Diona's closing submissions concluded that:
"190. The Commission would conclude that there was not in existence on 27 September 2022 at 5pm (or on 4 October 2022), facts that were sufficient to induce a reasonable person to form the belief that Diona was on that date, "contravening" either section 19 of the WHS Act or clause 300(2) of the WHS Regulation.
191. The evidence before the Commission demonstrates that Inspector Savage's 'belief' was based upon a litany of assumptions, which were unreasonable.
192. A belief that there was inadequate "arrangements in place" requires consideration of the Applicant's:
(i) Critical risk observations;
(ii) Inspections;
(iii) Take-5s;
(iv) Audits; and
(v) the adequacy of those observations, inspections, take-5s and audits.
193. This was not done by the Inspector, and more importantly, there was no consideration of what measures were in place at the time of the issue of the Notice to form the foundation of a belief in the fact of a contravention on the part of Diona.
194. The Respondent's reliance on the absence of information to support the formation by the Inspector of the belief should not be accepted by the Commission.
195. The Commission should find that where an Inspector fails to delay the issuing a Notice under the WHS Act, in circumstances where he knows that the applicant was cooperative - it is not objectively reasonable for him to base his belief on the absence of information.
196. Instead, what the absence of information demonstrates is a clear failure on the part of the Inspector make reasonable inquiries.
197. The Applicant was cooperative throughout the Inspector's investigation, and he could have easily attempted to test, in a timely and practical manner, the facts as they existed at the time he issued his Notice - but impermissibly failed to do so.
198. For the reasons set out above and, in the Applicant's original submissions, the Commission should make orders that the Internal Review Decision be revoked, and that the decision made by the Inspector to issue the Notice to Diona be wholly set aside."
This was supported by the following submissions and references to the evidence:
1. A belief in a contravention on 12 August 2022 does not suffice to induce a reasonable belief that the contravention was still occurring on 27 September 2022 or 4 October 2022.
2. Inspector Savage's departure on 12 August 2022 without issuing an improvement notice and his email on 20 August 2022 indicate he did not believe there was an ongoing or likely future contravention at that time.
3. The inspector's conversation with Mr. Stewart on 5 October 2022 further demonstrated that the Inspector had no basis for his belief, as he only required documentation of existing improvements to close the Notice.
4. The inspector issued the improvement notice based on an alleged contravention of section 19 of the WHS Act and clause 300 of the WHS Regulations. However, the notice did not clearly specify how Diona had contravened these provisions.
5. For Inspector Savage to form a belief that section 19 of the WHS Act was being contravened, he needed to consider what was reasonably practicable for Diona, which he did not do.
6. Inspector Savage needed to consider the facts and circumstances as they relate to a principal contractor, not as they might relate to the PCBU doing the work.
7. The reasonably practicable requirement applies to matters within the power of the defendant to control, supervise, and manage. There is no evidence of the inspector considering or making inquiries about what was within Diona's power to control, supervise, or manage, or what was reasonably foreseeable. Inspector Savage did not consider what Diona should be doing in its role as a principal contractor.
8. A belief in inadequate arrangements requires consideration of Diona's critical risk observations, inspections, Take-5s, and audits, which was not done.
9. Evidence of what was within Diona's power to control, supervise, or manage was available, as deposed by Barry Morris, the HSEQ Advisor.
10. Diona had a comprehensive WHS Management Plan in place, which included measures for monitoring and ensuring compliance with safety protocols by its contractors.
1. The WHS Management Plan outlined how Diona managed contractors to ensure they complied with their WHS obligations, including the monitoring of compliance with Safe Work Method Statements (SWMS).
2. The Cahill SWMS was prepared by Zain Jafar, HSEQ Manager for Edara Systems on behalf of Cahill, and reviewed by Diona's HSEQ Advisor, Barry Morris, before being forwarded to Hunter Water for review.
3. Diona provided a HSEQ Advisor and a Site Supervisor to the Project, who were onsite when work was being undertaken by contractors, including Cahill. Diona also had a Project Manager who attended the site.
1. Inspector Savage should have considered the contractual terms defining power to control, supervise, or manage among the involved parties.
2. The inspector's belief was speculative and based on an absence of information rather than concrete evidence. He failed to request necessary information from Diona, demonstrating a lack of reasonable inquiry.
3. The inspector did not know if the high-risk work was being conducted on 27 September 2022, making it impossible to form a reasonable belief about Diona's compliance.
4. By 4 October 2022, the inspector had no proper basis to believe Diona had contravened the WHS Act. His email to Mr Stewart reinforced that the Notice was issued due to Diona's role as principal contractor, not due to any specific failure.
5. Diona contends that the relevant duty holder was Cahill and/or Coast to Country.
6. Diona, as the principal contractor, did not breach any duty imposed on it under section 19 of the WHS Act in relation to the systems of work for pulling the pipe string into the trench. The responsibility lay with Cahill, Country to Coast, and Mr. Bourke, who had the capacity to influence and control the systems of work.
7. Chapter 6 distinguishes between the PCBU commissioning the work, the principal contractor, and the PCBU doing the work.
8. For Inspector Savage to form a belief that section 300 was being contravened, he needed to consider the Applicant as the PCBU doing the work, which is a misinterpretation.
9. The PCBU doing the work is not the PCBU commissioning the work or higher in the contractual chain.
10. The PCBU commissioning the work has duties under the WHS Act and specific duties under Chapter 6.
1. The principal contractor has overall management or control of the workplace and specific duties under Chapter 6.
2. Chapter 6, Division 2, deals with SWMS, which describe control measures for risks associated with the work.
3. The obligation to create a SWMS rests on the PCBU doing the work.
1. The PCBU doing the work is best positioned to create the SWMS and ensure the safety of its workers.
[2]
The respondent
SafeWork summarised their case as:
"134. The Commission should be satisfied that Inspector Savage at the time of issuing the Improvement Notice had made reasonable enquiries, and that his belief that a contravention was continuing in the circumstances prescribed by s 191(1)(a) constituted a reasonable belief."
This was supported by the following submissions and references to the evidence:
1. The object of the WHS Act is to secure the health and safety of workers and workplaces by protecting against harm, assisting in achieving a safer working environment, and ensuring compliance through effective measures.
2. Inspectors are appointed under the WHS Act to ensure compliance by requiring adherence to the Act through issuing notices.
3. The purpose of an improvement notice is to require the duty holder to take steps to remedy or prevent a contravention or to address the causes of a contravention.
4. The inspector's belief that Diona was contravening the WHS Act was based on several factors, including the presence of a SWMS, the requirement for a POZ, the injured worker being in the POZ without action taken to stop the task, and the lack of control over the pipe string.
5. The Improvement Notice included specific details on how the provisions were being contravened, such as the failure to take action when a person was in the POZ and the lack of control over the pipe string.
6. On 15 August 2022, Inspector Savage was allocated the matter for investigation. He had a telephone call and subsequent meeting on-site with Mr Morris, Iain Thomas (Project Manager), and James Paton (Hunter Water Corporation Project Manager). During this meeting, Inspector Savage inspected the site, which had not been preserved.
7. The incident occurred because the pipe string was not secured at both ends by the excavators.
8. Following the incident, Diona changed the work methodology to ensure that all pipes or strings moved into position for lowering into a trench would be connected at both ends to an excavator.
9. The inspector made reasonable inquiries with Diona and others concerning compliance with the SWMS during the period between the incident and the issuance of the Improvement Notice.
10. The inspector's request for further information was in the context of Diona having already ceased the pipe laying works as a prudent response to the incident.
11. The inspector was not required to conduct a full investigation before forming his reasonable belief.
12. On 27 September 2022, Inspector Savage reviewed all the information provided to him regarding the incident and formed a reasonable belief that Diona was contravening two provisions of the WHS Act, namely section 19 of the Act and clause 300 of the Work Health and Safety Regulation 2017.
13. The inspector considered Diona's role as a principal contractor and decided to issue the Notice to Diona rather than its subcontractor E & M for several reasons, including Diona's oversight of contractors and expertise in safety matters.
14. The inspector did not receive information confirming that measures were being implemented and monitored to ensure compliance with the SWMS.
15. The HRCW SWMS provided to the inspector included control measures for working in areas with powered mobile plant, such as maintaining positive communication and stopping work if people enter the POZ.
16. The inspector formed the belief that Diona was contravening the WHS Act and Regulations based on the information provided by Diona and the lack of adequate arrangements to ensure compliance with the SWMS.
17. The Improvement Notice was issued on 4 October 2022, identifying that the Inspector formed his belief on 27 September 2022 at 5.00pm. The notice described the contravention as a lack of arrangements to ensure compliance with the SWMS.
18. The inspector's email outlining the reasons for issuing the Improvement Notice highlighted the failure to stop work when a person was in the POZ, unclear control of the task, and failure to maintain control of the pipe string.
19. There is no evidence to suggest that the cost of implementing appropriate arrangements to ensure was unreasonable or excessive.
20. Diona, as the principal contractor, had the power to stop the work and direct Cahill to perform the work in a different and safe manner at Cahill's cost.
21. The Commission should reject the submission that the relevant duty holder was Cahill and/or Coast to Country. It was reasonably practicable for Diona to be involved in maintaining and properly implementing safety procedures at the site.
22. Diona had control over Cahill and the work performed at the site. Diona had the expertise to judge whether the work was being performed safely and in compliance with the SWMS.
23. The duties held by Diona under the WHS Act cannot be delegated to subcontractors, and Diona remains responsible for ensuring compliance.
24. Clause 300 of the WHS Regulation applies to principal contractors, as indicated by a statutory note.
25. The statutory note forms part of the text of the WHS Regulation and must be considered in interpreting clause 300.
26. If the statutory note is not accepted, extrinsic materials can be used for interpretation, and the content of the note cannot be disregarded.
27. The provision should be construed by considering the words in context, including surrounding statutory provisions and the provision's purpose.
28. The context of clause 300 includes the meaning of 'principal contractor' established in clause 293(1), which defines a principal contractor as a PCBU.
29. Diona was both a principal contractor and a PCBU, and the inspector had a reasonable basis to believe that clause 300 applied to Diona and that it was being contravened.
[3]
Consideration
Consistent with the analysis set out above at [35], the inspector had two substantial concerns arising from the accident on 12 August 2022. The first was that the pipe string was not adequately secured, and the second was a more complex concern arising from the combination of a worker entering the POZ, this not being detected and thus work not being immediately stopped when the worker entered the POZ. His concern in relation to the second aspect included a lack of clarity as to who was in charge of monitoring compliance with the POZ.
The Commission accepts the submissions of SafeWork as to the objects of the WHS Act, the reason for the existence of inspectors and the purpose of improvement notices. The authorities relied on by the parties, and in particular Lipman and Growthbuilt, have on their face taken these issues into account in coming to the principles set out therein. Accordingly, these submissions do not materially advance the position of SafeWork.
The Commission accepts in general terms the submission of SafeWork that the improvement notice set out details as to how various provisions of the WHS Act and Regulations were being breached. The difficulty for SafeWork is that this submission does not address the fundamental flaw which the Commission has concluded exists, being the absence of reasonable inquiries, and the absence of facts which could lead a reasonable person to conclude that a breach of the WHS Act and Regulations existed.
The Commission does not accept the submissions of SafeWork that the inspector made inquiries of "Diona and other parties" to the extent this phrase suggests. In particular, the Commission has concluded that reasonable inquiries should have been made of Cahill, and as to the relationship between Diona and Cahill and the relationship between Cahill and Country to Coast. Those inquiries were not made, and, in the absence of those inquiries, it is not possible to conclude that there was a reasonable basis on which the improvement notice could have been issued.
The Commission is concerned that the final documents on which the inspector relied on were received at approximately 4.00pm, and that by 5.00pm the inspector had concluded that there was a relevant breach requiring the issuing of an improvement notice. The documents were voluminous, to the extent that it is difficult to understand how they could have been properly understood in as little as one hour.
The submission set out by SafeWork above at [43(22-29)], are largely accurate in their terms. What the submissions do not address adequately is the phrase "reasonably practicable", nor the underlying, inherent structure of the WHS Act, requiring nuance and balance as to the responsibility which would be borne by each party in the specific circumstances of any improvement notice.
Even in submissions to the Commission, SafeWork did not address the relationship between the three parties. This should be contrasted with the concession by the inspector during cross examination that the improvement notice should also have been issued to Cahill.
This was a proper concession by the inspector, as it is obvious from the evidence before the Commission, that the parties actually conducting the relevant construction activity were Cahill and Country to Coast.
The Commission has concluded that the inspector did not have sufficient information to form a reasonable belief that Diona was breaching its obligations.
In part, this is for the reasons advanced by Diona, being that the inspector did not actually ask Diona directly whether there was a process by which it ensured compliance by Cahill with Cahill's SWMS. He was not entitled to assume that the absence of such a process without having specifically asked for that information. This also constitutes a failure by the inspector to have made adequate inquiries.
The evidence before the Commission demonstrated that the inspector's understanding of this aspect was correct, but the inspector assumed this, rather than having a proper basis for reaching his conclusion.
Largely, though, the absence of sufficient information to form a reasonable belief is for the reasons set out below at [56-63].
During the investigation and the subsequent exchange of documents, the first of Mr Savage's concerns, properly securing the pipe string, was addressed through a change to the Cahill SWMS. This change required the pipe string to be adequately secured at both ends, such that it could not move in an uncontrolled manner.
Whilst the inspector considered that the Cahill SWMS had been properly updated, his concern was that there was not an adequate process in place to ensure compliance with the SWMS. It should be noted that contrary to the submissions of SafeWork, this change was not to the Diona work method.
On its face, this is a reasonable concern. However, there was no consideration by the inspector in issuing the improvement notice, nor in his evidence to the Commission, addressing why in the circumstances that obligation was solely held by Diona. There was no evidence that he raised the issue with Cahill at any time.
There is force to Diona's submission that Mr Savage has taken the simple, Diona called it lazy, approach by determining that any inadequacy must be visited upon the principal contractor. At no point in the inspector's evidence was there consideration of the interaction between the parties or the extent to which the expert party was Diona or Cahill.
This concern is exposed further by the inspector's concession during cross examination that, on reflection, the improvement notice should also have been issued to Cahill.
The inspector pointed to several overarching obligations under the WHS Act but did not explain logically why in the particular circumstances Diona should bear all of the responsibility, or even co-responsibility. The most that Mr Savage could say was that Diona was engaged in detail in the process, assessed Cahill's SWMS as was required by the WHS Act and had certain expertise. As indicated elsewhere, the net effect of these is a perverse incentive for a principal contractor to have less expertise, and to be less engaged because to be engaged will expose them to greater liability.
In any event, this evidence from the inspector ignored the evidence of Mr Morris that at the time in question the most that could be said of Diona's personnel was that there were some of them somewhere along the project. The specific evidence of Mr Morris was that Diona was not physically engaged in supervising the trenching or laying of pipes.
It may well have been that, had a proper analysis of the relationship between all three parties been considered by the inspector, that an improvement notice could have been validly issued to Diona. Unfortunately, the information necessary to make that assessment was not available to the inspector, as he did not make inquiries of Cahill or as to the relationship between the three parties. No evidence was before the Commission for the Commission to make such an assessment.
The submission of Diona, that the inspector was not aware of whether trench digging and pipe laying work was physically in progress at 5.00pm on 27 September, or on 4 October when the notice was actually issued, does not ultimately persuade the Commission. This is because the breach identified by the inspector, should it be otherwise supported, goes to process. Whether or not trenching work was happening at precisely those times is an unreasonably narrow question.
It is clear the trenching work continued between 20 August and 27 September, and on at least some days after 4 October 2022. In that context, the inspector was entitled to address the inadequacy, as he saw it, of the system of work at the project whether or not at precisely 5.00pm on 27 September that specific work was occurring.
If, contrary to the above determination of the Commission, there were in existence facts which could have caused a reasonable person to conclude that it was likely that Diona was in breach of the WHS Act and Regulations, the correct and preferable decision by the Commission would in any event have been to revoke the improvement notice. This is for the same reasons as set above, namely the absence of logical basis for the Commission to set out the allocation of responsibilities between the parties.
On the material available to the Commission, it is doubtful that the improvement notice should have properly been issued to Diona. Fundamental to this is the apparent expertise of Cahill and Country to Coast, and the fact that, contrary to the assertions of the inspector, Diona was not actively involved in supervising the specific activities which were the subject of the improvement notice.
The most that it appears likely to the Commission that Diona ought to have done was to have insisted upon more explanation by Cahill as to how Cahill would ensure compliance with Cahill's SWMS. That was not the subject of the improvement notice.
Accordingly, the external review application should succeed, the internal review should be revoked, and the Commission should make an order revoking the original improvement notice.
[4]
Orders
The Commission orders:
1. The external review is upheld.
2. The internal review decision made by the SafeWork reviewer on 19 October 2022 is revoked.
3. The decision to issue Improvement Notice No. 7-427418 on 4 October 2022 is revoked.
C Muir
Commissioner
[5]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 19 November 2024
Parties
Applicant/Plaintiff:
Diona Pty Ltd
Respondent/Defendant:
SafeWork NSW
Cases Cited (3)
The Task of the Commission on external review
The applicant submitted that:
"34. The principles applicable to Commission's decision are set out in the Full Bench's decision in SafeWork NSW v Lipman Pty Ltd [2023] NSWIRCOMM 1034. …
35. It is uncontroversial that an external review application involves the Commission conducting a merits review' and that the Commissioner 'stands in the shoes/position of the decision maker.
36. An external review application does not involve the Commission needing to find any error in the internal review decision or the original improvement notice in order to exercise its powers pursuant to s 229 of the WHS Act. It is not open for the Commission to proceed on the basis that the original Notice is presumptively correct.
37.The Commissioner must determine the 'correct and preferrable decision'.
38. The Commission's determination goes to whether the original decision maker (Inspector Savage) could have formed a reasonable belief is based on evidence:
(i) that was viewed and/or considered by the Inspector at the time the Inspector issued the Notice;
(ii) which is relevant to the issues in the matter and is not evidence based on opinion or hearsay;
(iii) that was available to the Inspector at the time if the Inspector had made reasonable inquiries to establish or clarify facts.
39. The question is not whether this Commission - as the external reviewer - would have formed that belief. Similarly, the question is not whether the Inspector held a belief, but whether that belief was reasonable in the circumstances as they existed at the time of the issuing of the Notice.
40. Thus, what is relevant is the circumstances known to the Inspector and what a reasonable person in the circumstances of the Inspector ought to have known at the time he issued the Notice."
The respondent more economically submitted that:
"13. Lipman confirms that the Commission does not approach this matter on the basis that a Commissioner himself or herself needs to form a reasonable belief that a contravention was occurring rather than being satisfied that, on an objective basis, Inspector Savage could have formed that belief (Lipman at [43]-[48])."