Inspector Sharpin v Christie Civil Contracting Pty Limited

SOLICITOR Phillips Fox SYDNEY. LEGAL REPRESENTATIVES: DEFENDANT Mr A Britt of counsel

SOLICITOR Heidtman & Co. SYDNEY.

JUDGMENT: - 3 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

INSPECTOR JOHN SHARPIN v CHRISTIE CIVIL CONTRACTING PTY LIMITED

Prosecution under s16(1) of the Occupational Health and Safety Act 1983 JUDGMENT

1 Inspector John Sharpin, on behalf of the WorkCover Authority of New South Wales, has prosecuted the defendant, Christie Civil Contracting Pty Limited in respect of a breach of s16(1) of the Occupational Health and Safety Act 1983 ('the Act'). The defendant has entered a plea of guilty to the charge, which is that, as an employer, the defendant breached s16(1) as follows: On 9 October 1998 at the undercroft site located at Warringah Mall, 109A Old Pittwater Road, Brookvale in the State of New South Wales in that it failed to ensure that persons not in its employment were not exposed to risks to their health and safety arising from the conduct of its undertaking while they were at its place of work. In particular the Second Defendant:

(a) was aware that a fuel pipeline was in existence at the site prior to the accident;

(b) failed to prevent persons from performing work with oxy-acetylene cutting equipment on or near the fuel pipeline.

2 The charge arises from an incident in which Mr Bob Marcelja, engaged as a foreman by a sub contractor, Enpro Engineering Pty Limited ('Enpro'), suffered burns which ultimately proved fatal, after cutting an old, disused fuel line with an oxy-acetylene torch. The charge arises in a context where the defendant, and also Enpro and Bovis McLachlan Pty Limited ('Bovis McLachlan'), the Project Manager, have been charged with offences under the Act arising out of the same incident. In the course of submissions in this case, which was heard before the other matters, the prosecutor adverted to the need to consider the principle of consistency of sentence where three defendants are so charged. This judgment was deferred to await the hearing of the remaining matters. Penalty has been considered in the overall context.

3 The matter has been conducted upon the basis of an agreed statement of facts together with some other supplementary material including a series of photographs of the site and features of the accident. The evidence included that of Mr O'Brien for the defendant and Damien Ivan Delaney, a Systems Manager formerly employed by the defendant, who dealt with the occupational health and safety approach and experience of the defendant.

4 The defendant commenced in the construction business in April 1981. Then and now it had two directors being Michael William O'Brien and Gary Camarsh, who have filled the roles of Managing Director and Construction Manager respectively. Over approximately two decades the defendant engaged in many large construction projects including the following: (a) Macquarie Street restoration - which was a Bicentennial project in 1987-88 to the value of $3.3m including widening of the Macquarie Street footpath, repaving the area, and constructing the foundations for arches across the street whilst maintaining safety of pedestrians, and flow of traffic.

(b) Darling Park - tower building basement excavation in 1987 to the value of $10m including detailed shoring, underpinning to the basement, and foundations and tunnelling beneath the Western Distributor.

(c) Woy Woy Bus/Rail Interchange - reconstruction of interchange in 1997 to the value of $3.3m including structural foundations, pavements, landscaping and detailed paving.

(d) Sydney International Airport - a detailed lift pit in 1999 to a value of $0.5m which included de-watering, underpinning & chemical grouting to stabilise sands.

(e) Liverpool Bus/Rail Interchange - reconstruction of interchange in 1999/2000 to the value of $1.7m including new modular pavements and construction of an underground substation.

(f) Olympic Village Precincts 4 & 5 road works - bulk earthworks, stormwater and construction of road pavements in the Olympic Village in 1999/2000 to a value of $2.1m.

(g) Pyrmont Glassworks building excavation - building basement excavation to the value of $0.85m including shoring, underpinning, removal of contaminated soil, and detailed rock excavation.

(h) Breakfast Point subdivision - complete subdivision infrastructure in 2000/01 to the value of $4.4m including bulk earthworks and all services installation.

(i) Castle Towers Shopping Centre stages 2A & 2B - excavation of building pads, concrete shoring, bored pier foundations, detention tanks, stormwater drainage, service diversions, and road works in 1998/99 to a combined value of $4.2m.

(j) Chullora Fairfax building - construction in 2000 to a value of $1.5m including bored pier foundations, detailed earthworks, stormwater and pavement construction.

5 Over the same period the defendant grew from three employees to a maximum number of approximately 60. Due to the difficulties associated with the collapse of HIH Insurance and the consequential exposure resulting from a lack of insurance cover, the business ceased to trade in May 2001. Mr O'Brien and Mr Camarsh established another corporation, Christie Civil Pty Limited, to which was sold the business of the defendant; the new company now carries on that business, employing about 20 employees. The balance sheet of the defendant as at 31 December 2001 shows that it has assets of $342,428, $341,150 of which is due by way of dividend provision from Christie Civil Pty Ltd and $42,425 total liabilities giving net assets of $300,003, being the equivalent of shareholders equity.

6 Mr O'Brien's affidavit, dealing with the financial position of the two companies, deposed as follows: These results indicate our turnover has halved and we have traded at a loss. There has been a severe downturn in our type of construction as well as the winding down of CCC. We have fixed overheads and have reduced these as well as much as possible. We have work in hand for the next 5 months of $670,000. We need $4 million to break even. To fund both the survival of the company and paying for the cost of these proceedings will be difficult in these tight economic times and will come from assets of CCC, loans from Directors and bank overdraft.

7 Mr O'Brien also attested to the alterations in procedures which had been adopted at Christie Civil Pty Limited. He deposed to having initiated the following to minimise any further accidents or construction episodes on sites in which Christie Civil Pty Limited is involved:

(i) Continual improvement to our management system including updating of the manual and procedures to ensure that current best practice occurs.

(ii) Constant monitoring of safety via inspections which is done on site by the Systems Manager and individual site management.

(iii) The introduction of training and raising safety issues on site which is done via Toolbox talks and which is part of our regular procedure.

(iv) A Hot Works Permit form has also been introduced into our system as a result of the accident.

(v) All employees and subcontractors working for us on sites now are required to undergo three inductions before working, being the general industry induction (green card), a site specific induction, and a safe work method induction.

(vi) Internal audit reporting occurs as well as Project Review meetings which are minuted, and with results from both reported to myself and to the other director, Gary Camarsh.

(vii) From these minutes and reports improvements are discussed with needs and changes made.

In addition to these improvements, Christie Civil is seeking to partake in the Premium Discount Scheme offered by WorkCover as a means of keeping up with best practice in OHS management.

8 The defendant contracted with Warringah Mall Pty Limited and the Perpetual Trustee Company Ltd to undertake drainage works in the Warringah Mall re-development, stage 2. The main task was to construct the drainage line underneath the Warringah Mall complex, one aspect of which was the need to erect a steel structure in an area known as the undercroft, to enable the removal of concrete columns which were impeding the construction of the drainage line. The manufacture and erection of the steel work was sub contracted to Enpro.

9 Bovis McLachlan was appointed by the owners to manage and supervise construction work at the site. Bovis McLachlan was contractually responsible for the removal of a number of services, including electrical services, sprinklers and a particular fuel pipeline from the undercroft area to allow construction work to occur. The pipeline had been left in place when an underground petrol storage tank to which it had been connected was removed by others earlier in 1998.

10 The defendant informed Enpro that it was not to remove the services.

11 The Project Manager employed by Bovis McLachlan, Mr Hayden Berry, prepared a report on the day of the accident, which was put into evidence. According to it, Enpro's foreman, Mr Marcelja, discussed with Mr Berry the removal of services necessary to permit the erection of steel. This discussion took place on Wednesday 7 October 1998. Also present was the defendant's foreman, Erian Ibrahim, who wanted the electrical cables removed as a precaution. Mr Berry then arranged for electrical contractors to undertake that work and it was completed on 8 October with Mr Marcelja operating a cherry picker for that purpose. Mr Berry's report said "It was at this time in my presence, that Solomon (the electrical contractor) told Bob and his partner "not to cut the fuel pipe with any oxy torch". I again asked Bob whether he wanted the fuel line removed and he responded that there was plenty of room and he would work around it. I further reinforced to Bob not to cut the fuel line with his oxy".

12 On 8 October Mr Berry was informed by Erian Ibrahim that the sprinkler line needed removing; Mr Berry then organised for this to be done by others. On Friday 9 October 1998, the date of the accident, Mr Berry saw Mr Marcelja and his workmate on two occasions during the day when they seemed to be awaiting the arrival of other equipment. Subsequently he was informed that the accident had occurred. His report also contains the following observations: Christie Civil have been very cautious in relation to service removals. Erian (Christie Civil Foreman) would call me for identification and I would disconnect whatever he required to be disconnected.

All disconnections are organised immediately and the work carried out ASAP.

There are many examples of this process working between Christie Civil and Bovis Australia. The statement of agreed facts tendered in the proceedings states that the defendant "was aware that the fuel pipeline was in existence at the site prior to the accident and failed to prevent persons from performing work with the oxy-acetylene equipment on or near the fuel pipeline".

13 The agreed facts also include: On Friday 9 October 1998, Marcelja asked a work colleague to remove a fuel pipeline with an oxy-acetylene torch whilst they were in the process of cutting steel beams from a cherry picker adjacent to the fuel pipeline. His work colleague refused. Marcelja, Enpro's foreman, informed his work colleague that the pipe was dead. Marcelja then attempted to cut through the pipe with an oxy-acetylene torch and a flame came out of the pipe. The work colleague informed Marcelja that there must be something in the pipe. Marcelja then continued to cut through the pipe. Marcelja then swung the cherry picker to another area and continued to cut the pipe. Whilst so doing, he was engulfed in flames. As a result, Marcelja sustained severe burns to his body. An ambulance was called immediately and upon arrival he was given initial treatment for burns. He was then taken to the Royal North Shore Hospital. Marcelja died approximately 13 hours later. The death certificate lists the cause of death as "burns".

14 Also placed in evidence was a safe work method statement created by the defendant in respect of the relocation and structural steel work at the Warringah Mall site. It demonstrates that, in relation to the structural steel work involved, the construction process was broken down into seven identifiable stages. Potential hazards were identified as was the preventative action necessary to deal with those hazards. Mr Delaney's evidence also extended to safety audits undertaken by Lend Lease on a number of jobs performed by the defendant under contract, the details of which also demonstrate a rational and appropriate approach to safety. The operations manual, which deals with occupational health and safety issues, was also advanced through Mr Delaney. It marks the same quality of approach.

15 It must be said that, as the defendant has submitted, its employment of a considerable number of people in major construction works, particularly involving excavation and underground work, over more than 20 years without coming to attention in the context of the Act is indeed commendable. This record indicates, to my mind, not a history of good luck but one in which those positive steps designed to minimise the risks, which obviously attach to work in these environments, was genuinely and seriously undertaken.

16 The prosecutor accepts that the defendant has co-operated with the WorkCover Authority, entered an early plea and has no prior convictions under the Act. It recognises that the defendant is entitled accordingly to a substantial discount on penalty. The defendant submits that the discount for its early plea should be of the order of 25 percent, a view with which I would agree. The maximum penalty applicable for the offence is $550,000.

17 I note that the defendant contributed the sum of $10,000 in contemplation of the creation of a fund for the benefit of Mr Marcelja's family.

18 The parties accept that the principal indicator of a penalty is the nature and quality (or the objective seriousness) of the offence with which the defendant is charged. It is not to be measured by reference solely to the result of an accident, in this case the tragic death of Mr Marcelja, although that may be an indicator of the seriousness of the particular risk to which the employee was exposed and the breach involved (see the judgment of Hill J in Tyler v Sydney Electricity (1993) 47 IR 1 at 5).

19 The other aspects of the objective features of the offence, namely the maximum penalty involved and the need for the concept of deterrence to be considered in assessing penalty, were addressed in detail by Ms. McDonald of counsel for the prosecutor. The history of the regime of increasing penalties and the response of the courts thereto as to which see R v Slattery (1996) 90 ACrimR 519 per Hunt CJ at CL and the decision of the New South Court of Criminal Appeal in R v Howland unreported, 104 ACrimR 273 in which Spigelman CJ held: ". . . The community has indicated that it wishes to denounce this conduct in the strongest terms . . . by increases in the maximum sentences, the community, acting through the Parliament, has indicated that this is a crime which it wishes to denounce and deter. It is the duty of the Judges to reflect this community concern."

20 The concept of deterrence was discussed by the Full Bench in Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 in the following paragraph: "77. ... At least where the offender continues to be an employer, risks to the safety of its employees or contractors may exist or be possible. Breaches of the duties imposed by the Act may occur both by commission and omission. Employers are required to maintain constant vigilance and take all practicable precautions to ensure safety in the workplace. They must adopt an approach to safety which is proactive and not merely reactive: WorkCover Authority of NSW v Atco Controls Pty Ltd (1998) 82 IR 80 at 85. In view of the scope of these obligations, in most cases it will be necessary to have regard to the need to encourage a sufficient level of diligence by the offender in the future. This is particularly so where the offender conducts a large enterprise which involves inherent risks to safety."

21 Mr Britt of counsel for the defendant did not take issue with any of the legal submissions made for the prosecutor. He conceded there is a role for a level of specific deterrence, particularly given the degree of inter-relationship between the defendant and the new corporation, Christie Civil Pty Limited, although this would be a lower level than if the defendant was continuing to actively trade.

22 He submitted that this was not a situation involving an obvious or foreseeable risk, given the defendant was contracted not to remove services but to erect steel work. The foreseeability of the risk involves, it was submitted, "a consideration of actions by a person who was the senior representative on site from a particular company, the actions of a person who had a number of warnings in relation to the cutting of the pipeline and when the pipeline was being cut, some of the obvious concerns and risk about that particular activity were being relayed to the deceased. In that sense we freely concede that there is a failure of the system of work ...". That failure, it was submitted, ought be considered in the light of those elements.

23 Mr Britt also sought to argue that the failure to identify the risk of the fuel pipeline was understandable on the basis the construction process for the defendant was not to have begun until the services had been removed and the removal thereof was not a matter to be performed by the defendant itself or through its contractors.

Conclusions 24 The defendant has, in my view properly, pleaded guilty to the charge in this matter. The particulars of the charge are clearly satisfied. The introduction of a Hot Work Permit system for itself and for its subcontractors would, if operable prior to this accident, have caused oxy-acetylene usage to require a Hot Work Permit, which could not have been forthcoming for the particular task of cutting the fuel pipeline. That does, as was submitted for the prosecutor, indicate the simple measures by which this accident might have been avoided.

25 On the other hand, there is a degree of force in the proposition that this was work not within the contemplation of the defendant and should not have been within the contemplation of Enpro and its staff because of the limited nature of their contractual obligation. In addition, Mr Marcelja's workmate (and perhaps Mr Marcelja) was warned by Mr Solomon Hava not to use oxy-acetylene on the pipe and Mr Marcelja was specifically instructed by Mr Berry not to do so. I would infer from the evidence that Mr Marcelja took a view of the circumstances as they developed that he was exposed to little or no risk, despite what his workmate urged upon him, and proceeded to take a shortcut after having been delayed on the job for some days.

26 The purpose of penalties under this Act is not to penalise having regard to the nature of the consequences, tragic as they are in this case, but rather the nature and quality of the exposure to risk involved in a particular work circumstance. Given the countervailing aspects of the case to which I have referred I do not consider a penalty in this case ought be above low range. The prosecutor conceded that the worker involved was foolish and also that a substantial discount on penalty ought apply according to the guideline principles in R v Thomson; R v Houlton (2000) 49 NSWLR 383, particularly at 417.

27 Taking into account the circumstances of the case I have detailed, the fact that this is a first offence, that the defendant has expressed an appropriate degree of contrition as evidenced through its response to the accident in terms of its work safety rules and particularly through its actions in relation to the deceased's family, and the fact of its early plea, I consider an appropriate penalty in this case would be $65,000 to which I would apply a discount of a total of 30 percent giving a penalty of $45,500. The WorkCover Authority should have a moiety of penalty and its costs as agreed with leave to apply in the absence of agreement. I order accordingly.

28 The defendant is convicted of the offence charged and fined the sum of $45,500 with a moiety of penalty to the WorkCover Authority of New South Wales. The defendant is to pay the prosecutor's costs as agreed or, in the absence of agreement, as determined by the Court.

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