Environment Protection Authority v McConnell Dowell Constructors - [2003] NSWLEC 70 - NSWLEC 2002 case summary — Zoe

NSWNSWLEC

Environment Protection Authority v McConnell Dowell Constructors

[2003] NSWLEC 70

Land and Environment Court (NSW)|2002-11-04|Before: Pearlman J, Mrs J, Mr J

View original source

At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2002-11-04

Before

Pearlman J, Mrs J, Mr J

Source

Original judgment source is linked above.

Judgment (87 paragraphs)

[1]

Introduction 1 In February 1998, a quantity of oil and part of a pipeline fell into the waters of Woolloomooloo Bay during the re-development of the Finger Wharf. This case concerns a criminal prosecution for pollution arising out of that incident. 2 The defendant, McConnell Dowell Constructors (Aust) Pty Ltd, has been charged with an offence against the Environmental Offences and Penalties Act 1989 in that it polluted waters contrary to s 16(1) of the Clean Waters Act 1970. The defendant has pleaded not guilty to the charge. 3 Although the statutes under which the defendant has been charged have now been repealed, it is common ground that this Court has jurisdiction to hear and determine the charge (see Environment Protection Authority v Multiplex Constructions Pty Ltd (2000) 112 LGERA 1 at pars 19 - 22; Environment Protection Authority v Norco Co-operative Ltd [2000] NSWLEC 35 at pars 7 - 8). 4 The prosecutor's case is that the defendant is vicariously liable for the action of its subcontractor, Moltoni Corporation Pty Ltd ("Moltoni") which caused the section of pipeline and the contents of the pipe to fall into the water.

[2]

The incident 5 I am satisfied beyond reasonable doubt of the following facts. 6 The Finger Wharf ("the site") was originally a wooden structure extending in a northerly direction into Woolloomooloo Bay from Cowper Wharf Roadway. It comprised wooden piles, upon which sat wooden headstocks. Running perpendicular to the headstocks were wooden bearers, and upon them was concrete decking. The wharf superstructure sat on top of the wharf, with an apron of deck around it on its western, northern and eastern sides. Underneath the superstructure but on top of the concrete deck was a roadway running the full length of the wharf, with a short transverse portion halfway along the wharf which was open at the sides. 7 Multiplex Constructions Pty Ltd ("Multiplex") was under contract, through a complex set of arrangements not presently relevant, to develop the Finger Wharf. In general terms, this involved the demolition of the existing wharf and its reconstruction as a wharf containing a hotel, residential apartments, shops and restaurants, a boardwalk and a marina. Multiplex entered into a subcontract with the defendant to carry out certain works, in particular, the demolition of the wharf structure. In turn, the defendant subcontracted with Moltoni, a Western Australian corporation, to demolish the wharf sub-structure. I shall return later to consider the terms of the two subcontracts in more detail, but suffice it to say at this stage that the demolition work in which Moltoni was involved was the removal of the concrete decking, the bearers and headstocks, some of the wooden piles and underdeck piping. In order to lift the bearers and headstocks, Moltoni sometimes utilised an implement called a grapple which was attached to an excavator; at other times, the bearers and headstocks were lifted by means of a chain attached to the excavator arm. 8 On 25 February 1998, Moltoni was engaged in removing the bearers and headstocks from the eastern side of the wharf substructure. For this purpose, its employee, Mr C Manihera, was operating the excavator. At about 3:30 pm, a bearer being removed by a chain attached to the excavator slid along the headstocks and hit a pipeline situated underneath the deck. This caused a section of the pipeline to dislodge from its position, and part of that section fell into the water below. The oil in the pipeline spilled into the water. 9 In making the findings I have set out in par 8, I have had regard to a conflict in Mr Manihera's evidence. In his affidavit sworn on 28 October 1999, he said that a headstock was being lifted and it swung and hit the oil pipe. However, in the incident report which he filled in, he said that "… timber slid along headstocks, striking oil line". It is unclear when this incident report was completed by him, but it was certainly completed closer to the date of the incident than his affidavit. Furthermore, his incident report is corroborated by the incident report filled in by Mr D Blair, Moltoni's operations manager, apparently on the same day as the incident occurred. Accordingly, I accept the version set out in Mr Manihera's incident report. 10 Evidence was given by Mr R J Fadel, who was the site manager for Multiplex, and by Mr A Stewart, who was Multiplex's project manager, that, after the spill had occurred, Multiplex took over the control of the site. Various authorities and experts were called in to arrange for a clean up of the spill. There was some dispute between Multiplex and the defendant as to the latter's responsibility for the ultimate removal of the oil pipes, but eventually the defendant assumed that responsibility. After the site had shut down for a time following the spill, work continued, the spill was cleaned up and the oil pipes removed.

[12]

(b) The main "players" 19 The defendant's project manager on the site was Mr C Beveridge and he figures prominently in the recital of the facts and circumstances underlying these proceedings. However, at the time of the hearing, Mr Beveridge was in Hong Kong and it appears that he had evinced an attitude of non-cooperation and reluctance to give evidence in the proceedings. Consequently, he was not called to give evidence by either the prosecutor or the defendant. The prosecutor sought, however, to tender a record of interview given by Mr Beveridge to an officer of the prosecutor, Mr Callaghan. The defendant opposed the tender. For the reasons which I gave during the course of the proceedings, I ruled, under s 87 of the Evidence Act 1995, that the record of interview, although hearsay, was admissible as an admission by the defendant, but I excluded it under s 137 of the Evidence Act upon the basis that its probative value was outweighed by the danger of unfair prejudice to the defendant. 20 Mr Robert Moltoni was the managing director of Moltoni, and he was the principal witness for the prosecution. He said that Moltoni had been engaged in a contract for the demolition of a wharf at Fremantle. Through that project, Mr Moltoni had met Mr Lodge who had subsequently become an employee of Multiplex. Mr Lodge brought Mr Moltoni's attention to the Finger Wharf project, which led to the negotiations and ultimate establishment of the subcontract between the defendant and Moltoni to which I refer in par 7. 21 There were employees of both the defendant and Moltoni on the site. One of the defendant's employees was Mr M Petracca, who was engaged as a site engineer. Another was Mr J Mion, who was the defendant's general foreman on the site. 22 Mr Moltoni was present on the site on many occasions during the course of Moltoni's demolition work. Moltoni's operations manager was Mr Blair, and the excavator was, as I have earlier stated, operated on the day of the incident by Mr Manihera.

[35]

(iv) Work method statements 41 Clause 25 of the Multiplex subcontract was headed "Safety". It cast an obligation upon the defendant to provide itemised information, including a "safe work method statement". It required the defendant to obtain the approval of Multiplex to each of the items, and not to commence execution of works on the site unless that written approval had been obtained. 42 Item 8 of the written part of the Moltoni subcontract (refer par 29) provided as follows: 8 To work in a safe manner in accordance with all applicable legislation, regulations etc and in order to meet our zero accident goal for the project. To that end, providing work method statements and supporting information, as and when required (my emphasis) . 43 Apparently in compliance with this requirement, Moltoni furnished to the defendant a document ("the Moltoni method statement") entitled "method statement" and dated 7 November 1997. It contained a number of work descriptions under various headings. (According to Mr Moltoni, one of the items in the Moltoni method statement, relating to cutting the oil pipes with hydraulic shears, was changed at his own instigation after further under deck investigation. He noted that change, in handwriting, on a copy of the Moltoni method statement, and furnished it to the defendant). 44 Mr Petracca said that the Moltoni method statement was used as a guide to the preparation of the defendant's own method statement to be furnished to Multiplex in compliance with the defendant's contractual obligation. The defendant provided a work method statement ("the McConnell Dowell method statement") to Multiplex under cover of a letter dated 28 November 1997. 45 It is apparent, from a comparison of the Moltoni method statement with the McConnell Dowell method statement, that the latter incorporated in terms many of the provisions of the former. However, the McConnell Dowell method statement also included items not appearing in the Moltoni method statement. The additional items were directed to safety matters, and included such things as the shutting off of utility services, protection of adjacent areas from debris, the erection of barricades, and restriction of access to working areas. Only one of these additional items was directed to the manner in which the demolition was to be physically carried out by Moltoni. The Moltoni method statement contained a provision that the wharf timbers would be pulled or levered off without cutting the pins. The McConnell Dowell method statement added a provision that, should cutting be required, the area shall be 'wetted down' prior to the commencement of the work. 46 Having regard to the respective contractual obligations and the terms of each of the method statements, it is obvious that the McConnell Dowell method statement was not a set of instructions or directions from the defendant to Moltoni in relation to the manner in which the latter was to carry out its work. Rather, the McConnell Dowell method statement set out the responsibilities (for the purpose of safety) which the defendant undertook to Multiplex. The Moltoni method statement had the same purpose. It set out, for the purpose of safety, the work methods which Moltoni proposed.

[48]

Q Did you do it of your own accord? A No, what happened is there was a, the first idea was to make some holes because Craig had asked me to make in our discussions on, was it 5 November when he rang me in Perth, he said all you've got to do is make some holes for us to put the case ons (sic) through so when this wasn't working for the pile contractor who was working alongside us and we had to work in with them Craig and the pile contractor determined that the best thing they could do was cut a strip out and I said, well I'm not paying for it because I've picked up enough of this stuff if you want to cut the concrete you go ahead and cut it and we said we would assist by pulling the concrete out after some debate because I didn't want to do that either. Notwithstanding that we did, we ended up pulling the concrete out … 56 The next matter concerned the support straps on the apron headstocks. On 8 April 1998, the defendant wrote to Moltoni stating: "During demolition of apron headstocks, can you please ensure that all support straps are fully cut … removal with the excavator, so as to minimise the possibility of damage to timber piles that are to be incorporated in the permanent works". However, the evidence shows that this direction did not constitute a change in the manner of work. The Moltoni method statement contained the following item: The headstocks have steel holding stirrups, one on each side of pile which will be oxycut to allow lifting off of the headstock. 57 In his oral evidence, Mr Moltoni said that, before the date of the letter, he had known of the need to retain certain pieces of the wharf for future works. He had discussed the subject matter of this letter early in the project with Mr Beveridge, and the letter came as no surprise to him. He did not classify that subject matter as a change of the manner of work. Nor did Mr Blair. He said that Moltoni would have done its utmost to keep the piles intact because that was Moltoni's professional and proper way. 58 The third matter was the evidence given by Mr Mion that, before the pollution incident, he had had conversations with Mr Moltoni and Mr Blair in which it was agreed that the proposed method of removing the pipeline was for a sling to be placed around it to support it before cutting. It was to be slung out of position using the excavator as a crane. I do not, however, accept that this evidence demonstrates a direction to Moltoni from the defendant to change its method of work. At its highest, it simply indicates that Moltoni proposed a work method for the pipeline removal, with which Mr Mion agreed.

[70]

(g) Mr Petracca's evidence 65 Immediately prior to the pollution incident there were conversations between Mr Manihera, Mr Petracca and Mr Beveridge. Mr Petracca gave evidence about those conversations, and there was a conflict between that evidence and statements made in later documents. 66 In his evidence in chief, Mr Petracca said that, on the day of the incident, Mr Mahihera got out of the excavator and came to see him, Mr Petracca. Mr Manihera said: "We've come across a pipe, what do we do?" Mr Petracca and Mr Manihera then looked at the pipe and followed its location north and east under the apron of the deck. Mr Petracca then said: "Just don't touch it and I'll go and find out, I'll go and see Craig Beveridge to find out what to do". Mr Manihera went back to the excavator, and Mr Petracca went to where Mr Beveridge, Mr Jones and another person (he could not recall who it was) were in conversation. He drew Mr Beveridge aside and said to him: "Chris has come across a pipe, looks like it serviced a ship. Could be diesel, crude oil. What do you want us to do?". According to Mr Petracca, Mr Beveridge said; "The reservoir has been emptied by Multiplex, continue work". Mr Petracca went back to Mr Manihera and said: "I saw Craig Beveridge. He said that the reservoir has been emptied, to continue work". While walking back to the office, Mr Petracca felt the wall shaking. He ran back to where Mr Manihera was, and saw that the pipe and its contents had fallen into the water. 67 Mr Petracca completed an incident report either in the afternoon of the day the incident occurred or the next morning. Relevantly, under the heading "summary of event", the incident report contained the following: As Moltoni was demolishing in the area between pile grid 109-100 Eastern Building, they located a pipe 450mm. The excavator driver from Moltoni then approached myself (Michael Petracca - Project Eng.) and asked what do we do about this pipe. I then approached the Project Manager Craig Beveridge and we decided that we would first consult with Multiplex to see what the content of the pipe was. Moltoni then proceeded with Demolition in the area as a piece of timber fell on the pipe, due to the weight of the pipe and the age of the connections the connections failed in a domino fashion. The pipe was full of oil which was spilled into the water. The approximate length of the failure was 120m. 68 Mr Petracca said that he filled in the incident report in consultation with Mr Beveridge. Mr Petracca also said that the words "… we decided that we would first consult with Multiplex to see what the content of the pipe was …" were not true, but he inserted them in the incident report on the instruction of Mr Beveridge. He considered, however, that the remainder of the incident report was accurate. 69 The next relevant document was a statement made by Mr Petracca on 8 August 1998 apparently for an insurance assessor. The following are the relevant paragraphs: 4. On Wednesday 25 February 1998 I was working on site when an employee of the subcontract firm named Chris Manihera approached me.

[76]

I returned to where Chris Manihera was working and said words to the effect, "Leave the pipe where it is but continue to remove the timbers". 70 Mr Petracca said that he and Mr Beveridge and Mr Manihera got together before any statements were made to the insurance assessor and discussed the incident so as to get consistent versions. Mr Petracca went on to say that paragraph 8 of the statement was not correct, and was not what Mr Beveridge had told him. Nor did he say the words to Mr Manihera which are set out in paragraph 10 of the statement. 71 Mr Petracca was extensively cross-examined on the contents of the incident report and the statement in comparison with his present evidence. He was not, however, shaken in his recollection that what he was told by Mr Beveridge was that "… the reservoir has been emptied and continue work", and that he repeated words to that effect to Mr Manihera. He maintained his stance that the recital of what was said, both in the incident report and in the statement, was incorrect. He said that he knew as he wrote them that the words he wrote in the incident report, namely, that "… we decided that we would first consult with Multiplex to see what the content of the pipes was …" were incorrect. He went on to say that the fact that they were incorrect had been on his conscience since then, and now, under oath, he was stating correctly what was said. 72 Mr Manihera was not called to give oral evidence, but his affidavit sworn on 28 October 1999 was formally read. In par 15, he stated: 15 As we were working, I saw the pipes. I went to speak with a young man called Mike. I understand that he worked for McConnell Dowell. I said to him: "What do I do?". He said: "Leave them don't touch them." I also said to Dave Blair words to the effect of : "What should I do?". He said: Leave them, don't touch them till I get back to you." I cannot remember if I spoke to Mike or Dave first. 73 Mr Manihera's affidavit is silent as to any other conversation, with Mr Petracca or with Mr Blair. His evidence simply continued by stating, in par 16, "We worked near the pipes and we chained up the last headstock, pulled it, it swung around and it clipped the main pipe …". 74 I am satisfied beyond reasonable doubt that the correct version of the conversations is that first put forward by Mr Petracca in a statement made to the prosecutor in September 2000 and repeated in the witness box under oath, despite the fact that the incident report was written on or immediately after the day of the incident and the statement made not very long after that. Mr Petracca's explanations for the different versions have a ring of truth about them. He was a new graduate engineer, and his employment with the defendant was his first job. It is plausible that he would consult with Mr Beveridge, as project manager, in filling in the incident report, and that he and Mr Beveridge and Mr Manihera would endeavour to be consistent in their statements to the insurance assessor. It is also plausible that the matter had been on Mr Petracca's conscience, as he said, especially in view of the prosecution of the defendant in which he was to be called to give evidence under oath. I make the finding, therefore, that the instruction given by Mr Beveridge to Mr Petracca and repeated by the latter to Mr Manihera was as he now states, namely, "… the reservoir has been emptied by Multiplex, continue work".

[80]

General considerations 79 The general rule is that there is no vicarious liability at all in the criminal law, and none in tort, for the conduct or act of an independent contractor. It has been recognised, however, that the rule is "general", that is, it is subject to qualifications and exceptions (Torette House Pty Ltd v Berkman (1939-1940) 62 CLR 637 at 647; Stoneman v Lyons (1975) 133 CLR 550 at 562 - 563). 80 So far as concerns vicarious liability in criminal law, it has been held that the legislature may, expressly or by necessary implication, create a criminal offence for which a person can be found vicariously liable. Section 16(1) of the Clean Waters Act is such an offence. It may operate to make a master vicariously liable for the conduct of his employee or servant - Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715 at 720. However, in this case, it is expressly conceded by the prosecution that the relationship between the defendant and Moltoni was not that of master and servant but one of principal and independent contractor. 81 Ex parte Falstein; Re Maher and Anor (1948) 49 SR 133 was cited by Mr Buchanan as authority for the proposition that there can be vicarious liability in the criminal law for the conduct of an independent contractor if that person is an agent. In that case, Jordan CJ said, at 143: It was contended that the authorities which justify the attribution of vicarious liability for the acts of agents restrict the rule to agents who are servants and that it does not extend to agents who are independent contractors. It is sufficient to say that the decision of the Divisional Court in Brentnall and Cleland Ltd v London County Council (1945) KB 115 is inconsistent with this. 82 The possibility that a principal might be vicariously criminally liable was recognised, at least by implication, by Spigelman CJ in the first of the two cases which were stated to the Court of Criminal Appeal in the earlier part of these proceedings, McConnell Dowell Constructors (Aust) Pty Ltd v Environment Protection Authority (2000) 50 NSWLR 127, where his Honour noted, at par 41 that "[v]icarious liability is a direct liability. The acts of the servant or agent are taken to be the acts of the employer, or, in this case, the head contractor…". 83 However, as was pointed out by Gleeson CJ in Scott and Ors v Davis (2000) 204 CLR 333 at par 14, the term "agent" begs the question. It leaves unanswered what is meant by the term, and it is not the conduct or act of every "agent" which might render a principal vicariously liable. In the same paragraph of his judgment, Gleeson CJ made clear the sense in which the term is to be used in the vicarious liability context. His Honour referred to the explanation proffered by Jordan CJ in Christmas v Nicol Bros Pty Ltd (1941) 41 SR 317 at 319 - 320, namely that, in relation to a principal, an agent is a person "… acting for him and with his authority in some matter in respect of which he had the right to direct and control his course of action". 84 In this context, the position of the prosecution was made abundantly clear by Mr Buchanan in par 19 of his principal written submissions as follows: If the conduct is the act of an employee then, as a matter of law, control is assumed and the focus moves to a secondary test of whether the employee was acting in the course of his or her employment. If the conduct is that of an 'independent' contractor then (subject to whether there was direct authorisation of the offending conduct) the contractor is a principal in the work he or she does unless there was a sufficient power of control over the work they did which rested in the defendant as to make the defendant vicariously liable for the contractor's conduct. 85 It is on this point that the parties are at issue in regard to the applicable principles. Mr Glissan submitted that there are only two exceptions to the general rule that a principal is not liable for the act of an independent contractor. The first is direct authorisation of the particular conduct, and the second is breach of a non-delegable duty of care. The second exception is not relied upon by the prosecution. In Mr Glissan's submission, the test of the power of control is relevant only to distinguish between a contract of service and a contract for service. It is applied to categorise the relationship between the particular parties, and if, as a consequence of the application of that test, the person is found to be an independent contractor, then that puts an end to a claim based on vicarious liability, unless the facts and circumstances fall within either of the two exceptions. 86 Nevertheless, I prefer the analysis submitted by Mr Buchanan. I say that for three reasons. First, it pays due regard to the rationale for the modern approach to the doctrine of vicarious liability. Secondly, it is consistent with a line of cases in this Court where vicarious liability has been considered in the context of a strict liability offence. And, thirdly, it may, properly understood, be a distinction without a difference. 87 As to the first reason, I note, with respect, that the judgment of the majority of the High Court in Hollis v Vabu Pty Ltd. At par 36, their Honours said: Two further points should be made. The first is that it is one thing to appreciate the considerations which in modern times support the doctrine of vicarious liability; it is another to select particular terms which provide the criterion of liability in a given case. Secondly, examination is required of the content of those terms. That content will reflect, from the facts of case to case, the particular force given to the considerations supporting the doctrine of vicarious liability. Terms such as "employee" and "independent contractor" and the dichotomy which is seen as existing between them, do not necessarily display their legal content purely by virtue of their semantic meaning. 88 After referring, in par 41, to the Canadian decision of Bazley v Curry [1999] 2 SCR 534, their Honours continued in par 42 as follows: In general, under contemporary Australian conditions, the conduct by the defendant of an enterprise in which persons are identified as representing that enterprise should carry an obligation to third persons to bear the costs of injury or damage to them which may fairly be said to be characteristic of the conduct of that enterprise. 89 Their Honours went on to state, in par 43, that these notions "… also influence the meaning to be given today to "control" as a discrimen between employees and independent contractors". 90 As to the second reason, I turn to the line of cases in this Court. In each case the prosecutor had sought to establish that a principal was vicariously liable in criminal law for the act of an independent contractor. These cases have a common thread, and that is that, in each of them, the Court determined the defendant's liability by reference to whether or not the defendant exercised sufficient control over the conduct or act of the independent contractor. 91 In State Pollution Control Commission v Australian Iron and Steel Ltd (1992) 74 LGRA 387, the defendant was charged with a number of offences (including a breach of s 16(1) of the Clean Waters Act). AIS engaged a contractor, WGE Boilermakers (WGE), to remove certain pipes. An employee of WGE cut the pipe and oil escaped. Cripps J noted, at 394, that an employee of AIS "… exercised or purported to exercise, detailed control over the manner of the doing of the work …" by the employees of WGE, and, on the basis that AIS not only claimed the right to control but purported to control the work, his Honour concluded that AIS was vicariously liable for the act of WGE through its employee. The conviction of AIS went on appeal on another point (see Australian Iron & Steel Pty Ltd v Environment Protection Authority (1992) 29 NSWLR 497) but Abadee J, in delivering the judgment, with which the other members of the Court of Criminal Appeal (Carruthers and Badgery-Parker JJ) substantially agreed, quoted with apparent acceptance (at p 503 - 504) the findings of vicarious liability made by Cripps J. 92 In Environment Protection Authority v Snowy Mountains Engineering Corporation Ltd (1994) 83 LGERA 51, the defendant was charged under s 16(1) of the Clean Waters Act in relation to the escape of heating oil from a fuel bunker. Talbot J found (at 56) that the person responsible for the maintenance of the boiler and heating system, Mr Quan, was an independent contractor. At 56 - 57, his Honour made findings of fact by reference to whether the defendant effected "… any direct or real control over the manner in which [Mr Quan] undertook those responsibilities …" and concluded, at 57, that the defendant was not vicariously liable for the actions of Mr Quan. 93 Environment Protection Authority v Taylor Woodrow (Australia) Pty Ltd (1997) 101 LGERA 226 was another prosecution under s 16(1) of the Clean Waters Act relating to the overflow of water, soil and sediment from a coffer dam. The dam had been constructed by a contractor to the defendant. Lloyd J found, at p 245, that the defendant both itself and by its agent, a firm of engineers, was involved in the design and supervision of the relevant works, and "… directed the contractor in and about the construction …" of the works. The defendant was held to be vicariously liable for the offence. 94 In Environment Protection Authority v Munters Pty Ltd (1998) 98 LGERA 279, also a prosecution under s 16(1) of the Clean Waters Act, the charge against the defendant was based on circumstantial evidence but was dismissed on the basis that the prosecutor had failed to establish that the defendant caused or permitted the particular liquid to escape into the relevant waters. An issue arose, however, as to whether, if the spill had occurred as a consequence of the actions of a tanker driver decanting the liquid at the defendant's premises, the defendant would be vicariously liable for that driver's act. I found, at 288, that the driver was an independent contractor, but went on to hold, at 289, that, if he had caused the spill, the defendant would not be vicariously liable, because the driver was not "… acting under the control or direction of the defendant…". 95 Environment Protection Authority v Multiplex Constructions Pty Ltd, to which I have referred in par 3, was a prosecution of Multiplex under s 16(1) of the Clean Waters Act arising out of the incident at the Finger Wharf which is the subject of these present proceedings. Amongst other bases of liability, the prosecutor put forward a case for the vicarious liability of Multiplex for the act or conduct of Moltoni in causing the fall of the pipe into the water and the discharge of oil from the pipe. Lloyd J discussed the relevant principles at length in pars 274 - 289, concluding, at 280, that liability for the acts of an independent contractor may arise if the particular work was done subject to the principal's "control and direction". 96 As to the third reason, it seems to me that the point of diversion between the competing legal submissions in this case, (that is, whether the power of control test is applicable to determine the liability of a principal for an independent contractor, or whether it is applicable merely to determine whether the person whose conduct is in issue was an independent contractor or a servant), is a distinction without a difference. That point was made by Associate Professor Zada Lipman in an article entitled "Vicarious Liability for Independent Contractors" (2000) EPLJ 427 at 431 where, by reference to the cases I have set out in pars 92 - 96, the learned author said: The pre-eminent test in determining when a principal will be liable for an offence by an independent contractor is that of control…the policy rationale for holding a principal liable for the acts of an independent contractor in circumstances where control is exercised, is that the relationship is in substance no different from an employer/employee relationship.

[81]

The content of the control test 97 It is one thing to say that the power of control test is applicable to determine the liability of a principal for an independent contractor, it is quite another to define with precision the content or ambit of that test. 98 In the recent case of Scott v Davis, the High Court has set out the relevant principles. In that case the defendant was the owner of a plane. The appellants were a son and his parents. One of the appellants requested the defendant to allow the son to have a joy ride in the plane. The respondent asked a person who was a licensed pilot to fly the plane. The pilot did so, and the plane crashed, killing the pilot and seriously injuring the son. The appellants sued the respondent in negligence. The issue in the case was whether the defendant was vicariously liable for the negligence of the pilot who was not the defendant's employee nor authorised by the defendant to carry out the negligent act. 99 After quoting a passage from the judgment of Jordan CJ in Christmas v Nicol Bros to which I have referred in par 83 above, Gleeson CJ continued as follows (in pars 14 and 16): The reference to the right to direct and control the driver's course of action cannot be taken to include a reference to a right which is not, in practice, capable of being exercised … It may be noted that Jordan CJ did not merely apply the question-begging label "agent", he went on to explain what he meant by it. … The pilot was not the agent of the respondent in the sense explained in the above passages. At the time of the pilot's negligent act, the respondent was not in a position to assert a power of control over the manner in which the pilot was flying the aeroplane. The pilot was neither in fact, nor in law, subject to his direction and control at the critical time. 100 Hayne J also referred to direction and control (par 311). His Honour pointed out, at par 301, the nature of the bargain between the parties. He said: … vicarious responsibility of A, who contracts with B for B to perform a task, is much affected by the nature of the contract which those parties make. If A stipulates that he or she will have the right to control the way in which B performs the task, it likely that A will be held to be vicariously responsible for the negligence of B in the course of performance of that task. By contrast, if A stipulates only for the performance of the task and, under the agreement, A has no right to control how B does it, A will ordinarily not be vicariously responsible for B's negligence. 101 It is also useful to note that Callinan J, in discussing the conditions necessary to establish the liability of the owner of a motor car for the acts of its driver, pointed, in par 357, to "… the reality of an actual power of control". His Honour continued, in the same paragraph, by stating that "[t]he existence of a power of control can be of no relevance unless its exercise is, or is likely to be effective". 102 Guided by these statements from the judgments in Scott v Davis, it is possible to understand the precise content of the power of control test. That test involves a right to direct and control a course of action, in circumstances where the right is capable of exercise and is, or is likely to be, effective. It relates to the manner in which the independent contactor undertakes the course of action, that is, the way in which the tasks are to be performed or how they are to be carried out. 103 In the line of authority in this Court to which I have referred in pars 91 - 95, the power of control test described in this way has been applied (the emphasis is mine). Thus, in SPCC v Australian Iron & Steel, Cripps J, at p 394, referred to "… detailed control over the manner of the doing of the work …" by the independent contractor. Talbot J approached the matter in a similar way in Environment Protection Authority v Snowy Mountains Engineering Corporation where he considered, at p 55, whether the defendant effected "… any direct or real control over the manner in which …" the independent contract undertook his work, and had regard to "… what must be done, the manner of its doing, the means to be employed, the time when and the place where it shall be done". In Environment Protection Authority v Taylor Woodrow, Lloyd J referred, at p 245, to the principal's direction of the independent contractor "… in and about the construction …" of the works. In Environment Protection Authority v Munters at pp 288 - 289, I approached the issue of the control or direction of the independent contractor by reference to how the independent contractor was to carry out his task and whether he was supervised in the performance of it. Similar considerations were applied by Lloyd J in Environment Protection Authority v Multiplex at pars 290 - 291.

[84]

The power of control 108 Moltoni was engaged by the defendant to undertake a portion of the overall works which the defendant had contracted to carry out on the site. Moltoni was truly in the position of a subcontractor, fitting in with a number of other subcontractors on site, all of whom were engaged on various portions of the overall works. 109 In this scenario, the defendant was "the builder". It had responsibility for the whole of the works for which it had contracted with Multiplex. To fulfil its contractual obligations to Multiplex, the defendant assumed control of the site, including coordination of the whole of the works, compliance with the overall construction programme, hazard identification, safety measures, and engineering specification. Consequently, it was in a position to, and did, direct Moltoni as to what had to be done, when it had to be done and where it had to be done. But the defendant did not have the power or authority to control or direct how Moltoni carried out its demolition work. Moltoni was engaged as a skilled demolition contractor, with experience in wharf demolition. Its task was to use that skill and experience to carry out a portion of the overall works for which the defendant was responsible. 110 In the context I have outlined, Mr Moltoni's evidence of his understanding of the relationship between Moltoni and the defendant is compelling. He understood that Moltoni was required to comply with instructions as to what work to do, when to do it and where it was to be done; but the defendant had no power to direct Moltoni as to the manner in which the work should be carried out. He illustrated this in a telling manner - by laying his glasses case on the ledge of the witness box, and stating that, if directed to move it, it was his choice alone whether it was moved by pushing it away or by lifting it up. But Mr Moltoni was not alone in this understanding of the relationship between the defendant and Moltoni. It was corroborated by Mr Blair, and it was also reflected by Mr Mion when he outlined the tasks for which he was responsible. 111 Thus, Moltoni alone decided how to lift the bearers and headstocks, whether to use a chain or a grapple, how to lift the concrete strips and where to position its machines whilst carrying out its work. 112 Safety was a critical component of all works on the site, whether carried out by Multiplex, or by the defendant, or by any of the defendant's subcontractors. Instructions about safety measures and precautions could be given by anyone to anyone, and they could extend to the manner in which particular work was carried out. Mr Moltoni, Mr Blair, Mr Petracca, Mr Mion, Mr Fadel and Mr Stewart all gave evidence to this effect. 113 And it is in the safety context that the provision of work method statements must be understood. The Moltoni subcontract explicitly provided that they were to be furnished in a safety context to meet the goal of zero accidents. The work method statement furnished by Moltoni to the defendant, and incorporated with additions into the work method statement furnished by the defendant to Multiplex, cannot be regarded, as I have earlier found, as a set of directions and instructions from the defendant to Moltoni. 114 There were two instances where the defendant appears to have exercised a power to direct Moltoni in a course of action, but, on close examination, neither of them could be so categorised. The first concerned the wetting down of areas before cutting and the second was the direction from Mr Petracca to Mr Manihera to "continue the work". These matters have to be understood in the context of the defendant's overall responsibility for safety and coordination. The first was a safety measure. There is no direct evidence that the defendant actually directed Moltoni to wet down areas before cutting, but it may be inferred that the defendant was in a position to give that direction. It was not, however, a direction as to how Moltoni should carry out its demolition work; it was, rather, a safety instruction, in the same manner as a requirement for personnel to wear buoyancy vests while working on site. Secondly, the direction given by Mr Petracca to Mr Manihera related to safety and co-ordination. It was given in the context that Mr Manihera was uncertain what to do having come across the pipe. It was a direction that fell within the power of the defendant to tell Moltoni what to do and where to do it; but it did not amount to a direction to Moltoni as to how to carry out its demolition tasks. 115 There was evidence of one single instance in which the defendant issued directions to Moltoni about the manner of the latter's work. That concerned deck penetrations. Initially, Moltoni carried out this work by using a rock breaker. This did not fit in with the defendant's responsibilities for co-ordination and safety, that is, it did not meet the piling contractor's requirements and the need to avoid spall going in to the water. Hence Mr Beveridge asked Mr Moltoni to change the method from rock breaker to cutting and lifting strips of concrete. Mr Moltoni refused to carry out the cutting of the concrete, but he did agree to lift it out. Consequently, Moltoni's task changed. 116 I have found that, in matters of safety, every operator on the site, from Multiplex to the defendant, to Moltoni and other subcontractors, had responsibilities and could be directed as to how they went about their work in the interests of safety. I have also found one incident where the defendant actually directed Moltoni to change its manner of work (that is, cutting and lifting strips of concrete instead of using a rock breaker). But these findings are limited. The first related only to safety, and the second was a single, isolated instance. It is, however, the total relationship that must be considered (Hollis v Vabu at pars 44 - 45). The defendant engaged Moltoni as a skilled operator in a specialised field of work. The principals of Moltoni considered that they alone decided upon the method or manner in which Moltoni would carry out that work. They held that view despite the fact that it was not an express term of the Moltoni subcontract. Furthermore, the site was a "multi-contract" site, with many contractors working on the site at the one time. As the "builder" in such a situation, the defendant had a large scale task of sequencing and coordination. It could, and did, direct what was to be done, where it was to be done, and when it was to be done. It could not, so far as Moltoni was concerned, direct it as to how it was to be done. 117 Having regard to those matters in their totality, I am not satisfied beyond reasonable doubt that the defendant had a power to control or direct the manner in which Moltoni performed the works it had undertaken sufficient to render the defendant vicariously liable for the act or conduct of Moltoni in relation to the pollution incident.

Parties

Applicant/Plaintiff:

Environment Protection Authority

Respondent/Defendant:

McConnell Dowell Constructors

Cases Cited (14)

CITATION : Environment Protection Authority v McConnell Dowell Constructors (Aust) Pty Ltd [2003] NSWLEC 70 PROSECUTOR Environment Protection Authority PARTIES : DEFENDANT McConnell Dowell Constructors (Aust) Pty Ltd FILE NUMBER(S) : 50009 of 1999 CORAM: Pearlman J KEY ISSUES: Environmental Offences :- pollution - waters - vicarious liability - independent contractor - power of control - direct authorisation LEGISLATION CITED: Clean Waters Act 1970 s 16(1) Australian Iron & Steel Pty Ltd v Environment Protection Authority (1992) 29 NSWLR 497; Christmas v Nicol Bros Pty Ltd (1941) 41 SR 317; Darling Island Stevedoring and Lighterage Company Ltd v Long (1957) 97 CLR 36; Environment Protection Authority v Multiplex Constructions Pty Ltd (2000) 112 LGERA 1; Environment Protection Authority v Munters Pty Ltd (1998) 98 LGERA 279; Environment Protection Authority v Norco Co-operative Ltd [2000] NSWLEC 35; Environment Protection Authority v Snowy Mountains Engineering Corporation Ltd (1994) 83 LGERA 51; Environment Protection Authority v Taylor Woodrow (Australia) Pty Ltd (1997) 101 LGERA 226; CASES CITED: Ex parte Falstein; Re Maher and Anor (1948) 49 SR 133; Hollis v Vabu Pty Ltd (2001) 207 CLR 21; Kondis v State Transport Authority (1984) 154 CLR 672; McConnell Dowell Constructors (Aust) Pty Ltd v Environment Protection Authority (2000) 50 NSWLR 127; Scott and Ors v Davis (2000) 204 CLR 333; State Pollution Control Commission v Australian Iron and Steel Ltd (1992) 74 LGRA 387; Stoneman v Lyons (1975) 133 CLR 550; Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715; Torette House Pty Ltd v Berkman (1939-1940) 62 CLR 637 DATES OF HEARING: 04/11/2002; 05/11/2002; 06/11/2002; 07/11/2002; 08/11/2002; 11/11/2002; 12/11/2002; 13/11/2002; 14/11/2002; 19/11/2002; 20/11/2002; 21/11/2002; 22/11/2002; 26/11/2002; 27/11/2002; 29/11/2002; 06/12/2002 DATE OF JUDGMENT: 03/31/2003

(1992) 29 NSWLR 497

(1957) 97 CLR 36

(2000) 112 LGERA 1

(1998) 98 LGERA 279

(1994) 83 LGERA 51

(1997) 101 LGERA 226

(2001) 207 CLR 21

(1984) 154 CLR 672

(2000) 50 NSWLR 127

(2000) 204 CLR 333

(1975) 133 CLR 550

(1992) 25 NSWLR 715