INSPIRED ENTERPRISES LIMITED v WORKSAFE NEW ZEALAND [2023] NZHC 1539

INSPIRED ENTERPRISES LIMITED v WORKSAFE NEW ZEALAND [2023] NZHC 1539 [20 June 2023]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECRI-2023-409-34[2023] NZHC 1539BETWEEN INSPIRED ENTERPRISES LIMITEDAppellantAND WORKSAFE NEW ZEALANDRespondentHearing: 14 June 2023Counsel: G N Gallaway and J B Lill for AppellantT H C Braden for RespondentJudgment: 20 June 2023JUDGMENT OF RADICH J[1] Inspired Enterprises Limited (IEL), operated by its director and 50 per centshareholder Jonathan Cole, provides in-home flooring services.1 It gives quotationsand arranges product but engages contractors to carry out installation work.[2] In June 2021, IEL engaged a contractor, Lawrence Gannaway (Mr Gannaway),to remove and replace flooring in a Christchurch house. When lifting the carpet,Mr Gannaway encountered an old vinyl floor covering beneath it. In removing loosepieces of the vinyl, Mr Gannaway found that they were likely to contain asbestos.Asbestos fibres could, at that point, have been released into the air.[3] Mr Gannaway did not tell IEL at the time. When IEL learned of it, two dayslater, it arranged for another contractor to seal the area and to make it safe.1 The other shareholder in IEL is Mr Cole's wife.[4] Testing arranged by the homeowner indicated that the vinyl containedchrysotile asbestos and subsequent monitoring tests showed airborne fibre levels to beacceptable.[5] IEL was charged, under ss 36(2), 49(1) and 49(2)(c) of the Health and Safetyat Work Act 2015 (the Act), for failing to comply with a duty to ensure, so far asreasonably practicable, that the health and safety of other persons, including theoccupier of the Christchurch property, were not put at risk from the work carried outat the property.[6] Mr Gannaway was charged separately under the Health and Safety at Work(Asbestos) Regulations 2016 (the Regulations) for failing to ensure that asbestos thatwas likely to be distributed was identified and removed.2[7] IEL and Mr Gannaway, having pleaded guilty to the charges, were sentencedby Judge Couch in the District Court on 16 February 2023. The Judge ordered IEL topay a fine of $52,500, to pay $1,235.84 to WorkSafe as a contribution to its costs andto pay court costs of $130.3 The maximum penalty for the charge it faced was$500,000. Mr Gannaway was fined $1,100 and ordered to pay court costs of $1304 –the maximum penalty for the charges he faced was $10,000.[8] The appeal is brought on the following grounds:(a) that the Judge erred in his assessment of the facts and of points made inthe submissions for IEL; in particular:(i) the Judge said that IEL received positive test results for theasbestos-containing material but failed to inform a third partycontractor who then carried out work at the property.5 In fact,IEL had not received any test results but had it notified thecontractor that testing was being carried out; and2 Health and Safety at Work (Asbestos) Regulations 2016, reg 26.3 WorkSafe New Zealand v Inspired Enterprises Limited and Lawrence Gregory Gannaway [2023]NZDC 2844 at [45].4 At [56].5 At [5](f) and (g)].(ii) the Judge said that counsel for IEL had sought a dischargewithout conviction when the submission for IEL was that aconviction and discharge was appropriate; 6(b) that the Judge failed to make provision for several relevant mitigatingfactors;(c) that the impact of the conviction and the least restrictive outcome – inthe form of conviction and discharge – were not assessed; and(d) that the fine of $52,000 was excessive and a different sentence shouldhave been imposed.[9] WorkSafe New Zealand, the respondent (WorkSafe) admits the factual errorsmade by the District Court Judge but submits that the Judge assessed appropriately thestarting point, the mitigating factors and the proportionality of the fine in all of thecircumstances. It says that the Judge's errors were minor and that there was nodemonstrable error in the sentence.Summary of facts[10] IEL was engaged by the owner of a Christchurch property (the homeowner) on10 April 2021 to remove and replace her existing floor coverings. IEL, in turn,engaged Mr Gannaway to undertake the floor preparation work which includedremoving carpet and underlay from the dining area and removing ceramic tiles fromthe dining area.[11] The homeowner continued to live in the house while a range of refurbishmentwork was carried out. She had engaged several companies to undertake the work andwas, essentially, supervising the process.6 At [28].[12] Neither IEL nor Mr Gannaway identified a risk of asbestos being disturbed bythe flooring work before work began. They did not put in place a process to assessany such risk.[13] On 21 June 2021, after Mr Gannaway lifted the carpet and underlay, vinyl floorcovering was discovered. Mr Gannaway said that some of the vinyl was loose, so thatit lifted when the carpets were pulled up. The homeowner believed the vinyl to havebeen intact when the carpets were removed. In any event, loose sections of the vinylwere lifted and removed by Mr Gannaway. Some of it was broken in the process.While Mr Gannaway was removing parts of the vinyl, he identified a risk that the vinylproduct may have contained asbestos. He told the homeowner of the risk. He thenput the broken vinyl pieces into the back of his vehicle. In lifting the vinyl andremoving it from the house, Mr Gannaway disturbed the backing of the product –which had the potential to release asbestos fibres into the air. The asbestos wastransported by Mr Gannaway and disposed of in a waste bin provided by IEL, butwhich was not approved for asbestos disposal. Mr Gannaway did not tell IEL aboutany of this.[14] Exposure to asbestos carries with it a risk of developing asbestos-relateddiseases and disorders of the lungs and pleura (the tissue that wraps around the outsideof the lungs). The risk comes about through the tiny asbestos fibres that are releasedinto the air when asbestos-containing material are disturbed.[15] While the vinyl was being removed by Mr Gannaway, two workers came tothe property to begin preparation work for painting. Mr Gannaway told them aboutthe asbestos flooring and they worked in the kitchen for the rest of the day.[16] On 23 and 24 June, a kitchen contractor was at the property to install kitchencabinets. He had concerns about the damaged asbestos flooring and raised them withthe homeowner. The homeowner told the kitchen contractor that Mr Gannaway, too,had suspected that the damaged flooring contained asbestos. The kitchen contractorspoke to his head contractor and raised his concerns, and he spoke also with IEL andMr Gannaway. This is the point in time at which IEL became aware of the issue.[17] Mr Cole from IEL spoke with Mr Gannaway and asked why he had not calledhim when the vinyl was lifted so that he could have arranged for the immediate sealing(referred to as "encapsulation") of the existing vinyl. In any event, Mr Cole thenarranged for another contractor called Vinyl Installations to encapsulate the old vinylby installing a product called Thinsulate together with vinyl planking in the affectedareas the following week. He told Vinyl Installations about the asbestos issue, thattesting was underway to confirm whether the vinyl contained asbestos and, becausehe (Mr Cole) had not been to the site himself, he asked Vinyl Installations to carry outits own risk assessment before entering the site and beginning work.[18] This – together with a failure to assess risk before the work began – was thewindow in which IEL's culpability falls to be assessed. When it learned of the asbestosissue, a plan needed to be prepared to better manage the work from that point; toconsider whether work should have stopped until the test results were through.[19] The series of events from the point in time at which IEL became aware of theissue included the following:(a) On 25 June 2021, the head contractor for the kitchen work withdrew itsservices until it was safe to work.(b) On 25 June, the homeowner engaged Canterbury Home InspectionsLimited to undertake an asbestos test.(c) On 28 June, the asbestos test was conducted and the homeowneremailed all of the contractors, including IEL, notifying them of thetesting.(d) On 29 and 30 June, Vinyl Installations installed Thinsulate and vinylplanking in the areas over the top of the asbestos vinyl as mentionedabove.(e) On 1 July, the asbestos testing results were received and indicated thatthe vinyl contained chrysolite asbestos.(f) On 5 July, the homeowner arranged an asbestos air test to see if it wassafe for works in the kitchen and dining room to continue. This testindicated that airborne fibre levels were acceptable. Further surfacetesting gave positive results. An environmental clean wasrecommended to remove contamination.(g) On 9 July, the homeowner engaged a specialist company to undertakethe environmental clean and engaged another specialist company totake two swab samples following the clean. The swab samplesconfirmed there to be no asbestos fibres present on the surfaces.[20] Subsequently, IEL has, in association with the franchise organisation underwhich it trades, developed a safe system of work for identifying and managingasbestos. The system developed includes a requirement to undertake asbestosidentification at a property before any demolition or refurbishment work begins.District Court decision[21] The District Court Judge began his assessment of an appropriate sentence forIEL by identifying the factors and principles to be applied. He identified six relevantsets of authorities or provisions.7[22] First, he set out the four steps in the approach to sentencing that were identifiedin Stumpmaster v WorkSafe New Zealand – the guidance judgment for sentencingunder s 48 of the Act.8 Those steps are as follows:(a) assess the amount of reparation;(b) fix the amount of the fine by reference first to the guideline bands and thenhaving regard to aggravating and mitigating factors;7 WorkSafe New Zealand v Inspired Enterprises Limited and Lawrence Gregory Gannaway, aboven 3.8 At [9]; and Stumpmaster v WorkSafe New Zealand [2018] NZHC 2020. Section 48 relates to moreserious offending than that in question here – failing to comply with a duty that exposes anindividual to a risk of death, various injury or serious illness – but the approach to sentencing thereis relevant also for offending under s 49.(c) determine whether further orders under ss 152–158 of the Act are required;and(d) make an overall assessment of the proportionality and appropriateness ofthe combined packet of sanctions imposed by the preceding three steps.This includes consideration of ability to pay, and also whether an increaseis needed to reflect the financial capacity of the defendant.[23] Secondly, the Judge identified the culpability bands for offending under s 49that were put in place in East by West Company Ltd v Maritime New Zealand.9 Thesebands are as follows:low culpability : up to $85,000medium culpability : $85,000 to $200,00high culpability : $200,000 to $335,000very high culpability : $335,000 to $500,000[24] Thirdly, the Judge set out s 151 of the Act which is in the following terms:151 Sentencing criteria(1) This section applies when a court is determining how to sentence orotherwise deal with an offender convicted of an offence under section47, 48, or 49.(2) The court must apply the Sentencing Act 2002 and must haveparticular regard to—(a) sections 7 to 10 of that Act; and(b) the purpose of this Act; and(c) the risk of, and the potential for, illness, injury, or death that couldhave occurred; and(d) whether death, serious injury, or serious illness occurred or couldreasonably have been expected to have occurred; and(e) the safety record of the person (including, without limitation, anywarning, infringement notice, or improvement notice issued tothe person or enforceable undertaking agreed to by the person) to9 WorkSafe New Zealand v Inspired Enterprises Limited and Lawrence Gregory Gannaway, aboven 3, at [7]; and East by West Company Ltd v Maritime New Zealand [2020] NZHC 1912, (2020)18 NZELR 90.the extent that it shows whether any aggravating factor is present;and(f) the degree of departure from prevailing standards in the person'ssector or industry as an aggravating factor; and(g) the person's financial capacity or ability to pay any fine to theextent that it has the effect of increasing the amount of the fine.[25] Fourthly, the Judge set out the factors that had been identified as relevant forsentencing under the Health and Safety in Employment Act 1992 by the Court inDepartment of Labour v Hanham v Philp Contractors Ltd and which the Court inStumpmaster endorsed as remaining relevant under the Act. 10 Those factors include,as relevant:(a) The identification of the operative acts or omissions at issue. This willusually involve the clear identification of the "practicable steps" which theCourt finds it was reasonable for the offender to have taken in terms ofs 22 of the Act.(b) An assessment of the nature and seriousness of the risk of harm occurringas well as the realised risk.(c) The degree of departure from standards prevailing in the relevant industry.(d) The obviousness of the hazard.[26] Fifthly, the Court identified, as required by s 151(2)(b), the key purposes of theAct, which (by way of summary) are the protection of workers and other personsagainst harm to their health, safety and welfare by eliminating or minimising risks,securing compliance with the Act and providing a framework for continuousimprovement and higher standards of work health and safety.11[27] Sixthly, the Judge referred to certain of the purposes and principles ofsentencing in ss 7 and 8 of the Sentencing Act 2002. He referred to the purposes in10 WorkSafe New Zealand v Inspired Enterprises Limited and Lawrence Gregory Gannaway, aboven 3, at [9]; Department of Labour v Hanham and Philp Contractors Ltd (2008) 6 NZELR 79 (HC);and Stumpmaster v WorkSafe New Zealand, above n 8, at [37].11 At [10]; and HSWA, s 3(1).s 7 of denunciation, deterrence, accountability, promoting responsibility andreparation and to the s 8 principles of gravity, seriousness and consistency.12[28] Having identified these principles and provisions, the Judge referred, in thecontext of the first of the four Stumpmaster steps, to the fact that IEL had reimbursedthe owner of the property for the $2,735.85 in costs she had incurred in having theasbestos vinyl tested and in having the remedial work done.13[29] The Judge then proceeded to consider IEL's culpability by reference to theHanham factors only.14 His assessment of the Hanham factors as they relate to thefacts in this case are as follows:(a) The operative acts or omissions: the Judge noted that, in pleadingguilty, IEL accepted that it could have taken reasonably practicablesteps to identify whether asbestos was present in the floor to minimisethe risk of harm resulting from it.(b) The nature and seriousness of the risk of harm: the Judge assessed therisk as being potentially very serious as, in some cases, absorption ofasbestos fibres in the lungs can lead to serious illness and death.(c) The degree of departure from prevailing standards: the Judge noted thatthe risks associated with asbestos are well known.(d) The obviousness of the hazard: the Judge considered that, as asbestoswas commonly used in floor coverings for many years, it must havebeen known to those in the flooring industry that asbestos may havebeen present in the property that was built during the period asbestoswas used.12 At [12]–[14].13 At [15].14 At [16]; and Department of Labour v Hanham and Philp Contractors Ltd, above n 10.(e) The availability cost and effectiveness of the means to avoid the hazard:the Judge said that the means to minimise the risks associated withasbestos in floor coverings were readily available at minimal cost.(f) The current state of knowledge of the risks and potential harm: theJudge saw there to be no lack of knowledge about the risks and potentialharm associated with asbestos in floor coverings or about how the riskshould be managed.[30] On the basis of this assessment, and noting there to be no helpful comparableauthority, the culpability of the appellant was assessed to be towards the upper end ofthe low band referred to in [23] above. A starting point of $75,000 was fixed.15[31] The Judge did not believe there to be any personal aggravating factorsinvolving the appellant. He then reduced the starting point to $52,500:(a) in recognition of guilty plea, he gave a reduction of 25 per cent;16 and(b) in recognition of improved future processes, he gave a discount of fiveper cent.17[32] Reductions were not made for remorse, good character or cooperation.18[33] At this point, the Judge referred to what he described as a submission from IELthat it should be discharged without conviction. He asked, in terms of the test in s 107of the Sentencing Act, whether the consequences of conviction would be out of allproportion to the gravity of the offending. He assessed the gravity of the offending tobe reflected in the end point fine of $52,500 and found there to be no consequences,beyond those which would flow from any conviction, that would warrant a dischargewithout conviction.1915 At [19].16 At [21].17 At [26].18 At [22]–[24].19 At [28]–[34].[34] Finally, the Judge considered IEL's financial capacity or ability to pay any finein response to a submission about IEL's weak financial position. The Judge observed,from evidence on the financial position, that IEL's modest bottom lines were a productof drawings for the company's director and shareholders (Mr and Mrs Cole) such thatit was not appropriate there be a reduction under this head.20[35] Because it is relevant when considering relative culpability of IEL, on the onehand, and Mr Gannaway, on the other, I mention here the sentence imposed by theDistrict Court Judge on Mr Gannaway. As observed already, the maximum fine underreg 26 of the Regulations with which Mr Gannaway was charged, is $10,000. TheDistrict Court Judge set a starting point of $1,800 (referring to it as falling within thelow end of the medium band) and awarded a 25 per cent discount for a guilty plea anda 10 per cent discount for remorse and remedial steps. The resulting figure of $1,170was rounded down to a $1,100 fine.21Principles on appeal[36] Appeals against sentence are allowed as of right under s 244 of the CriminalProcedure Act 2011 and must be determined in accordance with s 250 of that Act. Anappeal against sentence may only be allowed by this Court if it is satisfied that therehas been an error in the imposition of the sentence and that a different sentence shouldbe imposed.22 As the Court of Appeal said in Tutakangahau v R a "court will notintervene where the sentence is within the range that can properly be justified byaccepted sentencing principles".23 It is appropriate for this Court to intervene andsubstitute its own views only if the sentence being appealed is "manifestly excessive"and not justified by the relevant sentencing principles.24Sentencing under the Act[37] Section 151 of the Act provides that, in sentencing IEL under s 49, the Courtmust apply the Sentencing Act and must have particular regard to the matters set out20 At [42] and [43].21 At [55].22 Criminal Procedure Act 2011, ss 250(2) and 250(3).23 Tutakangahau v R [2014] NZCA 279, [2014] 3 NZLR 482 at [36].24 Ripia v R [2011] NZCA 101 at [15].in that section. The section is set out in paragraph [24] above. It directs, amongstother things, the Court to have particular regard to ss 7 to 10 of the Sentencing Act.While, as mentioned in [27] above, the District Court Judge identified certain of thepurposes and principles of sentencing in ss 7 and 8 of the Sentencing Act, he did notdo so in a comprehensive way. The purposes of sentencing in s 7 that are of relevancehere include (by way of summary) to hold an offender accountable for any harm done,to promote a sense of responsibility, to provide for the interests of victims, to providereparation, to denounce the conduct, to deter the offender or others, to protect thecommunity and to assist in an offender's rehabilitation.[38] The District Court Judge referred to some of the s 8 principles of sentencingbut, again, not in a comprehensive way. The s 8 principles (by way of summary)include a consideration of the gravity of the offending, the seriousness of an offence,reserving maximum penalties for the most serious cases, consistency with appropriatesentencing levels, effects on the victim, imposing the least restrictive outcome that isappropriate in the circumstances and considering the personal circumstances of theoffending.[39] Section 9 of the Sentencing Act identifies aggravating and mitigating factorsthat must be taken into account by a Court. They are addressed later in this decision.[40] Section 10 requires the Court to take into account any measures taken by anoffender to offer amends, financially or otherwise, for the harm that has occurred.[41] The way in which the matters to which the Court is to have regard in s 151 ofthe Act are to be applied is provided for in the four-step Stumpmaster process, referredto in [22] above: after assessing reparation, the Court is to fix the amount of the fineby reference to the guideline bands, it is to have regard to aggravating and mitigatingfactors, it is to determine whether any further orders in ss 125 to 128 of the Act arerequired, and it is then to make an overall assessment of proportionality andappropriateness, including consideration of an ability to pay.[42] It is important to emphasise, as the Full Court did in Stumpmaster, that all ofthe s 151 factors must be considered.25 That includes, in particular, the instruction ins 151 to apply the Sentencing Act. While the factors set out in Hanham, referred to in[25] above cover many of the s 151 factors, they by no means do so comprehensively.The alleged errors and the issues on appeal[43] In the context of the grounds of appeal, referred to in [8] above, IEL submitsthat the two errors made by the Judge were "fundamental in the context of thesentencing hearing and explain why the fine imposed was manifestly excessive". Itsubmits also that the errors were such that the Judge approached the penaltysubmission for IEL (that a conviction and discharge was appropriate) on a flawedbasis. It is submitted for IEL that the errors were compounded when the Judge failedto allow sufficient credit for mitigating factors.[44] To recap, the alleged errors are these:(a) the finding that IEL had received positive test results for the asbestos-containing material and failed to inform a third party contractor ofthem, who then carried out work on the site; and(b) the view that counsel for IEL had sought a discharge withoutconviction.[45] I address the first error, primarily, in considering the Judge's approach to thestarting point for the fine. And I deal with the second error in considering the Judge'sapproach to the third and fourth stages in the sentencing process.25 Stumpmaster v WorkSafe New Zealand, above n 8, at [23] and [37].The starting pointThe effect of the factual error[46] In describing the facts upon which his assessment of culpability was based, theDistrict Court Judge said:26(f) The owner of the property had the old vinyl tested for asbestos. Shereceived a positive test result which she passed on to IEL andMr Gannaway on 28 June 2021.(g) On 29 and 30 June 2021, another contractor engaged by IEL installednew flooring material over the asbestos vinyl. IEL did not inform thatcontractor of the positive test result.[47] Both parties agree that the terms of both of these factual findings on the part ofthe Judge are wrong. They have their genesis in an error in [17] of the summary offacts in which the inclusion of the word "positive" was a typographical error. Thatparagraph reads:17. On 28 June 2021, [the homeowner] emailed all the contractors at [thehomeowner's property] including IEL and Mr Gannaway with an update aboutthe asbestos test being positive undertaken and that she was awaiting theresults.[48] IEL says the position was summarised correctly in Mr Cole's affidavit in whichhe said:In any event, I engaged the services of Chris Davidson who is a vinyl installer.I talked him through the situation and explained that there was testingunderway to confirm if the vinyl was asbestos backed.As I hadn't been to site by that point, I asked him to carry out a risk assessmentprior to entering the site and also before starting any work onsite.[49] This position is supported by the next paragraph in the summary of facts, whichis in the following terms:18. On Tuesday, 29 June 2021 and Wednesday, 30 June 2021,Mr Christopher Simon Davidson (Mr Davidson) (a sole trader trading as VinylInstallations) installed thinsulate and vinyl planking in the kitchen/diningareas over the top of the asbestos vinyl. Mr Davidson was engaged by IEL26 WorkSafe New Zealand v Inspired Enterprises Limited and Lawrence Gregory Gannaway, aboven 3, at [5(f) and (g)].and had been informed of the potential for asbestos containing material andadvised to carry out his own risk assessment at the property. He did notconfirm the outcome of the asbestos test or that results were still pending with[the Homeowner] prior to undertaking his work.(Emphasis added).[50] It is sufficiently clear the Judge erred when he found that IEL was informed ofa positive test result and then, with that knowledge, engaged a subcontractor withouttelling him. Counsel for both parties confirm that the factual error was raised bycounsel for IEL with the Judge after he had given his oral sentencing. I understandthat the Judge declined to amend the decision, saying that his sentencing remarks werebased upon the agreed summary of facts to which the appellant had entered a guiltyplea.[51] The question is as to how much of a difference the error made in the Judge'sassessment of IEL's culpability when setting the starting point for the fine. Counselfor IEL has said that the difference is significant – that instructing a contractor to enterthe site in the knowledge of a positive asbestos test result is bordering on egregious.Whereas, knowing there to be just a risk of asbestos-containing material on site,passing that on and advising a subcontractor to carry out their own risk assessment is,it is said, of considerably less concern.[52] For WorkSafe it is submitted that, had the Judge placed significant emphasison the typographical error, he would have placed the offending in the mediumculpability band.[53] I do not see the distinction mentioned in [51] to be so great. IEL's culpabilityturned, not only upon the lack of a system to identify asbestos issues prior to anydemolition or refurbishment work, but to the lack of a process following theidentification of a potential asbestos risk.[54] However, either way, IEL's culpability is relatively limited. Mr Gannaway didnot tell IEL of the asbestos issue when he was lifting the vinyl. IEL learned of it onlytwo days later and made arrangements, immediately, for the area to be sealed –although the contractor undertaking the sealing work did not do so until five days later.Sentencing Act considerations[55] Having discussed IEL's conduct in the context of the Hanham factors, theJudge said that he assessed its culpability "as towards the upper end of the low band"and took a starting point of a fine of $75,000.27[56] While IEL does not take issue with the assessment of culpability as being inthe low band, it does take issue with the starting point and says, amongst other things,that the Judge failed, in terms of s 8(g) of the Sentencing Act, to impose the leastrestrictive outcome that is appropriate in the circumstances. I agree that, in additionto the Judge's consideration of conduct under the Hanham factors, there are a numberof relevant provisions in the Sentencing Act that are on point and that were notassessed. They include these:(a) Under s 7(a) a purpose of sentencing is to hold an offender accountablefor harm done to the victim and the community. Here, harm is difficultto assess as the effects of inhaling asbestos fibres can take many yearsto be known. However, it is fair to say, as IEL does, that the small areaexposed to asbestos was sealed, no further remedial work was requiredand testing carried out showed there to be no airborne asbestos and nosurfaces were detected as containing asbestos.(b) Under s 7(f) a purpose of sentencing is to deter the offender or otherpersons from committing the same or similar offences. Here, the effectof the conviction on IEL (which was devastating by Mr Cole's account)and the remedial steps put in place are such that little is needed to deterthis company and its officers from committing similar offences.(c) Under s 7(g) a purpose of sentencing is to protect the community fromthe offender. For the same reasons as those given in subpara (b) above,this principle is not a primary concern here.27 WorkSafe New Zealand v Inspired Enterprises Limited, above n 3, at [19].[57] IEL has submitted, in addition, that s 8(e) of the Sentencing Act was giveninadequate consideration by the Judge. That provision describes a principle ofsentencing that requires the Court to take into account the general desirability for thereto be consistency in sentencing levels between similar offenders and co-offenderscommitting similar offences in similar circumstances.28 Disparity in sentences maylead to a reduction of a sentence on appeal only where the disparity between thesentences imposed cannot be justified and is gross.29 The question is always whetherthe starting point adopted is within an acceptable range by reference to the judge'sassessment of the particular culpability factors.30[58] While IEL does not take issue with the fact that Mr Gannaway, as a sole trader,was charged under the Regulations with an offence carrying a significantly lowermaximum penalty, the consistency-based submission looks at the placement, instarting point and proportionality terms, of Mr Gannaway's offending within the bandsrelevant to the offence under the Regulations and with the comparative placementwithin bands relevant to IEL's offending.[59] In many ways, the culpability of Mr Gannaway, on the one hand, and of IEL,on the other, are similar: neither used a process to assess the site for asbestos risk atthe outset or to manage risks from asbestos when identified. Both workers are soletraders but under different corporate structures. At another level, IEL was the headcontractor – but it did rely on Mr Gannaway's expertise in performing services on itsbehalf. As discussed in [13] to [15] above, Mr Gannaway's onsite actions gave rise tothe asbestos issues and he failed to inform IEL, as his principal, of the risk he hadidentified.[60] Moreover, it is important to consider the District Court Judge's approach toMr Gannaway. The Judge saw Mr Gannaway's omission in failing to identify theasbestos in the flooring as being something for which "a conviction and dischargewould have been appropriate". However, it was the "second aspect of the offence" –the incorrect disposal of the asbestos – which was seen by the Judge as being more28 R v Lawson [1982] 2 NZLR 219 (CA) at [223]; Zimmerman v R [2014] NZCA 523 at [14]; andO'Sullivan v R [2015] NZCA 147 at [21].29 R v Rameka [1973] 2 NZLR 592 (CA); R v Lawson, above n 28; and Singh v R [2013] NZCA 245.30 Arnott v R [2015] NZCA 236 at [12]; and Smith v R [2021] NZCA 169 at [41].serious because it created "a serious risk that asbestos fibres might be released into theair".31 It is on that basis that the Judge assessed Mr Gannaway's culpability to be atthe low end of the medium band. IEL's offending does not include that more seriousaspect of Mr Gannaway's offending. Comparatively speaking, the placement of IEL'soffending within the band relevant to the offence for which it has been charged shouldbe markedly lower than that placement adopted for Mr Gannaway.[61] For all of these reasons, I am satisfied that the starting point adopted by theJudge, at the top end of the low band, was an error and that a starting point at the mid-point for the lower band – $42,500 – is appropriate. While, for reasons I come on togive, I do not see a conviction and discharge as being available here, a starting pointat this level reflects the fact that it was wrong not to have systems in place beforeentering the site and upon identification of a risk, but that IEL's culpability was alwayslow.Mitigating factors[62] It is IEL's submission that a global discount of 45 per cent from the startingpoint is appropriate to reflect IEL's early guilty plea, its genuine remorse, its fullcooperation with WorkSafe throughout its investigation, its previous good record, theimprovements it has put in place to strengthen its management of asbestos and the$2,735.85 payment it made to the homeowner.[63] As mentioned already, the Judge awarded a global discount of 30 per cent:25 per cent for the early guilty plea and five per cent for the improvement processes.No discount was given for remorse, cooperation, good record or the payment made tothe homeowner to make amends. IEL says that, guilty plea aside, a discount offive per cent for the other mitigating factors is insufficient and is inconsistent withother sentencing decisions. For the reasons I go on to give, a global discount of45 per cent (including for the guilty plea) is in my view appropriate in the particularcircumstances of this case.31 WorkSafe New Zealand v Inspired Enterprises Limited and Lawrence Gregory Gannaway, aboven 3, at [48] and [49].Relevant principles[64] The level of discounts for offenders under the Act for mitigating factors hasbeen a point of contention. The Court in Stumpmaster cautioned that "routine standarddiscounts" with little analysis distorted the sentencing process by so reducing thestarting points that outcomes became too low.32 The Court observed this to have likelybeen a "contributor to legislative concern over sentencing levels". It said "there hasbeen a statutory response in the form of greatly increased sentencing levels" and thatto "undo this pattern of large discounts would be to impose a double increase".33However, it saw some correction as being necessary and concluded its comments onthis area in the following way:[67] Next, it is contrary to sentencing principle that those with previousconvictions receive the same global discount as those without when acomponent of that discount is a previous good record. By way of generalguidance, we consider a further discount of a size such as 30 per cent is onlyto be expected in cases that exhibit all the mitigating factors to a moderatedegree, or one or more of them to a high degree. That is not to place a ceilingon the amount of credit, but to observe a routine crediting of 30 per centwithout regard to the particular circumstances is not consistent with theSentencing Act. [65] Authorities have noted also that discounts should not be given for actions suchas cooperation with inspectors or remedial action to correct deficits which shouldnever have existed. Statutory duties were, it has been said, in place for those processesin the first place.34 However, with these cautions in mind, discounts for a lack of prioroffending, reparation, cooperation and remediation have been given, quite frequently,to reflect particular circumstances.3532 Stumpmaster v WorkSafe New Zealand, above n 8, at [64].33 At [64].34 In East by West Company Ltd v Maritime New Zealand, above n 9, at [119(a)], the High Courtemphasised that those who owe duties under the HSWA have a statutory duty to assist inspectorsin the exercise of their powers, and in those circumstances cooperation is to be expected and wouldnot usually attract a discount.35 See for example WorkSafe New Zealand v Ron Frew Family Partnership Ltd [2018] NZDC 20330,where a discount of 40 per cent was given for the defendant's 50 years of operation with noprevious incidents (10 per cent), being a good corporate citizen and charity contributor (five percent), genuine remorse and immediate reparation paid (15 per cent), cooperation in theinvestigation (five per cent) and the remedial steps taken (considered "within [the] context of whatcan be properly and realistically achieved by a responsible employer" at [54]) (five per cent);WorkSafe New Zealand Ltd v Sabre Logging Co Ltd [2020] NZDC 13436 (10 per cent for remorse,15 per cent for safety record, co-operation and remedial steps); WorkSafe New Zealand v AddictionFoods NZ Ltd [2020] NZDC 13929 (five per cent for each of safety record, remorse, "good works"in assisting complainant and five per cent for "efforts to prevent a recurrence"); and WorkSafeNew Zealand v N E Parkes & Sons Ltd [2020] NZDC 25449 (discounts totalling 45 per cent,Mitigating factors in this case[66] With these comments in mind, I turn to the circumstances of this case. I lookfirst at Mr Cole's remorse. The Judge has said that Mr Cole's affidavit showed "littleif any expression of concern or regret for the exposure of people to the potential riskof airborne asbestos fibres".36 I do not believe that to be correct. In his affidavit,Mr Cole spoke of having broken down over the charges, to having worked closelywith his franchise holder to ensure that events could not be repeated and to the damagethat has been caused to his relationships at home and to his mental health. He said:I am disappointed that I did not meet the high standards required at the timewe were working at [the homeowner's] place. I truly regret what occurredand will be working hard to ensure any work done through my businessproperly manages health and safety risks.[67] Mr Gannaway, by way of comparison, said in his affidavit:I am very remorseful for my offending. I acknowledge and take responsibilityfor the fact that I ought to have handled the accidental discovery of asbestosat [the homeowner's property] in a safe manner. I am committed toensuring that this type of offending does not occur again.[68] The Judge gave Mr Gannaway a 10 per cent discount for his remorse and forimplementation of improvements but found a similar (if not more significant)statement of remorse on Mr Cole's part as warranting no discount. I do not believethat to be a sustainable position. Further, while the Judge had acknowledged earlierin his decision that the reparation payment of $2,375.85 was a relevant consideration37and that an order for reparation was not required as a consequence, the payment can,and should in these circumstances, be taken into account also as a relevant indicatorof remorse.38[69] I look next at the fact that IEL has no previous convictions and a good safetyrecord; a factor that is relevant under s 9 of the Sentencing Act. I do not agree withincluding 25 per cent guilty plea, five per cent good character, 15 per cent for remediation andcooperation were granted reducing the starting point for the fine from $500,000 to $275,000).36 WorkSafe New Zealand v Inspired Enterprises Limited and Lawrence Gregory Gannaway, aboven 3, at [22].37 At [13].38 Sentencing Act, ss 7 and 10; and Department of Labour v Hanham & Philp Contractors Ltd, aboven 10, at [43], quoting R v M [2008] NZCA 112 at [31]–[32].the Judge that "the absence of that aggravating factor does not, of itself, constitute amitigating factor".39 Discounts have been awarded in cases under the Act in whichthere have been no previous incidents or offences under the Act. For example, adiscount of five per cent was credited in WorkSafe New Zealand v Ron Frew FamilyPartnership Ltd for the defendant having been a good corporate citizen and charitycontributor.40 A letter of support provided for Mr Cole describes him as generating"over $4,000 for local Canterbury charities" as an "incredibly generous and caringperson".[70] Turning to IEL's cooperation, I do not think it is right to say, as the Judge did,that IEL did not go "beyond the extent of its duty of cooperation". The Judge wasreferring to s 176 of the Act under which a duty is imposed to assist inspectorsappointed under the Act. Mr Cole had a number of discussions with the WorkSafeinvestigator, worked alongside his franchise holder on the issue and was involved inamending the "Site Safe" resource materials on asbestos to improve processes for allfranchise owners. He had regular meetings with WorkSafe, attended interviews andupdated documents over a five-month period. In circumstances in which IEL, throughMr Cole, did everything he could have done at that stage, his cooperation in my viewwent beyond that which was required of him under the Act and warrants a modestmitigating discount.[71] It is for these reasons that I am drawn to conclude that the Judge's findings onmitigating factors were in error and that a discount of 20 per cent for cooperation,previous good character, remorse and reparation is warranted, in addition to the25 per cent discount for the early guilty plea. Applying that discount of $19,125 to thestarting point of $42,500, the appropriate fine should have been $23,375.Conviction and discharge[72] Counsel for both parties agreed that the Judge erred when he said that counselfor IEL had sought a discharge without conviction. In fact, the submission made to theJudge for IEL was that a conviction and discharge was appropriate.39 WorkSafe New Zealand v Inspired Enterprises Limited and Lawrence Gregory Gannaway, aboven 3, at [23].40 WorkSafe New Zealand v Ron Frew Family Partnership Ltd, above n 35, at [13].[73] The Judge's error was compounded by his criticism of IEL in not having madean application for discharge without conviction as required by the Criminal ProcedureRules and in not having filed supporting evidence and submissions on the point. Whilethe Judge's approach was in error, I do not believe that in any event a conviction anddischarge would have been appropriate in these circumstances. Under s 109 of theSentencing Act, an offender may only be convicted and discharged if the Court issatisfied that a conviction is sufficient penalty in itself. Given the increase in penaltiesfor offences under the 2003 Act, it would be rare for a conviction not to be followedby a fine.41 And, in the circumstances here, it would not be right in my view, in termsof the consistency required under s 8(e), for a fine to be imposed for Mr Gannaway'soffending but not for that of IEL.Proportionality[74] The final matter to be considered under the Stumpmaster steps, isproportionality and the appropriateness of the combined packet of sanctions imposed.[75] It is WorkSafe's submission that, despite the Judge's error in consideringwhether a discharge without conviction was appropriate he, nonetheless, assessed inan appropriate way the gravity of the offending in concluding, in a proportionalitysense, that the end point of a fine of $52,000 was appropriate.42[76] IEL says that, in assessing proportionality, the Judge should have made areduction to reflect sentencing principles that emphasise the desirability of imposingthe least restrictive outcome and the need to adopt a consistent approach. With theseprinciples in mind, it is said for IEL that the Judge imposed a sentence that might bewarranted for corporate offenders in circumstances in which the evidence in this caseshowed IEL to have limited means to pay.41 Department of Labour v Areva T D New Zealand Ltd HC Rotorua CRI-2005-463-42, 9 November2005.42 WorkSafe New Zealand Ltd v Inspired Enterprises Ltd and Lawrence Gregory Gannaway, aboven 3, at [32].[77] Although the accounts that were in evidence at sentencing show Mr andMrs Cole to have made cash drawings from the company, the Court needed, it is said,to approach the proportionality assessment on the basis that either:(a) in reality, individuals were being sentenced here who did not warrant afine under a framework designed for corporate offenders; or(b) if it was right to have the company in mind, rather than Mr andMrs Cole, then account should have been taken of the limited means ofthe company to pay.43[78] I do not see it as being appropriate for there to be distinctions under s 49(2)(c)for different corporate offenders. Section 49(2)(a) and (b) relate to offending byindividuals (for whom the maximum fines are lower). Section 49(2)(c) relates to "anyother person", that is, to companies and other incorporated entities. Whether, in caseslike this, surplus funds are retained in a company or paid to shareholders does notwarrant a distinction to be drawn between corporate and personal offending or theability of a closely held company to pay a fine. I agree with the conclusion reachedby the Judge on this point that, if the company relied on shareholders for capital in itsday-to-day operations, then it will rely on them also for the payment of any fine.44Conclusion[79] The District Court Judge did err in his assessment of a material fact and in hisunderstanding that IEL had applied for a discharge without conviction. There is adegree of materiality in the first error but not in the second.[80] The first error, together with a range of considerations under s 151 of the Act,leads me to a conclusion that the fine of $52,500 imposed by the Judge is manifestly43 Also see s 14(1) which says a court may decide not to impose a fine, otherwise appropriate, thatan offender cannot pay and s 40(1) which directs a court, when imposing a fine, to have regard tothe financial capacity of the defendant.44 See YSB Group Ltd v WorkSafe New Zealand [2019] NZHC 2570 at [40], where it was arguedthere that the fine should be reduced from $100,000 to $15,000, which was the maximum thecompany could afford to pay for financial reasons. The Court observed that the payment of a fineis a higher priority than payments to shareholders and directors of the company, there being littleif any difference between this expectation and the general expectation that a company must payits third party creditors before it pays its directors and shareholders.excessive through the Judge having adopted a starting point that could not properly besustained and by providing insufficient credit for mitigating factors.[81] I have concluded that a starting point in the middle of the lower band – $42,500– was appropriate when assessing the level of IEL's culpability. And I have found thatIEL should have been entitled to an additional 20 per cent discount for remorse, itsgood record, its cooperation and for the reparation it made. I find that a fine at thislevel is proportionate and appropriate. A conviction and discharge would be at oddswith s 151 to the extent that it would undermine the principles that need to be appliedhere of holding the offender to account and of deterrence.45Result[82] The appeal is allowed in part. The order imposing a fine of $52,500 is quashedand is substituted with an order that IEL is to pay a fine of $23,375.00.[83] The District Court's orders for IEL to pay $1,235.84 to WorkSafe as acontribution to the costs of investigation and prosecution and to pay court costs of$135 are maintained.[84] If costs are sought and cannot be resolved between the parties, then theappellant may, within 10 working days from the date of this decision, file amemorandum and the respondent may, within a further 10 working days, file amemorandum in response. Any such memoranda should be limited to five pages inlength._______________________Radich JSolicitors/Counsel:Chapman Tripp, Christchurch for AppellantWorkSafe, Auckland for Respondent45 Street Smart Ltd v Department of Labour HC Hamilton CRI-2008-419-26, 7 October 2008 at [59].