Skip to Content, Skip to Navigation
Advertisement

Safeguard OSH Solutions - Thomson Reuters

Safeguard OSH Solutions - Thomson Reuters



OSH Tracker

Department of Labour v Shoestring Dairy Ltd (DC, 21/01/09)

Sentencing Tracker

Offender:
Shoestring Dairy Ltd
Principal Offences:
Failing to ensure that another person was not harmed by action of its
Employee (ss 15 and 50(1)(a) Health and Safety in Employment Act 1992)
Plea:
Guilty
Non-Custodial Sentences:
$10,804 reparation, $46,800 fine, plus solicitor’s fee of $250 and court
costs of $130
Mitigating Factors:
Reparation offer
Early guilty plea
Co-operation during investigation
Remedial action to prevent like accidents occurring
Victim:
Male
Male
Offender:
Marchwood Farms Ltd
Principal Offences:
Failure by principal to ensure no harm came to contractor/employee of contractor while doing work contractor engaged to do (ss 18(1)(b )and 50(1)(a) Health and Safety in Employment Act 1992)
Plea:
Guilty
Non-Custodial Sentences:
$38,500 fine, $10,804 reparation plus solicitor’s fee of $250 and court
costs of $130
Mitigating Factors:
Guilty plea
Cooperation with investigation
Remedial efforts
Reparation offer
Victim:
Male
Male

OSH Tracker

Defendant:
Shoestring Dairy Ltd
Shoestring Dairy Ltd was fined $46,800 and ordered to pay $10,804 in reparations after a man suffered serious injuries when his leg was caught by a grain auger which was being used without a hopper guard. Shoestring operates a sharemilking business on the Otago farm, and was charged under s 15 of the HSE Act. The man’s left calf was caught by the auger as grain flowed into it, digging into his leg. In undergoing treatment for the ‘degloving’ injury he also contracted a serious infection and since developed eczema. He has no feeling on the bottom of his foot and back of his heel due to a loss of tissue, and suffers chillblains due to a limited supply of blood. His tendon has been shortened and his calf is disfigured. Working long hours causes inflammation and pain. The DoL said it was clear the auger should have only been used with hopper guard, and the risk of harm was obvious ( Oamaru DC, January 21). 
Industry:
Agriculture, Forestry and Fishing
Sub-Industry:
Agriculture
Risk:
Machinery (trapped, crushed, cuts)
Harm:
Injury
Penalty Amount:
$46800.00
Reparation Amount:
$10804.00
Appeared in Safeguard issue 116

Judgment Text

NOTES OF JUDGE S J O'DRISCOLL ON SENTENCING 
Judge S J O'Driscoll
Introduction 
[1]
The first defendant company, Shoestring Dairy Limited (“Shoestring”) has pleaded guilty to one charge brought under s 15 of the Health and Safety in Employment Act 1992 (the Act). An employer's obligation under s 15 is to take all practicable steps to ensure that no action or inaction of any employee while at work harms any other person. 
[2]
The second defendant company, Matchwood Farms Limited (“Marchwood”) has pleaded guilty to one charge brought under s 18 of the Act, whereby the second defendant failed to take all practicable steps to ensure no employee of its contractor was harmed while carrying out the work as contracted to do. 
[3]
Both charges arise from an accident that occurred on Brookstead Farm on 18 January 2008. Pursuant to s 50(1)(a) of the Act, each defendant is liable to a fine not exceeding $250,000. 
Background 
[4]
At the time of the accident, Shoestring operated a sharemilking business on the Awamoko Dairy Farm in North Otago. Shoestring employed Jonathan Rowe to manage the sharemilking on the dairy farm and Matthew Bruno as the farm manager. 
[5]
Awamoko Dairy Farm is owned by Marchwood, which also owns Brookstead Farm. At the time of the accident Marchwood employed Ross Weir as farm manager on Brookstead Farm. 
[6]
It became necessary to move some grain stored in a silo on Brookstead Farm to a silo on Awamoko Farm. Mr Weir contracted Bennett Transport to transport the grain on behalf of Marchwood. As well as a truck and trailer to transport the grain between farms, an elevating grain auger was required to shift the grain from the silo into the truck and trailer. 
[7]
On Tuesday 15 January 2008 Mr Rowe brought a Grey Engineering Ltd elevating grain auger (“the auger”) to Brookstead Farm from Awamoko Farm. The auger is co-owned by Marchwood and a third party. A tractor was required to transport the auger and when in operation the auger is powered by a tractor power take off (PTO) drive shaft. To tow the auger, its hopper guard must be removed from the bottom of the auger and mounted in a transportation position part way along the tube. The hopper guard was thus removed for transportation. 
[8]
Mr Rowe met with Mr Weir at the silos on Brookstead Farm where they were required to dig a hole beneath the door of silo three from which the grain was to be removed. The hole was necessary in order for the silo to be emptied of grain. Two 100-litre drums were placed on either side of the hole. The auger was not positioned in the hole at that time, as a tarpaulin was needed to line the hole so as to prevent grain spill and to protect the grain from picking up moisture, oil, dirt or dust. The auger was to be placed in the hole so that when the door to the silo was opened the grain would run into the hole and the auger would carry the grain up and into the waiting truck. 
[9]
Mr Rowe and Mr Weir discussed the method for getting the grain from the silo into the truck. Mr Weir told Mr Rowe that it would be easier not to use the hopper guard on the auger. Mr Rowe subsequently told Mr Bruno, the farm manager on Awamoko Dairy Farm, who would be moving the grain with the driver from Bennett Transport that the auger would work better without the hopper guard in place. 
[10]
At about 11.30am on Friday 18 January 2008 Alan Johnston, the driver from Bennett Transport, arrived at Brookstead Farm. He pulled the truck up near to the silos. Mr Bruno and Mr Johnston put the tarpaulin in place and pulled the auger around so that one end of the auger was sitting down into the hole. Mr Bruno connected the auger and the tractor's PTO and set the auger going. Mr Bruno then unbolted the silo door and Mr Johnston pulled the door open so that the grain could spill down into the auger. Neither Mr Bruno nor Mr Johnston attached the hopper guard to the auger. 
[11]
When the truck was loaded, Mr Bruno set the tractor into idle so that auger would slow and Mr Bruno and Mr Johnston attempted to shut the silo door to halt the flow of grain. Mr Bruno, standing to one side of the auger, was preparing to bolt the door when it closed. Mr Johnston, standing to the other side of the auger, pushed on the silo door with his left foot in a way that meant that his left foot was positioned above the moving auger. As the grain flow into the auger lessened, the auger tilted catching Mr Johnston's left calf and digging into his leg. Mr Johnston managed to free his leg and Mr Bruno who also called emergency services took him to hospital. Mr Johnston was transferred to ambulance on route. 
Practicable steps 
[12]
The practicable steps the Department of Labour says could have been taken by Shoestring are as follows — 
i.
Undertaken a hazard analysis or provided a work plan that would have identified the hazardous nature of the process prior to the grain transfer. 
ii.
Instructed Mr Bruno to use the hopper guard when transferring grain from the silo at Brookstead Farm to the Bennett Transport truck. 
iii.
Provided information on the use of the auger. 
iv.
Ensured Mr Bruno was adequately trained in the use of the auger. 
v.
Ensure Mr Bruno was adequately supervised in the process of using the auger when transferring the grain from the silo at Brookstead Farm to the Bennett Transport truck. 
[13]
The practicable steps the Department of Labour says could have been taken by Marchwood are as follows — 
i.
Ascertained from its contractor, Bennett Transport, the methodology for the proposed work. 
ii.
Ensured its contractor had identified hazards associated with the work and had in place controls for managing those hazards prior to commencing work. 
iii.
Checked that the work methodology of its contractor was implemented. 
iv.
Instructed Mr Bruno to use the hopper guard on the auger when transferring grain (Mr Weir, Marchwood's employee, having failed to advise Shoestring (the employer of Mr Bruno) how the transfer of grain was to be property done, that is, with the hopper guard in place). 
Impact on the Victim (Alan Johnston) 
[14]
At the time of the accident Mr Johnston was employed by Bennett Transport, having been driving for over 30 years. As a result of the accident, Mr Johnston suffered what was effectively a “degloving” injury to his left lower leg. In Mr Johnston's case this involved a laceration of the skin, partial laceration of the Achilles tendon and complete disruption of the posterior tibial neurovascular bundle. He required urgent surgical intervention and subsequent nerve and skin graft operations. While undergoing treatment Mr Johnston contracted a serious infection affecting the graft over his tendon and has developed eczema in respect to the injury. He now has no feeling on the bottom of his left foot and the back of his left heel due to a loss of tissue and suffers chilblains due to the limited supply of blood. His tendon has been shortened and Mr Johnston's calf is disfigured. 
[15]
Although Mr Johnston has returned to work since the accident, his hospital care and rehabilitation meant that he missed out on extra work opportunities during the summer and autumn season. He is unable to work to the degree that he did prior to the accident and finds particularly short haul work difficult due to the necessary use of his leg injured in the accident. Working long hours causes ongoing inflammation and pain to Mr Johnston, he continues to have occasional nightmares and the scarring to his lower leg is significant. He is restricted in his recreational activities and in carrying out activities around the home. 
Approach to sentencing 
[16]
There is an approved two step approach to sentencing under the Act as confirmed by Priestley J in Department of Labour v Areva T & D New Zealand Ltd HC Rotorua CRI-2005-463-042 9 November 2005, endorsing the approach indicated by Judge Abbott in Department of Labour v Ferrier Woolscours (Canterbury) Limited [2005] DCR 356Has Cases Citing which are not known to be negative[Green] . Priestley J observed 
“[36]
… There is obvious sense in the two step approach … If, having regard to the relevant criteria, the court imposes a reparation sentence, then obviously, as a next step, whether or not to impose a fine and if so the quantum of the fine, must be considered in the light of all Sentencing Act criteria and in particular the totality principle and the overall appropriateness of sentences and orders imposed. ”
[17]
The two step approach does not preclude a fine being imposed in situations where an order for reparation is not made: see Areva. Justice Priestley did observe, however, in Transmission Equipment Maintenance Company Ltd v Department of Labour HC Rotorua CRI-2006-436-009 at [14] that the two step approach, while it made obvious sense, was not a binding rule to be followed in every case. The consideration of whether to impose a sentence of reparation would therefore be logically prior to consideration of the imposition of a fine. 
[18]
In Street Smart Duffy J was required to consider whether the sentencing Judge had erred in reducing the quantum of the fine to be imposed effectively taking a dollar for dollar approach taking into account the reparation agreed upon through a restorative justice process and approved by the Court. Duffy J, after setting out the judicial approaches to the application of the totality principle in considering the effect of reparation payments on the amount of fine imposed, stated a preference for the view of Priestley J expressed above and commented that: 
“[45]
… It follows that orders for reparation are to be viewed as part of the total sentencing package. The impact of reparation on a fine will depend on the circumstances, with the totality of the combined penalty of reparation and the fine being the guiding principle. ”
[19]
Following this observation, Duffy J went on to say: 
“[50]
I consider that the approach for a Court to follow is first for reparation to be set at an appropriate level, which, when there is agreement between the parties, will be the agreed amount. The Court then fixes the amount of the fine. This should be done in a principled way which outlines the various considerations. Where the fine is fixed at a low amount due to the offender's financial capacity, this factor should be separately identified after the general principles relating to fixing a fine are identified and considered. The offender's financial capacity should not, for example, influence the choice of starting point. The principles should be applied in a way that arrives at a fine that is generally appropriate for the level of offending and which takes account of any aggravating and/or mitigating circumstances of the offender. I consider that the emotional aspects of making reparation (being a reflection of an offender's remorse and desire to make amends to his or her victim) should be included in the discount given for mitigating factors. The figure then arrived at needs to be considered in terms of s 40(1) to (4) and altered, either up or down, to the extent that the offender's financial capacity to pay the fine is taken into account in fixing the final amount. This is the time to take into account the effect, if any, on the fine of an order for reparation. 
[51]
It follows that I agree with the views Pankhurst J expressed in Steelbro that it is wrong in principle to fix a starting point on the high side and then, after consideration of mitigating factors, effect a dollar for dollar reduction of the fine to take into account the reparation orders made. Such an approach distorts the general principles of sentencing. ”
[20]
It is clear that s 51A of the Act, in addition to the principles and purposes of the Sentencing Act 2002, guides sentencing in this case. Section 51A provides 
“51A Sentencing criteria 
(1)
This section applies when the Court is determining how to sentence or otherwise deal with a person convicted of an offence under this Act. 
(2)
The Court must apply the Sentencing Act 2002 and must have particular regard to— 
(a)
sections 7 to 10 of that Act; and 
(b)
the requirements of sections 35 and 40 of that Act relating to the financial capacity of the person to pay any fine or sentence of reparation imposed; and 
(c)
the degree of harm, if any, that has occurred; and 
(d)
the safety record of the person (which includes but is not limited to warnings and notices referred to in section 56C) to the extent that it shows whether any aggravating factor is absent; and 
(e)
whether the person has— 
(i)
pleaded guilty: 
(ii)
shown remorse for the offence and any harm caused by the offence: 
(iii)
co-operated with the authorities in relation to the investigation and prosecution of the offence: 
(iv)
taken remedial action to prevent circumstances of the kind that led to the commission of the offence occurring in the future. 
(3)
This section does not limit the Sentencing Act 2002. ”
[21]
Duffy J, observed in Department of Labour v Street Smart Ltd HC Hamilton CRI-2008-419-026 8 August 2008 at [33] that the criteria in s 51A(2)(a)-(d) are relevant to the fixing of the starting point while that in s 51A(2)(e) is relevant to credit. Subparagraph (e), therefore, provides for matters that can be taken into account when considering mitigating factors relating to the offender, however, as Duffy J said “the influence of any of those factors in a given case and their weighting is at the discretion of the sentencing Judge”
Reparation 
[22]
The sentencing regime that considers reparation, (see particularly s 12 and ss 32, 33, 34 and 38) makes it clear that a Court must impose a sentence of reparation where it is lawfully entitled to, unless satisfied that to do so would result in undue hardship or other special circumstances make it inappropriate. 
[23]
The informant has calculated economic loss for the victim in this case as being $6,608 and submits that emotional harm reparation should be ordered at the sum of $15,000 — a total of $21, 608. 
[24]
As to the capacity of any defendant to pay reparation and taking into account whether a defendant is insured against reparation payments, Ronald Young J is clear as to the approach to be taken by the Court, saying: 
“[17]
… A Judge's function is to identify what the properly level of reparation is in a particular case. The Judge then must consider the offender's capacity to pay. If capacity to pay is unlimited, that does not justify any increase in a reparation order because an offender is insured or wealthy. At best, the victim will get the full amount which can be justified. ”
[Emphasis added] 
[25]
Further, s 56I of the Act expressly prohibits insurance against fines but the Act is silent as to prohibition of insurance against reparation orders. This silence is an expression by Parliament that employers are permitted to insure against reparation orders. Section 10(1)(a) of the Sentencing Act 2002 permits financial offers of amends to be made both by and on behalf of an offender. Consequently if a third party makes financial amends on behalf of an offender, this will diminish the impact of any consequential reparation order for that offender. Therefore, whether an offender is insured against reparation orders will be practically relevant to any assessment of that offender's capacity to pay a fine under s 40(1) of the Sentencing Act 2002. 
[26]
In the circumstances of this case, where the payment of reparation is likely to be shared between two defendants, the impact of reparation on the ability to pay a fine may be lessened. 
[27]
The view I have taken, after considering the matters raised above is that it is appropriate to make an order for reparation in the amount sought by the informant. That will be the sum of $21,608. The order for reparation will be divided equally between each defendant resulting in ach defendant be required to pay $10,804. 
Fine 
[28]
The informant submits that the disparate purposes served by the sentences of fine and reparation need to be noted, particularly referring the Court to Police v Ferrier HC Auckland CRI-2003-404-195 Harrison J: 
“[15]
A fine is essentially punitive; it is a pecuniary penalty imposed by and for the state. By contrast, an order for reparation is compensatory in nature, designed to recompense an individual or her family for financial loss or emotional harm suffered as a result of another's offending (s 32(1)). The two are conceptually different and serve disparate purposes. ”
And to the following observations of Priestley J in Department of Labour v Areva T & D New Zealand Ltd HC Rotorua CRI-2005-463-042
“[38]
There is nothing improper about imposing a fine where Parliament has imposed one. A fine is a penalty and a sentence. 
[39]
In my judgment, given the clear purpose of the Act is to promote and enforce workplace safety, and given the fairly recent Parliamentary increase of the maximum penalty from $50,000 to $250,000 it would be a rare case indeed for a conviction not to be met by the imposition of a fine. ”
[29]
I accept the informant's submission that this is a case where a punitive sentence is appropriate and that in the context of a fine, the purposes of accountability, responsibility, denunciation and deterrence are particularly relevant. 
[30]
The informant submits that the following factors are relevant to Shoestring: 
i.
It was clear that the auger should only be used with the hopper guard; The risk of harm by using the auger without the hopper ii. pper guard was obvious; 
iii.
The hazard could easily been controlled by Shoestring through simple training, planning and communication; and 
iv.
The harm suffered by Mr Johnston was serious and could have been fatal. 
[31]
The Department of Labour submits that in taking into account the above matters a starting point of $87,500 (25% of the maximum penalty) would be appropriate for offending, which the informant submits must be in the medium range. The Department submits that an adjustment for the mitigating factors of an early guilty plea, co-operation during the investigation and the victim's own experience in using augers should be made. The Department submits that a discount of 25% for guilty pleas and 10% for co-operation would result in an appropriate end sentence of $56,875, which should not be reduced further as Shoestring is insured for reparation. 
[32]
In response, Shoestring submits that its employee, Mr Rowe, had consulted with Mr Weir, the farm manager at Brookstead Farm as to the method of transferring grain from silo three. Mr Weir accepted that advice. Neither Mr Weir nor Mr Rowe was present on the day the accident occurred. Prior to the accident neither Mr Bruno nor Mr Johnston discussed with the other the hopper guard and neither attempted to ensure it was in place despite both having some experience in using an auger. 
[33]
I note at this point the broad assessment of the full bench of the High Court in Department of Labour v Hanham and Philp Contractors Limited HC Christchurch CRI-2008-409-002 18 December 2008 Randerson and Panckhurst JJ at [57] as to the following scale for the fixing of starting points: 
Low culpability: 
a fine of up to $50,000 
Medium culpability: 
a fine of between $50,000 and $100,000 
High culpability: 
a fine of between $100,000 and $175,000 
[34]
My assessment of the appropriate starting point for the fine for Shoestring is $90,000. In determining the culpability of Shoestring as being to the higher end of the medium level I have taken into account that fault does not lie solely with Shoestring in this instance; however, the hopper guard was at hand and could have been put in place despite the prior indications that the work would be more easily carried out without the guard. 
[35]
As to mitigating factors relating to Shoestring, Shoestring has no previous convictions or breaches under the Act, a guilty plea was entered at the earliest opportunity, it co-operated in the investigation and has made an offer of amends in line with any court-ordered reparation. Mr Rowe, who is also a director of Shoestring as well as being employed by it to manage the sharemilking business, contacted Mr Johnston immediately after the accident to offer his apologies and visited the victim, with Mr Bruno, at his home sometime in May 2008. Further, Shoestring Diary Ltd has taken remedial action to prevent like accidents occurring. There are no aggravating factors. 
[36]
Shoestring are entitled to a discount from the starting point I have referred to above in the vicinity of 33% for the early guilty plea and a further 15% to recognise the remaining mitigating factors as set out above. Accordingly, the fine I impose on Shoestring is $46,800. 
[37]
The Department of Labour submits that the following factors are relevant to Marchwood: 
i.
The hazard was obvious and the failure to communicate proper safety requirements for use of the auger contributory; 
ii.
The harm risked by using the auger without the hopper guard was serious such that the actual consequences could have been more severe including potentially fatal; 
iii.
The hazard could easily been controlled by Marchwood through ensuring its contractor had identified the hazards associated with the work and had controls in place to manage those hazards; and 
iv.
The harm caused was serious. 
[38]
The informant submits that the gravity of the offending, taking into account the potential for harm, the degree of harm suffered and a medium level of culpability (to what it assesses as slightly less than that of Shoestring) requires a starting point of $80,000. The Department submits that Marchwood is entitled to a reduction from the starting point in light of its guilty plea and that it was co-operative throughout the investigation. The Department submits that an aggravating factor is that Marchwood had the requisite knowledge of the silo set up and knowledge of how to use the auger and guard. This matter, however, cannot be taken into account as an aggravating factor as it forms part of the assessment of culpability and fixing the starting point. 
[39]
Given that Marchwood's guilty plea was not entered at the earliest opportunity, the informant submits that the starting point should be reduced by a total of 30% (being 20% reduction for the guilty plea and 10% for co-operation) meaning that the final fine, in the informant's view should be one of $56,000. 
[40]
Counsel for the Marchwood, acknowledging the effect on the victim and the consideration of the degree of harm, submits that Marchwood's culpability should be assessed as low when the following factors are taken into account: 
i.
Marchwood was not in control of the work place at the time of the accident; 
ii.
The employees involved were the employees of the contractors; 
iii.
The employees were aware of the Health and Safety requirements and acted in breach of those requirements; and 
iv.
The employees were experienced in the use of the machinery. 
[41]
Further, it is submitted that the Marchwood has no previous prosecutions or convictions and a good record in respect of past accidents, entered a guilty plea, co-operated with the investigation, has taken steps to prevent any further accidents of this nature occurring and an offer of reparation. Counsel submits that an appropriate starting point would be $30,000 with discounts of 30-35% for the guilty plea and co-operation, 25-35% for remedial steps taken by the defendant and 20-30% for reparation (a total discount of 75-100%), resulting in a fine of $7,500. Counsel submits that this figure also takes into account that Marchwood was not solely responsible for the accident. 
[42]
My assessment for the appropriate starting point for the fine for Marchwood is $70,000. I do not accept the assessment of Marchwood's culpability as being “significantly” less than that of Shoestring to such an extent that the appropriate fine should be in the vicinity of $7,500. In pleading guilty to the offence as charged, Marchwood must be taken as accepting, in light of no disputed facts hearing to the contrary, that it had failed to take all practicable steps to ensure that the site was safe and that the work to be carried out by its contractor on site was to be completed in a safe manner. In particular, there was a complete failure to advise that the work should be carried out only with the hopper guard in place when that risk of harm in not doing so was significant. I have, however, taken into account in assessing culpability that Marchwood was not the only party at fault. 
[43]
Marchwood are entitled to a discount from the starting point I have referred to above in the vicinity of 30% for their guilty plea and a further 15% to recognise the remaining mitigating factors as set out above. Accordingly, the fine I impose on Marchwood is $38,500. 
Financial capacity and overall assessment 
[44]
Shoestring has filed information on its financial capacity, however Marchwood has not. I am satisfied that no adjustment needs to be made to the fine I have indicated should be paid due to lack of financial capacity or otherwise. 
[45]
I can see no disproportion in the overall imposition of the reparation orders and fines imposed as set out above. 
Insurance 
[46]
Submissions where made in respect of the effect of a defendant having insurance against an order of reparation being made following a conviction under the Act. In light of the comments of Randerson and Panckhurst JJ in Department of Labour v Hanham and Philp Contractors Limited HC Christchurch CRI-2008-409-002 18 December 2008 I consider that the proper response is to have regard to this matter when assessing the financial capacity of the defendant to pay a fine, reparation or both, including whether a fine may be increased to properly take account of the purposes of sentencing. In this case I do not believe insurance is a relevant consideration and I have not increased or decreased the fine due to insurance impacting on financial capacity. 
Other comments 
[47]
I apologise for not releasing this decision earlier. I had hoped to release the decision, as I indicated prior to Christmas, but I wanted to consider the recent decision of Randerson and Pankhurst JJ. 
Summary 
[48]
Shoestring Dairy is ordered to pay $10,804 in reparation and a $46,800 fine. 
[49]
Marchwood Farms Ltd is ordered to pay $10,804 in reparation and a $38,500 fine. 
[50]
Both defendants are also ordered to pay a solicitor's fee of $250 and court costs of $130. 

From OSH Tracker

Table of Contents