 

In coming to her decision, Her Honour provided the following reasons:

  1. The defendant is a corporate citizen of good character and has made significant charitable donations.

  2. The defendant has good prospects of rehabilitation.

  3. The defendant has demonstrated its remorse. The defendant has done this in part by implementing many measures to minimise the risk since the incident, at a significant cost.

  4. The defendant co-operated with SafeWork NSW during its investigations.

  5. The defendant entered a plea of guilty early, which demonstrates remorse and acceptance of responsibility for the incident.

Capacity to Pay

In exercising her discretion to reduce the penalty, Her Honour also placed considerable weight on the capacity of the business to pay a substantial fine. In doing so, she found that financial statements showed a recent loss, the company had few assets, and a crushing fine would likely put the company into liquidation.

All this was true.

Accordingly, the court imposed the following:

  1. The defendant was convicted and fined $400,000.00 for the offence.

  2. This was automatically reduced by 25% to reflect the plea of guilty, leaving a fine of $300,000.00.

  3. Exercising discretion under s 6 of the Fines Act 1996 (NSW), the fine was further reduced by 50%, for the reasons outlined above.

  4. The defendant was ordered to pay a fine of $150,000.00.

Following this judgement, it appears there were two persuasive factors in the final decision:

  1. Firstly, the defendant took active steps and implemented new safety systems, equipment and training for his employees all at a considerable cost. Unsurprisingly, the genuine remorse shown by the defendant, and the actual practical steps taken by the defendant were viewed favourably.

  2. Secondly, and arguably more surprisingly within the context of the recent decisions, was the significant weight given to the financial capacity (or lack thereof) of the defendant and how a fine significant would effectively destroy (or ‘crush’) the company.

It is a timely reminder that the purpose and fundamental duty of the Court is general deterrence. That is, the Court has demonstrated an ongoing commitment to compel attention to WHS issues, so that persons are not exposed to risks to their health and safety at the workplace.

The imposition of crushing fines may be a relevant deterrent – however it is not the only option available. As this decision shows, in the right circumstances, discretion regarding significant fines remains an important consideration for the Court.

Critically, this case again demonstrates that it is more important than ever to be intentional both in preventing risks and managing the aftermath. It is timely that business owners and managers prioritise these issues because maximum penalties for Category 1 WHS offences (offences involving gross negligence or reckless conduct) were recently increased from:
  • ​$3,992,492 to $10,424,983 for bodies corporate;
  • $798,383 to $2,168,029 for officers and individual persons conducting a business or undertaking like sole traders; and
  • $399,479 to $1,041,992 for other individuals.

Those recent changes also double the maximum jail term for these offences from five to 10 years, increase other fines by approximately 40 per cent, and provide the police with the power to enforce compliance and issue penalty notices under WHS laws.

Finally, the changes also extend provisions which ban the ability to mitigate business risk though insurance. Specifically, it prevents insuring against WHS penalties by clarifying that any such contracts (made after June 2020) are void.

As always, some attention to business policies and procedures, along with reviewing workplace practices from time to time is key to protecting your business, workers, and key decision makers.

Please contact Hicksons’ Partner, Warwick Ryan, at [email protected] should you need any assistance or guidance.

Post by Hicksons’ Partner, Warwick Ryan.

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