Comcare v Subsee Explorer Pty Ltd

Federal Court of Australia|2011-07-27|Before: Mr J, Collier J

Background 4 The Department of Immigration and Citizenship is a Department of the Commonwealth of Australia. At all times relevant to these proceedings prior to 30 January 2007 the Department was known as the Department of Immigration and Multicultural Affairs ("DIMA"). 5 Unique migration issues arise in the Torres Strait because of a treaty signed by the Commonwealth of Australia and Papua New Guinea in 1978 which sought to resolve uncertainty as to the international boundary between the two countries. The treaty recognises and seeks to preserve the traditional rights of the inhabitants of the Torres Strait to travel throughout the region for trade and cultural activities without the imposition of the burdens usually associated with international travel. 6 DIMA was charged with the responsibility for managing immigration and border control through the Torres Strait. Movement Monitoring Officers ("MMOs") were recruited by DIMA to assist in patrolling the reefs and islands of the region. The MMOs used immigration response vessels ("IRVs") to conduct such patrols. At the time of the sinking of the Malu Sara, DIMA had a regional office on Thursday Island, which was staffed by four full-time employees and supported by twenty-seven MMOs. 7 Towards the end of 2002 Mr Garry Chaston was appointed as DIMA's regional manager on Thursday Island. In February 2004 Mr Chaston put a business case to DIMA to replace the existing fleet of vessels with new IRVs. Expenditure for the new IRVs was approved by DIMA. The procurement of the new IRVs remained the primary responsibility of Mr Chaston but he was assisted by Mr Paul Nemes, DIMA's senior contract adviser. Mr Chaston also consulted Mr Greg Hellessey who was a qualified marine engineer, the MMOs and a range of other government agencies. 8 After advertising, eight tenders were received. Criteria for assessment of the tenders were settled by Mr Chaston and Mr Nemes, and a team was established to evaluate each tender received. Subsequently, Subsee was contracted for the supply of the six IRVs. The contract with Subsee contained specific descriptions of the proposed vessels, the equipment to be fitted, the standards of construction, and the certificates required to accompany the vessels. Further, the contract stipulated that the vessels be supplied to the certified requirements of the Uniform Shipping Laws Code ("USL Code"), Class 2C, and comply with the Australian Standard ("AS") 1799 and AS 1665. 9 The contract also made provision for a prototype vessel to be delivered to Thursday Island within seven weeks of the contract being signed. The prototype vessel was to be subjected to various tests stipulated in the contract, including a sea trial, to ensure that any minor alterations required to the remaining vessels could be undertaken prior to finalisation of construction. 10 The prototype IRV vessel constructed by Subsee was delivered to Thursday Island on 15 May 2005. The prototype was used in sea trials and although it performed satisfactorily, a large amount of water was noted coming into the pod of the vessel. A list of suggested modifications was developed and sent to Subsee. However as subsequently became clear, the prototype was not designed or constructed in accordance with critical requirements of USL Code 2C or AS 1799. This omission was not disclosed by Subsee or discovered by DIMA at the time of the sea trials. Further, no reference to the omission was made in the modifications specified. 11 Based on DIMA's acceptance of the prototype after the sea trial, subject to modifications, Subsee embarked on the building of the remaining five IRVs. The vessels were completed in early August 2005. 12 Mr Chaston made two visits to the builders' yard during the construction process. No independent marine surveyor was engaged to monitor the building or to survey either the prototype or any of the other vessels after they were completed. Mr Chaston had no relevant or appropriate expertise to competently assess whether any of the vessels were constructed in compliance with the contract, USL Code 2C, or AS 1799. 13 The contract with Subsee also stipulated that Subsee was to provide six different certificates for each of the IRVs. Only one certificate was provided by Subsee, a certificate of positive flotation. The positive flotation certificate (issued by a Mr Radke, the principal of Subsee) was a document declaring that the vessel when filled with water would remain afloat in an upright position while carrying its normal operational equipment and six passengers (in this way the vessel would perform a role akin to a life raft supporting the occupants if the vessel was no longer operational). The other five certificates, including certificates that the vessels were to class 2C survey standard, and confirmation they complied with AS 1799 and AS 1665, were never provided to DIMA. No explanation for the failure of Subsee to provide the certificates was given prior to the loss of the Malu Sara. 14 Following the acceptance of the prototype trial with specified modifications, the remaining five IRVs were completed by Subsee in early August 2005. These vessels were subsequently delivered to Thursday Island on 21 and 22 August 2005. 15 The IRVs were of a centre console configuration and were constructed of aluminium plate aluminium alloy. They had a designed overall length of 6.65 metres, a designed measured length of 5.90 metres, a breadth of 2.15 metres, and a draft of 0.45 metres. The vessels were designed to carry up to six people or 510 kilograms. 16 The navigation equipment on board consisted of a magnetic compass and navigation lights. The safety equipment included a 121.5/243 MHz analogue emergency positioning indicating radio beacon ("EPIRB"), life-jackets, flares, a fire extinguisher, bailing buckets, first-aid kit, tool-kit, paddles and two hand-held torches. The communication equipment consisted of a hand-held satellite/CDMA telephone and a "hands-free" system for the telephone. 17 As "Commonwealth ships" within the meaning of the Navigation Act 1912 (Cth), the IRVs were not required to be surveyed. Instead, an operator of Commonwealth vessels under seven metres in length could request the Chief Marine Surveyor to issue a letter of survey acknowledging that the vessel met specific criteria. The letter would be subject to the provision of assurances to the Chief Marine Surveyor about the construction, equipment and area of operation of the vessel. 18 On 24 August 2005, Mr Chaston applied for a letter of survey for the IRVs by writing a letter to the Australian Maritime Safety Authority ("AMSA") declaring: (a) he was the officer responsible for the safe operation of the six IRVs; (b) the IRVs were built to AS 1799; (c) the vessels were suitable for their intended operations and were in a seaworthy condition prior to each operation; (d) a planned maintenance program was in place; (e) a risk assessment was undertaken prior to each operation; and (f) the vessel's area of operation was the partially smooth waters of the Torres Strait. 19 It is now clear that each of the declarations (b), (c), (e) and (f) were untrue and were made without Mr Chaston having or obtaining any evidence to satisfy himself that they were true. 20 On 2 September 2005, AMSA issued a letter of survey for the six IRVs. 21 DIMA had standard operating procedures ("SOPS") for the IRVs containing instructions for the MMOs, including administrative processes and operational information. These procedures required the submission of a "tasking request form" prior to operations and a "post-patrol report" after each patrol. In relation to the operation of the IRVs, the SOPs included information relating to limits of operation in terms of area, time of day, duration, weather and crew qualifications. 22 An annual training workshop for the MMOs was arranged to be held on Saibai Island in the Torres Strait from 8 to 13 October 2005. Three of the IRVs, including the Malu Sara, were to travel to the island for the workshop. The Malu Sara left Badu Island for Saibai Island on 8 October 2005, a journey of 58 nautical miles. On Wednesday 12 October 2005, the Malu Sara was used in two training patrols. In the first, the outboard motor stopped without apparent reason but was restarted and no further problems were reported. In the second, a significant quantity of water entered the cockpit through the scuppers in the cockpit transom while the vessel was anchored with five persons on board. 23 After the patrol was completed, the crew reported to Mr Chaston that the vessel appeared to be sitting low at the stern. Mr Chaston inspected the vessel while it remained in the water and told the crew to inspect the boat overnight to ensure the problem did not reoccur. No further action was taken. 24 On 14 October 2005, the Malu Sara left Saibai Island shortly before 12.30 pm carrying two employees of the respondent and three members of the public. Mr Baira was the skipper. He called DIMA's Thursday Island office (then staffed by Mr Jerry Stephen) at 12.22 pm to advise of the departure and arranged a subsequent call when he reached Turnagain Island. At 2.08 pm he made the scheduled call reporting that he was near Turnagain Island, and arranged to call again when near Mabuiag Island. 25 Between 3.54 pm and 3.57 pm Mr Baira rang the office on four occasions telling Mr Stephen he was "a bit lost in a fog" but that all onboard were well and he had plenty of fuel. Mr Stephen advised Mr Baira to steer at 160 degrees or 170 degrees to get into the lee of the reefs and towards Mabuiag Island. 26 Failed attempts by Mr Baira to call Mr Stephen were made at 4.25 pm, 5.50 pm and 6.05 pm. At 6.22 pm Mr Baira rang Mr Stephen reporting that he had sighted an island believed to be Gabba Island but was still lost. Mr Stephen told Mr Baira that he should activate his EPIRB to fix his position if he could not locate the island. There was further contact at 7.34 pm when Mr Stephen and Mr Baira had further discussions about activating the EPIRB. 27 At about 7.15 pm the Queensland Police Service at Thursday Island was notified by Mr Chaston that the Malu Sara was overdue and seemingly lost. At 7.40 pm Sergeant Warren Flegg, an officer from the Queensland Water Police on Thursday Island, began co-ordinating the search. The Australian Search and Rescue organisation ("AusSAR") in Canberra was contacted at 8.11 pm. 28 Some telephone contact was maintained with Mr Baira between about 7.45 pm and 9.30 pm. About 10 of 20 attempted calls were successful and the EPIRB was transmitting. Based on the satellite information, AusSAR established an approximate position of the vessel at approximately 10.00 pm and relayed this to Mr Stephen asking that he advise Mr Baira to head due east towards Mabuiag Island. Thereafter, telephone contact with the vessel was difficult to establish. 29 At about 1.37 am on 15 October 2005 Mr Baira informed Sergeant Flegg that the vessel was at anchor but was out of oil. At 2.15 am Mr Baira told Mr Stephen the vessel was taking on water and was sinking. No further contact with the vessel could be established. 30 At approximately 2.30am, Sergeant Flegg contacted the Thursday Island Volunteer Marine Rescue ("VMR") requesting a search vessel be sent out. At about 4.15 am, the "Pedro Stephen" left Thursday Island with three crew onboard. Shortly before 6.00 am the IRV from Mabuiag Island also joined the search. 31 Intensive air and sea searches ensued in the following days. At approximately 10.30 am on 15 October 2005 the vessel's EPIRB was found with a 1.5 m length of its lanyard attached. No other debris has been recovered. 32 At about 2.30 pm on 16 October 2005 a fixed wing aircraft sighted a person in the water but despite attempts, the person was unable to be recovered. On 26 October 2005, a body subsequently identified as being that of Ms Flora Enosa was found by Indonesian fisherman about 50 miles west of the vessel's last known position. No other bodies have been recovered. 33 It is not in dispute that the telephone on the vessel would not have functioned in the water. As the telephone on the vessel was still accessing the network until 3.57 am it is estimated the vessel finally sank at some time around or after 4.00 am on 15 October 2005. 34 Upon the search being scaled back, an investigation into the incident was instigated by DIMA. The Entry Policy and Procedures Branch issued a report dated 3 November 2005 which found a combination of factors had contributed to the incident. The use of the remaining IRVs was suspended on 15 or 16 October 2005 and subsequently not allowed back into service. 35 It is clear from later testing of the IRVs, after the loss of the Malu Sara, that the declarations made by Mr Radke as to the capacity of the vessels (including the Malu Sara) to float upright when swamped were false. Despite the description of buoyant material having been installed throughout the vessels, no such material was installed at any time. The positive flotation statement itself required that the "recognised standard" by which the calculations were made was to be nominated, and that complete calculations be provided. None of these materials were provided to DIMA. 36 It is clear from these events that the air-filled void on the Malu Sara was not: watertight (in that it was open to the penetration of water through the air vent and through any other defects in welding or construction, or through any defect in the drain plug or through any incorrect fitting of the drain plug); nor compliant with AS 1799; nor compliant with the contract between Subsee and the Commonwealth; nor capable of causing the vessel to comply with Mr Radke's flotation statement.

The OHS Act 37 Section 18(1) provides as follows: Duties of manufacturers in relation to plant and substances 18(1) A manufacturer of any plant that the manufacturer ought reasonably to expect will be used by employees at work must take all reasonably practicable steps: (a) to ensure that the plant is so designed and constructed as to be, when properly used, safe for employees and without risk to their health; and (b) to carry out, or cause to be carried out, the research, testing and examination necessary in order to discover, and to eliminate or minimise, any risk to the health or safety of employees, that may arise from the use of the plant; and (c) to make available to an employer, in connection with the use of the plant by employees at work, adequate information concerning: (i) the use for which it is designed and has been tested; and (ii) details of its design and construction; and (iii) any conditions necessary to ensure that, when put to the use for which it was designed and tested, it will be safe for employees and without risk to their health. Note: A manufacturer who breaches subsection (1) may be subject to civil action or a criminal prosecution (see Schedule 2). 38 Section 19(1) is in similar terms and provides: Duties of suppliers in relation to plant and substances 19(1) A supplier of any plant or substance that the supplier ought reasonably to expect will be used by employees at work must take all reasonably practicable steps: (a) to ensure that, at the time of supply, the plant or substance is in such condition as to be, when properly used, safe for employees and without risk to their health; and (b) to carry out, or cause to be carried out, the research, testing and examination necessary in order to discover, and to eliminate or minimise, any risk, to the health or safety of employees, that may arise from the condition of the plant or substance; and (c) to make available to an employer, in connection with the use of the plant or substance by employees at work, adequate information concerning: (i) the condition of the plant or substance at the time of supply; and (ii) any risk to the health and safety of employees to which the condition of the plant or substance may give rise unless it is properly used; and (iii) the steps that need to be taken in order to eliminate such risk; and (iv) in the case of a substance--the first aid and medical procedures that should be followed in the event of the condition of the substance causing injury to an employee. Note: A supplier who breaches subsection (1) may be subject to civil action or a criminal prosecution (see Schedule 2). 39 Schedule 2 to the OHS Act relevantly provides: 2 Declarations of contravention (1) If a court considers that a person has breached one of the following provisions, or was involved in such a breach, it must make a declaration that the person has contravened this subclause: … (c) subsection 18(1) or 18(2) (duties of manufacturers in relation to plant and substances); (d) subsection 19(1) (duties of suppliers in relation to plant and substances); … 4 Pecuniary penalty orders (1) If a court has declared, under subclause 2(1), a contravention of that subclause by a person because the person breached, or was involved in the breach of, a provision listed in that subclause, the court may order the person to pay the Commonwealth a pecuniary penalty. (2) The pecuniary penalty must not exceed the amount stated in the table to be the maximum penalty in relation to the provision concerned.

Admitted contraventions of the OHS Act 40 Subsee has admitted to extensive and substantial contraventions of the OHS Act. They are as follows: 1. At all material times Subsee knew that the Malu Sara would be used by employees within the meaning of s 9(1) of the OHS Act, at work, and in the sea conditions that were likely to occur in the waters of the Torres Strait (including up to 15 miles offshore). 2. Pursuant to s 18(1) of the OHS Act, Subsee had an obligation as manufacturer of the Malu Sara to take all reasonably practicable steps to: (a) ensure that the Malu Sara was designed and constructed so as to be, when properly used, safe for use by employees of the Commonwealth and without risk to their health; (b) carry out, or caused to be carried out research, testing and examination necessary in order to discover and to eliminate or minimise, any risk to the health or safety of employees of the Commonwealth that may arise from the use of the Malu Sara; and (c) to make available to the Commonwealth, in connection with the use of the Malu Sara by its employees, adequate information concerning: (i) the use for which it is designed and had been tested; (ii) details of its design and construction; and (iii) any conditions necessary to ensure that, when put to the use for which it was designed and tested, it would be safe for employees of the Commonwealth and without risk to their health. 3. Pursuant to s 19(1) of the OHS Act, Subsee had an obligation as supplier of the Malu Sara to take all reasonably practicable steps to: (a) ensure that, at the time of supply, the Malu Sara was in such a condition as to be, when properly used, safe for all employees of the Commonwealth and without risk to their health; (b) to carry out, or cause to be carried out, the research, testing and examination necessary in order to discover, and to eliminate or minimise, any risk to the health or safety of employees of the Commonwealth, that may arise from the condition of the Malu Sara; and (c) to make available to the Commonwealth, in connection with the use of the Malu Sara by Commonwealth employees at work adequate information concerning: (i) the condition of the vessel on supply to the Commonwealth; (ii) any risk to the health and safety of Commonwealth employees to which the condition of the vessel may give rise unless it was used properly; (iii) the steps that need to be taken in order to eliminate such risk. 4. Subsee accepts that it contravened s 18(1) and s 19(1) of the OHS Act in the following respects: (a) the Malu Sara was not constructed in accordance with, and did not meet the standards prescribed by, the contract between Subsee and DIMA, and in particular, was not compliant with material parts of AS166520, AS1799 and USL Code 2C as required; (b) the scuppers draining the weather deck on the Malu Sara were substantially smaller than the minimum required of AS1799; (c) a single centre line freeing port in the outboard well was of insufficient size and did not comply with AS1799; (d) the above deficiencies referred to in the preceding two sub-paragraphs, in combination with the effect of a flap fitted to the outboard motor side of the scuppers and freeing port, restricted drainage of water overboard from the weather deck and limited the effectiveness of the items; (e) the Malu Sara did not meet level flotation or swamp stability requirements, in that: (i) it was not constructed with any buoyancy situated at upper levels of the vessel to ensure that the vessel remained floating upright if swamped, contrary to AS1799; and (ii) it was not constructed with sufficient reserve buoyancy to prevent it from sinking altogether when swamped, contrary to AS1799. (f) the positive flotation statement for the vessels supplied by Subsee (including the Malu Sara) was irregular on its face, in that it incorrectly cited void air compartments as being "buoyant material", did not correctly assess or describe the standard and calculations used to assess the allowable flotation under AS1799 or USL Code 2C, and falsely declared a condition of positive buoyancy that the Malu Sara (and each of its sister vessels) did not have; (g) when the Malu Sara was fully loaded, it exhibited negative freeboard, which permitted ingress of water through scuppers onto the weather deck, affecting the weight and stability of the vessel; (h) on the basis of tests conducted on two of the sister-ships, the weather deck on the Malu Sara was not water tight, which allowed the ingress of water into the bilge, also affecting the weight and stability of the vessel, and compromising the only void relied upon for buoyancy in the vessel; (i) Subsee did not conduct swamp tests or sea trials on the Malu Sara for the purpose of verifying the accuracy of the statements made on behalf of Subsee in the positive flotation statement; (j) Subsee did not have the Malu Sara assessed or inspected by any qualified person to determine whether or not the vessel met all requirements of the contract or AS1799 or the standards required by USL Code 2C; (k) the fuel tank gauge was faulty as it read incorrectly and was not calibrated; (l) it was probable that the welding and sealing of void spaces in the Malu Sara were faulty, such that the water tight integrity of the vessel was not able to be maintained; (m) the weather deck draining provision was such that the Malu Sara's decks would not be able to be sufficiently cleared of water in conditions of weather and sea, which could reasonably be expected to be encountered; (n) no bilge alarm was fitted; (o) the fuel lines on the Malu Sara were not sufficiently protected; (p) no operational manuals or other information about the use, operation (including safe operation) or maintenance of the vessel were provided to the Commonwealth by Subsee (although operations manuals for the outboard motor were provided by Subsee); and (q) no plate or sign was affixed to the Malu Sara to indicate to the operator the safe carrying capacity of the vessel.

Consideration of relevant principles 41 As a general proposition, the sentencing principles developed by State Courts and the State Workplace Health and Safety legislation provide "useful, analogical, general guidance as to the approach to be taken in consideration of penalties under the Act": Comcare v Commonwealth of Australia [2007] 163 FCR 207 at [124]. In that decision, which comprehensively considered principles relevant to imposition of penalties under the OHS Act, Madgwick J stated those principles to be as follows: (i) the penalty must be such as to compel attention to occupational health and safety generally, to ensure that workers whilst at work will not be exposed to risks to their health and safety; (ii) it is a significant aggravating factor that the risk of injury was foreseeable even if the precise cause or circumstances of exposure to the risk were not foreseeable; (iii) the offence may be further aggravated if the risk of injury is not only foreseeable but actually foreseen and an adequate response to that risk is not taken by the employer; (iv) the gravity of the consequences of an accident does not of itself dictate the seriousness of the offence or the amount of penalty. However the occurrence of death or serious injury may manifest the degree of the seriousness of the relevant detriment to safety; (v) a systemic failure by an employer to appropriately address a known or foreseeable risk is likely to be viewed more seriously than a risk to which an employee was exposed because of a combination of inadvertence on the part of an employee and a momentary lapse of supervision; (vi) general deterrence and specific deterrence are particularly relevant factors in light of the objects and terms of the Act; (vii) employers are required to take all practicable precautions to ensure safety in the workplace. This implies constant vigilance. Employers must adopt an approach to safety which is proactive and not merely reactive. In view of the scope of those obligations, in most cases it will be necessary to have regard to the need to encourage a sufficient level of diligence by the employer in the future. This is particularly so where the employer conducts a large enterprise which involves inherent risks to safety; (viii) regard should be had to the levels of maximum penalty set by the legislature as indicative of the seriousness of the breach under consideration; (xi) the neglect of simple, well-known precautions to deal with an evident and great risk of injury, take a matter towards the worst case category; (x) the objective seriousness of the offence, without more may call for the imposition of a very substantial penalty to vindicate the social and industrial policies of the legislation and its regime of penalties. (at [120]) 42 As I have already noted, however, the Court has not, to date, imposed penalties on a supplier or manufacturer under the Act, and the question arises whether those same principles applied by Madgwick J (and subsequently adopted on many occasions by this Court) are relevant in this case. 43 In my view these principles are relevant, subject to modification appropriate to the circumstances of a manufacturer or supplier of equipment to be used by employees, rather than the circumstances of an employer. I find support for this view in the decision of the New South Wales Industrial Relations Commission in Inspector Jelley v Lanza Management Pty Ltd [2008] NSWIRComm 125, where suppliers were charged with supplying for use - by persons at work - plant which they failed to ensure was safe and without risks to health when properly used contrary to the relevant State occupational health and safety legislation. I note in particular the analysis of President Boland in considering the appropriate penalty at [36], [38], [41], [43], [44] and [45]. 44 Notwithstanding the assistance provided by these principles however, the quantum of penalty to be imposed in an individual case must be determined by reference to the facts of each case. The overriding principle in assessing penalty is that the amount of the penalty should reflect the Court's view of the seriousness of the offending conduct in al the relevant circumstances: Comcare v Commonwealth of Australia [2007] 163 FCR 207 at [116]. 45 In this case the following facts are clear. 46 First, Subsee designed, manufactured and supplied to the Commonwealth vessels which not only failed to meet the requirements of the contract between the parties, but were dangerously unseaworthy and unsuited to the conditions in which they were required to operate. 47 Second, Subsee knew the conditions in which the vessels were required to operate, namely on the open sea. I reject the submission of Subsee that it had no knowledge of the actual use of the vessels by the Commonwealth once supplied, and that therefore it cannot be said that it actually foresaw the risk of injury inherent in the fatal voyage of the Malu Sara. It is indisputable that passengers and crew on the Malu Sara in the open ocean would depend entirely on that vessel to sustain their lives. It was entirely foreseeable that, if the manufacture and supply of the vessels including the Malu Sara was not carried out in a sound and competent manner, the MMOs and any other persons on board could be placed in a situation which was, at the very least, life-endangering. While Subsee may not have foreseen the actual events which occurred, including that Mr Baira became disorientated and lost in the conditions, that is irrelevant in this case. In my view had the Malu Sara been constructed in a competent and seaworthy manner, or in accordance with the relevant standards and the contract, the vessel would have been sufficiently seaworthy and sound to support and protect the passengers and crew while waiting for rescue. It clearly was none of these things. 48 Third, the fact that in this case the vessel was lost with all aboard manifests the degree of seriousness of the relevant detriment to safety. The inability of a vessel to sit at anchor while loaded without taking water and eventually sinking is almost inconceivably dangerous in the case of a vessel which is expected to go out to the open sea with passengers. It is almost inevitable that the passengers and crew will be thrown into the water without proper support and without the possibility of immediate rescue. Even worse, the Malu Sara was represented as being constructed such that it would remain afloat even if it were swamped, and provide a measure of safety for its occupants while awaiting rescue. It is abundantly clear that this was not the case. 49 Fourth, while as a general proposition considerations of whether conduct is systemic may appear more relevant to the conduct of an employer than a manufacturer or supplier, in this case there is ample evidence to support a finding, for the purposes of penalty, that the actions of Subsee constituted a systemic failure to appropriately address a known or foreseeable risk. The reasons for the complete and utter failure of Subsee to design and construct the vessels in the manner contracted are not explained on the material before me, and can only be the subject of inferences damning to Subsee. That material demonstrates a course of conduct of Subsee in respect of the construction of the vessels including the Malu Sara which was, at best, derelict and grossly neglectful of the standards required by the contract and the requirements of the construction of a seaworthy vessel. That Subsee actively attempted to mislead DIMA as to the flotation characteristics of the vessels by issuing flotation certificates which were false in almost every respect indicates systemic failures of the most serious kind. 50 Fifth, in my view issues of general deterrence and specific deterrence are both relevant factors. It is important to remind those concerned with the manufacture and supply of vessels of this kind that fundamental failures to implement their responsibilities will result in the imposition of severe penalties. 51 Sixth, Subsee did not take all practical measures to ensure the safety of the vessels. Indeed, its approach to safety in this matter appeared non-existent. Simple, well-known precautions, including testing and research to ensure that the vessels carrying the requisite load would remain buoyant, were not apparently undertaken at any point in the manufacturing and supply process. Again, what appears to be an almost incomprehensible lack of interest by Subsee in ensuring that its vessels were, in fact, safe and seaworthy, is not explained on the material before me. The tragedy of this case is exacerbated (if possible) by the fact that it was readily avoidable by Subsee producing vessels in accordance with the terms contracted. 52 In my view, these facts take this case into the very worst case category under the OHS Act.

Factors in mitigation 53 Subsee contends that two mitigating factors present in this matter which may cause the Court to impose a penalty less than the maximum are: the extent of Subsee's cooperation; and the fact that Subsee's culpability is somewhat less than that of the Commonwealth in that the Commonwealth's conduct was a more proximate cause of the fatal events. 54 In relation to the issue of Subsee's cooperation - it is clear that Subsee advised the applicant within three months of the commencement of proceedings that it admitted liability and intended to proceed to a penalty hearing to be conducted by way of a statement of agreed facts. While this prompt course of action may have obviated the need for a trial, for reasons to which I advert below I reject the submission that such early acceptance of liability and cooperation warrants a discount of 25% on the penalty which is otherwise appropriate. 55 Further, I reject the submission that Subsee's culpability is less than that of the Commonwealth because, in summary: at the time of supply of the vessels the Commonwealth failed to have them independently surveyed so as to ensure that they met the requirements of the contract. the risk of injury created by the respondent's contraventions could have been averted if this had taken place. Subsee had no control over the course of events that transpired once the Malu Sara was supplied to the Commonwealth. the risk of injury resulting from the fatal voyage was actually foreseen by the Commonwealth, and the most proximate cause of the fatal events was the Commonwealth's failure to take appropriate action in relation to the Malu Sara after evidence of the vessel's compromised buoyancy was brought to its attention just two days before its fatal journey. 56 In this case the culpability of Subsee is demonstrated by the facts to which it admits. Five people died in circumstances which were entirely avoidable. The Malu Sara was constructed by Subsee in such a manner that it was unseaworthy and, contrary to representations of Subsee, incapable of floating in cases where it ought to have remained afloat. In my view, this case falls into the worst category of case under the OHS Act. While Subsee admitted contraventions of the OHS Act relatively promptly, to do otherwise would have been pointless in what appears to have been overwhelming and conclusive evidence of Subsee's culpability. I consider that the maximum penalty ought be imposed with no discount. 57 Further, I am not persuaded that Subsee's culpability is less than that of the Commonwealth. The facts of this case demonstrate that the principal of Subsee, Mr Radke, was experienced in the boat-building industry, and was himself an accreditation holder under the Transport Operations (Marine Safety) Act 1994 (Qld). There is also undisputed evidence that Mr Chaston, the DIMA officer with responsibility for the project of procuring construction of the vessels including the Malu Sara, had no relevant or appropriate expertise to competently assess whether any of the vessels were constructed in compliance with the contract, USL Code 2C or AS 1799. As I have also already noted, a certificate of positive flotation issued by a Mr Radke in respect of the vessels constituted a complete falsehood. The disturbing picture painted by these events, including the willingness of Mr Chaston to accept the vessels notwithstanding the absence of five of the six required certificates, is one of a deliberate strategy of Mr Radke to take advantage of Mr Chaston's ignorance and gullibility, and procure Mr Chaston's acceptance of vessels which were both unseaworthy and non-compliant with the specifications. 58 In relation to the Commonwealth's knowledge that the Malu Sara was taking water prior to the fateful voyage, and Subsee's claim that it did not know of the use the Commonwealth intended to put the vessels - in my view these factors in no way obviate the obligation of Subsee as the manufacturer to undertake testing and research to ensure that the vessels, which were the bulwark of the passengers and crew against the dangerous waters of Torres Strait, were safe and seaworthy. During oral submissions, Mr Herbert, Counsel for Comcare, submitted: The manufacturer has an obligation imposed by the Act to know that thing, to do the testing and the research under section 18 (1)(b) to discover that fact. It is not a circumstance of mitigation to say, "We didn't discharge our obligation under the Act. We didn't know that the vessel we provided to the Commonwealth to be used as a Commonwealth work base was entirely dangerous and utterly unsuited for the use to which we have provided, and when we get apprehended for doing that thing, we should receive a discount on the penalty because we didn't know". In my submission, that is, as I have said earlier, that is a circumstance of aggravation and not mitigation. (TS p 21 ll 34-42) 59 I agree.

Conclusion 60 Clause 7 of Pt 1 Sch 2 of the Act provides as follows: 7 Conduct constituting a breach of 2 or more provisions listed in subclause 2(1) Proceedings may be instituted under this Act against a person in relation to one or more contraventions of subclause 2(1). However, the person is not liable to more than one pecuniary penalty under this clause in respect of the same conduct. 61 In this case the same conduct is relied on in relation to both contraventions alleged, and only one pecuniary penalty may be imposed on the respondent despite admission of liability in relation to both matters. 62 In my view the maximum penalty of $242,000 should be imposed on the respondent on account of the contravention of s 18(1) and s 19(1) of the OHS Act. 63 Finally, an impact statement has been filed in these proceedings by Ms Racquel Banister, the sister of Mr Wilfred Baira. The Court acknowledges the extreme pain and anguish caused to Ms Banister and her family by the loss of Mr Baira. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

REASONS FOR JUDGMENT 1 On 2 December 2010 I delivered judgment in Comcare v The Commonwealth of Australia [2010] FCA 1331. Many of the tragic circumstances giving rise to the application before me were described in detail in that decision, where the Court imposed a penalty on the Commonwealth of Australia as the employer of persons who died in the ill-fated voyage of the Malu Sara. Now, however, Comcare seeks relief against Subsee Explorer Pty Ltd ("Subsee"), the manufacturer and supplier of the Malu Sara. It appears that this is the first case in which the Court has been called on to impose a penalty upon a manufacturer or supplier rather than an employer under the Occupational Health and Safety Act 1991 (Cth) ("OHS Act"). 2 The proceedings before me were commenced by an Application and Statement of Claim filed on 23 December 2009. The parties to the proceedings have submitted a Statement of Agreed Facts in which the respondent admitted that it had contravened s 18(1) and s 19(1) of the OHS Act. The parties have also agreed upon a minute of order, which deals with all matters between them save one: namely the penalty to be imposed on the respondent for those contraventions. In summary, Comcare submits that the Court should impose a pecuniary penalty fixed at the maximum sum allowable by law in relation to the admitted contraventions, and payment of costs. While the respondent concedes that its contraventions of the OHS Act warrant imposition of a significant penalty, the respondent submits that a number of mitigating circumstances exist supporting a reduction in the penalty to be imposed. 3 In considering the question of penalty, it is appropriate to describe the background to these proceedings. While many relevant facts were described in Comcare v The Commonwealth of Australia [2010] FCA 1331, it is necessary to examine all relevant facts relating to Subsee and it role in the events culminating in the loss of the Malu Sara and all on board.

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