Daly Smith Corporation (Aust) Pty Ltd & Anor v Workcover Authority of NSW [2006] HCATrans 475 (1 September 2006)

--

Daly Smith Corporation (Aust) Pty Ltd & Anor v Workcover Authority of NSW [2006] HCATrans 475 (1 September 2006)

Last Updated: 8 September 2006

[2006] HCATrans 475

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S128 of 2006

B e t w e e n -

DALY SMITH CORPORATION (AUST) PTY LTD

First Applicant

THOMAS EDWIN CURTIS SMITH

Second Applicant

and

WORKCOVER AUTHORITY OF NEW SOUTH WALES (INSPECTOR MANSELL)

Respondent

Application for special leave to appeal

CALLINAN J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 1 SEPTEMBER 2006, AT 12.36 PM

Copyright in the High Court of Australia

MR B.W. WALKER, SC: If it please your Honours, I appear with my learned friend, MR B.J.A. SHIELDS, for the applicants. (instructed by Deacons)

MR J.V. AGIUS, SC: May it please the Court, I appear with my learned friend, MR P.M. SKINNER, for the respondent. (instructed by Workcover Authority)

CALLINAN J: Yes, Mr Walker.

MR WALKER: Your Honours, in our submission, it is of self-evident importance that the common law governing how courts should interpret and apply statutes creating offences or regulating their prosecution and punishment should converge as a matter of authority in this Court. The New South Wales legislation has set up a form of judicial hierarchy bifurcated in relation to industrial matters which on the arguments against us which we would seek to test in this Court will prevent that common law being pronounced in a binding fashion with respect to very important offences, offences which, as your Honours appreciate, depending upon policy from time to time, may go so far as to include what has been called politically industrial manslaughter, offences which punish conduct which either posed a risk of or have in fact brought about injury or death in workplaces.

CALLINAN J: Mr Walker, we are going to adjourn and resume at 1.50 pm.

MR WALKER: Yes, your Honour.

CALLINAN J: You might give some thought to the practical consequences in relation to guilt or otherwise in the event that your argument were correct, the argument that you are developing now. We will resume at 1.50 pm.

AT 12.38 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 1.49 PM:

CALLINAN J: Yes, Mr Walker.

MR WALKER: May it please your Honours, the success on our part of an argument about the availability of section 53 as an answer to the commission of an offence on the part of Mr Smith is, of course, peculiar to his position. It does not apply to the corporate applicant. So that success on what I will call the section 53 argument as to its availability would not avail the first applicant at all. Your Honours, while on that, could I take you in the application book to page 89. This is in the learned trial judge’s reasons and in paragraphs 131 and 132 one finds the nub of the case which dealt with the position of Mr Smith under section 50, to which I will come in just one moment.

We submit that properly read that is a passage which shows that being managing director was to the forefront because that gave him authority to put systems in place. The system included putting somebody appropriate in place but that, as one sees at the foot of 89 and the top of 90, the perceived failure was in a shortcoming in the diligence in the adequate supervision of compliance with any system. Now, your Honours, the common law similarly recognises in the law of negligence by employers that one takes into account because it is human nature, indeed, one has to guard against it as an employer because it is human nature, that employees will suffer lapses from time to time.

It would be odd, in our submission, if the notion of influence or control or due diligence, language which appears in section 50 and section 53, were to be construed so as to forbid a person to put in place a system with persons more experienced and expert than the managing director himself to train, for example, in relation to safety at a number of scattered work sites and then to say that the managing director will fail in all due diligence because of something called inadequate supervision of compliance with any system.

Your Honours will have noticed there are no findings of fact at that point in relation to a failure to ensure compliance. The testimony extracted in paragraph 133 on page 90 has as its most concrete the proposition which we would paraphrase at line 37 that Mr Teahan – and it is not suggested it was wrong to select Mr Teahan for this job – was not asked to provide, in effect, the syllabus of training.

Now, it cannot be the case that managing directors either are factually or should be as a matter of law more expert than a person appointed to carry out training of employees than that person himself. In our submission, there is an inadequacy of reasoning which highlights the importance in this serious matter of criminal liability of ascertaining what are the defences available and of examining the way in which the tribunals below construed the statutes.

The statute was construed in particular – may I take your Honours to pages 158 to 160 of the application book. If I could just hand up – it lacks, I fear, from the materials before your Honours – a copy of section 50 as it stood. Your Honours will there see that there is a familiar deeming provision in these criminal provisions whereby certain persons, directors and each person concerned in the management, “shall be deemed to have contravened the same provision”. We interpolate, difficult to see in substance any difference between contravening a provision and committing an offence. In any event, that would appear to be the only verbal distinction between section 50 in this Act and the provisions both of the Crimes Act and of the taxation legislation considered in the High Court authority to which we have drawn attention in our written submission at page 184 of the book, line 22, Hookam v The Queen [1994] HCA 52; (1994) 181 CLR 450.

Now, in Hookam it is very clear that deeming provisions were provisions which were to be construed so as to create an offence. The word “deem” did not mean there was a fiction imposed for the purpose of visiting punishment on somebody but so as to overcome by an onus of proof shift the exercise necessary for a prosecution to prove that a natural person had been relevantly complicit in a corporations offence.

CALLINAN J: Mr Walker, (b) is a very strong provision against employers in that it does not use the word “affect”. It uses the word “influence”.

MR WALKER: Yes.

CALLINAN J: You could influence something without necessarily producing an outcome, I would have thought.

MR WALKER: Now, that is one of the textual reasons – so you have the High Court authority construing the Crimes Act (Cth) and the Tax Act saying a deeming provision for an officer complicit with a corporation does create an offence whereby provisions elsewhere in the legislation requiring the commission of an offence are also applicable in - - -

CALLINAN J: When was this provision introduced?

MR WALKER: It was introduced and it has been amended. Your Honours will see the repeal of paragraph (a) in subsection (1). I do not know whether it precedes 1983 is the question, your Honour.

CALLINAN J: There would be analogues or near analogues in other States I suppose?

MR WALKER: Yes, and, as I say, in the Crimes Act and the Tax Act analogues in relation to deeming someone to have contravened or offended because they are, for example, a corporation officer have been construed in this Court – to which the arguments against us would deny all access – as creating an offence so as to carry in its train all the legislative consequences of an offence being committed whether they are - - -

CALLINAN J: All due diligence, whether that has been used or not, would be very fact specific in any case – in every case.

MR WALKER: There is no doubt about that, your Honour. Our complaint is that we were denied the opportunity not merely to argue for Mr Smith paragraphs 50(1)(b) or (c), but also, and very important, section 53. Could I show your Honours section 53 which is to be found conveniently at page 77 of the application book. This is where we foundered before the Full Bench. At about line 46 your Honours see that there is a defence provided but it is for persons against whom there are proceedings “for an offence”, et cetera. Your Honours there see that there are different tests also fact rich in relation to how that might be essayed and reasonable practicability is one of them and there is:

the commission of the offence was due to causes over which the person had no control and against the happening of which it was impracticable for the person to make provision.

Now, bearing in mind the ineradicable frailty of human nature, in our submission, one would never start an examination of the availability of a section 53 defence by saying that it is automatically defeated upon proving that someone has failed to follow through a system. Much more would be necessary to examine in the facts, including how much was known about the possibility and the likelihood of such failure to the system. All of that has been denied us as a factual defence to a criminal charge because of an interpretation which is, it seems, special to this jurisdiction being a jurisdiction guarded by the privative provision, as the argument against us would have it, from supervision on appeal by the Court of Appeal except on limited points which do not presently arise and, most importantly, therefore guarded against the supervisory, including visitorial, jurisdiction of this Court.

Now, it is not just the possible injustice in the particular case upon which we would rely in this case. There is the serious matter that the law has been construed by this decision and by the number of decisions that your Honours will have seen at page 158 of the application book referred to by the Full Bench in such a way as to treat a person who is going to be punished as somebody who has not committed an offence and therefore is somebody who was not entitled to raise a specific statutory defence to the possibility of an offence.

In our submission, that is at first sight a startling way to construe a criminal statute so as to cut back the availability of a penal statute by giving to the word “deemed” its content as indicating something fictitious rather than real contrary to the position reached in provisions almost the same in the Crimes Act (Cth) and in the taxation legislation of the Commonwealth by this Court. So, in our submission, there are serious matters of regulating important criminal proceedings which are raised at least in Mr Smith’s application.

We then come to the question which is most odd or peculiar of all in our application, namely, how do we get to make an application to this Court from the Industrial Relations Court which is not called the Supreme Court of New South Wales? Now, your Honours have already seen the passage on which we have relied in our written submissions. In Parkin and Cowper v James Sir Samuel Griffith regarded it as a possibility that courts serving the function of the Supreme Court would be within the expression “Supreme Court” in section 73.

This is not a case which raises the antecedent history of the colonies where, as is notorious, there was at least one, perhaps more – one in South Australia – of the courts not regarded as the Supreme Courts and not being the Supreme Courts from which there lay an appeal to the Queen in Council, which would explain the language and has been understood as explaining the language of section 73 referring to other courts. This is a subsequent development by which, as your Honours have seen, provisions of New South Wales enactments take away that which would have been but for those provisions the jurisdiction of the Supreme Court exercised by the Court of Criminal Appeal which has been held to be the Supreme Court for the purpose - - -

CALLINAN J: In BHP Billiton did a similar sort of point arise there? That was an appeal, I think, to a single judge, was it not, from the Dust Diseases Tribunal? Did that not purport to cut off any other appeals? But I do not think this was argued.

MR WALKER: No, there is an appeal from the Dust Diseases Tribunal to the Court of Appeal on matters of law.

CALLINAN J: I thought there was one case where - - -

MR WALKER: This section 73 issue, the identification of what is the Supreme Court - - -

CALLINAN J: I know it is a different point.

MR WALKER: - - - did not arise directly in BHP v Schultz, no, your Honour. Now, it is, of course, impossible to point to authority apart from the observation by Sir Samuel. We have drawn to attention Stewart v The King, but Stewart v The King is rather more remote than the observation which is directly on point by Sir Samuel. It raises a very serious question for a view of the constitutional structure which sees Chapter III as deliberately ensuring that this Court makes the common law by ensuring that nothing important – and certainly these are important criminal convictions – can be entirely insulated from direct binding adjudication by this Court.

CALLINAN J: Section 73 is not concerned simply with the common law of Australia.

MR WALKER: Of course not, your Honour. I referred earlier to the common law of statutory interpretation and that is a long-winded, perhaps unnecessary, way of saying that the proper way of reading statutes is something which is just as importantly reposed in final and sole binding responsibility of this Court as any other aspect of the law, be it judge made or otherwise, and particularly where it is a protection of somebody against a reading of a statute which denies them a defence on the merits factually in circumstances where, as we have put in our written submissions, it would appear the courts below do not even entertain the possibility that the managing director may have a different factual position from the corporation as a whole – something which flies in the face of common sense and experience, where the managing director could not possibly be supposed reasonably to have all the expertises necessary for the management of perhaps 1,000 strong scattered workforce with different training and safety requirements.

It is for those reasons, in our submission, that the combination of the importance from the point of view of these significant criminal offences, plus the high importance of this Court pronouncing upon whether State legislation can preclude this Court from looking at the matter, justifies a grant of special leave. May it please your Honours.

CALLINAN J: Thank you, Mr Walker. Yes, Mr Agius.

MR AGIUS: Your Honours, we have two submissions to make generally in relation to the case that is brought against us. Firstly, it is our submission that the prospects of success, even should this Court hold that it has jurisdiction to entertain an appeal from the Full Bench of the Industrial Relations Court, are so slim as to make this case not an appropriate vehicle for the grant of special leave and, secondly, we do submit that no appeal lies to the High Court from the Full Bench of - - -

CALLINAN J: You should focus on the first, because the second might itself be a special leave point in a sense.

MR AGIUS: Yes, and I would not anticipate that this Court would deal definitively with the second argument in a special leave application.

CALLINAN J: No.

MR AGIUS: In relation to prospects, can I just deal with some of the matters that my learned friend put. His primary submission is that the individual applicant was denied an opportunity to rely upon section 53 defences. Of course, what we do know is that both the primary judge and the Full Bench on appeal dealt with the section 53 defences for the corporation and found that they did not run in respect of that aspect of the charge that was found proved against the corporation. So if the individual applicant had run the section 53 defences in relation to any activity that the company had undertaken, one would have expected the same result.

CALLINAN J: I do not know about that. There is a case here in which recently – and I cannot remember the name of it – a director and a question of contributory negligence or negligence on the part of a director should have defeated his claim and this Court adopted a dissenting judgment, an earlier dissenting judgment of Justice Dawson, which imposed upon the company a liability in negligence, really, entirely independently of the persons who acted or carried out all of the company’s activities. Do you know the case I mean?

MR AGIUS: I cannot put a name to it, your Honours.

CALLINAN J: It involved a trolley, I think, loading a trolley onto a truck.

MR AGIUS: This case is different.

CALLINAN J: Allyacht Spars was the previous case I think with Justice Dawson.

MR AGIUS: It might be Woolworths, your Honour.

CALLINAN J: No, it was not Woolworths. I remember it because I dissented. But, in any event, you can take it that I think that is a fairly accurate summary of what was held. So that the two are not necessarily as a matter of law in this Court coincident in all circumstances and all cases.

MR AGIUS: But one would need to look at section 53 in its context. I am not speaking so much as a matter of common law; I am speaking about the way in which section 53 operates. Your Honours would find section 53 set out in the book of authorities that we have put on. It is a book entitled “RESPONDENT’S AUTHORITIES”. The first case there is Powercoal and the Chief Justice of New South Wales in the course of dealing with Powercoal set out section 53 at page 17 of that book.

What my friend seeks to do is to have section 53 applied to the individual applicant. That would be entirely inconsistent with the words of section 53 itself, in our respectful submission. Firstly, section 53 speaks against a background that the person who is being prosecuted has an obligation under either section 15 or section 16 of the Act. They are the two sections that impose obligations on employers. This individual applicant was not an employer. Now, if you bear that in mind when you read section 53, it is impossible to see how section 53 could work and be available as providing a defence to an applicant who is an individual and not an employer:

It shall be a defence to any proceedings against a person for an offence against this Act or the regulations for the person to prove that:

(a) it was not reasonably practicable for the person to comply with the provision of this Act –

Now, the provision of the Act is section 15.

CALLINAN J: Do we have that?

HEYDON J: It is about eight pages from the end of the applicants’ list of authorities bundle.

CALLINAN J: We have found it, Mr Agius.

MR AGIUS: Section 15 provides that:

Every employer shall ensure the health, safety and welfare at work of all the employer’s employees.

Now, our point is that section 53 was meant to be available to employers and not to directors of companies where the companies are employers. If you bear that in mind, you will see that section 53 cannot apply.

CALLINAN J: Just show me why that is so in the statute.

MR AGIUS:

It shall be a defence to any proceedings against a person for an offence against this Act –

So it shall be an offence against the director – it shall be a defence in proceedings against the director for an offence against this Act for the director to prove that it was not reasonably practicable for the director to comply with the provision of this Act. Now, the director is not charged with a breach of the provision of the Act. The director is guilty against a provision of the Act because of the deeming provision in section 50. So, in order for section 53 to apply, the director needs to be in the position of somebody who is charged with a breach of section 15. He has to be in the position of an employer.

CALLINAN J: And not somebody who is deemed to have been.

MR AGIUS: Well, that is a different matter.

HEYDON J: Your point is that the harshness of section 50 is ameliorated by the provisions in section 50 and there is no need to look to section 53 to ameliorate the provisions?

MR AGIUS: Yes. Indeed, we would go further and say it is a lot easier, that there would be unnecessary duplicity in having both section 53 and section 50 defences available and it is very difficult to conceive of the circumstance in which a section 50 defence would not also involve a section 53 defence.

CALLINAN J: I do not know about that. It seems to me that, for the reason I put to Mr Walker, you can be guilty of an offence under 50 or to which 50 applies if you are in a position merely to influence as opposed to affect an outcome.

MR AGIUS: It is not just influence the conduct of the corporation, but it is influence the conduct of the corporation in relation to its contravention, which means that the director has to have some sort of authority in relation to the contravention of the provision. There is a logic to the way in which section 53 and section 50 work together. If one has a corporation that is charged under section 15, then the section 53 defence is available to that corporation. So before you even get to the stage where the director is deemed to have committed the section 15 offence, the section 53 defences have already been taken into account, otherwise you do not get to a situation where there is a deemed finding of guilt against a director.

HEYDON J: A corporation cannot contravene unless section 53 defences have been negated or not established is your point.

MR AGIUS: Well, yes, that is what we would say. The section 53 defences are available to the corporation and - - -

HEYDON J: If they work, there never was a contravention.

MR AGIUS: If they work, there is no contravention. If they do not work, then you look to the director, but you have already made a decision about section 53 and to then reinvigorate section 53 as part of the director’s defence is unnecessarily duplicitous. It requires you to go back and deal with something that you have already dealt with. Now, we commend, by way of submission, the reasoning which the Full Court set out at page 159 of the application book. Starting a third of the way down the page, paragraph 62, the Full Court there set out all of the reasons which we adopt by way of argument why it is that section 53 does not apply to an individual whose guilt arises because of section 50.

CALLINAN J: Could a prosecution be brought against a natural person without there first having been a prosecution or a conviction of a corporation?

MR AGIUS: Yes.

CALLINAN J: So that in those proceedings, although there is no charging of the corporation, there might be need to prove that the corporation contravened?

MR AGIUS: You have to prove that a corporation contravened the Act before any liability under section 50 arises, even if you do not prosecute the corporation. As I am reminded, even if in separate proceedings the corporation has been convicted, you cannot simply rely upon the conviction. You have to reprove - - -

CALLINAN J: It is an element in the offence against the very - - -

MR AGIUS: It is an element in the proof of section 50 liability. Section 50 is a mechanism by which the individual is fitted with the responsibility of the corporation, so you have to reprove the responsibility of the corporation.

CALLINAN J: You cannot do that under the Evidence Act by tendering a minute of conviction or anything?

MR AGIUS: Not only under the Evidence Act, you cannot do it in terms of the jurisprudence that surrounds this in the Industrial Relations Court. But if you take my learned friend’s proposition and apply it to section 15 and look at how section 53 would operate, you get to, with great respect to my learned friend, a nonsense situation. Section 15 provides that:

Every employer shall ensure the health, safety and welfare at work of all the employer’s employees.

Now, if the managing director were entitled to rely upon section 53 and if that was the design of the Act, then it would mean that that director would be able to rely upon a provision which requires him to prove that it was not reasonably practicable for him to comply with the provision of the Act. Now, what is it that would not reasonably be practicable for him to comply with, ensuring “the health, safety and welfare at work of all the employer’s employees”, but all of those employees are employed by the corporation. It is the corporation that has the primary responsibility to ensure their health and safety; it is not the director or the managing director.

The section 53 defence is appropriate to a party that is charged directly with a breach of section 15(1), but it is not appropriate to a director of the company because the director of the company cannot, and is never intended to, on his or her own comply with the provisions of section 15. The director of the company is required to, if one looks at section 50, ensure that if they are in a position to do what they can to ensure that the company does not commit a breach. That is why section 50 is structured the way it was. One must bear in mind that section 50 places the onus on the individual defendant, not on the prosecution.

CALLINAN J: Yes, thank you, Mr Agius. Anything in reply, Mr Walker?

MR WALKER: Your Honours, the problem with what my friend puts about section 15, that is the use of the word “employer’s”, it does not seem to be an argument that was entertained below and does not seem to play any part in the reasoning which was relied upon as precedent below. It is a new argument and is worthy of consideration, but that would justify special leave.

he problem with the answer about section 53 is that the failure of a defence raised under section 53 which might spare a corporation of being convicted of an offence under section 15 would arise by dint necessarily of a review of the conduct, the capacities, the acts, the omissions, not just of one officer or person concerned in the management, but of a great deal of people, particularly where, as in this case, the employer has employees in a number of different work sites.

A corporation is going to be everywhere present simultaneously in all the different places it has responsible officers whose conduct and knowledge can be imputed to it, but a natural person, be he a managing director or anyone else, can only be in one place at one time. So questions of practicability, indeed, of diligence, indeed, of control, will necessarily involve different matters and for the corporation on the one hand, the natural person on the other, the argument against us is one which denies the same opportunity to point to the actual facts of the actual case in all the circumstances for a natural person as Parliament has clearly given to the corporation.

Where there is doubt or an arguable contention which would spare a person criminal liability, then, in our submission, in accordance with well-established authority, that is something which ought to be taken into account in the interpretation of such a statute. That is a matter which very much ought to be supervised by this Court.

Your Honours, on the second question I should simply say, of course, as to whether special leave is available given the identity or constitutional character of this court in acting in place of the Court of Criminal Appeal, obviously enough that would be a matter that, if it were to go beyond today, would need to be argued before a Bench differently constituted without there being a grant of special leave in relation to it. It would be part of the argument for special leave. May it please the Court.

CALLINAN J: In this case we would refuse special leave because we think there are insufficient prospects of success. Of course, we say nothing about the question of whether an appeal lies to this Court because, as the parties agree, that is not a matter appropriately decided by two Justices alone. With costs? Yes. The application for special leave is refused with costs.

AT 2.24 PM THE MATTER WAS CONCLUDED