Fair Work Act 2009

s 394 - Application for unfair dismissal remedy

Applications for unfair dismissal remedies - alleged failure to comply with health and safety procedure - 'isolation' of electrical power - risk to health and safety of others - employer investigation - dishonesty during investigation - serious misconduct - allegations not substantiated - no valid reason for dismissals - future redundancies - procedural unfairness - lengthy periods of unblemished service - reinstatement not inappropriate - lost remuneration heavily discounted for dishonesty - associated orders.

[1] This decision will determine unfair dismissal applications filed by Paul McGrath and Maitland Hayward (the 'applicants') seeking reinstatement and associated orders, pursuant to the provisions of Ch 3 - Part 3-2 of the Fair Work Act 2009 (the 'Act'). The applicants were dismissed by Sydney Water Corporation (the 'respondent' or 'Sydney Water') on 5 September 2012, following an investigation and findings that they had failed to comply with Sydney Water's Lockout/Tag Out (LOTO) procedure (HSP049) when carrying out the electrical 'isolation' on WS0194 Reservoir, Yagoona, New South Wales on 16 May 2012 and that this failure caused a real risk to the health and safety of others attending the site.

[2] Both applicants are experienced electricians (Level 4) with 43 years service (Mr McGrath) and 34 years service (Mr Hayward). They were employed under the Sydney Water Trades and Apprentices Enterprise Agreement 2010 [AE878307] (the 'Agreement'). Mr Hayward has no disciplinary record and Mr McGrath had one written warning from May 2012, which was under appeal and is contested. They strongly denied that they had failed to comply with Sydney Water's policies and procedures, and in any event, there was never any real risk to the health and safety of others attending the site. The allegations against the applicants are identical and were detailed in separate letters to them of 24 July 2012 as follows:

'Following the fact finding investigation you are required to attend a meeting with myself and a Human Resources Representative to respond to the following allegations.

1. It is alleged that you failed to comply with the LockOut / TagOut procedure (HSP 049) while carrying out the electrical 'isolation' on WS0194 Reservoir, specifically,

a. you failed to ensure all energy sources into or within a device must be 'isolated' prior to work commencing.

b. you failed to ensure all isolations must be tested for effectiveness prior to commencement of any work - ie the equipment must be proved de-energised and shown to have no stored energy.

c. you failed to ensure all isolations must have the appropriate tag applied at each 'isolation' point.

d. you failed to ensure wherever possible each isolation point must be locked out as well as tagged.

e. you failed to ensure that 'isolated' equipment was proved isolated from all sources of energy. This includes ensuring that there are no alternate sources of energy (eg dual feeds, hydraulic, mechanical etc) to the equipment and that there is no stored energy. It should be noted that attempting to start equipment does not always prove equipment is 'isolated' as there may be additional sources of power to the equipment.

f. you failed to comply that the effect of the isolation on the Water / Wastewater system shall be identified. If necessary the SOC and/or the relevant asset owner should be notified.

g. you failed to attach a yellow "out of service" tag to the isolation point/s ensuring that all information is completed.

h. you failed to fit a Silver Control Lock used by Sydney Water electrical personnel to maintain an electrical isolation overnight.

i. it is alleged that you knowingly made false statements on your risk assessment that SWMS E01 and E04 had been complied with.

2. It is alleged that you failed to demonstrate the level of personal responsibility required of an employee with your level of qualifications and experience when you failed to complete the work within a suitable time frame (2 hours)

3. It is alleged that you failed to demonstrate the level of personal responsibility required of an employee when you failed to comply with using the FRM in accordance with the FRM Usage Policy. This includes competent completion of Safe Work Method Statements prior to work and Risk Assessments.

4. It is alleged that you have breached the Sydney Water Health and Safety policy and your actions may have led to the injury or death of other staff or contractors. Specifically, you have created a serious hazard, failed to provide a safe working environment and not used safe systems of work'

[3] The applicants were suspended on full pay from that day pending the finalisation of an investigation. Following the investigation, including a number of interviews with the applicants and other Sydney Water employees and inspections of the work, Allegations 1, 3 and 4 were substantiated and Allegation 2 was not substantiated. The applicants were invited to respond to the outcome and they provided further information which Sydney Water investigated.

[4] However, on 5 September 2012, the applicants were summarily dismissed by a letter from Mr Geoff Mossman, Manager MED. Although they were in slightly different terms, both letters contained the following:

'Inspection of the top of the reservoir and of access records demonstrate that the top of the reservoir was not accessed, and therefore that "the tails" were not removed. I have inspected the site with electrically qualified staff, supervisor and OHS representative, including a demonstration on-site of the LOTO procedure. I am satisfied that you did not follow the LOTO procedure, and that this caused real risk to the health and safety of others attending that site.

It is my view that the allegations are substantiated and the proposed outcome which was provided to you on 20 August 2012 is appropriate. Your conduct was a real risk to safety which may have caused injury or death of divers entering the reservoir and is a serious breach of Sydney Water safety procedures.

Your employment with Sydney Water is terminated effective today, Wednesday 5 September 2012. You will be paid accrued entitlements.'

[5] The applications for reinstatement were filed on 19 September 2012 by the applicants' Union, the Communications, Electrical and Plumbing Union (the 'Union') and listed for conciliation on 17 October 2012. The conciliation was unsuccessful and the matters were joined and listed for arbitration on 4, 5 and 6 February and 6 March 2013, Mr J Kennedy, Solicitor, representing the applicants and Ms E Brus of Counsel representing Sydney Water were both granted permission to appear pursuant to s 596 of the Act.

[6] At the outset of proceedings, I determined that the evidence in one matter shall be the evidence in the other. The following persons provided written and/or oral evidence in the proceedings:

• Mr Stevce Stanojevic, Facility Technician, Sydney Water;

• Mr Liam Whelan, Acting Maintenance Supervisor, Sydney Water;

• Mr Peter Murdoch, Electrical Fitter Mechanic, Sydney Water;

• Mr Douglas Hobart, Workplace Health and Safety Coordinator, Sydney Water;

• Mr Geoffrey Mossman; Business Unit Manager, Mechanical Electrical Delivery, Sydney Water and

• Mr Michael Cox, Area Manager, Mechanical Electrical Delivery, Sydney Water.

[7] The following is a list of abbreviations used frequently throughout this decision:

[8] In addition, there was some interchanging in the evidence of the names of the various pieces of equipment. I have endeavoured to standardise the expressions such as to make it clear that the Mixer Starter Panel is in the Mixer Starter Panel Box. There are three fuses in the Mixer Starter Panel. It powers the Mixer, which is a large agitator in the reservoir. The Council Meter Panel is in a separate and distinct Council Meter (Supply) Box and it supplies energy to the Mixer Starter Panel.

[9] Mr Hayward is 58 years old and is married with one child. In his written statement, he said that his wife, a former employee of Sydney Water, is currently suffering from serious medical problems and he is her primary carer. Mr Hayward had been first employed by Sydney Water in March 1978 as an Electrical Mechanic. Prior to the incident that led to his termination, he had never had any disciplinary issue at work. The last position that he held was as an Electrical Tradesperson in the position of a Level 4 Control Electrician. He believes that he will struggle to find another job with the same type of work, conditions and pay.

[10] Mr Hayward deposed he last received training in the LOTO procedure in 2006. The focus of the procedure was on the use of different coloured locks and tags. The procedure had been raised 'regularly' at toolbox meetings, as many of the assets on which the electricians worked were not compatible with the procedure because they cannot be physically locked out and have no designated point for attaching tags. Sydney Water Management had often been questioned about this, but had never given an answer.

[11] On 15 May 2012, Mr Hayward received a courtesy text from Mr Ed Filipic, the Sydney Water Maintenance Supervisor at around 8:15pm assigning him to a job at Reservoir WS0194 the following day. On 16 May 2012, he arrived at the unmanned site at approximately 6:30am. He received a text from his usual partner, Mr Ewen Young, advising him that he was off sick. As there were staff shortages, only Mr McGrath was left in the gang. He was at work on 16 and 17 May 2012. Mr Filipic rang Mr Hayward 15 minutes later to say that Mr McGrath would be working with him that day.

[12] Mr Hayward said that the work record was transferred to his mobile Field Resource Management (FRM) computer at 6:57am. He attached a printout from his FRM which reflected this. However, there were some discrepancies. While the FRM disclosed that he was 'on route' and 'on site' at 7:00am, he was already on site at that time. The computer forced him to enter these times to accept the work order. In addition to being used for work order pro-formas, the FRM was used to access email, connect to the internet and to connect to IICats Panels onsite. There was a problem with the FRM in that the charger plug did not fit into the plug directly and the battery was often low. This problem was resolved on 18 May 2012 when he used his own charger from his car.

[13] Mr Hayward deposed that the job that the work order set out was to 'isolate' the reservoir Mixer Motor and any cathodic protection in order to make it safe for divers to enter the reservoir for maintenance. The Mixer is a large propeller which circulates water throughout the reservoir. Mr Hayward decided that the job should be done in accordance with Sydney Water's Safe Work Method Statements E01 'De-Energising, Energising and Commissioning Electrical Circuits' and E04 'Testing Equipment'. Copies of these statements were annexured to Mr Hayward' statement.

[14] Mr Hayward said that he carried out the initial risk assessment by identifying and entering into his FRM additional hazards and SWMSs needed for the job. This was done in order to access the work order. He left the FRM in the car as normal. However, he could not say whether the risk assessment was transmitted elsewhere by the FRM. Mr Hayward said that he did not carry out any manual work or access an electronic panel prior to Mr McGrath's arrival on site.

[15] Mr Hayward said that on Mr McGrath's arrival on site between 7:00 and 7:15am, he told Mr McGrath what the job was and that he had performed a risk assessment on the FRM. They agreed that there were no further hazards on the site and that Mr Hayward would check for cathodic protection, while Mr McGrath would do the Mixer 'isolation'.

[16] Mr Hayward explained that cathodic protection was used in some reservoirs in the form of anodes that serve to protect the structure of the reservoir through electrolysis. Accordingly, part of his job was to see if there was electrical supply for cathodic protection anywhere on site. He also said that there were four panels at Reservoir WS0194: the IlCats panel (for communications and monitoring of the reservoir), the Council Meter Panel Box (which has the power meter and other supply fuses) the Dosing Panel and the Mixer Starter Panel. The Council Meter Panel and the Mixer Starter Panel Box were adjacent to each other. All panels are within a 20-30 meter radius. The Council Meter panel is accessible by a key that all Sydney Water field employees have in their possession. Mr Hayward noted that non-Sydney Water staff, such as meter readers, would have access to this box.

[17] Mr Hayward opened the Council Meter Panel Box with his key and looked to see what was there. He realised from his observations that power was coming in from the street and then distributed to the Mixer Starter Panel. The Council Meter Panel also supplied power to the IlCats panel. He noted further that, while the Council Meter Panel box was lockable, it would be easy to unlock, as so many people were in possession of a key, including non-Sydney Water personnel. There was no place for a silver electric lock to be attached in accordance with the LOTO procedure.

[18] Mr Hayward decided that it would not be safe to leave the fuse wedges out in the Council Meter Panel as supply voltage could be exposed by touching the fuse holders. As a result, he decided that it would be best to 'isolate' at the Mixer Starter Panel, which has a lock on its Box with its own key. Fewer people have access to this panel so it is more secure. Mr Hayward engaged in a discussion with Mr McGrath, who said words to the effect of: 'I will 'isolate' the Mixer in the Mixer starter panel. I will just 'isolate' the fuses in there.'

[19] Mr Hayward said that there was no lockable switch in the meter panel, only fuses. Mr McGrath told him that pulling the fuses would be the best method of isolating the Mixer. Mr McGrath started this work at 7:24am, which was shown in the IICats record (annexed to Mr Hayward's statement). The purpose of this is to remotely alert someone in the SOC that the Mixer is offline. Mr McGrath removed the fuses and put tape across the fuse slots. He then closed the panel and locked the door of the Mixer Starter Panel Box with the external lockable handle.

[20] Mr Hayward claimed that he went to the top of the reservoir to look for cathodic protection, but was unable to find it. He tried to call Mr Brian Woods, a co-worker to ask if there was anywhere on site that he had missed, but Mr Woods did not answer. Accordingly, Mr Hayward formed the view that there was no cathodic protection on site. He was not involved in the development of the specific Asset 'isolation' procedure for the work order, or the actual work done in the reservoir, only the 'isolation' and lock/out tagging of the Mixer Motor and cathodic protection. He believed that he performed this work in line with the relevant SWMSs.

[21] Mr Hayward said that the Asset Isolation Procedure needs to be signed off by the electrician who did the 'isolation' and that, accordingly, he expected to go back to Reservoir WS0194 to meet the team doing reservoir maintenance. This did not occur and he was not directed to return to site or advised as to when the maintenance work would occur.

[22] Mr Hayward said that he and Mr McGrath started cleaning up at approximately 7:43am and had shut and left the site by 8:00am. As they were leaving, he noticed an 'out of service' tag on the handle of the Mixer box. On returning to the car, he also noticed that the FRM was in 'sleep' mode. It had not been charging as the vehicle was off and needed to be charged before it could be used. He turned the vehicle on and fixed the problem with the charger plug not fitting correctly. He turned the FRM back on as he left to return to the Daceyville Depot, as he needed to use the GPS system.

[23] Mr Hayward deposed that once at the Daceyville Depot, he assisted Mr Filipic to unload his ute. He noticed that the FRM had gone into shutdown mode again. He discussed this fault with Mr Filipic, who told him that he should complete a paper risk assessment form. When he attended the Waverley Reservoir for a job, he completed a paper risk assessment form and entered the relevant times into the FRM for the job at Reservoir WS0194 after lunch and after it had been charged up. The paper based risk assessment forms were also reentered into the FRM. When they finished work at the Waverley Reservoir, Mr Hayward went back to the Daceyville Depot to get missing IICats modems and take them back to Parramatta.

[24] Mr Hayward said that on 17 May 2012, he and Mr McGrath went to site SP001 in the city for a previously booked appointment. While they were there, Mr Filipic called between 8:00 and 8:30am from Reservoir WS0194. Mr Filipic said that he had gone to the site to reassure the contractors who were entering the reservoir that the Mixer was isolated'. The conversation was in words to the effect of:

I'm here at the reservoir, I have the asset owner representative on speaker, can you tell me if you have done the 'isolation'?

There is no tag anywhere and I can't access the Mixer panel, I don't have a key for it.

Mr Hayward then passed the phone over to Mr McGrath and walked away. He did not hear the ensuing conversation between Mr McGrath and Mr Filipic.

[25] Mr Hayward said that he and Mr McGrath returned to the Daceyville Depot for lunch. While they were there, Mr Filipic told him that he had removed the fuses from the Council Meter Panel at Reservoir WS0194 in order to reassure the contractors.

[26] Mr Hayward deposed that he and Mr McGrath went back to Reservoir WS0194 in order to wait for the contactors to exit the reservoir. While there, they noticed that the 'out of service' tag was no longer attached to the Mixer Starter Panel. They looked around, but were unable to find it. He assumed someone had taken it off. There were no visible additional tags or locks on any other panels or equipment on site. He and Mr McGrath left Reservoir WS0194 after the contractors exited the reservoir.

[27] In his evidence, Mr Hayward responded individually to each of the allegations put to him by the respondent (see para [2]). He denied Allegations 1(a) and 1(b). He had observed Mr McGrath remove the Mixer Motor control fuses and tape over the fuse sockets. This is the normal procedure with this type of 'isolation'. He also saw Mr McGrath test the supply side of the fuses, which showed a voltage present. Mr McGrath told him that he had tested the load side running out to the Mixer Motor and that no voltage was present. The supply came from the Council Meter Panel and they could not lock out that panel in accordance with Sydney Water procedures, as it powers other equipment on the site and other persons need access to it. The job was not to de-energise and 'isolate' the entire site.

[28] In response to Allegations 1(c), 1(d), 1(g) and 1(h) (see para [2]), Mr Hayward stated that it was not possible to comply with the LOTO procedure as the Mixer Starter Panel is not designed to be 'tagged' in accordance with the procedure. He noted that he saw the 'out of service' tag on the outside handle of the box when leaving the site. Mr Hayward also said that it was not possible to fit a Sydney Water silver electrical lock to the Mixer Starter Panel. The Mixer Starter Panel was locked out by Mr McGrath, who locked the external handle with his key. Only certain Sydney Water employees would have a key to this handle.

[29] Mr Hayward denied Allegation 1(e) (see para [2]) and said that the process that he observed Mr McGrath undertake (see para [19]) meant everything reasonably required to ensure that the Mixer Motor was electrically 'isolated' had been carried out. No other sources of energy to the Mixer Motor were present. He had himself checked for cathodic protection and had found none.

[30] Mr Hayward denied Allegation 1(f) - that he had failed to comply with the requirement that the effect of the 'isolation' on the Water/Wastewaters System be identified. He said that because the owner of the asset was Sydney Water, it was required to create an OCR. The SOC would then be notified. There was no record of the OCR being created and, accordingly, it was Sydney Water that had failed to follow its own procedures. Because the OCR was not created, the SOC was not advised of the work being carried out and the 'isolation' of the Mixer Starter Panel created an alarm which was reported as a breakdown. As a result, another electrician, Mr Peter Murdoch, was sent out to the site to identify the problem. Mr Hayward believed it was Mr Murdoch who reported the matter to management and to Mr Doug Hobart (the OH&S Representative). He said that he and Mr Murdoch had 'fallen out' earlier in 2012 over the creation of Field Technician positions by Sydney Water.

[31] Mr Hayward denied Allegation 1(i) (see para [2]) that he had knowingly made false statements relating to the Safe Work Method Statement (SWMS). He said that he had completed the SWMS honestly and to the best of his ability. He was unaware of which part of the SWMS was said to be false.

[32] Although Allegation 2 (see para [2]) was subsequently found to be not substantiated, Mr Hayward said that he was disturbed that this was not reviewed before it was put in writing. He denied Allegation 3 (see para [2]). He believed that aside from 16 and 17 May 2012, his record of FRM use would have been good and he attributed the failure to create timely FRM records to the battery problems he described above (see para [12]). He had never seen or been issued with an FRM policy.

[33] Mr Hayward denied Allegation 4 (see para [2]). There was no supply to the Mixer Motor and no risk to anyone who went into the reservoir as it could not be operated onsite or by IICats remote control. Neither he nor Mr McGrath had created a hazard. The Mixer Motor could not be operated without reversing the controls which he and Mr McGrath had put in place.

[34] Mr Hayward said that on 24 July 2012, he received a letter of investigation signed by Mr Cox (see para [2]). He was stood down from work on full pay and asked to attend a meeting on 26 July. This was subsequently put back to 30 July. This letter was the first occasion the issue had been raised with him.

[35] Mr Hayward deposed that on the morning of 30 July 2012, he spoke to Mr McGrath. He said that somebody had told him that the fuses in the Mixer Starter Panel were not supply fuses - they were control fuses. Approximately one hour later, Mr McGrath rang him back to suggest that they say that they had also disconnected the motor leads at the terminal box on top of the reservoir. Mr McGrath told him that he understood, after a conversation with another person working for Sydney Water, that they had not technically followed the LOTO procedure.

[36] Mr Hayward attended the meeting with Mr Daniel Weizman of the Union, Mr Cox and Ms Claire Saker, an HR representative of Sydney Water. At the meeting the allegations of his alleged failure to work according to Sydney Water policy were read out. He responded by explaining his actions on 16 May 2012 to the best of his ability. He recalled that he said something about disconnecting the motor leads at the top of the reservoir. He also recalled telling Mr Cox that he had removed power from his FRM, as it was interfering with his personal GPS.

[37] Mr Hayward attended another investigation meeting on 20 August 2012 with Mr Weizman, Mr Geoff Mossman and Ms Kim Ching, HR Consultant of Sydney Water. At this meeting, he asked for the minutes of all of the investigation meetings, but they were never supplied. Mr Mossman read out the contents of a letter that addressed the allegations in the letter of 24 July. The findings of the investigation were that, on the balance of probability, all of the allegations were substantiated, except for Allegation 2. Further, Mr Hayward was told that the outcome of the investigation was that Sydney Water had decided to dismiss him. He was given a further opportunity to respond and to meet again on 22 August 2012.

[38] Mr Hayward said that prior to attending the next meeting, he spoke to Mr Filipic at the Daceyville Depot. He asked him if there had been any problems with his GPS locations for 16 May and Mr Filipic replied in the negative. He also asked if anyone had contacted him in relation to the problems on that day. Mr Filipic replied: 'No, only the guy who was looking after the divers on the day.' Mr Hayward then went to the meeting and responded to the same allegations. He did not take any notes.

[39] There was a further meeting on 29 August 2012 with Mr Mossman, Ms Ching and Mr Weizman. At this meeting, he responded to specific questions in relation to the supposed work he had done in relation to disconnecting the motor at the top of the reservoir. He told Mr Mossman and Ms Ching that it was Mr McGrath who had placed the tag on the Mixer Starter Panel Box door and that he had disconnected and reconnected the leads on the terminal box.

[40] Mr Hayward conceded that what he had said was 'obviously' not true. He realised in hindsight that he should have told the truth. He agreed to Mr McGrath's proposal to say that they had disconnected the motor leads partly because he did not want Mr McGrath to get in trouble, but also because he was worried about his job as well. He felt he was under a lot of pressure.

[41] A final termination meeting was held on 5 September 2012. Mr Hayward, Mr Weizman, Mr Mossman and Ms Ching were present at this meeting. Mr Mossman read out the letter of termination (see para [4]). Mr Hayward was summarily terminated. He returned the vehicle and all property of Sydney Water and requested that the Union file an unfair dismissal application.

[42] Mr Hayward said that it was obvious that the respondent had 'cut and pasted' his name into the same letter given to Mr McGrath. Accordingly, he believed that the findings made against Mr McGrath had been applied to him without a true review of the facts. At no point during the six investigation meetings was he asked as to the actual steps he had taken to ensure 'isolation' of the Mixer Motor.

[43] In oral evidence, Mr Hayward said that he had spoken briefly to Mr Cox before the investigation on two occasions for ten or twenty minutes. Once was at the Pymble Depot when he had introduced himself.

[44] Mr Hayward said that he had known Mr Murdoch for 26 years. They had been friends, but they had had a disagreement about Mr Murdoch's work on an 'isolation'. On this occasion, Mr Murdoch had worked alone on an 'isolation', despite the fact that they were always required to work with two electricians when performing an 'isolation'. The product of Mr Murdoch's work was that Mr Hayward and Mr McGrath had had to stay back to repair two cell starters. They had had a 'fair altercation about him lying to me'. Mr Hayward blamed his failure to get a Field Technician's job on this altercation with Mr Murdoch. He had had a phone call that he had been successful in getting the job, but was then told by Mr Liam Whelan that he had been 'pulled off the list'.

[45] Mr Hayward agreed that he had been told 'You have to follow LOTO procedures' at toolbox meetings on one or two occasions, but said that this was all that was said. On numerous occasions, they had raised the issue that they could not lock the fuses out. They had never received a response. He had specifically asked what to do in this event, but again had not received a response. He could not recall ever having been in a toolbox meeting with Mr Doug Hobart.

[46] Mr Hayward agreed that his last training in LOTO was probably in August 2006, although he could not recall the details of that training. His understanding was that this procedure should be the subject of refresher training every two years and that proof of capability in these procedures was required. Before the job at Reservoir WS0194 on 16 May 2012, he had never been involved in a job with divers going onto the reservoir in a boat.

[47] Mr Hayward said that he did not understand the possibility put forward by Mr Cox and Mr Hobart as to the contactors of the fuse welding shut. He thought it was 'pretty much impossible' and said that he had never seen it happening or heard of it happening. There would have been no way for it to happen while it was de-energised. Mr Hayward ridiculed the suggestion that lightning could weld the ccontactors shut and said if lightning struck the Box it would be destroyed.

[48] In cross examination, Mr Hayward acknowledged the importance of safety on Sydney Water sites. He agreed that the Mixer Starter Panel and the Council Meter Panel boxes were on the same metal pole approximately 20 metres from the fence. He also agreed that you would need a key for the Jackson Lock in order to access the Council Meter Box. This key was one which many people have copies of.

[49] Mr Hayward admitted that he could not physically see Mr McGrath removing the three fuses from the Mixer Starter Panel and he did not see where they were physically placed afterwards. However, Mr McGrath told him that he had done so. He agreed it was possible that Mr McGrath only removed one of the fuses, but it would not have made a difference to 'isolating' the Box.

[50] When asked why he had not actually pulled the leads from the motor at the top of the reservoir, as he had originally suggested to Mr Cox and Mr Mossman, Mr Hayward responded:

'Well, possibly, when you look at the LOTO tag out policy they don't actually tell you how to do that job. It's not - I wouldn't say a preferred method. I was of the assumption at the time the job was done that the three fuses that were pulled were the supply fuses.'

[51] Mr Hayward emphasised that the LOTO procedure does not actually tell you how to do the job. He insisted that he had checked the top of the reservoir for any cathodic protection, but could not find any.

[52] Mr Hayward conceded that he did not actually see Mr McGrath put a tag on the outside of the Box, but he definitely saw it there when they left. In addition, it was physically possible for a tag to have been put inside the Box. However, he would not have tagged the actual fuses.

[53] Mr Hayward explained again why he had lied to Mr Cox and said if it had been anyone other than him and he had done something wrong, he would not have lied. He agreed he did not tell the truth to the decision maker, Mr Mossman, and challenged him to go out and look (which they did). Mr Hayward said that while he was aware that there had been a review which had concluded that the top of the reservoir had not been accessed, he was '95% sure' that he went on top of the reservoir to check for cathodic protection. He now regretted his lies, it was not planned, it just happened in the morning of the interview. He was just trying to get himself and Mr McGrath out of trouble. If he had to do the same job again, he would not do so without consulting his supervisor.

[54] Mr Hayward agreed he was twelve months off being able to retire and to gain access his superannuation, but he did not believe it would last very long and he needed to work until at least 65 years of age.

[55] Mr Hayward explained that he had not called the SOC because the procedure says the SOC or the asset owner should be notified. As Sydney Water was the asset owner, he assumed all the paperwork had been put through.

[56] Mr Hayward said that when he went back to Reservoir WS0194 to re-energise, he looked on the ground and the fence line area for the missing tag. He assumed someone had taken it off. He noted that there had been issues with children climbing fences and causing damage to Sydney Water sites. He agreed that if the tag had been on the inside of the panel, then no children would have been able to access them, but went on to say that the team would not have been able to see them either.

[57] Mr McGrath is 60 years old and has been working for Sydney Water since 1969, the year after he left school, when he began work as an apprentice electrical fitter mechanic. At the time of his dismissal, he was employed as a level 4 Controls Technician. Mr McGrath had been a delegate of the Union over the previous twenty years. In his written statement, Mr McGrath said that prior to 2012, he could not recall having ever received a written warning from Sydney Water. While there had been an issue in 2009 regarding Personal Protective Equipment, he believed that this had been resolved without him being issued with a written warning.

[58] Mr McGrath said that in early 2012, Sydney Water announced that it would be outsourcing the Electrical, Maintenance and Installation part of the business, a move which would directly affect his job. At around this time, Mr Cox began working as an Area Production Manager. Mr McGrath deposed that Sydney Water had made a number of allegations against him in relation to work purchases and the use of Sydney Water resources and facilities at a site in Wiley Park. He maintained that he had merely been working as other employees had. He believed that he may have been targeted for the investigation due to his position as a 'senior and vocal delegate' of the Union at Sydney Water.

[59] At the end of the investigation, Mr McGrath was handed a letter, dated 2 May 2012, which set out the allegations against him and the conclusions of Sydney Water following the investigation. It concluded as follows:

In determining the action to be taken against you, we have taken the following into consideration:

• The honesty displayed in your responses to the allegations;

• Previous documented non-compliance with Sydney Water policy on your Confidential Service File; specifically HSP-071 Protection from UV Radiation;

This behaviour constitutes a serious breach of Sydney Water's policies.

It is recommended that you be issued with a written warning for this behaviour.

It is further recommended that you be transferred to Bondi. This move will allow your performance and future compliance with Sydney Water policies to be more closely monitored.

This is your opportunity to put anything to us that should be considered before we make the final determination. We ask that you respond to us by 12pm Monday 7 May 2012, after which time we will consider all information you provide to us.'

[60] Mr McGrath made a written response in which he contended that the conduct he had been found guilty of had been approved by managers and/or was a regular course of conduct for Sydney Water staff. He denied that he had not complied with HSP-071 and said that he had not previously heard of this matter. He believed that the outcome proposed by Sydney Water was 'harsh, unjust, unreasonable and biased.'

[61] Mr McGrath referred to clause 46 of the Agreement, which allows for an appeal procedure that works its way up four levels of management. Having appealed the decision, it was never finalised and he was never advised of any outcome. He could not recall receiving a copy of a written warning. He was moved to the Bondi Depot on 18 June 2012.

[62] Mr McGrath deposed that the LOTO procedure had been introduced about ten years ago. He could not recall any training being provided on how this procedure was to be applied to unmanned assets such as reservoirs and pumping stations. While the procedure works well on manned sites, like water and sewage treatment plant locations, the nature of the equipment on unmanned assets meant that there was no designated place to put tags, so 'people would just put it where they thought it was best. Different people had different places.' These problems had often been raised with supervisors and at toolbox meetings. He recalled doing so himself.

[63] Mr McGrath deposed that he began work on 16 May 2012 at 6:30am. At 6:45am, he received a call from Mr Filipic in which he was asked him to meet Mr Hayward at Reservoir WS0194 in Yagoona. He arrived on site at 7:15am. When he arrived, he was told by Mr Hayward that they were to 'isolate' the Mixer to allow workers to enter the reservoir.

[64] Mr McGrath said that Mr Hayward told him that he had entered the risk assessment on his FRM. Mr McGrath agreed with his assessment that there was nothing out of the ordinary with the job. He had performed this type of work for Sydney Water 'more than 20 times.' He noted that when Sydney Water staff work in pairs, the job is only issued to one person. He assumed that Mr Hayward would handle the administrative requirements through his FRM. He had worked with Mr Hayward before and he would usually take responsibility for the 'electrical power side of things' with Mr Hayward acting in support. Mr McGrath worked on isolating the Mixer and Mr Hayward checked for cathodic protection (see para [16]).

[65] Mr McGrath said that he and Mr Hayward decided to use SWMS E01 and E04. Copies of these were annexed to his statement. Mr McGrath said that he inspected the Mixer Starter Panel and decided to do a control 'isolation' instead of a total power 'isolation', as it was not possible to do the latter as the power came from the Council Meter Panel. This panel had a universal Jackson lock which was a semi-auto lock. Further, it was not a Sydney Water asset and supplied power to the entire site. Accordingly, he believed the best way to ensure that the Mixer was 'isolated' and incapable of interference by third parties, was by isolating the Mixer Starter Panel itself.

[66] He proceeded to unlock the Mixer Control Panel Box door, then remove the screws from the inner control so as to open the panel. He tested for voltage on the contactor with his multimeter. This contactor pulls the three contacts together to connect line (supply) side to the load (Mixer) side. The testing showed that there was power supply to the contactor on the line side, but not on the load side. This meant there was no supply to the Mixer. He then removed the primary supply fuses and placed them at the bottom of the box. This was also normal procedure. He also removed the secondary supply fuse and put it at the bottom of the Box. He placed red insulation tape over the holders for each of the fuses.

[67] Mr McGrath deposed that, having performed the above procedure, he was satisfied that the Mixer was 'isolated'. He was further satisfied that it could not be operated on site or by remote control, without undoing the steps which he had performed. Ideally, he would have preferred to lock the two switches, but this was not possible as there was no place to attach a lock. Accordingly, he locked the Mixer Starter Panel Box door using the lockable handle. He attached a yellow 'out of service' tag to the box. His name and phone number were on the tag, which was tied securely to the handle with string. His thinking was that it would have been of no purpose to attach a tag behind a locked panel door. After this was done, Mr Hayward told him that he was going to check the cathodic protection. He walked away. He and Mr Hayward left the site at approximately 8:00am.

[68] The next day, Mr McGrath was working again with Mr Hayward. He remembered that Mr Hayward received a call from Mr Filipic, who asked about the key to the Mixer Starter Panel. Mr McGrath asked Mr Hayward to inform him that he had used a No.68 electrical key. Mr Filipic should have had one of these keys.

[69] Mr McGrath deposed that at some point during the day, Mr Filipic directed he and Mr Hayward to return to Reservoir WS0194. When they arrived, Mr McGrath observed that the contractors were packing up. He also noticed that the tag he had attached to the door handle on the Mixer starter panel had been removed. He reconnected the power supply to the Mixer and reestablished the fuses in the Mixer Starter Panel. He tested the device and it was working normally. They both left the site shortly thereafter.

[70] Mr McGrath responded in his written statement to each of the allegations put to him by Sydney Water (see para [2]). He disagreed with Allegation 1(a) that he did not take the steps needed to 'isolate' the electricity supply and Allegation 1(b) that he failed to ensure the 'isolations' were effectively tested. He was not able to 'isolate' the Mixer by way of three phase 'isolation'. This would have required locking off the Council Meter Panel which was not a Sydney Water asset. Accordingly, the only viable option to perform a control 'isolation', was to remove the Mixer Starter Panel supply fuses, placing them at the bottom of the box and taping over the fuel sockets. He tested the supply to the Mixer Motor after he did this, by testing the supply line side (which showed a voltage present) and the load side, which did not. He formed the opinion that it was effectively 'isolated'.

[71] Mr McGrath said that he had been aware of Mr Hayward checking for cathodic protection and finding none. As Mr Filipic was unable to access the Mixer Starter Panel, this supported his assertion that it was appropriately locked and 'isolated'. He was told that Mr Filipic removed the fuses in the Council Meter Panel, so as to be assured of 'isolation', without tagging or locking it and that he had faced no sanction for doing so. As the SOC identified the stopping of the Mixer as a fault, this further proved that there was no power to the Mixer.

[72] Mr McGrath said that the above steps, in conjunction with the fact that there was no other source of energy to the Mixer Motor on site, indicated that there was no basis to Allegation 1(e) - that he failed to ensure that the 'isolated' equipment was proven to be 'isolated'. He referred to Sydney Water Policy - HSP070 - Flow Management and 'isolation' of Hydraulic Assets, which was annexed to his statement. This procedure requires that the Asset Owner/Project Manager should be on site to ensure the correct form was filed out. The same person is also responsible for getting the OCR signed and sent to the SOC. As this did not happen on or before 16 May 2012, Sydney Water had not followed its own procedures.

[73] Mr McGrath disagreed with Allegation 1(c) - that he had failed to ensure that all 'isolations' had the appropriate tag applied and 1(d) - that those 'isolations' were locked out. He had filled out and attached the tag to the outer handle of the box. If he had attached it to the inside, it would have been necessary to open the box to see that the asset had been 'isolated'. He stressed that there was no point at which a Sydney Water silver electrical lock could be attached and the best way of locking the 'isolated' asset was to lock the box using the outer handle. This problem has previously been brought to Sydney Water's attention. The above facts also supported his denial of Allegation 1(g) - that he had failed to attach a yellow 'out of service' tag to the 'isolation' and Allegation 1(h) - that he had failed to attach an electrician's lock to maintain the 'isolation'.

[74] Mr McGrath denied Allegation 1(f) - that he failed to comply with the requirement that the effect of the 'isolation' of the Waste/Wastewater system shall be identified. While it was usual practice to contact the SOC for maintenance purposes, on this occasion, he did not contact SOC as he was called onto the job and he believed that SOC should already have been informed by an OCR. This was a failure of Sydney Water to abide by its own policy (HSP070). It meant that because there was no OCR, the SOC identified the issue as a fault and sent Mr Murdoch to attend the site in order to identify the reason the Mixer was not working. Mr McGrath denied Allegation 1(i) - that he knowingly made false statements in relation to safe work method statements E01 and E02. He was not sure as to what statements he had made which were alleged to be false.

[75] While Mr McGrath acknowledged that Allegation 2 - that he failed to complete the job in a timely manner - was withdrawn, he believed that the fact that the allegation was actually made, was unfair and made for the purpose of 'padding out' the investigation to give further scope to terminating his employment.

[76] Mr McGrath disagreed with Allegation 3 - that he had failed to use the FRM in accordance with policy. He had not used his FRM on 16 May 2012 as the job was allocated to Mr Hayward and accordingly was on his FRM.

[77] Finally, Mr McGrath disagreed with Allegation 4, - that he had created a serious hazard, had failed to provide a safe working environment and did not use safe systems of work. He rejected the notion that any risk or hazard had been created by his actions and reiterated that the Mixer Motor was electrically 'isolated' and that there was no supply to the motor. As a result, the Mixer was not capable of operation. The facts that the SOC noticed the Mixer had stopped and identified it as a fault supported his argument that there was no hazard, as did Mr Murdoch's attendance on site and confirmation of the 'isolation'.

[78] Mr McGrath said that he heard nothing further about the work he and Mr Hayward had performed on Reservoir WS0194 until he was informed on 24 July 2012 that the incident was the subject of an investigation by Sydney Water. At that time, he was working at the Bondi treatment plant. He was handed a letter by two managers, Mr Michael Cox and Mr Matt Duffy. It was in the same terms as the one handed to Mr Hayward (see para [2]). Like Mr Hayward, he was stood down on full pay and told to attend an interview with Sydney Water at a later date. He was very worried about his job and felt that Sydney Water was 'after' him.

[79] Mr McGrath deposed that shortly after, he had a conversation with Mr Hayward, in which he said that someone had told him that he had removed the control fuses, and not the three phase supply. The three phase supply was located in the Council Panel. He inferred from Mr Hayward's comment that he thought that he had made a mistake by not removing the three phase supply. They had a conversation in words to the effect of:

We can just say that we disconnected the cables at the box on the roof of the reservoir.

Yeah I had access to the roof, I could have done it.

They agreed to put this version of events to Sydney Water.

[80] Mr McGrath said that he realised, in hindsight, that he and Mr Hayward should not have done this, but he was 'panicking' and he 'felt like Sydney Water were out to get me'. He had not read the LOTO procedure at the time. If he had, he would have known that they had already complied with the procedure and that there was no need to lie about the cables.

[81] Mr McGrath said that about a week later, a meeting was held with himself, Mr Weizman, Mr Cox and Ms Claire Saker from HR in which he was questioned about his work on Reservoir WS0194 on 16 May 2012. He queried what it was that he had not done in accordance with the procedure. This question could not be answered by the two Sydney Water representatives at the meeting. Mr Weizman drew a diagram on the whiteboard in the course of explaining that Mr McGrath and Mr Hayward had complied with the procedure. Mr Cox could not understand this explanation.

[82] Mr McGrath attended a further meeting on 20 August 2012 which included Mr Weizman, Mr Mossman and an HR Manager from Sydney Water. The representatives said that all of the allegations, except Allegation 2, were substantiated. Accordingly, the decision had been made to terminate his employment, despite his generally good employment record and length of service. He was told that he could respond to this outcome at a further meeting on 22 August 2012. He asked for a copy of the investigation and fact finding notes. Sydney Water told him that he would receive a copy of these documents, but he never did.

[83] A meeting was held on 22 August 2012 with himself, Mr Weizman, Mr Mossman and Ms Ching from HR attending. Mr Weizman told Mr Mossman that the investigation and its outcome were a 'witch hunt' and told him he should stop the course of action proposed. They walked out of the room and the meeting ended.

[84] A further meeting was held on 29 August 2012, with himself, Mr Weizman, Mr Mossman and an HR representative attending. Mr Mossman and Mr McGrath said, in words to the effect of the following:

We have done the investigations and we have three questions. Who put the lockout tag on the Mixer box?

Who did the reconnection up top of the reservoir?

[85] Mr McGrath acknowledged that his answers to the second and third questions were not true. They were a continuation of what he and Mr Hayward had agreed to say. He reiterated that he knew he had done the wrong thing and that he was very sorry for having done so.

[86] On 5 September, Mr McGrath attended a further meeting at which he was summarily terminated. He could not recall much of what was said at this meeting, because he was in a state of 'total despair'.

[87] Mr McGrath said that about a month after his termination, Dean Stafford, a former employee of Sydney Water who had left its employment in December 2011, told him that Mr Cox had said words to him to the effect of:

'I am going to inflict a culture change at Sydney Water by targeting these older blokes. I am gunning for them and will use any means necessary, whether it be phones, safety and GPS or whatever to get rid of them. I don't care if they know because I want them to know I'm after them.'

Mr McGrath claimed that four other employees of Sydney Water agreed that Mr Stafford had related this conversation to them as well. Mr Stafford forwarded an email to Mr McGrath (which was annexed to his statement) in similar terms.

[88] Mr McGrath noted that Sydney Water had put its maintenance employees on notice that their division will be outsourced from June 2013. As a consequence, should he not accept a job with the new employer, he may have been entitled to 120 weeks pay for redundancy and accumulated leave. He believed that this was a factor in the decision of Sydney Water to terminate his employment.

[89] Mr McGrath said that his dismissal had been a 'disaster' as he was 60 years old and had been unable to find a full time job in his field, although he had had some training and casual work in other areas.

[90] In oral evidence in relation to the Wiley Park investigation, Mr McGrath deposed that he had had 51 allegations put to him, while others had only had five or six. He said that senior management were also using the disused site at Wiley Park and that those people had not been subjected to the same disciplinary action as he had. He denied that he was given a First and Final Warning as a result of this investigation and could not recall having been given a copy of that warning. He said that he had asked for the decision to be reviewed and that Mr Cox conducted this review himself, being the 'final judge and jury'.

[91] In response to allegations that the Sydney Water car he had been using had sustained damage that would cost somewhere between $13,000 and $15,000 to repair, Mr McGrath denied any damage was caused by him. He had arranged for an auditor to go through the car when he returned it. Any damage sustained must have occurred after its return to the depot and arisen from its further use by other employees. He said that he returned the phone, but kept the SIM card to get his phone number off it. He had not phoned out using that SIM card once he had been told to return the phone. He denied saying to Mr Cox, 'Well, I handed back the phone, but the SIM card isn't the phone, so I kept the SIM card.'

[92] Mr McGrath said that he could not recall being trained in the LOTO procedure or of any discussion of the procedure at toolbox meetings until after the incident of 16 May 2012. He said that the employees were unable to access safety policies on their FRM until December 2011. However, the screen was a small ten inch screen and reading from it was difficult and cumbersome. Before the policies were made available in this manner, a supervisor was required to hand out relevant documents. Sometimes they would not be received.

[93] Mr McGrath rejected the assertion that the contactors in the control fuse in the Mixer Starter Panel could close and said that there was no such thing as contacts of a control fuse. He said that what was probably meant by Sydney Water's assertion was the welding together of the contacts of the contactor. Because of the design of the air gap in relation to contactors, there was no way they can weld together without human intervention. He disagreed that contactors 'have a habit' of welding together, calling this statement a 'furphy'. Moreover, a lightning strike could not weld the contactors together. Rather, a lightning strike would simply destroy the box. He could not recall this matter being put to him in the investigation process.

[94] Mr McGrath denied that the Council Meter Box could have been locked by removing the Jackson lock, placing it in the bottom of the box and then locking it with a silver lock. The only way to lock the Council Meter Box would have been to get a special lockable device from the Council.

[95] In cross examination, Mr McGrath agreed that the principle behind the LOTO procedure was that the lock out prevents other people from accessing dangerous electrical equipment and, similarly, the tag out is performed to advise people that something has been done to a particular piece of equipment. He also agreed that while he could not recall having been trained in LOTO, it did not necessarily follow that he was not trained. He said that he knew of the procedure's existence in May 2012, but 'didn't dot the i's in knowing exactly but fundamentally knew what was needed in a Lock Out/Tag Out procedure.' He had always complied with the procedure prior to May 2012.

[96] Nevertheless, Mr McGrath believed that he had complied with the LOTO procedure on 16 May 2012. Specifically, he said that he had complied with the requirement that 'All energy sources into or within a device must be 'isolated' prior to work commencing' in that he had 'isolated' every possible source that was capable of being locked. The Council Meter Panel was not capable of being locked off as someone had mistakenly put a Jackson lock on it. Locking off a device with a Jackson lock would not have complied with the procedure as it was not sufficiently secure. He agreed that he would physically have been able to access that Box.

[97] Mr McGrath agreed that if he did not turn off the power at the Council Meter Panel, then there would be an energy source leading into the Mixer Starter Panel. He agreed that the Mixer Starter Panel itself was not 'isolated'. He had pulled out the fuses in the Mixer Starter panel and put red tape across the three sockets - this was a known electrical 'isolation' process. He denied that he had only removed one fuse, but could not remember which fuse he removed first. He then tested the Mixer Starter Panel to test the 'isolation', but did not change the position of the switches in the Box. However, this was irrelevant as there was no power to the contactor. He left them in the 'on' position. He was satisfied that no power could move to the Mixer at all.

[98] Mr McGrath agreed that the LOTO procedure required him to affix a yellow tag to the 'isolation' point. In this context, he understood the 'isolation' point to mean the Meter Starter Panel box as a whole. He contended that he had tied the tag securely to the external lockable handle. He did not accept that it would have been possible for the tag to have blown off.

[99] Mr McGrath said that after he had completed the 'isolation', he was not sure where Mr Hayward had gone. However, Mr Hayward saw him filling in the tag. Mr Hayward would have said something about it if they had left the site without putting the tag on.

[100] Mr McGrath agreed that there was a requirement to let the SOC know of the work being performed, but said that this was dependent on a HSP070 being filled out correctly and the asset owner notifying the SOC through a HSG045601 of the exact nature of the 'isolation'. He could not recall seeing the FRM order from Mr Hayward and could not recall whether he had his own FRM with him that day. However, he remembered that Mr Hayward had been having trouble with his FRM.

[101] Mr McGrath said that when he returned to Reservoir WS0194 on 17 May 2012, he replaced the fuses in the Meter Starter Panel and also the supply fuses in the Council Meter Panel box. He had been told by Mr Filipic that somebody had removed the Council Meter Panel fuses. He noticed that Mr Murdoch had turned the 'isolation' switch off and had put a post-it note on the inside of the Mixer Starter Panel Box to this effect.

[102] Mr McGrath agreed that he received the letter dated 24 July (see para [2]) by hand on that date, but said that, although the letter referred to the LOTO procedure, he did not immediately refamiliarise himself with this procedure. This was because he did not have the procedure 'just sitting around'. He could not remember exactly when he first refreshed his memory of the procedure, but it was in the first period when he and Mr Hayward had been stood down. He did not read it before being interviewed by Mr Mossman or Mr Cox. He said he generally struggled with reading and that he preferred to be physically trained on something.

[103] Mr McGrath acknowledged that he lied about having pulled the 'tails' at the top of the reservoir because his knowledge of the LOTO procedure was lacking at the time. Even so, he was confident that he had 'isolated' the supply to the Mixer. The pulling of the 'tails' would have had no technical effect in addition to what he had already done. He had lied because Mr Hobart inferred to him that in order to comply with HS049, he should have pulled the tails. This was inferred through Mr Hobart's use of the words 'totally 'isolate''. He admitted he had not previously mentioned this conversation with Mr Hobart. He had lied, not because he thought that the job had been performed poorly or dangerously, but because he had been given the impression that he had not complied with the procedure. He now knew this to be false.

[104] Mr McGrath agreed that he physically could have performed the 'isolation' on the Council Meter Panel, but he would have been unable to lock that Box with his own lock as this would have been contrary to the requirements of the electricity provider.

[105] In respect to the Wiley Park matter, Mr McGrath said that he recalled being hand-delivered a letter dated 28 February 2012, requiring him to attend a meeting with Mr Cox and a HR representative in relation to the allegations made against him (see paras [58] - [61]). He could also remember receiving a letter dated 2 May 2012 (see para [59]) setting out the investigation's finding and recommending that a written warning be issued. However, he could not remember being handed a letter dated 16 May 2012, which was expressed as constituting a written warning issued after the investigation in early 2012, although he could not say for sure that he had not received it. He acknowledged being told that he was to be based at the Bondi depot and he did so.

[106] Mr Stanojevic has been employed by Sydney Water since January 1993 and is currently employed as an acting Facility Technician. He has an Electrical Trade Certificate, an Electrical Supervisor's Certificate, an Associate Diploma in Electrical Engineering and an Electrical Contractor's Licence. He is been a delegate of the Union for six years and is the current co-convenor. He also sits on the Occupational Health and Safety Committee.

[107] Mr Stanojevic deposed in his written statement that he had never worked directly with either applicant, but he knew Mr McGrath through his work as a Delegate. He regarded both applicants as honest and trustworthy.

[108] Mr Stanojevic said that he was often required to perform electrical 'isolation' on Sydney Water sites according to Sydney Water Policy. This included the use of the LOTO procedure. He has performed these duties at sewerage treatment sites, as well as water and waste water network sites. He had also encountered difficulties with the LOTO procedure, in that it does not, in itself, set out the steps which are to be carried out in order to 'isolate' particular assets.

[109] Mr Stanojevic drew particular attention to an example where the Main Switch attached to the starter cell circuit breaker at the Shellharbour Sewage Treatment Plant which, he said, had been broken due to the use of cheap plastic parts. Even if an 'isolation' lock were attached in this instance, it would still be possible to turn the switch on. He reported this issue in 2006 and was involved in the replacement of 10-12 switches in 2005-2006. However, Sydney Water continues to use these parts.

[110] Mr Stanojevic said that his own experience with Mixer Starter Panels at reservoir sites was that the lack of ability to put a lock through the main switch was an inherent problem. He annexed three photographs of a Mixer Starter Panel at Kiama which illustrated this point in that there was no hole in the switch. He said that this issue had been raised many times during toolbox meetings. He put both this problem and the problem with the Main Switch at the Shellharbour site down to poor tender specifications written up by Sydney Water. He believed this was an ongoing problem which Sydney Water did not want to spend money on to remedy.

[111] Mr Stanojevic said that after the applicants had been stood down, there was a toolbox meeting held at the Prestons Depot, convened by Mr Robert Barna (Supervisor) and Ms Jackie Carr (Northern Area Manager) on 26 July 2012, in which Mr Doug Hobart, the OH&S Representative gave a presentation on the LOTO procedure. During this meeting, Mr Stanojevic, Mr Glen Clapham, Mr Terry Brindley and Mr Ewen Young put their views that the many types of main switches and circuit breakers were problematic. Mr Brindley said words to the effect of:

'There is no provision to lock out the main switch on the Mixer panels like of other sites can. In these circumstances I remove the control fuse and/or remove the motor leads.'

Mr Hobart responded that they should try to follow the LOTO procedure as best they could. Mr Stanojevic annexed a photocopy of a diary note that purported to record, amongst other things, the presentation by Mr Hobart and fact that he spoke to 'Terry, Kinno, Barna and Nick' in the carpark about 'lock/tagout, FRM, same procedures etc.'

[112] Mr Stanojevic said that another toolbox meeting for Facility Technicians was held on 16 August 2012 at the Preston Depot. A number of employees raised the same concerns that had been raised by Mr Brindley. Ms Carr said words to the effect of: 'Continue doing LOTO the same way you have for the last twenty years.' A further diary note annexed to Mr Stanojevic's statement records this comment. Mr Hobart was also present at this toolbox meeting.

[113] Mr Stanojevic deposed that he had not performed an asset 'isolation' on a Mixer Starter Panel before, but he had performed asset 'isolations'. He said that his normal approach in this instance would be as follows:

a. Test my multimeter is working on a known power source.

c. Test to make sure the voltage is removed from the load side of the switch with my multimeter.

e. Test there is no voltage in the starter circuit with my multimeter. At this stage the asset is proven 'isolated'.

f. Attach an Out of Service tag to the main switch only because these main switches have no provision for a lock.

g. Lock the panel with a key and attach an 'Out of Service' tag to the switch or outside the box (if the box was closed and there is somewhere to attach it.'

[114] Mr Stanojevic said that he would also test the motor leads and tape them together, although he did not think that this was mandated by the LOTO procedure.

[115] In oral evidence, Mr Stanojevic said that the initial training in the LOTO procedure tools took place about ten years ago. The next refresher training occurred in July 2012, after the applicants were stood down. He could not recall being trained in the procedure in 2006. He said that the safety policies were not easily searchable on Sydney Water's intranet.

[116] Mr Stanojevic deposed that he had never performed an 'isolation' at a Council Meter Panel. It is preferable to perform the 'isolation' on the relevant Starter Control Panel. He would attach an 'out of service' tag to the outside of the Box, as it would not be visible if placed inside. In relation to the removal of the motor leads, he said that he would do this as a precautionary measure due to failures he had observed in the front of Starter Control Panels that cause the main isolator switch to turn even while locked. If it was possible to lock out the main isolator this should not be necessary.

[117] Mr Stanojevic further deposed that if he had arrived on a site and found one fuse removed and taped over in a Starter Control Panel, he would have turned it off and tagged it so as to allow him to determine what work had been done. He would not have considered removing the tape and reinstating the fuse as the tape was a sign that some work had been performed.

[118] Mr Stanojevic disagreed with the assertion that it was possible for contactors inside a fuse to weld together, and that statement may refer to contacts in a contactor. He doubted that it was possible for lightning to result in contactors welding together, as it was likely that all of the equipment inside the box would be destroyed. Otherwise, the air break between contactors can only be closed if something is physically inserted between them.

[119] In the course of his oral evidence Mr Stanojevic was shown a bundle of documents (Exhibit 6) that were said to relate to the approval of work on Reservoir WS0194. He observed that some of these documents were incomplete in that there were no signatures which indicated the assignation of responsibility. He noted that a document with a table dealing with Risk Assessment indicated that the hazard of a live electric Mixer should be dealt with by way of a site-specific plan implementing the LOTO procedure. Such a plan should have been communicated by the Project Manager to the supervisors and tradespersons who were intended to perform the work. On the form in question, this person was listed as a 'J. Pilling', but that person's responsibility was not indicated. The form did not indicate that there was no suggestion that SOC had been notified of any asset going off line. A further document showed that the person in charge of the job did not see the need for a meeting to be held with 'key players' in relation to the site specific plan.

[120] In cross examination, Mr Stanojevic agreed that he would not view the type of paperwork referred to above in his day to day work performing maintenance or repairs. He was basing his assessment on his experience on the Occupation Health and Safety Committee.

[121] Mr Stanojevic said that the fundamental principles behind the LOTO procedure were proving the 'isolation' and the notification of the 'isolation' itself, usually by way of an 'out of service' or 'Danger' tag. The lock out is to occur wherever possible as there are some facilities where it is not possible to place a lock on a piece of equipment. A note of this should be placed on the tag. He agreed that a failure to attach a tag to show that an asset was dangerous or out of service would be a fundamental failure to comply with the LOTO procedure. He said that where it was not possible to attach a lock, a tradesperson would probably make a note on the tag that a lock cannot be attached. Generally a tag should be attached to the outside of a box so that it can be seen. If it was placed inside, a person without a key to the panel would not have been able to see that the asset was out of service.

[122] Mr Stanojevic said that on arrival to a site, the first place he would go to check was the Mixer Starter Panel to establish if it had supply, if any control fuses had been blown and then he would work methodically back from that. When asked why he would not remove power from the Mixer Starter Panel by working on the Council Meter Panel, Mr Stanojevic replied:

'Like I said, we don't do an 'isolation' - we don't go back to taking the whole thing off. You would do it again at the 'isolation' - we don't go back to taking the whole thing off. You would do it again at the isolator. It is where you 'isolate' your three phase supply. That is what it - on the board it says is a main isolator and that's where you affix all your locks and your tags. That's what the LOTO procedure refers to. ... You 'isolate' the load side of the main isolator. We don't 'isolate' the line side of a main isolator, otherwise you'd be taking a lot of equipment offline. We don't go back to, like, a main switchboard that has, you know, 20 or 30 panels on it to 'isolate' that particular one; so you will find that on the line side you have power still, on the load side is what you are taking all sources of energy off.'

[123] On being shown a photograph of the Mixer Starter Panel with three fuses, Mr Stanojevic said that in 'isolating' the asset, he would 'probably' pull all three out, although you could probably just pull the 24 volt control fuse. Having taken out the fuses, he also would probably have turned off the main 'isolator' switch.

[124] In re-examination, Mr Stanojevic said that if the 'isolator' switch iss left on but the control fuse is removed, the equipment would be safe unless somebody went into the panel to force the equipment. There was not much risk of the electricity getting to the Mixer Motor. This was because the three phase isolator only supplies the line side voltage, while the control circuit is what engages all the mechanisms, relays and switches through the circuit. On being shown a photograph of the Mixer Starter Panel, Mr Stanojevic said that he would put a tag around the lockable handle using a cable tie.

[125] Mr Young is 66 years old and has been employed by Sydney Water for 37 years. He is a Level 4 Electrician. While he understood that he was a Controls Technician, he noted that Sydney Water does not appear to use that term anymore. His work is comprised entirely of field work at different sites, on sewage pumping stations, water pumping stations, water reservoirs and valve chambers.

[126] In his written statement, Mr Young said that he had known both applicants for over twenty years and that he had worked with them directly on a number of occasions. He said that he had a good rapport with Mr McGrath and regarded him as someone who is honest, as possessing a great work ethic and as someone who would follow safety procedures. He also regarded Mr Hayward as honest and as being 'one of the safest employees I have ever worked with at Sydney Water.' His opinion was that there would be no problems at work if the applicants were reinstated. Mr Young deposed that although he was not directly aware as to why Mr Hayward and Mr McGrath had been terminated, he understood that their terminations flowed from work on a Mixer at a reservoir in Yagoona, New South Wales.

[127] Mr Young recalled that he had been trained in the LOTO procedure in or around 2000, but could not remember the details of that training and he had not been trained again since then. A few years later, staff were issued with personalised locks. He could not recall being given a copy of the LOTO procedure and had not read it, in full, until early 2012 when a problem had occurred in its application. On reading it, he noticed that it required that he be retrained in the procedure every two years.

[128] Mr Young explained that the above problem had arisen at a pumping station in Drummoyne, New South Wales when, in the course of a job, he crossed out the name of another person on a tag and wrote his own name on it. Mr Cox had explained to him that he should have used his own tag and offered him further training in the LOTO procedure. This training had not occurred. Mr Young was not told that he could be terminated for a breach of the LOTO procedure at this time, or any other time. He was not aware of any other employees being warned for not following the LOTO procedure.

[129] Mr Young said that many of the assets which Sydney Water staff worked on and which would be subject to the LOTO procedure, were incapable of having tags or locks attached to them. This issue had been brought up at a number of toolbox meetings. He remembered a specific toolbox meeting held at the Prestons depot after the applicants had been stood down at which a number of employees drew attention to these issues. At this meeting was Ms Jackie Carr (Team Manager) and Mr Barna (Supervisor), along with a number of Sydney Water employees. Mr Hobart, as Safety Officer, may have been at this meeting, but he was not sure. The employees were told by the managers that they should lock out 'where they could'. He also recalled one of them saying that they should continue doing what they had been doing.

[130] Mr Young noted that he had performed an 'isolation' on a Mixer on a number of occasions. He said that the LOTO procedure did not prescribe the exact steps to be taken by the person performing the 'isolation' - this is left to the interpretation of that person. He had never been trained on the specific steps to be taken under the LOTO procedure. It does not mandate as to whether the Council Meter Panel or the Mixer Starter Panel is to be 'isolated'. He was aware that different employees take different approaches. He noted that the Council Meter Panel could not be satisfactorily locked out as it can be accessed by non-Sydney Water personnel.

[131] Mr Young described his own procedure in 'isolating' a Mixer Motor as follows:

'I would normally 'isolate' both the fuses at the distribution board and the control fuses at the Mixer Starter Panel. However I can understand an employee working under our LOTO procedure only 'isolating' the control fuses in the Mixer Starter Panel. If the control fuses are removed then power cannot be switched to the Mixer.'

[132] In oral evidence, Mr Young said that the last time he had undergone training in the LOTO procedure was 'quite a while ago' and he could not recall it being as recent as August 2006. However, it could have been. He could not recall what was said at this training. As a field worker, he did not really have access to computers to be able to examine procedure, unless at a depot, and he often forgot to do so. He could not recall being given a copy of the procedure prior to May 2012. Mr Young said that the LOTO procedure does not tell an electrician where to make an 'isolation', as every site is different.

[133] Mr Young deposed that he had been to work at Reservoir WS0194 himself two or three times, but not to perform work similar to the applicants. He disagreed with an assertion that in order to 'isolate' the Mixer, three fuses should be pulled from the Council Meter Panel. This was because he could not put a lock on it, as the energy supplier needed to have access. This meant it could not be locked out.

[134] In relation to the Mixer Starter Panel, Mr Young said that in order to 'isolate' the Mixer, you could pull out all three fuses, or you could pull the 24 volt fuse which is the supply to the contactor. This would be sufficient. Mr Young said that he could not attach a lock to the Mixer Starter Panel box. The LOTO procedure provided that the 'isolation' lock should be attached 'if possible'. It was not necessary to take the motor leads ('tails') out, as he had proven that there was no voltage moving through the contactor. Mr Young deposed that he would not replace a fuse in a situation where he had arrived on site to find an untagged Mixer Starter Panel with the control fuse removed, until he had determined what work had been performed and what the situation was.

[135] Mr Young did not understand what was meant by an assertion that 'contactors inside the fuses' could weld together. A contactor was a device in itself that was entirely separate to a fuse. There was no risk of a contactor welding together if the fuses had been removed. If lightning had hit the Box, the Box would have been destroyed. He had seen this happen. There was no part of an 'isolation' procedure that could protect against lightning anyway.

[136] Mr Young recalled that he had been interviewed about the decommissioned Wiley Park site. The interview focused on why he used the site and why he had left a vehicle report book there. At the end, he was told that there was no case to answer, but something would still go on his record.

[137] In cross-examination, Mr Young said that he had come across contactors that had welded together, but only in circumstances where the contact is already made, in a closed position. It was not possible for the contactors to weld closed where the fuses were removed.

[138] Mr Young agreed that it was physically possible to pull the fuses out of the Council Meter Panel. However, he would not do this because he would not have been able to lock it to his satisfaction and therefore he would deem this to be unsafe. He was not aware of the processes that the energy authorities undertake to access their facilities on site.

[139] Mr Young disputed that working on the Mixer Starter Panel while energy was flowing into it, violated the LOTO procedure which says that energy sources should be 'isolated' prior to commencing work on a device. Electricians are aware of what circuits and wires are 'live'. He agreed that pulling the motor leads from the Mixer at the top of the reservoir would have completely eliminated the risk. While the overriding purpose of the LOTO procedure may have been the total elimination, rather than control of risk, the LOTO procedure merely states that all energy to the device, in this case the Mixer, must be isolated'. He added that if the job in question had been done by way of pulling the 24 volt control fuse, taping over the fuse socket, placing the fuse at the bottom of the Panel Box and left with no tags, he would not describe that as a job done properly.

[140] Mr Young agreed that the LOTO procedure normally required the worker to ring the SOC prior to starting the job and to call them after it was completed. This was normal procedure. This was something that an experienced Sydney Water electrician should know.

[141] Mr Young said that he was not aware that the applicants had lied during the course of the investigation and was surprised to learn that this was the case.

[142] In re-examination, Mr Young said that he understood the word 'work' in relation to the LOTO procedure requirement that no work should occur on a 'live' device, referred to work of the person fixing the Mixer.

[143] Mr Young said that normally contact with the SOC occurred in the context of arriving on site to fix a breakdown. On an 'isolation' job, an electrician should have been given an OCR. This is generated by the person or manager wanting the job done. Normally, SOC would be aware of the job prior to the person requesting to perform an 'isolation' arrived to start work.

[144] Mr Whelan is 38 years old and has been employed by Sydney Water for 13 years. He is trade qualified and has a Certificate 4 in Electrical Instrumentation. He is an Acting Maintenance Supervisor in MED, and was previously a Level 4 Electrician.

[145] In his written statement, Mr Whelan said that he had known the applicants for approximately eight years. He had worked alongside both of them as part of a two person team. He had worked more with Mr McGrath. He had never seen either applicant work unsafely and had never heard of either of them acting dishonestly. He spoke highly of their experience and work ethic. He not only believed that there would be no problems if the applicants were reinstated, but thought it would actually lift overall morale and productivity of employees.

[146] Mr Whelan deposed that he had been told that the applicants had been terminated for failing to follow the LOTO procedure when isolating a Mixer in Yagoona. He was not aware of what element of the LOTO procedure the applicants were alleged not to have followed.

[147] Mr Whelan estimated that the LOTO procedure was introduced in 2003. In fact, he had been on the working group that put it together. He could not remember when he had last been formally trained on the LOTO procedure, but thought that it was at least 5-6 years earlier.

[148] Mr Whelan explained that the LOTO procedure does not prescribe the steps that are required in 'isolating' the device. In his experience, Sydney Water has enforced the procedure in a 'common-sense' manner. He was aware that some employees at sewage treatment plants had forgotten to attach personal and/or operational locks. These failures had been dealt with at the local level and not by way of a formal disciplinary procedure. He believed that a single breach could result in the employee being subject to a warning and undergoing further training. He had never been told that an employee could be terminated for a single breach of the procedure. He was not aware of any employee being formally disciplined for failing to follow the procedure prior to May 2012.

[149] Mr Whelan was aware of a problem with the LOTO procedure in that some pieces of equipment were incapable of having a lock physically attached to them. This issue was raised when the LOTO procedure was first developed. He could not recall the answer that was given. He thought that the procedure required that a lock be attached, wherever possible.

[150] Mr Whelan said that he had 'isolated' a Mixer at a reservoir five or six times. He described his 'usual' procedure as follows:

a. Turn off the switch at the Mixer Starter Panel;

b. Remove the motor line and control fuses in the Starter Panel;

e. Fill out a tag and attach it to the outside of the box which houses the Panel with electrical tape, string or wire.'

[151] He would not have performed any work on the Council Meter Panel because it is not Sydney Water's equipment and non-Sydney Water personnel may require access to it. He did not think that he had any authority to work on it. He would not have pulled the motor leads as it was not required by the procedure. He was aware that other employees tape over fuse sockets after the removal of the fuses, but it was not something that he would usually do.

[152] In oral evidence, Mr Whelan said that in view of what had occurred with the applicants, he had read the LOTO procedure a few times in the recent past. It was easily accessed on Sydney Water's network or available at the sewage treatment plant or at a depot. It was also available on his FRM. He did not dispute the assertion by Mr Hobart that he had attended training on the LOTO procedure in 2006. However, he understood that he was to be trained in the LOTO procedure every two years. He agreed that Sydney Water had him attend other mandatory training every year, but did not think that this was properly reflected in Sydney Water's records.

[153] Mr Whelan accepted that the LOTO procedure had been mentioned during toolbox meeting prior to May 2012. This was usually in the form of 'Remember to follow LOTO procedures. Is everyone comfortable with the LOTO procedures? Any issues?' He had conducted LOTO training in his new capacity as a supervisor in June 2012 by way of a powerpoint presentation.

[154] Mr Whelan said that he had had employees raise complaints with him in relation to mechanical employees not following the LOTO procedure, but these had been dealt with at a local level. He was not fully aware of the reasons for the applicants' dismissals.

[155] Mr Whelan deposed that he had not been to the reservoir in question, but he had 'isolated' a Mixer in the past. He would not have removed the fuses from the Council Meter Panel box as too many different contractors have access to that panel. The asset in question was probably an asset with mixed ownership, between Sydney Water and a power supplier such as Energy Australia or Integral Energy. His own preference would have been to 'isolate' at the Mixer Starter Panel. Additionally, he would have placed his tag on the Mixer Starter panel on the outside of the box, so everyone could see it.

[156] In relation to the Mixer Starter Panel, Mr Whelan said that he would have removed the 24 Volt fuse as well as the 415 transformer fuse. He would then have made sure that the main switch was off. He would then test with his multimeter to prove it was in a working condition. He would then test the motor leads at both the bottom and top to prove it de-energised. He would then attach a tag to the outside of the box with electrical tape or wire. He agreed that you could also place tags on the panel inside the Box.

[157] Mr Whelan said that he would not have removed the motor leads unless he was removing the Mixer itself. This would be an unnecessary extra step after the device was proved de-energised. He did not think there was any risk of energy moving to the Mixer Motor where only the control fuse was removed and the transformer fuses were left in place.

[158] Mr Whelan said that the only way a contactor could weld shut was if it was forced into an energised state by physically pushing the contactor in. Lightning would destroy the Box before contactors could weld together.

[159] Mr Whelan said that there was nowhere to place a lock on the Mixer Starter Panel and that it was only accessible by means of a special key.

[160] In cross-examination, Mr Whelan said that if a person from the energy supplier had come on site and seen the appropriate tags on the Council Meter Panel, they would have understood that work had been performed on the device and they would be able to call the phone number left on the tag.

[161] Mr Whelan said that he was unaware of the applicants lying during the investigation. He believed that if Mr McGrath had lied, this was in the context of the possibility of losing his livelihood.

[162] Mr Whelan agreed that you can 'isolate' power from the Mixer by pulling the motor leads. However, this was not something that he would normally do. Additionally, he would consider placing a tag on the inside of the Mixer Starter Panel Box as well as on the outside, but he did not see it as necessary on every occasion. In circumstances where the tag was exposed to the elements, he would use a weatherproof tag and attach it in such a way that it was harder to remove. Mr Whelan agreed that you could also tape the fuses to the bottom of the box once removed.

[163] Mr Filipic appeared in this matter in response to a summons. In oral testimony, he said that he had been working as a 'floating' Supervisor for Sydney Water for the last two years. He had been the supervisor of both of the applicants from July 11, 2011 up to the time of the incident that resulted in their dismissals. Mr Filipic said that he had known Mr McGrath and Mr Hayward for most of the time that he had worked at Sydney Water. However, he had never worked with either of them directly, apart from the 'odd job on standby'. Mr Filipic said that he had not known either of the applicants to work unsafely. He understood that they had been terminated due to 'an issue with the 'isolation' LOTO' at Reservoir WS0194.

[164] Mr Filipic said that he had become aware of the work to be performed on 16 May 2012 when he had received an email requesting the 'isolation' of the Mixer and a check for cathodic protection from a person from the diving team in Sydney Water. He understood that the divers were to go out on the reservoir on a raft to inspect the roof. Accordingly, he notified Mr Hayward and Mr Young of the job to be performed. As Mr Young had called in sick, he rang Mr McGrath to assist Mr Hayward.

[165] Mr Filipic said that he had seen Mr Hayward at the Daceyville Depot after the job had been performed. He could not fully recall what they had discussed. It was possible that they had discussed the 'isolation' job. He had had discussions about the issues that Mr Hayward had been having with his FRM and, on reflection, he thought that that must have been at the time they met at the Daceyville Depot. He had advised him to carry out risk assessments on paper in these instances.

[166] Mr Filipic said that on 17 May 2012, he received a call from the Project Manager on site at Reservoir WS0194, asking if the 'isolation' had been carried out. He could not recall the name of this person or what particular department he worked for. He decided to go out to the site to see for himself. He arrived there at approximately 9:00am.

[167] Mr Filipic said that, on arriving at the site, he identified the Mixer Starter Panel Box and saw that it was locked. He and the Project Manager were unable to find a key and were therefore unable to access the box. He rang Mr Hayward, who was with Mr McGrath, to ask if the 'isolation' had been carried out. Mr Hayward put Mr McGrath on speaker, who said that it had been carried out, although he did not outline the steps taken. Mr McGrath said that he had the key for the Mixer Starter Panel box in his pocket.

[168] Mr Filipic said that he removed the three phase supply fuses from the Council Meter Panel. He was not sure if this was strictly necessary, but he was 'extra safety conscious'. Mr Filipic said that he had not locked or tagged anything after the work he had carried out because he had not carried out an 'isolation'. This had already been 'completed and verified'. His actions were merely an additional precautionary measure. If he were to have performed the 'isolation', in order to comply with the LOTO procedure, he would have removed the three fuses, and perhaps removed the wires out of the contactor in the starter in the Mixer Starter Panel. As a result, there would be no need to remove the motor leads at the top of the reservoir. In his personal view, he saw this as fully removing the source of the supply, as required under the LOTO procedure. He did not think that removing only the control fuse from the Mixer Starter Panel was good practice. He preferred to see a bigger air gap break. He agreed that the possibility of electricity getting to the Mixer Motor once the control fuse had been removed was 'very minimal'. It would require mechanical force.

[169] Mr Filipic said that he had been trained on the LOTO procedure at some time, but could not recall when. He said that there was a discussion of it at a toolbox meeting shortly after this incident. It had been referred to in a general sense prior to this time, simply in the form of reminding workers to comply with it. He could not recall Mr Cox or Mr Hobart attending any toolbox meetings. He thought he could recall Mr Hayward bringing up the lack of ability to lock at some sites. He had replied that in these instances, the wires coming out of the starter should be disconnected as an extra safety measure.

[170] Mr Filipic's understanding was that in order to comply with the LOTO procedure, a tag must be fixed at the 'isolation' point. In this case, he would have affixed it to the inside of the Mixer Starter Panel Box. He may have attached a note or another tag to the outside in order to notify non-Sydney Water staff. In terms of locking, Mr Filipic would use what was available. He noted that he would not have been able to attach a silver lock to the Mixer Starter Panel.

[171] Mr Filipic explained that where someone was going to do an 'isolation' job, they should first call the SOC to tell them what they were proposing to do. He also said an OCR should have been forwarded to SOC at a time coinciding with the job, so it should be completed prior to the workers arriving on site.

[172] Mr Filipic said that a few weeks or a month after the incident, Mr Cox told him that the applicants were under investigation in relation to the work they had carried out on 16 May 2012. He was then interviewed by Mr Cox. He could not recall if he had been asked about the FRM. He also could not recall whether he had been asked if the Mixer had been 'isolated'.

[173] Mr Filipic said that he was aware of situations where a contactor could 'weld in', but said that this only occurred while it was in operation. He could not say what would happen in the event that the fuses were removed or lightning hit the Box.

[174] Mr Barna also appeared in answer to a summons. He has been employed by Sydney Water for twenty years and has been working in the role of Supervisor for the last thirteen months. He has known the applicants throughout this time. In oral testimony, he said that he had a good relationship with them and had not observed them working unsafely. He was aware that they were alleged not to have followed the LOTO procedure, but was unaware of the specifics. He said that he had 'had a three-minute phone call to deal with the whole situation and then whatever was happened, I was totally circumnavigated'.

[175] Mr Barna said that he had spoken to Mr Murdoch at about 7:30am on 16 May 2012. There was a job for a Mixer having failed. Mr Murdoch had gone to the site and called him to say that the Mixer had been 'isolated' by way having a fuse pulled. He could not recall as to whether Mr Murdoch had said anything about tags or locks.

[176] On closer investigation, he found that there had been a job created for that site for an 'isolation' and that this job had been carried out by the applicants. He told Mr Murdoch that a job had been created for an 'isolation'. He thought that he had 'more than likely' told him who had carried out the job. They agreed they would both call the SOC to tell them why the Mixer was offline. He did not call the applicants as he was not their supervisor. He could not recall reporting the matter to Mr Cox. The next time that he discussed the matter with anyone was when the applicants were dismissed.

[177] Mr Barna said that he had attended toolbox meetings in his capacity as Supervisor and in August or September of 2012 and had organised an OH&S manager to run briefings on the LOTO procedure over approximately two hours in each session. This was done so as to clarify the LOTO procedure after 'what had happened'. There were a lot of questions asked and he could remember Mr Hobart saying, 'just try and follow the LOTO procedure as best you can'. He also recalled Ms Carr saying, 'Continue doing LOTO the same way you have for the last twenty years.'

[178] In cross examination, Mr Barna agreed that on being called by Mr Murdoch and told that power was flowing to the Mixer Starter Panel, and a fuse had been removed from it, he had looked up the Maximo system, which creates jobs. He then told Mr Murdoch that there had been a job issued for an 'isolation' and Mr Murdoch said he would call SOC.

[179] Mr Murdoch has been an employee of Sydney Water for 28 years. He has been carrying out the duties of his current position, as Electrical Fitter Mechanic, for 24 of those years. In his written statement, he said that he had known Mr Hayward for about 25 years and Mr McGrath for about 26 years. However, he had had a 'falling out' with Mr Hayward due to his choice to participate in a 'Facility Technician' trial, rather than remaining with the 'brotherhood' of MED technicians.

[180] Mr Murdoch stated that he had been formally trained in the LOTO procedure in 2004 and again in 2006. The procedure had also been 'formally discussed, reviewed and reemphasised' at toolbox meetings approximately every six months.

[181] Mr Murdoch deposed that on the morning of 17 May 2012, he was required to attend Reservoir WS0194 as a breakdown had been reported. On arriving, he called SOC, performed a risk assessment on his FRM and completed the SWMS. He observed that the Mixer Starter Panel Box did not have a tag or string attached to the handle. On opening it, he observed that the control switch was in the auto position, but the light was off, indicating that it was not running. There was no tag on the panel itself. He then opened the control panel cabinet door to look at the Mixer Starter Panel and observed that the 24V control fuse had been removed, with the socket covered with thin black electrical tape. There was no tag on the actual Mixer Starter Panel.

[182] Mr Murdoch then went back to the Council Meter Panel Box and observed that the three phases remained intact. He was of the opinion that he could fix the fault by reinstating the control fuse in the Mixer Starter Panel as there was energy still flowing into it. However, he was not sure what had occurred. It looked like a partial 'isolation', but there were no 'out of service' tags attached. He would have expected to have found the three fuses in the Council Meter Panel removed and the Panel Box locked, if the reservoir was to be 'isolated'.

[183] Mr Murdoch said that rather than restoring power by replacing the control fuse, he decided to call Mr Barna, his Supervisor, to explain the situation. He asked him:

'Do you know of any work that has been done previously here? Because we've got power to this starter but there is a fuse missing, it's nowhere to be found. And the Mixer is still switched on.'

Mr Barna looked up Maximo and found that there was a job issued to 'isolate' the Mixer to allow divers to enter the reservoir the next day. Mr Murdoch told him there was a missing fuse and he was unsure whether the job had been completed. He suggested calling SOC to explain the situation. He spoke to 'John' at SOC to explain what he had found at the site and that there was a job in Maximo for an 'isolation' to be performed. 'John' said that he was unaware of the 'isolation' job. Mr Murdoch said that when the call had ended, a Civil Maintenance man arrived on site. He presumed that he was there to complete the 'isolation' of the reservoir. The man said that he had just been told to turn up and was not sure what was going on. Mr Murdoch left a post-it note on the Mixer Starter Panel which said 'Please use LOTO procedures' and left the site.

[184] Later that morning, Mr Murdoch made a report of his visit in the system. He quoted an FRM/Maximo Report annexed to Mr McGrath's written statement:

'FOUND CONTROL FUSE REMOVED IN MIXER CIRCUIT AND CONTROL SWITCHES LEFT ON. NO TAG LEFT ON SITE. MIXER HAD BEEN ISOLATED FOR DIVERS BUT NO NOTIFICATION GIVEN TO SOC. REPORTED FINDINGS TO SOC OPERATOR.'

Mr Murdoch also made a File Note of what he had found, possibly at the request of Mr Cox.

[185] Mr Murdoch deposed that on his way to another site, he called Mr Hobart to tell him that he had found the reservoir had not been properly 'isolated', that divers were due to go in that day and that SOC had not been notified. He said that the control fuse had been pulled. Mr Hobart agreed to go and look at the site. Mr Hobart called him back later that morning to say that he did not have a key for the Mixer Starter Panel. Mr Murdoch replied that he had one and offered to return, but Mr Hobart said that this was unnecessary and that he would have 'a look around'.

[186] Some time later, he was called by Mr Cox to discuss what he had found at the site on 17 May 2012. He also had a further meeting with Mr Hobart and Mr Cox to discuss the incident and attended the site with Mr Hobart to demonstrate what he had found.

[187] Mr Murdoch attended Reservoir WS0194 with Mr Cox, Mr Mossman, Mr Filipic and Mr Hobart to reconstruct the conditions he had found on 17 May 2012. Mr Mossman asked him how he would have performed the 'isolation'. He replied as follows:

'I would have gone to the back panel [Council Meter Panel Box] and pull [sic] the fuse cartridges at the supply and prove the starter de-energised. I would then put an 'out of service' tag across the fuses. I would also lock-out the supply box by removing the Jackson lock and replaced [sic] it with an electrical silver lock.'

[188] Mr Murdoch said that on the same site visit, Mossman asked him whether it was possible to perform an 'isolation' at the point of the panel at the top of the reservoir. He replied:

'Yes, you could remove the tails from the electrical connection and turn the 'isolation' switch in the panel. You generally wouldn't do that though unless there was a fitter there working on the Mixer for its removal.'

[189] Mr Murdoch claimed that he had not known that the 'isolation' work done on 16 May 2012 had been performed by Mr Hayward and/or Mr McGrath at the time that he first attended the reservoir.

[190] In cross-examination, Mr Murdoch agreed that as a Facility Technician he worked on his own and that he had previously worked as part of a two person team. On 14 March 2012, he was working as the only electrician with two other fitters at a Sewage Pumping Station in Alexandria. On that occasion, he had 'isolated' the pumps on his own. He did not think that he required another electrician to be present to perform this work safely, as he had conducted his hazard risk assessment under the SWMS that was preferred. Subsequent to this, he and Mr Hayward had had a disagreement as to Mr Murdoch's preference to become a Facility Technician, despite Union opposition to the creation of this position.

[191] Mr Murdoch said that he was aware of the outsourcing and restructuring that Sydney Water was undertaking and that part of this restructure was the creation of a role known as Facility Technician. He was currently working in this role on a trial basis. Mr Murdoch hoped to obtain one of the Facility Technician positions once the trial was over. He said that he had applied for one of two Supervisor positions being created in that area. He denied that this was an incentive which was influencing his evidence in favour of Sydney Water.

[192] Mr Murdoch denied that he had failed to follow proper safety procedures and said that he could not recall precisely which SWMS he had been working under, but thought that it was E007. He rejected the suggestions that he was either working contrary to the SWMS or was working under a SWMS which was not approved.

[193] Mr Murdoch believed that the Council Meter Panels were owned by Sydney Water. It was possible that electrical companies needed access to that Box to check the meter. He agreed that it would be unusual for this box to be locked by a Sydney Water lock, due to the need for access by other parties.

[194] Mr Murdoch said that on arriving on site at Reservoir WS0194 on 17 May 2012, he had spent a 'couple of minutes' looking to see if a tag had fallen on the ground. He used his 'L and F' key to open the Box, which is a key that Sydney Water electricians, fitters and Transfield contractors have. Mr Murdoch disagreed that the fuse socket was covered with red tape and said that it was definitely black. He denied that it was common practice to put tape over fuse sockets and said that he had not seen other electricians do this 'for a very long time'. He accepted that, having seen the tape, he would not have reinstated the fuse, without making further enquiries. Mr Murdoch accepted that Mr Barna had found the 'isolation' job in Maximo, a facility that he also would have had access to through his FRM.

[195] Mr Murdoch acknowledged that the job which had been allocated to the applicants was to 'isolate' the Mixer Motor from electricity. However, the Mixer Motor and the Mixer Starter Panel are one and the same in the same circuit. In order to remove all sources of energy, as required by the LOTO procedure, it would be necessary to remove the three fuses from the Council Meter Panel. However, he conceded that the LOTO procedure did not say what specific steps should be taken to achieve such a result. He agreed that it was up to the discretion and training of the electrician. Regardless, Mr Murdoch said that he would pull all three fuses as an extra safety precaution.

[196] Nevertheless, Mr Murdoch conceded that there was no power flowing to the Mixer and the contactor was not energised. However, he did not consider what had been done to be an 'isolation', at least in accordance with the LOTO procedure. However, he said that he could not envisage every circumstance and anything could happen. He thought it was possible that a lightning strike could weld the contactor together. He had seen a contactor weld together, but had never seen or heard of a de-energised contactor welding together without human intervention. He said that there was nothing to stop anyone getting a fuse cartridge, placing it in the panel and powering it up, as no LOTO procedures had been followed. Additionally, SOC had not been notified. He agreed, however, that the tape placed over the fuse socket made him 'question' what had been done. He could not speak for the actions of other tradespeople and suggested that if three fuses had been pulled and taped over, this would make people less likely to replace the fuses.

[197] Mr Murdoch could not recall if Mr Barna had mentioned that the applicants had carried out the job, but conceded that there was a possibility that he had mentioned it. He also agreed that he had the ability to look up the job on Maximo to see who had done the job, but he did not recall doing so. He also did not recall saying to Mr Cox that he did not want the incident 'raised under his name', but did not deny it. He said that he did not want to be victimised by people who disagreed with the actions that he had taken. He had been worried about the impression the applicants may have formed from his account of the incident after his discussion with Mr Cox.

[198] Mr Murdoch agreed that the usual process for an 'isolation' job would be for an OCR to be filed, meaning that SOC would usually be aware of the job being performed before it occurred. Accordingly, when an electrician calls SOC once they are on site, the SOC is usually already aware of the job. In this case, SOC was not aware of the job. He said he had been told by 'John' at SOC that there was no OCR created for the job.

[199] Mr Murdoch said that on leaving the site, he was concerned about the safety implications of what he had discovered. As for the effectiveness of a post-it note as a safety measure, he said that he did not know who to phone and that he had agreed with Mr Barna to get into contact with SOC. Accordingly, he had no reason to find out who had performed the work and get in contact with them. At that time, he was unaware of what stage the 'isolation' was up to and just thought the post-it note may have been useful in communicating with whoever was working on the panel.

[200] Mr Murdoch rejected the proposition that he had left an unsafe asset, as he had tested it and proved it de-energised. The serious safety implications flowed from the fact that the LOTO procedure was not followed. In order to make the divers aware of the issues, he had spoken to Mr Barna, the SOC and Mr Hobart. He agreed that he did not speak to the people who were to do the job, as he believed there was no power going to the Mixer. He acknowledged that he had reported the Mixer as 'isolated'. Mr Murdoch further agreed that locking the box with a lockable handle would sufficiently comply with the LOTO procedure where there was no place to use a lock on a panel.

[201] Mr Murdoch initially said that he had not been trained in the LOTO procedure since 2006. However,it was mentioned in toolbox training, although he could not recall when this had occurred prior to May 2012. He later said that he had had training for his High Voltage accreditation by a third party which was 'in alignment' with the LOTO procedure. He believed that the 're-emphasis' of the LOTO procedure in toolbox meetings constituted training.

[202] Mr Hobart has been employed by Sydney Water for 32 years. He completed an electrical apprenticeship with Sydney Water, and worked as an electrician, and then in various supervisory roles. He has been employed as a Workplace Health and Safety Coordinator since 2003. He is responsible for dealing with OH&S issues for the Operations Division, which includes MED. Mr Hobart said in his written statement that he was aware of the significant legal safety obligations that Sydney Water was obliged to work under and said that Sydney Water took them seriously. He noted in particular the requirement under the Work Health and Safety Act 2011 (NSW), that risks be eliminated insofar as reasonably practical (s 17). His role involved assisting in formulating and reviewing Sydney Water health and safety policies and procedures and in the coordination of training modules. He emphasised that all staff attend mandatory annual training on occupational health and safety issues.

[203] Mr Hobart said that he has known Mr McGrath for approximately 30 years and had worked with him at Riverstone Sewage Treatment Plant when it was being built. He has also known Mr Hayward for some time; but has never worked with him. He provided copies of the training records of the applicants, to demonstrate they had been subject to formal training in the LOTO procedure in December 2004 and August 2006.

[204] Mr Hobart said that the relevant Sydney Water safety policies in this matter included the following:

a) The Sydney Water Health and Safety Policy, current at 16 August 2012;

b) Hazard Identification and Risk Assessment procedure ('HIDRA'), current at 28 June 2007;

c) Guide for Safe 'isolation' of Assets or Equipment, current at 15 April 2011;

d) Electrical Safety procedure current at 21 December 2009; and

Further to this, MED also uses Safe Work Method Statements, including:

b) De-energizing, Energizing & Commissioning Electrical Circuits (MEM0014 E01)

[205] Mr Hobart deposed that the fundamental position of Sydney Water in relation to electricity is that no electrical work is to be performed 'live'. Accordingly, all electrical power must be 'isolated' from the source. Under the Electrical Safety procedure, all equipment is assumed to be 'live' until it is proved de-energised and ''isolated' from all sources of current and voltage'.

[206] Mr Hobart drew attention to the following specific sections of the LOTO procedure:

a. '... the isolation and lockout and tagout (LOTO) of plant or equipment from all sources of motive power, stored energy ... prior to any work being carried out' (section 1);

b. 'It includes the means for effective isolation, padlocking, tagging, testing and reconnection' (section 1);

c. 'all energy sources into or within a device must be isolated prior to work commencing' (section 2);

d. 'all 'isolations' must have appropriate tag applied at each isolation point' (section 2);

e. 'wherever possible each isolation point must be locked out as well as tagged' (section 2); and

f. 'attach a yellow "out of service" tag to the 'isolation' points' (section 3).

[207] Mr Hobart said that LOTO procedure is well known in the electrical industry. Mr Hobart drew attention to the following definitions under section 5 of Sydney Water's LOTO procedure:

The process of physically locking a piece of plant or equipment with stored power or energy so that it can not be operated.

The official written warning to others not to operate or tamper with equipment.

Putting an effective barrier in place between the energy source and the work and also removing any residual energy that may affect the work.

[208] Mr Hobart claimed that he has heard supervisors and managers remind employees of the LOTO procedure at toolbox meetings. He denied that MED had raised concerns with him about the inability to place locks to 'isolation' points on certain assets. He also drew attention to the fact that the LOTO procedure states that equipment should be locked out, wherever possible.

[209] Mr Hobart deposed that on 17 May 2012, he was contacted by Mr Murdoch. Their conversation was in words to the effect of the following:

I have just been on a job where presumably an electrical 'isolation' was supposed to have taken place. I could find no lock out or tag and the control fuse had been removed and with some electrical tape on it. What do I do?

Thanks for informing me, you will need to call your supervisor Rob Barna and let him know.

[210] Mr Hobart said that it was understood that two MED staff had been instructed to perform an 'isolation' of the Mixer at Reservoir WS0194. He outlined two ways that the 'isolation' job could have been carried out in accordance with proper 'isolation' procedure. The first was as follows: SOC should have been notified that an 'isolation' was to be performed so that they would be aware the Mixer would be offline. He stressed that in order to eliminate or 'isolate' power to the Mixer, three fuses should be removed from the Council Meter Panel. This would mean that the Mixer was 'isolated from all sources of current and voltage and that there would be an 'effective isolation'. After this had been done, SOC should have been renotified again. He noted that the Council Meter Panel was secured with a 'Jackson' lock and that all MED employees have a key to such a lock.

[211] Mr Hobart explained that the second 'control' procedure was satisfactory, but not ideal. He described it as follows: Three fuses should have been removed from the Mixer Starter Panel (the two 415V fuses and the 24V fuse) and the 'tails' should have been pulled to ensure that no circuit could operate. A tag should then have been attached to the screws that close the panel door and the starter switch should have been in the 'off' position. On the description and subsequent demonstration by Mr Murdoch, neither of these two procedures had been carried out.

[212] Some time after 17 May 2012, Mr Hobart received phone calls from Mr Mossman and Mr Cox. Shortly afterwards, he participated in a meeting at the St Mary's depot with Mr Cox and Mr Murdoch. At this meeting, Mr Murdoch explained what he had found at Reservoir WS0194 on 17 May 2012. He said that he had found the Council Meter Panel locked and, on opening it, found that fuses 2A, 2B & 2C were still connected and operational. The Mixer Starter Panel was locked at the handle. On opening it, he found that the 24V control fuse had been removed and electrical tape had been placed over the holder. There were no locks or tags attached. Mr Hobart said that after hearing Mr Murdoch's report, it was agreed that this was an incident which would need to be placed on Sydney Water's Incident Reporting System (IRS).

[213] Mr Hobart said that either on the day of the meeting with Mr Cox or on the day after, he, Mr Murdoch, Mr Cox and Mr Filipic participated in a site inspection at Reservoir WS0194. He said that he did not see an 'out of service' tag tied to the handle of the Mixer Starter Panel or any string tied to the panel. Mr Murdoch demonstrated that he had found the Council Meter Panel locked, and, on unlocking it, found that the three fuses 2A, 2B and 2C were connected and supplying power to the Mixer Starter Panel. The Mixer Starter Panel Box was locked at the handle. Mr Murdoch opened it and adjusted the Panel to demonstrate what he had found on the day. The controls were configured in their usual operational mode, rather than 'isolation'. He also went behind the Mixer Starter Panel controls to show the electrical components and explained that he discovered that one fuse, the control fuse, had been removed and the socket had been taped over.

[214] Mr Hobart deposed that subsequent to this demonstration, he had a conversation with Mr Cox in which he told him that this was not an 'isolation' in accordance with the LOTO procedure. He also identified the brackets on the supply side of the Mixer Starter Panel or the Mixer Starter Panel controls as sites where a tag could have been placed. In addition, the 'tails' should have been pulled. Mr Cox asked him whether there was still a 'live' circuit. He responded:

'The three phase power supply was live until it entered the Mixer Control Panel. The source of supply was not removed. With the removal of the control fuse would the Mixer have operated? Probably not, but should the contactors on the control fuse weld together, which they do have a habit of doing, then it would create the circuit. Furthermore, by not tagging out indicating 'isolation' had been performed, it creates the potential for another electrician with access to the Mixer control panel simply reconnecting the control fuse and reenergising the reservoir. The 'out of service' tag, as per the procedure, is to relay information to the status of that piece of equipment. So it says "it has been isolated'. It's been 'isolated' on the 14th of December by Doug Hobart". Whether I've signed or not but it'll have my name clearly written and a phone number so that if you guys go there and you see that the Mixer 'failed', you know there's no way the Mixer failed because the thing's isolated'. The out of service tags are key to conveying the status of the equipment.'

[215] Mr Hobart assisted Mr Cox with the report dated 2 August 2012. He identified three specific risks. Firstly, that it was possible for the contactors in the Mixer Starter Panel to weld together; secondly, the lack of notification to SOC and lack of a tag meant that an inattentive employee responding to the fault notification may have reinserted the control fuse; and thirdly, the placing of one layer of tape on the fuse socket did not provide adequate protection from 'live' electricity.

[216] On 23 August 2012, Mr Hobart participated in another site visit with Mr Mossman and Mr Filipic. Mr Mossman asked him how power to the Mixer should be 'isolated' and he outlined the two methods described above (see paras [212]-[213]). Mr Mossman asked him whether it was possible to 'isolate' the Mixer from the Box at the top of the reservoir. Mr Hobart replied that the Mixer would be 'isolated' if the tails were disconnected in the Box. Mr Hobart said that he and Mr Mossman examined the top of the reservoir to see if any recent work had been done. He noted that this area was subject to swipe card access and that an attempt to enter without a swipe card would trigger an alarm. As no alarm or card access had been recorded, he understood that the applicants had not accessed the top of the reservoir.

[217] Mr Hobart said that he attended a meeting of the Facility Technicians which discussed the application of the LOTO procedure. He denied that any manager made a statement that staff should 'just continue to do what they had been doing' or that anyone said 'try and follow the LOTO procedure as best you can.'

[218] In cross examination, Mr Hobart claimed to have witnessed three occasions where a welding of contactors had occurred.

[219] Mr Hobart agreed that he had been working in the role of Workplace Health and Safety Coordinator when the LOTO procedure was implemented by Sydney Water in 2004. He had not had to implement it, but had a good understanding of the procedure. He had not performed an 'isolation' under the current procedure.

[220] Mr Hobart said that if a policy or procedure was updated, employees would be trained, either by way of direct training or toolbox meetings. This depended on the nature of the procedure and the change. He said that Sydney Water tried to make procedures and policies as easily accessible to its employees as possible, although he admitted there were some logistical difficulties with field workers. He was not sure of what the process of accessing such policies were these days.

[221] Mr Hobart conceded that there had been no formal training in the LOTO procedure since 2006. This was not ideal in view of the fact that the procedure stated that training must be conducted more often. He accepted that there was no training record for Mr Stanojevic. Mr Hobart agreed that he had said that all employees must attend annual training. However, he also conceded that Mr Whelan and Mr Hayward had not received training since 2006. Mr Hobart said that he now understood Sydney Water had not complied with the procedure.

[222] Mr Hobart agreed that once an employee had performed a risk assessment, which they were required to do at every site, they needed to exercise their discretion as to how to implement the LOTO procedure. He agreed that the LOTO procedure required that an electrician remove all forms of supply to a device. He accepted that the word 'device' in this instance could refer to the Mixer Motor.

[223] Mr Hobart said that he had concerns about the LOTO document and had asked for a review after a reasonable period. He thought that the procedure needed to be updated, particularly in relation to the mechanical section, where employees worked on 'live' equipment.

[224] Mr Hobart claimed that there had been many toolbox meetings relating to the LOTO procedure since May 2012. Nevertheless, he conceded that there was a degree of concern from MED employees as to what was required by the procedure. He also agreed that there were few meetings on the LOTO procedure prior to May 2012. He could not remember attending a toolbox meeting that 'specifically targeted' the LOTO procedure. He had previously told employees that they should tag and lock 'where possible' when concerns were raised in relation to equipment that could not be locked, but could not recall specific instances of this. He said that he had not been approached 'formally' or by 'the business' (meaning MED) about any problems. Mr Hobart said that it would have been ideal if all 'isolation' switches were capable of being locked.

[225] Mr Hobart said that he could not remember if Mr Murdoch had mentioned how many fuses had been removed from the Mixer Starter Panel when he called him on 17 May 2012. Mr Murdoch had not mentioned the names of the people who had performed the job when he called him. He went to the site as soon as he received a phone call from Mr Cox. All he knew was that there was an alleged breach of the LOTO procedure. He did not know who was alleged to have performed the non-compliant work. When he arrived, he was unable to access the Mixer Starter Panel as he did not have a key, although he has since discovered he has one. There was no one on site when he arrived. However, he had another colleague with him, Mr Steve Churchill. He admitted that it was possible that he was confusing two different site visits.

[226] Mr Hobart acknowledged that contacting SOC was not part of the LOTO procedure; rather it was part of a 'work practice'. He agreed that the procedure for unmanned sites stated that 'If necessary, the SOC and/or relevant asset owner should be notified'. He did not know why it was expressed with the phrase 'if necessary'. He was not aware of what the work practice would be if an employee gets allocated a job, but receives no number from SOC or no person to contact. He noted that the phrase 'relevant asset owner' was contentious and agreed that there was confusion about what it meant. He could not say that notifying a supervisor after an 'isolation' had been performed would constitute notifying the asset owner as he was not involved with job allocations. He did not know how jobs are generated to the SOC.

[227] Mr Hobart was shown a bundle of documents, being the forms filled out in relation to the job performed by the applicants (Exhibit 6). He said that it was not a preferred process, as appeared to have occurred in this case, by a third person (in this case a 'J. Pilling') not involved with the 'isolation' who signed off on a job without contact with the electricians carrying out the job. He noted that Mr Pilling had signed off on a box next to a statement, 'Verify Mixer is 'isolated' and lock out/tag out procedure followed'. He agreed that Mr Filipic had allocated the job to the applicants. He also agreed that a Form Checklist for Isolation/Flow Management Plan had not been completed and that this was not satisfactory from a health and safety point of view. Mr Hobart said that he was aware of what an OCR was, but was not part of that process. He denied blaming the applicants for the failure to notify SOC.

[228] Mr Hobart agreed that an electrician who had found him or herself in the position of Mr Murdoch, in that they arrived on site and found an asset in an unsafe state, should take steps to ensure that the site is made safe before leaving. This could include the making of a phone call.

[229] Mr Hobart denied that it was unusual for a Council Meter Panel to be locked with a Sydney Water lock. While non-Sydney Water personnel may need access to the Council Meter Panel, the Panel, aside from the Council fuses and the meter, was Sydney Water's property. Being that the Sydney Water and non-Sydney Water parts of the Panel were separated by a dotted line, he accepted that the panel was a shared panel. However, he could understand a position where Sydney Water employees believed that they could not lock out the Council Meter Panel because it was not Sydney Water's asset.

[230] Mr Hobart agreed that if that the contactor has been tested and found to have been de-energised and the 'tails' had not been pulled and only one fuse, being the control fuse, had been removed, there would be no difference in risk of the Mixer Motor becoming energised if the same process occurred, but with all three fuses removed. He remained uncomfortable with this approach, and said:

'But we can't see that. We can only determine with our skills, knowledge and competency with a multimeter or testing device.'

He claimed that there was still a source of supply to the Mixer Starter Panel from the Council Meter Panel. A risk also remained that the contactor could be pushed together by way of a physical human act. However, he did not think a de-energised contactor could weld through by an act of nature, like lightning. The removal of the 'tails' was a secondary backup precaution.

[231] Mr Hobart believed that the divers on site would probably have not seen the 'out of service' or 'danger' tags attached to a device pursuant to the LOTO procedure. However, as part of the flow management plan, it would be pointed out to them. He agreed that, on his approach, divers would not see them at all, because they would be attached to the inside of one of the panel boxes, to which they would not have access. He agreed that the outer handle of the Mixer Starter Panel box was part of the 'isolation' point for the purposes of the LOTO procedure and by tagging it, would convey the status of the equipment to those who were unable to gain access to it.

[232] Mr Hobart agreed that it was not possible to use a lock on the Mixer Starter Panel in question. He also conceded that his second 'control' method of 'isolation' would comply with the LOTO procedure. He also agreed that his preferred method of covering the exposed live point in the Mixer Starter Panel with a blank fuse cartridge was not specifically mandated by the LOTO procedure. He agreed that tape over a fuse socket would indicate to an electrician that the fuse had been removed for a purpose. Being that the fuse socket was inside a locked panel box and behind a set of controls secured by two nuts, the risk of a person coming into contact with the 'live' fuse socket was low. Mr Hobart conceded that the LOTO procedure did not specifically prescribe pulling the 'tails'. He agreed that the applicants had been terminated for not following specifics which were not in the procedure.

[233] Mr Hobart believed that 'device' in the LOTO procedure could, in this case, refer to the Mixer itself or the Mixer Starter Panel. When pushed for his professional opinion as to which it was, he replied that it was 'all part of it' and said that it could be either.

[234] Mr Hobart said that when the investigation commenced, he was asked by Mr Mossman to put together a PowerPoint presentation in relation to Mechanical and Electrical 'isolation'. The primary catalyst for this was the incident with the applicants. However, there was another issue with fitters asking for 'isolation' of their jobs. He provided the PowerPoint presentation to management, which was given to Field Supervisors and then delivered by them at toolbox meetings. He did not deliver these toolbox meeting presentations himself and accordingly did not take questions on the presentation.

[235] Mr Hobart agreed that he went to 'one or two' toolbox talks where the LOTO procedure was discussed, including the Facility Technicians team meeting at the Prestons depot. Mr Young, Mr Stanojevic and Mr Barna also attended this toolbox talk. He denied saying that they should follow the LOTO procedure as best they can. What he would have said was, 'In regards to LOTO, the supplies have to be 'isolated, a test that your 'isolation' is effective and a tag be attached. In regards to that, do the best you can.'

[236] Mr Hobart could not recall any other employee being disciplined for not complying with the procedure. He believed that Sydney Water took a 'practical approach' to compliance with the procedure. He was surprised to hear that the applicants had been terminated. He could not remember having formed an impression that Mr Cox wanted to 'get rid' of the applicants.

[237] In re-examination, Mr Hobart said that the process of pulling the cables in the terminal block at the bottom of the panel would probably take five minutes. He agreed that that this could be adopted as a standard operating position for an experienced electrician.

[238] Mr Cox has been employed by Sydney Water for 11 years and has been in his current role as Area Manager of MED since January 2011. In his written statement, he said that his duties are to coordinate and deliver work plans requested on behalf of MED. He reports to Mr Mossman. He has a previous background in aviation engineering and has a limited electrical licence on aircraft and holds a Disconnect/Reconnect Electrical licence issued by the Department of Fair Trading.

[239] Mr Cox said that he had not had spoken to Mr Hayward prior to the investigation of the incident of 16 May 2012. He had had dealings with Mr McGrath in relation to the use of a decommissioned Sydney Water depot at Wiley Park, WP003. This site had previously been closed by MED and was to remain unused and unoccupied. Following a routine investigation of decommissioned sites, it was found that WP003 was operational and Mr McGrath was involved. An investigation commenced by way of a letter handed to Mr McGrath on 28 February 2012, which required him to attend a meeting on 2 March 2012.

[240] Mr Cox deposed that on 2 May 2012, Mr McGrath was given a letter informing him that five allegations in respect to Wiley Park were substantiated. They included that he had had secure keys cut and distributed to staff members. He had used his procurement credit card to purchase the keys, along with a wireless broadband internet connect, office supplies and a multi-function phone/fax/scanner/photocopier. It was also found that he had failed to keep motor vehicle running sheets. The letter recommended that he be given a written warning and be transferred to operations at Bondi. Mr Cox reviewed the recommended disciplinary action, but did not alter the recommendation.

[241] Mr Cox said that Mr McGrath was due to begin work at Bondi on or around 18 June 2012. After representations by him and his Union, this date was extended twice by 14 days. A letter dated 18 June 2012 granting one of these extensions also required Mr McGrath to return 'completed running sheets, fuel cards and any other tools associated with the vehicle'. A further 14 day extension was granted in a letter dated 28 June 2012. Mr McGrath was required to return his phone and his motor vehicle. However, when the vehicle was returned, it was found to have been damaged. Sydney Water had had quotes to repair the damage of between $13,500 and $15,000. Mr McGrath handed his phone back 2 July 2012 and claimed that he had also returned the SIM card. However, when the relevant number was rung, Mr McGrath answered. He explained: 'Well I handed back the phone but the SIM card isn't the phone so I kept the SIM card.'

[242] Mr Cox said that he received a phone call from Mr Barna in late May or early June 2012. He was told that Mr Murdoch had witnessed a 'near miss' at Reservoir WS0194 on 17 May 2012. Following this phone call, his preliminary enquiries led him to establish that a work order had been generated directing the applicants to 'isolate' power to the Mixer at the site for the purpose of allowing divers to conduct maintenance. Further enquires revealed that a breakdown work order had been issued in relation to the same Mixer on 17 May 2012. There was an entry by Mr Murdoch in answer to this fault.

[243] Shortly after this, Mr Cox said that he spoke to Mr Murdoch in relation to the incident. Mr Murdoch told him that the fuses in the Council Meter Panel had been left in, but the 24V control fuse had been taken out of the Mixer Starter Panel and the fuse socket taped over. He also said that there were no tags. Mr Murdoch emphasised that he did not want the incident 'raised under my name'.

[244] Mr Cox said that he later met with Mr Murdoch and Mr Hobart at the St Mary's depot. Mr Murdoch explained how he had been called to the site on 17 May 2012 and what he had found there. Mr Hobart agreed with Mr Murdoch's assessment that the Mixer was not properly 'isolated' and that the LOTO procedure had not been complied with. They agreed that a safety incident had occurred and that it needed to be recorded in the Incident Reporting System.

[245] Mr Murdoch later recreated what he had found on 17 May 2012 at a site visit with Mr Cox and Mr Hobart. Mr Cox asked Mr Murdoch whether the removal of the control fuse 'isolated' the Mixer. Mr Hobart replied:

'Technically, it's not 'isolated' at the source. The correct procedure is to 'isolate' the three phases on the supply side. If, for example, the box got hit by lightning or through some other malfunction, the contracts of the control relay welded together, the circuit would be complete and the Mixer could power up. Also Paul and Maitland have not followed LOTO procedure because there were no 'isolation' tags left in the Mixer control panel.'

[246] Mr Cox explained the key requirements of the LOTO procedure as requiring that all energy sources into, or within a device, are to be 'isolated' prior to commencing work; that all 'isolations' must be tested for effectiveness prior to commencing work; that all 'isolations' have an appropriate tag at each 'isolation' point and that each 'isolation' point should be locked out, wherever possible. The applicants had been trained in the LOTO procedure in 2004 and 2006. Mr Cox was concerned that two experienced electricians had not abided by the LOTO procedure given that it is a well-known policy in the industry.

[247] Mr Cox did not believe that the Occupational Health and Safety Committee had been notified of issues with the LOTO procedure. Nobody had brought any issues with 'isolation' under the LOTO procedure to his attention during his time with MED. He was not aware of any issue in relation to 'isolation' under the LOTO procedure on unmanned assets. The only issue he could recall with the LOTO procedure was raised at a toolbox meeting in North Head, where staff had not been following the LOTO procedure correctly and further training had been arranged.

[248] Mr Cox said the proposed SWMS referred to by Mr Stanojevic was for mechanical 'isolation' only and that the procedure required that where electrical 'isolation' was required, an electrican must be called.

[249] It was Mr Cox's evidence that effective 'isolation' in compliance with the LOTO procedure would have required the applicants to remove the three fuses in the Council Meter Panel. The Council Meter Panel Box belonged to Sydney Water, as did the supply fuses - only the meter belonged to the Council. Further compliance with the LOTO procedure would have required the applicants to attach tags to the fuse sockets, removing the 'Jackson' locks from the Council Meter Panel Box and locking with a silver lock. Because a 'live' energy source was still supplying the Mixer Starter Panel, there was a danger of both electrocution and of the Mixer re-energising. The failure to sufficiently tag could also mean that an inattentive employee might re-energise the Mixer, not being fully aware that work had been conducted to 'isolate' it.

[250] Mr Cox said that he had previously seen the LOTO procedure carried out by way of the removal of three supply fuse holders, the fuses removed and 'out of service' tags placed in between the fuse sockets and the fuse. The outside socket could then be pushed back in and the 'out of service' tags should then be visible. The fuse cartridges could then be placed in the Box. The fact was that a lock could not be placed on the fuses, but the policy only required that a lock be fitted on each 'isolation' point, where possible.

[251] Mr Cox was also of the opinion that the applicants should have pre-notified SOC, although he conceded that the Project Officer should have generated an OCR. If the applicants had notified SOC, it would not have allowed them to continue the job in the absence of an OCR. His investigations revealed that Mr David Sowden, being the relevant Project Officer, had forwarded an OCR to SOC on 3 April 2012.

[252] As a result, Mr Cox provided the applicants with letters which outlined the allegations against them on 24 July 2012 (see para [2]). On or around 26 July 2012, each of the applicants was read the letter, handed a copy at individual meetings and stood down on full pay.

[253] Mr Cox noted that the applicants provided verbal responses to the allegations in individual meetings, where notes were taken. Mr McGrath said that he could not 'isolate' three fuses and that he placed tape 'across the control fuse he removed'. Mr McGrath also said that he was not sure who to contact in relation to the work to be performed and that he could not see how anyone was going to get hurt.

[254] Mr Cox recalled Mr Hayward saying that his FRM was not functioning properly. Mr Hayward also said that the top three fuses in the Mixer Starter Panel were removed with tape placed over them, although he did not personally do it. Mr Hayward said that the tag was placed on the handle of the Mixer Starter Panel and that someone must have taken it. He could not recall if he had notified SOC. Mr Cox recalled both applicants saying that there was no place to connect a lock and that a tag had been placed on the handle of the Mixer Starter Panel box. Mr Hayward said that somebody must have taken it.

[255] Following the applicants' responses, Mr Cox engaged in further investigations. This included analysis of the FRM data. Mr Cox referred to GPS data retrieved from each of the applicants' FRMs. The GPS data from Mr McGrath's FRM first shows him to be in Yagoona at 06:43 on 16 May 2012. The GPS data from Mr Hayward's FRM first shows him in Yagoona at 06:40 on 16 May 2012. Mr Cox said that these GPS reports taken from the FRM appeared to be valid and correct. Therefore he concluded both FRMs must have been functioning correctly. It also showed that the times entered in for when the applicants entered and left the site at Yagoona did not correspond to the GPS data. This was a further breach of Sydney Water policy.

[256] An internal report was compiled on or around 2 August 2012. The report recommended that both applicants be terminated. The report concluded that it had taken into account a breach of procedure that staff could reasonably be expected to know and follow and that the applicants were aware that divers were entering the site, and should reasonably have known the implications of their actions was risk of injury or death, particularly in light of their qualifications and experience. While the long service of both applicants was considered as a mitigating circumstance, this was found not to discount the seriousness of the breach and the danger. The report also noted Mr Hayward's clean disciplinary record and the written warning issued to Mr McGrath in relation to the Wiley Park investigation earlier in 2012.

[257] Further meetings with the applicants were scheduled for 20 August 2012. Mr Weizman attended these meetings and a letter was read and given to each of the applicants which proposed their employment be terminated. This was subject to the applicants being given a further chance to provide further information relevant to the findings of the investigation and the proposed termination of their employment. Mr McGrath added nothing further, but Mr Hayward suggested that it was possible to 'isolate' the Mixer from a panel at the top of the reservoir. He also asked that the recommendation be reviewed by a 'Manager Once Removed', being Mr Mossman. As a result, Mr Cox had no further input into the outcome of the matter.

[258] Mr Cox denied that Mr McGrath was targeted because of his prominent position in the Union. He denied that he had discussed targeting Mr McGrath with any Sydney Water employee. He did not agree that Mr Young had been treated more leniently for failing to follow the LOTO procedure. In that instance, while Mr Young had reused a tag meaning that his writing was difficult to read, he had otherwise effectively 'isolated', locked and tagged pursuant to the requirements of the LOTO procedure.

[259] In further evidence in chief, Mr Cox said that he was not aware of whether an inspection of the vehicle returned by Mr McGrath had occurred on the day that he returned it. Usual practice would have been to complete weekly running sheets for the vehicle or a hand-back sheet when the vehicle was returned. This sheet would be given to the Fleet Manager, Mr Brett Hawkins. It was Mr Hawkins who had told him that there was an MED vehicle that had sustained significant damage.

[260] In cross examination, Mr Cox did not accept that he had never worked on Sydney Water sites in a practical sense. While he was not a trade qualified technician, he had worked in Civil Delivery, which maintained valves and pipelines to and from reservoirs. His position with MED was his first Senior Management role. He agreed that in this position, he worked in a capacity to restructure the organisation as a member of a team. Mr Cox did not agree that part of his brief was to change the culture in MED, but rather to improve safety and efficiency. Changes to practices in MED were by means of a consultative process, involving team managers and supervisors of affected areas. This included increasing productivity. He agreed that the Union had been resistant to some of the proposed changes. However, he did not negotiate with the Union in relation to the changes, as this was done by Mr Duffy, who reported to the MED Management team. Mr Cox added that he was a member of the Union himself.

[261] Mr Cox said that it was possible that Mr McGrath was the first person interviewed in relation to the use of the decommissioned Wiley Park site. He had not made any assessment that Mr McGrath was the 'ringleader'. He was aware that Mr McGrath was not the only person accessing the site. He said that Mr McGrath had been upset at the idea that the Wiley Park site was a disused site and that he done something wrong. He could not recall asking Mr McGrath how many persons were using the site. About five employees had been disciplined in relation to this matter. It was possible that Mr McGrath's interview had been the longest out of the employees who had been interviewed.

[262] Mr Cox said that the purchase of the secure keys by Mr McGrath had not been approved by a Manager, but the expenditure on the Procurement Credit Card had been approved after the fact. It would have been open to that Manager to investigate and possibly discipline Mr McGrath, but this had not occurred. The relevant Manager had also been interviewed and disciplined.

[263] Mr Cox said that he had given Mr McGrath a first and final warning as a result of the Wiley Park investigation. He disagreed with the proposition that he had not provided a copy to Mr McGrath. He could not recall giving him a copy of this warning, although it should have been given to him. On being shown a copy of the letter to Mr McGrath dated 16 May 2012, he acknowledged that it referred to a 'written warning' rather than a 'first and final warning'. He could not remember meeting Mr McGrath about the letter and was not aware that Mr McGrath had asked for the decision to be reviewed.

[264] Mr Cox agreed that the issue of damage sustained to the vehicle had not been raised with Mr McGrath while he was still an employee. However, it was not up to him to investigate Mr McGrath. He was unaware as to whether the Fleet Manager had spoken to him about this issue.

[265] Mr Cox accepted that there was some tension in relation to the role of Field Technician as the Union did not support the creation of this position. He was not aware as to whether Mr Murdoch and Mr Hayward had applied for the positions, as he was not involved in the recruitment process. He was also unaware that they had had a disagreement in relation to this role. He was unaware that there was tension due to the document allowing Field Technicians to work on 'isolations' on their own. Mr Cox had not spoken to Mr Murdoch about his relationship with the applicants. He noted that Mr Murdoch had been concerned as to a backlash from the Union as a whole, but this was due to Mr Murdoch's status as a Field Technician.

[266] Mr Cox said that he could not remember the exact date that Mr Barna had told him of the incident of 16 May 2012, but said that it was late May or early June. He did not query why it had taken so long to report the matter to him. He thought that Mr Barna's assertion that the next time he spoke to someone after the discussion with Mr Murdoch on 17 May 2012 was incorrect. He agreed that he had spoken to Mr Murdoch immediately after speaking to Mr Barna. He said that there had been a process to be followed through HR in order to suspend an employee and that was why he had waited to July to suspend the applicants on full pay.

[267] Mr Cox thought that the actions of the applicants had resulted in 'one of the most serious possible risks I've seen in my time in Sydney Water.' He emphasised that he was not electrically qualified, although he had 'intimate knowledge' of what the procedure required. He admitted that he would not be in a position to contradict an electrically qualified person if they told him that once a contactor was de-energised and the fuse removed, then the only way power could have moved to the Mixer Motor would be by way of human intervention. He sought advice from Mr Hobart on these matters, as well as Mr Murdoch. They advised him that the 'isolation' had not been carried out correctly. He understood that the LOTO procedure required that the source supply be 'isolated' and that, accordingly, the three supply fuses in the Council Meter Panel were the 'isolation' point for the Mixer.

[268] Mr Cox believed that there was only fuse in the Mixer Starter Panel, although when shown a picture of the Mixer Starter Panel, he said he did not think that the other two fuses were supply fuses. He also thought that there was only one way to 'isolate' properly under the LOTO procedure, being at the Council Meter Panel Box. However, he agreed Mr Murdoch had put the alternative method of complying with the LOTO procedure was by way of removing the control fuse and pulling the motor leads. He accepted that the applicants said they had removed the control fuse and tested the contactor and proven it de-energised. However, without removing the tails, it was possible for power to get to the Mixer Motor and that it was possible for the contactors to weld together.

[269] Mr Cox agreed that if it was found that three fuses were removed, then that could have changed the outcome of the investigation. He could not explain the discrepancy between the evidence of Mr McGrath and Mr Murdoch in relation to the colour of the tape used to cover the empty fuse sockets. However, he had preferred the evidence of Mr Murdoch over that of the applicants. He also thought of Mr Murdoch as being 'above the rest' in terms of skills and intuition. He said that on the morning of 17 May 2012, Mr Filipic had mentioned one fuse being pulled and the fuse holder being covered in black tape. He agreed that Mr Murdoch said he had spoken to Mr Barna, but could not say whether Mr Barna had told Mr Murdoch who had been working at Reservoir WS0194. He conceded that Mr Murdoch's Maximo entry described the Mixer as having been 'isolated' (see para [184]). He could not remember Mr Murdoch telling him that he placed a post-it note on the panel, closed the Meter Starter Panel Box and left the site.

[270] Mr Cox was taken through the allegations in the letter of 24 July 2012 (see para [2]). He said that the failure to ensure that 'isolations' must be tested for effectiveness was due to the failure of the applicants to remove supply He accepted that the applicants tested on the contactor relay. He agreed he had been told by the applicants that they had applied a tag to the handle of the Mixer Starter Panel Box, but this was not the 'isolation' point. The applicants had failed to put a lock where they could have put one.

[271] Mr Cox said the he was not sure whether the meter in the Council Meter Panel box was the property of the energy company or that of Sydney Water. Over the objections of Ms Brus, Mr Cox was shown a NSW Government document entitled 'Service and Installation Rules of New South Wales - The electricity industry standard of best practice for customer connection services and installations - August 2012'. He agreed that at cl 4.2, it stated, in part:

'The customer must ensure that access to any enclosure for meters or service and metering equipment is never restricted or made unsafe. The location must always be kept clear.'

[272] Mr Cox's attention was also drawn to cl 4.6 - Locking of Service and Metering Enclosures, which stated, in part:

'Locking and restricting access to a meter enclosure or other enclosure for service equipment is acceptable if the lock or access is by means of a standard locking system obtained through the electricity distributor.'

[273] Mr Cox agreed that if there had been a tag placed on the inside of the Mixer Starter Panel Box, it would not have been visible to persons working on the site. He would have suggested placing tags on both the inside and outside of the Mixer Starter Panel Box. He could not completely discount the possibility of the tag being removed, but thought that it was highly unlikely. There were no alarms activated on site indicating that another person had come onto the site. If it had been blown off, then it had obviously not been securely attached.

[274] Mr Cox could not say how an employee would know whether it was necessary to contact either the SOC or asset owner when performing an 'isolation'. He did not think that telling a supervisor of what they had done would have complied with the requirement to notify SOC. He agreed that it was possible that Mr David Sowden had not provided an OCR to the SOC. He also agreed that such a circumstance could create a potential risk, but this should have been mitigated or eliminated by the persons on site following the LOTO procedure. He had not asked Mr Sowden for a copy of the OCR during the course of the investigation. He had not spoken to SOC as they were the ones who had notified the Mixer failure on 17 May 2012. He also did not attempt to speak to 'John' at SOC, to whom Mr Murdoch said he had spoken.

[275] Mr Cox said that in respect to the allegations in relation to the failure to properly use the FRM, Mr Hayward had responded that there were issues with his FRM. However, the GPS logs and the FRM 'signature' indicated that it had not failed. Moreover, Mr Hayward had not reported these issues until he was working at the Daceyville Depot later that morning. The failure should have been reported earlier to IT, rather than merely to Mr Filipic. He did not accept that the results shown in the GPS logs of the FRM were consistent with Mr Hayward's account of having had difficulty charging the FRM. He believed that Mr Hayward was lying.

[276] Mr Cox said that toolbox meetings were run by supervisors and team managers and it was the health and safety delegate's responsibility to bring significant safety concerns to these meetings for the attention of the OH&S Committee. Mr Cox did not know whether Mr Hobart had attended toolbox meetings prior to May 2012 to discuss the LOTO procedure. In addition, Mr Cox could not say when the last formal training in the LOTO procedure had been undertaken. He was unaware that the procedure required formal training and proven competency every two years. Subsequent discussion of the LOTO procedure at toolbox talks had occurred as a result of concerns raised by staff after the suspension of the applicants.

[277] In re-examination, Mr Cox said that the changes in HSP048 to which Mr Stanojevic referred had no relevance to the investigation of the applicants.

[278] Mr Cox explained that the necessity to call SOC was due to a number of potential impacts of any work carried out on Sydney Water assets, including, for example, chemical dosages that could affect water quality. If an OCR was not sent to SOC in relation to the job in question, this would not absolve the applicants of the requirement to contact SOC themselves.

[279] Mr Cox said that while he was a shared decision maker in relation to the applicants' terminations, he did not have delegated authority to terminate anyone's employment. That authority rested with Mr Mossman, who made a recommendation to HR which was considered by the Service Delivery Manager, Mr Eric De Rooy. It was Mr Mossman's signing of a recommendation and marking it 'approved' that meant that the termination was affected.

[280] Mr Cox reiterated that Mr McGrath was not the only person subject to a penalty in relation to the use of the Wiley Park site. Team Managers had also received warnings, or were performance managed or relocated.

[281] Mr Mossman has been working at Sydney Water since April 2007 and has held his current position of Business Unit Manager/Mechanical Electrical Delivery since 1 July 2009. In his written statement, Mr Mossman said that he was responsible for mechanical and electrical maintenance in all facility assets, through a workforce of internal and external service providers, thoughout Sydney Water's operations. He is four tiers of management removed from the applicants. However, he has dealt regularly with Mr McGrath as Senior Delegate of the Union, but not with Mr Hayward.

[282] Mr Mossman outlined the requirements of safety policies, SWMS and risk assessments. There are two policies that deal with dangers of electricity. The Electrical Safety procedure and Guide for Safe 'isolation' of Assets or Equipment. He said it was fundamental to electrical safety that no electrical work is to be performed 'live' and that all power must be 'isolated' from the source. The specific SWMS that apply are E01 and E04. The LOTO procedure is incorporated into the SWMS and applies to sites under the control of Sydney Water. Mr Mossman said that MED electricians would perform Lock Out/Tag Out several times a day. Mr Mossman said that toolbox meetings were held every month. However, he was unsure as to whether the LOTO procedure was discussed every month. Nevertheless, safety and the adherence to safety procedures is regularly reinforced.

[283] Mr Mossman said that he was first made aware of the 16 May 2012 incident in late May or early June 2012, when he was told of it by Mr Cox. It was reported to him that a work order was created for an 'isolation' job on the Mixer at Reservoir WS0194 on 16 May 2012. The next day, Mr Murdoch responded to what was reported as a fault in the system. He reported that no 'out of service' tag was found at the site. As a result, Mr Mossman told Mr Cox to raise the matter in the Incident Reporting System. Mr Cox conducted the investigation to determine if any breaches had occurred and was dealing with Mr Filipic in his capacity as the applicants' Supervisor and with Mr Hobart in his capacity as a Workplace Health and Safety Officer.

[284] Mr Mossman became directly involved after Mr Hayward requested that a Manager, removed from Mr Cox, conclude the investigation. This was after the preliminary investigation and resulting suspension occurring on or about 26 July 2012, the preparation of the investigation report and the letter presenting the allegations and given to the applicants on 20 August 2012.

[285] Mr Mossman then convened a meeting with each of the applicants. He was accompanied by Ms Kim Ching of Sydney Water HR. Union Organiser, Mr Daniel Weizman attended the meeting with Mr McGrath and the conversation was as follows:

Do you wish to provide any written and/or verbal additional evidence to support your case in regards to the proposed termination letter you received 48 hours ago?

I will have to check whether I can provide those. It is an internal document.

About the silver lock - out in the field there is no capability of putting in a lock system in place. What would you do and how would you go about it?

This meeting is about you Paul - an opportunity for you to provide any additional or supporting information.

[raised voice] Have you even gone out to the site? Do you even know what it looks like? Have you spoken to Eddie Filipic and was the power disconnected? This is bullshit! I'm fucking sick of this!

I don't work for you Geoff and you don't tell me what to do. It's obvious you're just out to get Paul.

Yes, note it down as Geoff Mossman is out to get Paul McGrath [Mr Weizman gets up to leave].

Daniel is representing me. I've got nothing further to say.

[286] Mr Mossman said that, by contrast, his interview with Mr Hayward was lengthy, focusing mainly on his faulty FRM. In the course of the meeting, the following was said:

We 'isolated' power from both the supply box and the Mixer control box. I also physically pulled the tails from the box at the top of the reservoir. Have you actually been out to the site Geoff?

[287] Mr Mossman, accompanied by Mr Murdoch, Mr Hobart, Mr Filipic, and Mr Cox conducted a site visit at Reservoir WS0194 on 23 August 2012. Mr Hobart told him that the preferred method of 'isolation' is to remove the three fuses marked 2A, 2B and 2C from the Council Meter Panel and lock and tag out. He also said that you could remove the three fuses from the Mixer Starter Panel, disconnect the tails on the three supply wires up to the motors and 'tag out'. They also inspected the top of the reservoir. He asked Mr Hobart whether the 'isolation' could be done from this point. He was told that pulling the 'tails' from the load side would 'isolate' power to the reservoir.

[288] Mr Mossman said that he subsequently ordered copies of the security logs for the reservoir for 16-18 May 2012. These logs indicate whether a security pass had been swiped to get to the top of the reservoir. The logs did not show that the reservoir had been accessed on 16 May 2012 or on 18 May 2012 (when they returned to the site to reenergise). However, the logs did show that divers had accessed the reservoir on 17 May 2012. Mr Filipic tested the alarm system on 27 August 2012 and this testing showed that it was working effectively. Mr Mossman concluded that he could not accept Mr Hayward's statement that he had accessed the top of the reservoir and 'isolated' it from there.

[289] On 3 September 2012, Mr Mossman produced a supplementary report stating that the additional information provided on 22 August was not credible and that accordingly, the proposed outcome (of dismissal) would not be changed. In affirming the decision to terminate the applicants, Mr Mossman said that he took into account their long service, and balanced this with safety requirements and the fact that the applicants were experienced electricians and could reasonably be expected to know and follow procedure. He denied that Mr McGrath's status as a Union Delegate or the applicants' significant entitlements in the event of redundancy, were factors in making his decision. He said further that if he had been aware of the applicants' dishonest collusion, this would have influenced him to dismiss them. As a result, he no longer held trust and confidence in the applicants.

[290] Mr Mossman was satisfied that on 16 May 2012, the applicants failed to effectively 'isolate' the Mixer from the power source, tag out, report their work to the SOC and lock out. He said that the applicants appeared to be unaware that their actions created a safety risk, including the risk that the contactors of the control fuse [sic] in the Mixer Starter Panel could weld shut and reconnect power to the Mixer.

[291] In cross examination, Mr Mossman confirmed that he had made the decision to terminate the applicants' employment. Initially, a decision to terminate was made based on the report of Mr Cox, but then he took subsequent steps to confirm matters raised by the applicants. His final decision was made following the investigations on site. Mr Mossman agreed that to his knowledge, he had never gone against the recommendation of an investigator. However, he denied that there was no possibility that he could have changed his mind. He again denied that the outsourcing and restructure of MED and the possibility of large redundancy payments made to the applicants, was a factor in his decision.

[292] Mr Mossman understood that the applicants had failed to 'isolate' all sources of power to the Mixer on 16 May 2012. He also understood that when Mr Murdoch arrived on site, there was still power flowing to one side of a contactor, being the one which 'supports the motor or provides power to the motor'. He did not know if Mr Murdoch had found there was no power to the Mixer Motor when he arrived on site on 17 May 2012. After his conversation with Mr Hobart and Mr Cox, he understood that there was potential for the power still to be flowing to the Mixer, especially if the contactor welded together.

[293] Mr Mossman conceded that he did not actually understand how the risk could occur. He just took the advice of Mr Hobart and Mr Cox that there was a risk. He said he had heard of, and witnessed contactors welding together in the past in his capacity as a Manager. He could not be sure as to whether these contactors were energised or not.

[294] Mr Mossman said that the substantiated allegation that the applicants had failed to test the 'isolation' for effectiveness, was based on his discussions with Mr Murdoch. He understood that there was still 'energy on that side of the contactor which would have been picked up if it had been tested.' He said that he confirmed what Mr Murdoch found, that 'it was not able to be de-energised'.

[295] Mr Mossman believed that there was no evidence that Mr McGrath had applied a tag to the outside of the Mixer Starter Panel Box, other than the evidence of the applicants. He agreed that he had accepted Mr Murdoch's evidence over them. He understood the tag was to be attached to 'each 'isolation' point, not on the door itself'. He understood that locking the handle on the Mixer Starter Panel Box was not sufficient for it to be 'locked out' and that it should have been done with scissor clips or with padlocks. Mr Mossman disagreed that it would not be necessary to use a silver lock if the handle to the Mixer Starter Panel Box was lockable. He noted that numerous people have keys to the Box and keys to the silver lock, but the silver lock was a sign that work was being performed.

[296] It was Mr Mossman's view that the applicants calling their Supervisor in relation to their work was 'not typical of the process' in notifying the asset owner of the work performed.

[297] Mr Mossman acknowledged that he did not put to Mr Hayward, the security log records showing that there had been no access to the top of the reservoir. He had given Mr Hayward the chance to respond to a proposed outcome, being his termination. They had provided information which meant that he made further inquiries. He felt that they had already been given an opportunity to provide this information.

[298] Mr Mossman agreed that the SOC should be aware of the 'isolation' job at all times. He was not aware of whether an OCR had been filled out. He agreed that Mr Hayward had told him that he was having problems with his FRM that day and that he had told Mr Filipic about the problem. He said that either person in a work team can report the jobs as long as the first person puts the nominated person down as a work team member and ensures that they participate in risk assessment and work method statements.

[299] Mr Mossman did not accept the applicants' explanation that they could not 'isolate' at the Council Meter Panel Box, because the power supplier would not have access to the meter. His understanding, based on his experts' advice, was that the Council Meter Panel was the logical place to perform the 'isolation'. He also understood that if the electricity provider had needed access to the site, they would have simply notified Sydney Water of their requirements.

[300] Mr Mossman was surprised at the proposition that there was confusion on the part of electricians in relation to the LOTO procedure. This was especially so in view of the updating of SWMS and risk assessments in 2011, in which the OH&S committee had participated. No confusion in relation to the LOTO procedure was raised with him then. He said he would be concerned if electricians had given evidence that they did not feel comfortable locking the Council Meter Panel Box. He was not sure of the training frequency requirements in the LOTO procedure and was not sure when the last formalised training in the LOTO procedure had occurred. However, he noted that there were regular toolbox meetings in which these matters could be raised.

[301] Mr Mossman said that disciplinary procedure in relation to breaches of the LOTO procedure was not necessarily prescribed. They were decided on a case-by-case basis. He agreed that summary termination was the most serious form of disciplinary action and that this was the applicants' first contravention of the LOTO procedure in their 35 plus year careers.

[302] Mr Kennedy, in written submissions, put that there was no valid reason for the applicants' dismissals in that they were not guilty of the allegations made against them (see para [2]); See: Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 ('Selvachandran'), Edwards v Justice Giudice [1999] FCA ('Edwards v Giudice') 1836 and King v Freshmore (Vic) Pty Ltd [2000] AIRC 1019 ('King v Freshmore'). He said the dismissals were 'harsh, unjust and unreasonable' due to:

b) the applicants' ages, lengths of service and work records;

c) custom and practice as to the LOTO procedure, leading to differential treatment of the applicants compared to others;

d) the applicants' personal and economic circumstances; and

e) the sanction of dismissal was disproportionate to their conduct.

[303] The Commission would also consider whether the applicants' actual conduct was of sufficient gravity to constitute a valid reason for termination; See: Qantas Airways Ltd v Cornwall [1998] FCA 865. This exercise involves a close scrutiny of the evidence and requires clear, cogent or strict proof that the allegations have been made out; See Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 and Neat Holdings v Karajan Holdings [1992] HCA 66; (1992) 67 ALJR 170. The onus is on Sydney Water to establish the misconduct took place and that it constituted a valid reason for dismissal; See: Culpeper v Intercontinental Ship Management Pty Ltd [2004] AIRC 261 ('Culpeper').

[304] Mr Kennedy contrasted the actual allegations made - that the applicants failed to follow the LOTO procedure and that this caused a real risk to the health and safety of others attending the site - with the actual tasks the applicants undertook on 16 May 2012 to 'isolate' the Mixer Motor. Power to the Mixer Motor runs from the street, through the Council Meter Panel into the Mixer Starter Panel in to the reservoir.

[305] Mr Kennedy argued that the applicants did not breach the LOTO procedure and there was never any real risk to any person's health and safety as a consequence of their actions. He noted that the allegations contain 9 individual, but related allegations which fail to make clear what the applicants did, or did not do, on 16 May 2012. Moreover, the LOTO procedure does not specify the precise task to be carried out to effect compliance with the procedure. The evidence was that the precise steps are largely a matter for an employee's discretion. The applicants decided to 'isolate' the Mixer Starter Panel, rather than the Council Meter Panel, consistent with the LOTO procedure for the following reasons:

a) the Council Meter Panel is not an asset of Sydney Water, and is commonly accessed by non Sydney Water personnel;

b) the Council Meter Panel box could be locked with a key, but this would not prevent it from being accessed by other Sydney Water employees and non Sydney Water personnel (who commonly have a key);

c) it was not appropriate to 'isolate' at the Council Meter Panel because it supplies power to other assets at the site, including the Dosing Panel and the IICats panel; and

d) electricity to the Mixer Motor could be effectively 'isolated' at the Mixer Starter Panel and the box more effectively locked with a key, which only a limited number of Sydney Water employees have in their possession.

[306] In any event, Mr Kennedy put that the applicants did 'isolate' the Mixer Motor from all sources of energy. There was no means by which power could enter the Mixer without undoing the steps taken by the applicants. The SOC was alerted to a failure resulting in Mr Murdoch visiting the site and reporting 'the Mixer had been 'isolated' for divers'.

[307] Mr Kennedy further submitted that the steps taken by the applicants were in accordance with custom and practice. He refuted the allegation that the applicants had not tested the effect of the 'isolation' and had not tagged each 'isolation' point. Mr McGrath had tested the electricity supply before and after he had tagged the outside of the box, as it would not be seen inside the locked Box. Moreover, it was not possible to lock the Box and so this allegation must fail.

[308] Mr Kennedy submitted that Sydney Water failed to comply with its own procedure in respect to notifying the SOC. No OCR had been created; yet it was said the applicants failed to comply with a direction which was never given.

[309] Mr Kennedy refuted the allegation of making false statements on the Safe Work Method Statement. Mr Hayward had explained what he had done with his faulty FRM (see paras [12] and [32]). He was honest and forthright about it.

[310] Even if it was said that the applicants somehow breached the LOTO procedure, their actions were not of such gravity as to justify a genuine and valid reason for dismissal. This was because the LOTO procedure had been introduced ten years ago and, despite mandatory refresher training every two years, the applicants had only attended such training six years ago. The applicants believed that the procedure was unsuitable for assets such reservoirs as there was no capacity to lock out. This issue had been frequently raised with Management and ignored and the employees were advised to do what they had always been doing (custom and practice).

[311] Mr Kennedy claimed that Sydney Water was itself guilty of a number of failings with the job. No OCR was created as required by the policy and no asset 'isolation' procedure was carried out. The SOC was not advised, as required, because the OCR report had not been created. This was not the fault of the applicants.

[312] Mr Kennedy submitted the applicants' conduct could not be characterised as misconduct, as generally understood from the relevant authorities; See: North v Television Corporation Ltd (1976) 11 ALR 599 and Gottwald v Downer EDI Rail Pty Ltd [2007] AIRC 969. Indeed, the procedure makes no mention of any disciplinary action which might flow from a single breach. The applicants had neither been wilful or malicious and they had not imperilled any other persons. Mr Kennedy noted that even if the conduct was held as a valid reason for dismissal, a dismissal may still be found to be 'harsh, unreasonable or unjust'; See: Windsor Smith v Liu [1998] AIRC 1737.

[313] Mr Kennedy then dealt with issues of procedural fairness. Specifically, he claimed that the allegations had never been sufficiently detailed for the applicants to clearly know what they had done wrong and be able to respond accordingly. In relying on Wright v Telstra Corporation Limited [2003] AIRC 292, Mr Kennedy said that Sydney Water had an obligation to notify the applicants of the reasons for terminating their employment:

[314] Mr Kennedy further submitted that the investigation of the allegations was seriously flawed in that the applicants were never afforded a proper opportunity to respond and Sydney Water had made up its mind to dismiss them, without an opportunity for them to respond to non-specific allegations. These factors support a finding that the terminations were 'harsh, unjust and unreasonable'.

[315] Mr Kennedy said that as Sydney Water is a large employer with a dedicated Human Resources division, it should be held to a high standard of ensuring procedural fairness. Mr Kennedy relied on the decision of the majority in Lawrence v Coal & Allied Mining Services Pty Ltd T/A Mt Thorley Operations/Warkworth [2010] FWAFB 10089 ('Lawrence') as involving a factual scenario similar to that which exists here. In that case, the dismissal was found to be 'harsh' because:

a) of the absence of any real risk to the health and safety of other employees (including that there were no employees in the vicinity at the time);

b) the applicant gained no personal advantage through his conduct;

d) the policy breached by the applicant contemplated that a breach will not necessarily result in disciplinary action, let alone dismissal;

e) the conduct was most out of character for the applicant, in that he had a clean employment record through 28 years service;

f) the applicant devoted the majority of his working life to the respondent, meaning it was not feasible for him to start a new career; and

g) the applicant was the primary breadwinner in his family and remained unemployed at the time of the hearing, despite his best efforts to obtain alternative employment.

[316] Considerable weight should apply to the similar circumstances in this case. In addition, Mr Kennedy said the LOTO procedure had not been strictly enforced by Sydney Water, its practical compliance was up to the employees' discretion and what had happened on 16 May 2012 was in accordance with custom and practice.

[317] Mr Kennedy submitted that there had been differential treatment accorded to the applicants for doing no more than custom and practice and where no one else had been terminated in similar circumstances. Neither Mr Murdoch or Mr Filipic were disciplined for not attaching a tag or lock to the Mixer Starter Panel Box some time after the applicants had 'isolated' the box.

[318] Mr Kennedy noted the applicants' significantly long periods of service, free of any blemish over safety issues and, in Mr Hayward's case, free of any blemish at all; See: Shivas v Nyrstar Hobart Pty Ltd [2009] AIRC 48.

[319] Mr Kennedy said the penalty of summary dismissal and its effect on the applicants was disproportionate to their conduct and was 'harsh'; See: Lawrence. Sydney Water had other disciplinary options available, but ignored or refused to consider them. Mr Kennedy said that considerable weight should be placed on the applicants' ages, family circumstances and the unlikelihood of them finding comparable alternative employment; See: Quinlivan v Norske Skog Paper Mills (Australia) Ltd [2010] FWA 883.

[320] Mr Kennedy put that there was no impediment for the Commission ordering the reinstatement of the applicants, with full back pay and no loss of continuity. Reinstatement is the primary remedy for unfair dismissal under the Act, and even if a valid reason for the dismissals exists, reinstatement would not be found to be inappropriate.

[321] In oral submissions, Mr Kennedy cross-referenced his various propositions with the evidence in the proceedings. He predicated his submissions by identifying what the job done on 16 May 2012 entailed. This was to 'isolate' the Mixer Motor by de-energising, or in other words, preventing electricity from going into the Mixer. There was agreement to this from Mr Hayward and when properly analysed, this was exactly what Mr McGrath had done.

[322] Mr Kennedy said that all the Union witnesses and Mr Hobart had said that the two applicants were good workers who worked safely. As a result, there had been no loss of trust and confidence such as to militate against their reinstatement.

[323] Mr Kennedy briefly touched on the earlier warning given to Mr McGrath concerning the Wiley Park issues. He noted that Mr McGrath had made a number of purchases which had been authorised or signed off by Management. The matter had never been finalised because the disciplinary action had been appealed, but it had been overtaken by Mr McGrath's dismissal. In any event, the warning could not be relied on because it was harsh and Mr McGrath had never received it and so it was never issued. Other allegations, such as damage to a Sydney Water vehicle and the retention of a phone SIM card were not supported by the evidence and, in any event, should not weigh very much for an employee of 43 years standing.

[324] Mr Kennedy submitted that the evidence of both Mr Hayward and Mr Murdoch indicated a falling out of two long term friends over safety issues and the introduction of the Field Technician classification (which the Union had opposed). Mr Kennedy said Mr Murdoch's evidence as to when he knew the 16 May incident involved Mr Hayward was inconsistent and Mr Barna had said 'I more than likely would have told him it was McGrath and Hayward.' Mr Murdoch could have decided to construct a story that would reflect poorly on them both.

[325] Mr Kennedy put that despite the decision making roles of Mr Mossman and Mr Cox, they had both relied on what Mr Hobart and Mr Murdoch had said about the LOTO procedure. However, both Mr Hobart and Mr Murdoch agreed that under the policy, it was permissible to 'isolate' in two ways; at the Council Meter Panel or the Mixer Starter Panel.

[326] Mr Kennedy noted that the applicants had had no formalised training in the LOTO procedure since 2006, and the procedure does not mention specific functions to achieve 'isolation' such as what one does to fuses, 'tails' or leads. Even so, Mr McGrath removed the fuse, the multimeter was tested and proved to be 'isolated'. The Box was closed, locked and tagged on the outside.

[327] Mr Kennedy said a dismissal must be 'manifestly harsh' when it is based on doing something which is not in the procedure and where other employees would carry out the task in the same way. Mr Kennedy also referred to the lack of training and the fact that Sydney Water had now undertaken 'a road show' in the LOTO procedure because of concerns from other employees. Moreover, when earlier concerns were raised in toolbox meetings, employees were told just to keep doing what they'd always been doing. Mr Hobart had said as much.

[328] Mr Kennedy noted both Mr Murdoch and Mr Hobart had agreed that, in respect to 'isolation', employees had a discretion to take what steps they believed appropriate. The applicants, Mr Young, Mr Whelan and Mr Stanojevic had all said that their preferred method was to 'isolate' the Mixer Starter Panel and that they did not feel comfortable locking out the Council Meter Panel Box. Mr Filipic said that he did not know if all three fuses needed to be pulled, but all other witnesses said only one fuse was necessary to be removed to achieve effective 'isolation' .

[329] Mr Kennedy added that it was not necessary to pull the motor leads to affect 'isolation'. Mr Hobart had said that the procedure did not tell the electrician to pull the 'tails'. Removing the 'tails' is a secondary buffer. There is no risk of power getting to the Mixer, except by human intervention. As to tagging, Mr Hobart had said it was 'ok' to tag on the outside and other witnesses had agreed. Locking was only necessary, where possible, and in this case, it was not possible, yet this was one of the alleged proven allegations. Sydney Water could give no explanation for this inconsistency. Mr Murdoch had agreed the locking procedure had been complied with. Indeed, Mr Filipic and Mr Hobart could not access the panel because it was locked.

[330] Mr Kennedy submitted that it was possible Mr Hayward had called the SOC. In any event, this area of the procedure is very confusing and even Mr Hobart had not known what was required. Nevertheless, the applicants had notified their supervisor and they had logged on to the Maximo system to record what had been done. In respect to the FRM, the LOTO procedure does not deal with the requirements as to the FRM. Mr Hayward had reported problems that day with his FRM and Mr Filipic acknowledged the problems had been reported.

[331] In dealing with risk, Mr Kennedy highlighted the evidence of Mr Hobart and Mr Murdoch that there was no risk of the contactor welding together, without human interaction. A fuse had been removed and taped over. There was no risk. The contactor had been de-energised. It was tested to prove it was de-energised by Mr McGrath and Mr Murdoch.

[332] Mr Kennedy had asked all the witnesses about risk and they all agreed there was no risk without further human intervention. While pulling the 'tails' was an added precaution, the procedure did not require it and there was no risk by not doing so, nor was there any risk by pulling only one fuse, rather than three. Mr Murdoch had recognised this because he left the Mixer Starter Panel Box as he found it on 17 May 2012. He did not pull other fuses or motor leads and simply left a post-it note. Mr Kennedy noted the significant contradiction between how Mr Murdoch left the site and what Mr Cox and Mr Mossman concluded was how the applicants had left the site in an unsafe manner, with a danger to others.

[333] Mr Kennedy referred to the evidence as to the effect of lightning hitting the Box. Contrary to Mr Murdoch's evidence, all the other Electrician witnesses said that lightning hitting the box would simply blow it up and not cause the contactor to weld together.

[334] Turning to the investigation, Mr Kennedy noted that the decision maker, Mr Mossman, did not know the critical issue - whether there was power to the Mixer Motor. While he was put in a difficult position (not being an electrician), the evidence now discloses that there was no power to the Mixer Motor and no risk to anyone's safety.

[335] Mr Kennedy said that Mr Mossman signed off on the Cox report on 17 August 2012, approving the applicants' dismissals. They had only been interviewed once and they had not been given an opportunity to properly respond to the allegations prior to Mr Mossman's decision.

[336] Turning to the applicants' dishonesty, Mr Kennedy acknowledged this was a very serious issue, but explicable in the circumstances. Both applicants were feeling pressured and harassed and had been told they were going to be sacked. They panicked, told a lie which they very much regretted, and this dishonesty was out of character.

[337] Mr Kennedy submitted that Mr Murdoch's evidence was not to be preferred. He had two motives for supporting Sydney Water's case: he had had a falling out with Mr Hayward and he was to embark on a selection process for a new Field Technician position. He changed his evidence in the face of incontrovertible evidence to the contrary (the locking procedure) and he was selective, evasive and gave deliberately convoluted answers.

[338] Mr Kennedy submitted that Sydney Water had breached its own procedure in that:

• there was no mandatory training every two years in the LOTO procedure;

• no action was taken against Mr Murdoch or Mr Filipic for leaving the site in an allegedly unsafe state (the same as they found it).

[339] Mr Kennedy put that the impact of the dismissals was very harsh. Mr Hayward had a sizeable mortgage and a seriously ill wife. Mr McGrath has had irregular employment. His income is the sole income for his family, including dependent children. Both had been finding it difficult to obtain comparable employment. They also stood to forego significant redundancy entitlements when their work is outsourced. Both applicants gave forthright and candid evidence, as did Mr Hobart. Mr Cox and Mr Mossman's evidence was of little benefit, because they did not understand the practical risk or what the procedure actually prescribed. The investigative reports wrongly focussed on isolating the Council Meter Panel Box, when this was not the preferred 'isolation' method.

[340] In referring to remedy, Mr Kennedy submitted that reinstatement is the preferred remedy under the Act and there was no lack of trust and confidence in the applicants, particularly when they are not guilty of any wrongdoing. Mr Barna, Mr Filipic and Mr Hobart all said that they had never witnessed either applicant working unsafely.

[341] Ms Brus submitted that the applicants had:

b) failed to demonstrate a level of personal responsibility (for employees of their experience) in performing their job safely.

She described them as 'lazy' and their actions as 'knowingly unsafe'. In tracing the actions of the applicants, Ms Brus said that the Mixer had not been appropriately 'isolated' (only a control fuse removed) and the LOTO procedure had not been followed. There was no effective 'isolation', no tag out, no lock out and no notification of completing the job. They were dishonest during the investigations. It would have been unnecessary for them to do so, if they had done nothing wrong. The applicants had destroyed the trust and confidence Sydney Water must have in them, particularly as they refuse to acknowledge the potential safety consequences of their actions.

[342] Ms Brus said the central issues in this case were whether the applicants' conduct on 16 May 2012 disregarded safe work practices and placed the safety of others at risk and whether their subsequent dishonesty rendered their reinstatements inappropriate.

[343] Ms Brus dealt extensively with Sydney Water's safety policies and procedures and submitted that the applicants' serious safety breach not only justifies summary dismissal, but provides a valid reason for dismissal. She emphasised that the safety issue is the elimination of risk as is reasonably practicable, not the adoption of less satisfactory control measures. All risks must be eliminated or, if this is not reasonably practicable, control measures adopted. The applicants' conduct constituted an unsatisfactory control measure. As very experienced and trained technicians, their alleged ignorance of how to safely 'isolate' the Mixer Motor is not an available defence.

[344] Ms Brus identified Sydney Water's approach of assuming all electrical installations, wiring/equipment are 'live' until proven de-energised and 'isolated' from all sources of current and voltage. She referred to the specifics of the LOTO procedure and claimed that it is well known, having been in place for some time.

[345] Ms Brus put that to effectively 'isolate' power to the Mixer, you would remove all three fuses from the Council Meter Panel Box. To ensure power was not accidentally reconnected, you would then lock out and tag out the three fuses. You would then notify the SOC that this task had been performed. What the applicants did on 16 May 2012, was to only remove one 24V control fuse from the Mixer Starter Panel Box and place black insulation over the fuse holder. They did not lock out and tag out. There was no call made about the job and it was not promptly recorded on the FRM. As there was no report, a system error was activated.

[346] Ms Brus submitted that the risks which followed the applicants' actions included:

i. if the contactors to the control fuse had welded closed together (which can occur) there could have remained a completed circuit for electricity to flow to the Mixer as power was not 'isolated' at the source of the Supply Box;

ii. due to the lack of notification of the work by the applicants, and the absence of any lock out/tag out (i.e. warning tags), a hasty careless, inadvertent or inattentive employee responding to the Mixer fault notification could have reinserted the control fuse to return power supply to the Mixer (unknown to them that divers were at the reservoir or to attend that day); and

iii. the mere placing of tape over the fuse socket was not adequate protection from what was, underneath, 'live' electricity (because it had not been 'isolated' from the Supply Box).

[347] Ms Brus said that the applicants' versions of events cannot be accepted because they say:

a) their FRM was not working, yet searches demonstrate the devices were functioning;

b) you cannot tag out, but it has been demonstrated you can;

c) they went to the top of the reservoir to 'isolate' power, but that is now an admitted and deliberate lie;

d) they placed a tag outside the Mixer Starter Panel Box on a piece of string - no such tag was located, and if it was placed in that manner (which is not accepted) it was insecure and negligent to do that way.

[348] Ms Brus denied any claims of procedural unfairness. The applicants were notified of the allegations on 24 July 2012 and stood down on full pay. On 20 August, the applicants were advised the allegations (bar one) were found to be substantiated. They were given a chance to respond and did so. The applicants were assisted at all times by the Union Organiser. They attended two meetings each with Management and their Union Organiser. They lied during the investigation, causing further enquiries to be made. Their responses were considered, as were their long periods of largely unblemished service, before the final decision to terminate their employment was made.

[349] Ms Brus said it was not the point that no safety incident resulted. If it was not for an inquisitive Facility Technician, something serious might have occurred. The applicants knowingly adopted an unsatisfactory and unsafe work practice, creating a not insignificant risk to safety. They have refused to acknowledge any wrongdoing and told lies during the investigation. Sydney Water could not be confident that they would act safely in the future or not tell lies when put into a similar situation.

[350] Ms Brus submitted that their dishonesty itself justified dismissal. Orders for reinstatement or re-employment are inappropriate. Given all the circumstances, dismissal was a decision fairly open to Sydney Water. Alternatively, reinstatement would be inappropriate.

[351] In her oral submissions, Ms Brus dispelled two conspiracy theories postulated by the applicants. Firstly, that Mr Murdoch was so embittered by an argument with Mr Hayward in May 2012, the details of which he does not remember, that he sought to wreak revenge on him when the circumstances arose on 17 May 2012. Secondly, that Mr Cox had a simmering desire to get rid of Mr McGrath and that Mr Murdoch's revelations fell neatly into this scheme. Ms Brus described both theories as ridiculous and without a shred of evidence to support them.

[352] Ms Brus put that Mr Murdoch gave careful, deliberate and honest evidence for which he could not be criticised. It was accepted that Mr Murdoch left the site having satisfied himself that there was no power going to the Mixer Motor. His concerns went to what stage whoever had done the job was up to. As there was no tag, he could not be sure if the job was partially completed at all. His job was not to 'isolate', but to inquire into the registered fault of the Mixer not working and an alarm having been triggered. As to whether he knew it was the applicants who had performed the job, the highest the evidence got was Mr Barna's unclear recollection that he 'probably told him'. This is consistent with Mr Murdoch saying he had no recollection of being told. Ms Brus put that Mr Murdoch's only motivation was a concern that there had been no lock-out or tag-out. Moreover, Mr Murdoch could not possibly have known the outcome of his report would lead to the dismissals of the applicants.

[353] Ms Brus submitted that if Mr Cox had truly wanted to get rid of Mr McGrath, he could have done so after the Wiley Park incident. The fact was Mr McGrath was not treated any differently; others, including supervisors had been given warnings, transferred or put on performance management plans. Mr McGrath was treated quite fairly. The warning was entirely appropriate. It was absurd to suggest he was not aware of any warning. He had appealed the decision and turned up at Bondi in accordance with the disciplinary outcome. It was not unjust and he was not singled out. His role as a Union delegate had nothing to do with it. In any event, Mr Cox was not the final decision maker.

[354] In dealing with the applicants' dishonesty, Ms Brus observed that the applicants' claims of having 'panicked' does not sit comfortably with their other emphatic evidence that they had done nothing wrong and had 'isolated' correctly. The lie they created was the very step Mr Murdoch, Mr Hobart and Mr Filipic said would create a complete and absolute circuit breaker in which there could be no risk. The standard Mr McGrath applied was one of minimal risk.

[355] Ms Brus also said that it was 'curious' that Mr Hayward had said if it was any other Manager (than Mr Cox) he would have told the truth. When asked if he was comfortable in lying to Mr Cox, he answered 'Yes, I suppose I was.' This did him little credit and Sydney Water could not be satisfied that he would not lie to any other Manager who he did not like. The evidence of fellow electricians, as to being able to work again with both applicants, is but one aspect of the consideration of reinstatement. As for Mr McGrath, if he had done the right thing, there was absolutely no reason for him to lie. Mr McGrath had a propensity to embellish the evidence.

[356] Ms Brus submitted that there are two accepted ways of 'isolating' the Mixer Motor. The first is to remove the three fuses in the Council Meter Panel Box. That Box had a Sydney Water 'Jackson' lock on it and was sitting behind a barbed wire fence on a site only Sydney Water employees could access. Specific arrangement had to be made to allow the energy authorities access to the Council Meter Panel box. The second means of 'isolation' was to pull all three fuses in the Mixer Starter Panel and pull the 'tails', either at the Mixer Starter Panel or 'on top of the reservoir'. Mr Hayward's evidence can be ignored because he was not facing Mr McGrath and could not see how many fuses he pulled. Mr McGrath said he pulled all three, but Mr Murdoch said he found only one fuse removed and its socket was taped over.

[357] Mr McGrath did the barest he had to achieve de-energisation. It was not completed properly as attested to by Mr Hobart, Mr Murdoch and Mr Filipic. Ms Brus acknowledged that removing the 24V fuse from the Mixer Starter Panel de-energised the Box and it could not be re-energised, without human intervention. But this still left a risk; albeit a remote one. The applicants had taken a short cut.

[358] Ms Brus put that while there may have been a system breakdown between OCR and SOC, this is irrelevant and does not minimise the responsibility of the applicants for completing their work safely.

[359] In respect to future redundancies, Ms Brus said there was no evidence to support the applicants' claims to redundancy. The current position is that all affected staff will be offered employment with Thiess, with redundancy protection guaranteed for twelve months.

[360] Ms Brus concluded by submitting that while the applicants would not accept their breach of safety, it does not follow that they did not do it. This constituted a valid reason for dismissal. Sydney Water had a legitimate concern if the applicants were reinstated. Such an outcome would be inappropriate in this case.

[361] In reply, Mr Kennedy said that conspiracy was not his word, but in any event, it was unnecessary to rule on these allegations. Mr Kennedy repeated Mr Murdoch's view as to the safety of the site when he left it.

[362] Mr Kennedy referred to all of the witness evidence which went to no risk if the 'tails' were not pulled. Only human intervention, by physically pushing the contactor together could recreate a risk. Lightning, or just coming together on its own was impossible, so there was no risk.

[363] As to reinstatement and the feelings of the Managers, Mr Barna and Mr Filipic were supervisors, and neither had said that they had lost trust or confidence in the applicants. As to the 'Jackson' lock on the Council Box, this was of no significance. Mr Hobart and Mr Murdoch both agreed that pulling of one fuse or three still meant the Box was left in a safe manner and no risk was created.

[364] There are a number of jurisdictional prerequisites which must be satisfied before these two applications are determined on their merits. In this respect, I do not apprehend there to be any controversy that:

a) the applicants were persons protected from unfair dismissal in that they:

i. had more than completed the minimum employment period (subsection (a) of s 382); and

ii. were covered by an enterprise agreement; namely, the Sydney Water Trades and Apprentices Enterprise Agreement 2010 (s 382(2)(b));

b) the applicants were dismissed from their employment on 5 September 2012 (s 385(b));

c) the applications for remedies for unfair dismissal were made within the 14 days (now 21 days) statutory time period (s394(2));

d) the Small Business Fair Dismissal Code is not applicable in that Sydney Water employs over 2700 employees (s 385(c)); and

e) the dismissals were not for reasons of genuine redundancy (s 385(d)).

[365] Accordingly, the remaining matter for the Commission to determine is whether the applicants' dismissals were 'harsh, unreasonable or unjust' within the meaning of s 387 of the Act. That section is expressed as follows:

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person - whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.'

[366] The well known passage from Byrne & Frew v Australian Airlines Ltd [1995] HCA 24 ('Byrne') is relevant to the consideration of whether a dismissal is 'harsh, unjust or unreasonable.' Their Honours McHugh and Gummow JJ said, at para [128]:

'It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted'.

[367] There is no doubt that this is a case involving allegations of serious misconduct. In this respect, the Act makes reference to the meaning of serious misconduct where at s 12, it says:

serious misconduct has the meaning prescribed by the regulations.'

The regulations referred to are r 1.0.7(1) & (2) of the Fair Work Regulations 2009, (the 'Regulations'). It is expressed as follows:

(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2) For subregulation (1), conduct that is serious misconduct includes both of the following:

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) conduct that causes serious and imminent risk to:

(ii) the reputation, viability or profitability of the employer's business.'

[368] By reference to the above Regulation, Sydney Water found that the applicants' conduct caused an 'imminent risk to the health or safety of a person'. Before leaving the more general statutory provisions, I repeat the statutory instruction in s 381(2) of the Act to apply the principle of a 'fair go all round':

'(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a "fair go all round" is accorded to both the employer and employee concerned.'

[369] As mentioned at the outset, both applicants were summarily dismissed for misconduct, allegedly because of a breach of Sydney Water's Policies; namely the LOTO procedure. Not only do the applicants say their dismissals were 'harsh, unreasonable and unjust', but they deny having committed the misconduct alleged against them. With this in view, the onus is on Sydney Water to prove to the Commission's satisfaction, on the balance of probabilities, that the misconduct occurred; See: Culpeper and Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201.

[370] While decided in a different statutory context, the comments of Moore J in Edwards v Giudice at paras [4] and [7] are apposite:

'4 In the present case the Full Bench concluded that Commissioner Tolley had failed to determine whether Ms Edwards was guilty of misconduct in the way alleged by Telstra Corporation Ltd and that the Commissioner should have done so as part of ascertaining whether her termination had been harsh, unjust or unreasonable. The approach of the Full Bench was, in my opinion, unexceptionable. When the reason for a termination is based on the misconduct of the employee, the Commission must, if it is an issue in proceedings challenging the termination, determine whether the conduct occurred. The obligation to make such a determination flows from s 170CG(3)(a). That is, the Commission must determine whether the alleged conduct took place and what it involved. Section 170CG(3) provides:

"In determining, for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to:

(a) whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; and

(b) whether the employee was notified of that reason; and

(c) whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee; and

(d) if the termination related to unsatisfactory performance by the employee - whether the employee had been warned about that unsatisfactory performance before the termination; and

(e) any other matters that the Commission considers relevant."

7 The reason would be valid because the conduct occurred and justified termination. The reason might not be valid because the conduct did not occur or it did occur but did not justify termination. An employee may concede in an arbitration that the conduct took place because, for example, it involved a trivial misdemeanour. In those circumstances the employee might elect to contest the termination in the arbitration on the basis that the conduct took place but the conduct did not provide a valid reason and perhaps also by relying on the other grounds in paras (b) to (e). However an employee may not concede or admit, for the purposes of the arbitration, that the conduct occurred or may not be prepared to accept that the Commission could assume the conduct occurred. In either situation the employee would be putting in issue whether the conduct occurred. In my opinion the Commission must, in these circumstances, determine whether the conduct occurred as a step in resolving whether there was a valid reason. I do not see how the Commission can move straight to a consideration of whether termination was justified by assuming the conduct did occur. First the Commission would have failed to resolve an issue raised by and relied on by the employee, namely whether the conduct occurred at all. Second the Commission would have failed to make findings by reference to which a Full Bench might have to determine an appeal where the Commission had concluded the termination was harsh unjust or unreasonable on assumed facts and not facts found [my emphasis].'

[371] In King v Freshmore, a Full Bench of the Australian Industrial Relations Commission (AIRC) said at paras [24], [26], [28] and [29]:

'[24] The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.

[26] As we have noted above, s.170CG(3)(a) obliges the Commission to make a finding as to whether there was a valid reason for the termination of employment. In circumstances where a reason for termination is based on the conduct of the employee the Commission must also determine whether the alleged conduct took place and what it involved.

[28] It is apparent from the above extract that his Honour answered the question of whether the alleged misconduct took place on the basis of whether it was reasonably open to the employer to conclude that the employee was guilty of the misconduct which resulted in termination. This is not the correct approach. The Commission's obligation is to determine, for itself and on the basis of the evidence in the proceedings before it, whether the alleged misconduct took place and what it involved.

[29] In our view the Senior Deputy President failed to determine for himself whether Mr King was guilty of misconduct in the way alleged by Freshmore and he should have done so as part of determining whether the termination had been harsh, unjust or unreasonable. When the reason for a termination is based on the misconduct of the employee the Commission must, if it is an issue in the proceedings challenging the termination, determine whether the conduct occurred. The absence of such a finding leads us to conclude that the member below failed to properly determine whether there was a valid reason for the termination of Mr King's employment [my emphasis].'

[372] The meaning of 'valid reason' in s 387(a) is drawn from the judgment of North J in Selvachandran. This meaning has been applied by members of the Commission and its predecessors for many years:

'In its context in s 170DE(1), the adjective "valid" should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee's capacity or conduct or based upon the operational requirements of the employer's business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must "be applied in a practical, commonsense way to ensure that the employer and employee are treated fairly.'

[373] Even accepting that a finding of serious misconduct was open to Sydney Water, it must not be confused with the statutory language. This still requires the Commission to find that there was, or was not, a valid reason for dismissal (s 387(a)). In Royal Melbourne Institute of Technology v Geoffrey Asher [2010] FWAFB 1200, a Full Bench of Fair Work Australia (FWA) held at para [16]:

'[16] In the circumstances of this matter the University purported to terminate Dr Asher's employment for serious misconduct within the meaning of that term in the University's enterprise agreement. If it successfully established that Dr Asher had engaged in serious misconduct it would necessarily follow that there was a valid reason for the dismissal. However, the converse is not true. As established by Annetta, the question that needed to be considered was whether there was a "valid reason" in the Selvachandran sense - whether the reason was sound, defensible or well founded. Whether it also amounted to serious misconduct may well be a factor relating to the overall characterisation of the termination but it was not an essential requirement in the determination of whether a valid reason exists.'

[374] In another case involving a breach of an employer's safe working practices, an appeal Bench of FWA in Parmalat Food Products Pty Ltd v Wililo [2011] FWAFB 1166 ('Wililo'), found at para [24] and [26]:

'[24] We do not consider that the decision discloses a clear line of reasoning leading to the decision reached. The existence of a valid reason is a very important consideration in any unfair dismissal case. The absence of a valid reason will almost invariably render the termination unfair. The finding of a valid reason is a very important consideration in establishing the fairness of a termination. Having found a valid reason for termination amounting to serious misconduct and compliance with the statutory requirements for procedural fairness it would only be if significant mitigating factors are present that a conclusion of harshness is open. We do not believe that any of the circumstances involved in this matter amount to such factors.

[26] Mr Wililo's conduct was found to be serious misconduct. It involved deliberate acts. We consider that characterising the actions as carelessness does not derogate from the seriousness of his action or the possible consequences. Further we do not believe that there was a sufficient basis to find that the employer could not apply its safety standards because of alleged actions in relation to other safety breaches. If it was entitled to take the action in this case the need to enforce its safety rules suggests that the resultant termination is not harsh [my emphasis].'

[375] Subsections (b) - (e) of s 387 of the Act might be broadly characterised as issues relevant to whether a dismissed employee was afforded procedural fairness. Mr Kennedy argued that the applicants had been denied procedural fairness in a number of significant respects. It is trite to observe that, even if there was a valid reason for an employee's dismissal, the dismissal may still be held to be unfair, if the employee was not afforded procedural fairness. This has been a long held industrial principle adopted and applied by this Commission, its predecessors, other Courts, industrial tribunals and the High Court. In the High Court case of Byrne, supra above, their Honours McHugh and Gummow JJ said at para [130]:

'130. That is not to say that the steps taken, or not taken, before termination may not in a given case be relevant to consideration of whether the state of affairs that was produced was harsh, unjust or unreasonable. Thus, it has been said that a decision which is the product of unfair procedures may be arbitrary, irrational or unreasonable (168). But the question under cl 11(a) is whether, in all the circumstances, the termination of employment disobeyed the injunction that it not be harsh, unjust or unreasonable. That is not answered by imposing a disjunction between procedure and substance. It is important that matters not be decided simply by looking to the first issue before there is seen to be any need to enter upon the second.'

[376] At this juncture, I cite three further authorities on the subject of procedural fairness in an unfair dismissal case. In Crozier v Palazzo Corporation Pty Limited t/as Noble Storage and Transport (2000) 98 IR 137 ('Crozier v Palazzo'), a Full Bench of the AIRC, in a matter not too dissimilar to this one, said at para [73]:

'As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170CG(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment.'

[377] In Wadey v YMCA Canberra 1996 IRCA 568, Moore J made clear that an employer cannot merely pay 'lip service' to giving an employee an opportunity to respond to allegations concerning the employee's conduct. His Honour said:

'In my opinion the obligation imposed on an employer by that section has, for present purposes, two relevant aspects. The first is that the employee must be made aware of allegations concerning the employee's conduct so as to be able to respond to them. The second is that the employee must be given an opportunity to defend himself or herself. The second aspect, the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend.'

[378] Nevertheless, procedural fairness steps should be applied in a commonsense and practical way. In Gibson v Bosmac Pty Ltd (1995) 60 IR 1 ('Gibson'), Wilcox CJ said at 7:

'Ordinarily, before being dismissed for reasons related to conduct or performance, an employee must be made aware of the particular matters that are putting his or her job at risk and given an adequate opportunity of defence. However, I also pointed out that the section does not require any particular formality. It is intended to be applied in a practical, commonsense way so as to ensure that the affected employee is treated fairly. Where the employee is aware of the precise nature of the employer's concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements of the section.'

[379] In addition, it goes without saying that any issue or issues of procedural unfairness may not be of such significance as to outweigh the substantive reason/s for an employee's dismissal, particularly in cases of misconduct where the proven misconduct is of such gravity as to outweigh any other considerations such as age, length of service, contrition and issues of procedural unfairness generally. This was no doubt the approach adopted by Sydney Water; although it strongly resisted any suggestion that the applicants were denied procedural fairness.

[380] Given the focus of the LOTO procedure in this case, I annex to this decision the complete document as Annexure A.

[381] A number of general observations may be made about the LOTO procedure:

a) The procedure is divided into five main sections with appendices. The latter are to be read in conjunction with the substance. These sections are: Scope, Key requirements, Procedure, Additional Information, and Definitions.

b) The reservoir (WS0194) is an unmanned site, so the procedure to be applied is that identified at page 4. Two matters may be noted as not being mandatory; firstly, notification to the SOC and/or the asset owner (in this case, Sydney Water) and secondly, attaching a red or blue lock (only if possible).

c) Personnel are required to undertake refresher training every two years.

d) There are no disciplinary references in circumstances where employees are alleged to have breached or failed to comply with the procedure.

[382] As to this last point, it was not contended otherwise that Sydney Water relied on and applied its disciplinary policy relevant to misconduct found at cl 6.10 of the Agreement. This clause is expressed as follows:

The Employer will investigate and determine matters in relation to any alleged misconduct.

During any investigation by the Employer the rules of natural justice will apply.

Nothing will prohibit the Employer suspending from duty an employee for alleged misconduct, where the Employer deems it necessary to further investigate the alleged misconduct.

The employer may defer payment for any day or part of a day during any period of suspension but only up to a maximum period of 14 calendar days.

Where an investigation determines that an employee suspended, without pay for alleged misconduct is not guilty of the alleged, misconduct, the employee will receive any payments deferred, during the period of suspension.

Where an investigation determines that an employee has, committed misconduct, the employee may not be entitled to receive any remuneration deferred during any period of suspension and the Employer may:

a) Terminate the employee's employment in accordance with either subclause 6.9 or 6.12; or

c) Subject the employee to other action as the Employer deems appropriate.

[383] The Agreement also refers to summary dismissal at cl 6.12 as follows:

Where it has been established to the satisfaction of the Employer that an employee has been guilty of serious misconduct, the Employer may summarily dismiss without notice.

[384] Also relevant, in the present context are the terms of cl 38.5 and 38.6, which are as follows:

The Employer and all employees will comply with the New South Wales Occupational Health and Safety Act, 2000 and Regulations and Codes of Practice as amended or replaced from time to time.

Employees have a responsibility to comply with agreed safe systems of work and for reporting any new hazards identified in the course of their activities.

[385] Returning back to the LOTO procedure, I do not apprehend there to be any disagreement that the key focus of the procedure is to ensure the effective 'isolation' of all plant and equipment from all sources of power and, in doing so, the identification of 'isolation' points by means of tagging and locking out (noting that locking out is only applicable 'wherever possible').That this is the central focus of the procedure is strengthened by the terms of the allegations themselves which refer to the applicants' failure to carry out the electrical 'isolation' on the reservoir. In addition, the definition of 'isolation' as found in HSP 049 is, consistent with this focus:

'Putting an effective barrier in place between the energy source and the work and also removing any residual energy that may affect the work.'

[386] It is also relevant that the first key requirement of the procedure is that 'all energy sources into or within a device must be isolated prior to work commencing.' Mr Hobart agreed that a 'device' could be either the Mixer itself (in the reservoir) or the Mixer Starter Panel. The obvious questions are had the applicants 'isolated' the Mixer and/or the Mixer Starter panel and, if they had, how could they be in breach of the key requirement of the procedure if they had 'isolated' the 'device'?

[387] For a qualified electrician, the task of 'isolation' is a relatively straightforward and unremarkable job undertaken on a frequent basis. It seems to me that the subtlety of the evidence in this case is whether the LOTO procedure was breached or whether the key focus of the policy - 'isolation' of the Mixer Starter Panel - had been achieved by the applicants on the day in question (16 May 2012). I use the conjunction 'or' because, in my opinion, this is a very pertinent distinction. Put another way, it might be said that applicants breached the LOTO procedure in one or more specific ways, but nevertheless successfully 'isolated' the Mixer Starter Panel such as to render it impossible, except by subsequent human intervention, to pose a real danger to any person who may have come on site. To my mind, these two propositions are not just matters of mere semantics, but constitute a significant distinction in the context of whether there was a valid reason for the applicants' dismissals.

[388] That said, I have no doubt at all that if the Mixer Starter Panel had not been 'isolated, it posed a catastrophic risk (including risk of death) to the safety of any divers in, or on a boat on the reservoir and/or to other persons working in, or near the reservoir. The applicants claimed that there was no risk as they had successfully 'isolated' the Mixer Starter Panel Box and had done so in accordance with the usual practices of Sydney Water. In my view, for Sydney Water to succeed in this case, it is this claim which it must disprove.

Was there a valid reason for the applicants' dismissal?

[389] There is no doubt that this has been a difficult case; difficult in the sense of a layman's understanding of quite complex technical electrical jargon and processes. I am indebted to both Mr Kennedy and Ms Brus for guiding me through the technical details of the electricians' evidence. Far from claiming to be an expert in the field, I believe that I now have a sufficient understanding of what it is the applicants were accused of and what impact their actions may have had for the health and safety of others who entered the site.

[390] This brings me to the testimony of a number of experienced electricians who gave evidence in the proceedings. It was apparent that not every electrician who gave evidence agreed on what additional measures they would take, or which were prefereable to 'isolate' equipment by additional safety or observance backups. It seems to me that experienced and qualified views may differ. What I can say is that I am no position to quibble with any of this expert evidence.

[391] Nevertheless, the question which has exercised my mind throughout this case was whether the actions of two very experienced electricians, with no previous safety infringements, effectively 'isolated' the Mixer Starter Panel Box and therefore rendered any risk to be nil, save for any subsequent human intervention. On this question, the expert evidence seems not only clear, but overwhelming.

[392] Referring to this evidence as to whether the 'isolation' had been properly effected and there was no risk, I detail the following extracts from the evidence:

'Absent that, there was no risk of power getting to the Mixer Motor, was there?---When I left, no, there wasn't.

Do you accept that when you left the site, there was a possibility of divers coming at any time?---Yes

And on your statement do you therefore accept that those divers would have had their safety compromised?---I believe that that part of the process hadn't been followed at that point of time when I left the site.

As an electrician, it's your job to eliminate risk, ensure asssets are safe before leaving, isn't it?---Yes.

And in this circumstance, on your evidence, you left an unsafe asset?---No, I did not. As I stated to you, I prove [sic] de-energised. There was no power going to that Mixer

So you're now saying it was left in a safe manner?---No, I'm saying when I left that site there was no power going to that Mixer. The safety concerns I had - and as I said in my statement - sorry, I'm just looking up - - -

I understand---As far as I was concerned, there was no power going to the Mixer, so I did leave it safe.

Have you ever seen or heard of a de-energised contactor welding together on its own, without any man intervention or person intervention?---No, sir.'

'So in terms of risk, right, if I remove just one there's no difference in the risk to removing all three?---I would say in this particular case, just from the drawing, without seeing a schematic diagram, I would say yes. I think that's what you're asking.

... I'm putting it to you that there's no risk of the Mixer Motor becoming energised because the only risk that exists is if a man-made risk - a person pushing the contactor together somehow?---What you're saying yes

But there's no natural disaster that's going to lead to the contactor getting - - -?---Not that I'm aware of.

Yes, considering it's de-energised?---After that I've tested to see that's de-energised?

'Like I said, we don't do an isolation - we don't go back to taking the whole thing off. You would do it again at the 'isolation' - we don't go back to taking the whole thing off. You would do it again at the isolator. It is where you 'isolate' your three phase supply. That is what it - on the board it says is a main isolator and that's where you affix all your locks and your tags. That's what the LOTO procedure refers to. ... You 'isolate' the load side of the main isolator. We don't 'isolate' the line side of a main isolator, otherwise you'd be taking a lot of equipment offline. We don't go back to, like, a main switchboard that has, you know, 20 or 30 panels on it to 'isolate' that particular one; so you will find that on the line side you have power still, on the load side is what you are taking all sources of energy off.'

a. Turn off the switch at the Mixer Starter Panel;

b. Remove the motor line and control fuses in the Starter Panel;

e. Fill out a tag and attach it to the outside of the box which houses the Panel with electrical tape, string or wire.'

'Okay. In terms of your isolation steps, Mr Murdoch and Mr Hobart say that the preferred method under the LOTO procedure is to remove the motor leads or tails at the top of the reservoir?---Yes.

What is your view on that? Do you agree?---I wouldn't do that in my experience. I wouldn't remove the motor leads unless I was doing a - removing the actual Mixer itself. I would not do that in my experience.

Why not?---Because I believe you've already proved that the motor is de-energised and that's just - you can do - it's an extra step you can take, but I don't believe it's necessary if you've proved the motor is de-energised and will not start.'

'I would normally' isolate' both the fuses at the distribution board and the control fuses at the Mixer Starter Panel. However, I can understand an employee working under our LOTO procedure only 'isolating' the control fuses in the Mixer Starter Panel. If the control fuses are removed then power cannot be switched to the Mixer.'

'Assuming that the fuses in the supply Mixer panel have been removed - - - ?---Yes.

- - - what is the risk created by leaving the tails removed?---I don't see a risk with the tails, no.'

[393] Before leaving this evidence, I feel that I can dispel two specific theories in Sydney Water's case - firstly, that the contactors 'inside the fuse' could weld together. All of the electricians did not understand how this was physically possible. It would appear that this theory was based on a misunderstanding by Sydney Water management. Secondly, that a lightning strike could have caused the Mixer Starter Box to become re-energised by causing the contactors to weld together, and therefore causing the Mixer to re-energise. I accept that this theory is implausible. All the electricians' evidence (apart from that of Mr Murdoch) was that a lightning strike to the Mixer Starter Box would destroy the Box completely and thus render the power source immediately recognisable as a major fault.

[394] In balancing the competing considerations in this case, I make these observations:

a) there is conflicting evidence of whether there was a breach of the LOTO procedure, in form or substance. Resolving this conflict will determine the question of whether there was a valid reason for the applicants' dismissals;

b) it is of critical importance that there is strict compliance with Sydney Water's safety policies in a field which is inherently dangerous and poses risks of not only serious injury, but death;

c) the applicants have admitted lying during the investigation;

d) on one view, the applicants' long service and experience actually tells against them in that they should have been well aware of what was expected of them; and

e) there is contested evidence of the training the applicants received on the LOTO procedure, although the uncontested evidence is that that their last formal LOTO training was 6 years ago.

a) the applicants have exceedingly long periods of service with Sydney Water, in Mr Hayward's case, unblemished service and in Mr McGrath's case, one recent contested warning, unrelated to safety;

b) given their age and work history, they are unlikely to be able to secure comparable alternative employment, or at all;

c) I have no doubt that their dismissals will have long term detrimental effects, including financially, on them personally and their families;

d) the applicants acknowledged their dishonesty during the investigation and are deeply remorseful for their actions;

e) the LOTO procedure does not expressly detail the steps required to be taken to 'isolate' power sources;

f) the LOTO procedure requires formal training every two years, which, as acknowledged by Sydney Water, did not occur in the applicants' cases. There is some attraction therefore, in Mr Kennedy's submission that Sydney Water was itself in breach of its own policy;

g) the LOTO procedure is not only unclear, it is silent as to the consequences of non-compliance or breach. While it may be comfortably presumed that serious breaches of policy may result in disciplinary action, including dismissal, such an outcome is not only discretionary, but would require the decision maker to consider whether alternative disciplinary action may be warranted in all the circumstances; See: Lawrence at para [20]. This would seem to be the irresistible conclusion to be drawn from the provisions of cl.6.10.6 - Misconduct in the Agreement (see para [382]);

h) the evidence of experienced electricians was that the LOTO procedure was, at best, unclear, and at worst, confusing. This seems to have been acknowledged by Sydney Water when it undertook extensive retraining of its employees on the procedure following agitation by them in light of the stand down of the applicants (lest they too be subject to disciplinary action for any breach); and

i) there was no evidence of any other employee being dismissed for a breach or failure to observe the LOTO procedure, even though I am confident that less than strict compliance with the procedure occurred on a regular basis.

[396] I do not doubt that Sydney Water undertook a similar balancing exercise in the course of its investigation as the Commission has been required to do here, although obviously not to the extent and thoroughness which occurred during these proceedings. This is not to be necessarily critical of the investigation of the allegations which, I later indicate I am generally satisfied with. However, the Commission must make its own findings on the evidence it has before it. So much is evident from the decision in King v Freshmore. This is a distinction which has a real impact in this case.

[397] One further matter needs developing. It is not disputed that the applicants were dismissed for a single act of misconduct relating to an alleged safety breach in a long, and otherwise unblemished, work history. Ms Brus expressly referred to the meaning of serious misconduct in the Regulation, so it may be safely assumed that Sydney Water relies on both limbs of subregulation (2) (see para [367]).

[398] Given this acknowledgement, it is appropriate to consider whether the applicants' conduct was such as to constitute a repudiation of their contracts of employment or, in other words, were a breach of the express, or implied terms of their contracts of employment. Put another way, the Commission must determine whether the evidence before it, discloses a deliberate and wilful intent by the applicants to commit an act which strikes at the heart of the employment relationship.

[399] This principle has been elucidated in a number of well known authorities: In North v Television Corporation Ltd (1976) 11 ALR 599, Franki J said at p 616:

'It is clear that a single act of disobedience may be sufficient to justify dismissal on the ground of misconduct but it was held in Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285, that to justify summary dismissal a single act must be such as to show that the employee was repudiating the contract of service or one of its essential conditions.'

[400] The 1959 English case referred to above makes it plain that an act of disobedience or misconduct (justifying dismissal) requires also that the disobedience must be 'wilful':

'... I do, however, think (following the passages which I have already cited) that one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and for that reason, therefore, I think that one finds in the passages which I have read that the disobedience must at least have the quality that it is "wilful": it does (in other words) connote a deliberate flouting of the essential contractual conditions (P288).'

[401] In Concut Pty Ltd v Worrell and Anor [2000] HCA 64; (2000) 103 IR 160, his Honour, Kirby J, dealt with the ordinary relationship of the employer and employee at common law and said at para [51]:

'The ordinary relationship of employer and employee at common law is one importing implied duties of loyalty, honesty, confidentiality and mutual trust. At common law:

"[c]conduct which in respect of important matters is incompatible with the fulfilment of an employee's duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal. ...[T]he conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to its future conduct arises."

In the present case, the findings at trial went beyond mere uneasiness as to the future. They necessitated, or at least warranted, a conclusion that the "confidence" essential to the relationship of employer and employee had been destroyed. Instead of pursuing the interests of the company and its shareholders, the employee had pursued his own private interests. Not only was the employee in breach of his duty of fidelity and trust owed to the employer, he had remained in breach of that duty to the date of the trial. Until that time he had not accounted for the benefits wrongly appropriated by him. Indeed, he had denied any wrongful appropriation. The issue so tendered at the trial was determined against the employee. He was then subject to the employer's counter-claim for an order to make a refund. Such order was duly made at trial. It was not contested on appeal. Given his senior status in the company's service and the nature and extent of the misconduct disclosed in the evidence and accepted by the primary judge, it was open to him to find that the employee had undermined the confidence essential to the ongoing relationship of employment. Prima facie, this had afforded a legal justification for the employee's summary dismissal.

It is, however, only the exceptional circumstances that an ordinary employer is entitled at common law to dismiss an employee summarily. Whatever the position may be in relation to 'isolated' acts of negligence, incompetence or unsuitability, it cannot be disputed (statute or express contractual provision aside) that acts of dishonesty or similar conduct destructive of the mutual trust between the employer and employee, once discovered, ordinarily fall within the class of conduct which, without more, authorises summary dismissal. Exceptions to this general position may exist for trivial breaches of the express or implied terms of the contract of employment. Other exceptions may arise where the breaches are ancient in time and where they may have been waived in the past, although known to the employer. Some breaches may be judged irrelevant to the duties of the particular employee and an ongoing relationship with the employer. But these exceptional cases apart, the establishment of important, relevant instances of misconduct, such as dishonesty on the part of an employee like Mr Wells, will normally afford legal justification for summary dismissal. Such a case will be classified as amounting to a relevant repudiation or renunciation by the employee of the employment contract, thus warranting summary dismissal.'

[402] In Farquharson v Qantas Airways Limited [2006] AIRC 488, the Full Bench of the AIRC referred, with approval, to the following analysis of Ross VP (as he then was) in Rose v Telstra [1998] AIRC 1592:

'[19] The issue, then, is whether the "out of hours" conduct involves a breach of an express or implied term of the contract of employment. Ross VP then considered the relevant implied terms:

An employee's implied duty of fidelity and good faith is particularly relevant here. One of the most concise and authoritative statements of what is generally encompassed by the duty of fidelity and good faith is to be found in Blyth Chemicals v Bushnells. In that case their Honours Dixon and McTiernan JJ said:

"Conduct which in respect of important matters is incompatible with the fulfilment of an employee's duty. Or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal ... But the conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to future conduct arises."

In the same case their Honours Starke and Evatt JJ note:

"The mere apprehension that an employee will act in a manner incompatible with the due and faithful performance of his duty affords no ground for dismissing him; he must be guilty of some conduct in itself incompatible with his duty and the confidential relation between himself and his employer."

The obligations imposed by the common law duty of fidelity and good faith operate to prohibit acts outside of the employment which are inconsistent with the continuation of the employment relationship. But as Spender AJ observed in Cementaid (NSW) Pty Ltd v Chambers, 'an actual repugnance between the employee's acts and his relationship with his employer must be found'._

More recently the implied term of fidelity and good faith has been expressed as an obligation to serve the employer loyally and not to act contrary to the employer's interest. In England this obligation appears to have been subsumed by the more general obligation of mutual trust and confidence. The implied term of mutual trust and confidence imposes reciprocal duties on the employee and employer that they shall not 'without reasonable and proper cause, conduct themselves in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee'.

If conduct objectively considered is likely to cause serious damage to the relationship between employer and employee then a breach of the implied obligation may arise.

There is some support for the proposition that the existence of an implied term of trust and confidence in contracts of employment has been accepted in Australia.

The words `trust and confidence' in this context are used in a contractual sense rather than as an ingredient of a personal relationship. As McCarry notes:

"... the words `trust and confidence', just like the employee's reciprocal duties of 'fidelity and good faith', do not now refer to the ingredients of a personal relationship, even if they once did. The words now represent, in shorthand form, a bundle of legal rights which have more to do with modes of behaviour which allow work to proceed in a commercially and legally correct manner than with ingredients in an interpersonal relationship."

The above statement is consistent with the shift in the nature of the employment relationship, from status to contract, referred to earlier.

[20] His Honour then formulated a summary of principle which has now been applied on a number of occasions:

"It is clear that in certain circumstances an employee's employment may be validly terminated because of out of hours conduct. But such circumstances are limited:

• the conduct must be such that, viewed objectively, it is likely to cause serious damage to the relationship between the employer and employee; or

• the conduct damages the employer's interests; or

• the conduct is incompatible with the employee's duty as an employee.

In essence the conduct complained of must be of such gravity or importance as to indicate a rejection or repudiation of the employment contract by the employee."'

[403] It seems to me that on any objective analysis, including the ordinary bystander test, that the conduct of the applicants did not come 'within a bull's roar' of constituting a deliberate and wilful intent to breach Sydney Water's safety policies; let alone do so in a manner which caused a real risk to the health and safety of other persons. While I accept that breaches of safety, warranting dismissal, may involve inadvertence, negligence or carelessness; see Wililo, supra above I do not accept, given my earlier findings, that the applicants' conduct even made it to that threshold. In addition, there was no personal advantage for the applicants in respect to their conduct.

[404] Given Sydney Water's characterisation of the applicants' misconduct and even if the applicants did not comply to the strict letter of the LOTO procedure (of which I am not entirely convinced), I am satisfied from the evidence of the applicants, Mr Stanojevic, Mr Whelan, Mr Young and even Mr Murdoch and Mr Hobart, that there was no valid reason for the applicants' dismissals. In my opinion, they had 'isolated' the Mixer Starter Panel (it being a 'device' for the purposes of the procedure) and there was nil, or extremely minimal risk, to any person attending the site. To have re-energised the Box would have required subsequent, deliberate human intervention. They were not guilty of misconduct, let alone serious misconduct. Sydney Water has failed to discharge the onus it bears in proving the applicants' misconduct.

[405] Three further matters fortify my conclusion that effective 'isolation' had been carried out. Firstly, there is some strength to the argument of Mr Kennedy that had Mr Murdoch believed that the Box had not been 'isolated' to the extent necessary to render it safe, he would not have left it in substantially the same state as the applicants had and leave the site, not knowing who or when other persons might attend the site. Indeed, in his immediate report put into Maximo, Mr Murdoch reported 'MIXER HAD BEEN ISOLATED FOR DIVERS'.

[406] Secondly, the fact that after the applicants completed the job on 16 May 2012, the SOC had recorded a fault, being that the Mixer was not operational, confirms that no power was going to the Mixer from any source. Thirdly, I note that a 'Mr J Pilling' (not called as a witness in this case) signed off on the work on the relevant form 'Verify mixer is isolated and lock out tag out procedure followed' (Exhibit 6).

[407] Moreover, if the incident was as serious as Sydney Water contends, it seems strangely inconsistent that no action was taken following the report of the incident to Mr Barna on 17 May 2012 and the decision to suspend the applicants on 24 July 2012 - over two months later.

[408] That said, it is my view that Sydney Water's decision fits neatly into the description of one of those rare cases where there has been a 'manifest injustice' as observed by the majority in Lawrence:

'[28] This is not to say that there will be a public interest in granting permission to appeal in any case to which s.400 applies where error is identified. To adopt that approach would effectively set the limitation in s.400 at nought and would frustrate the obvious intent of the legislature to limit appeals from unfair dismissal decisions. Moreover, it is not to say that there will be a public interest in granting permission to appeal merely because the appeal bench would have reached a different conclusion from the member at first instance. Again, such an approach would be at odds with the principles in House v R. Rather, we have in mind a case where the outcome is so at odds with what the Full Bench considers a proper outcome that the epithet "manifest injustice" can properly applied. Such a conclusion will only be reached in rare cases.

[29] In our view, this is such a case. For reasons which will become evident, we consider that the proper exercise of discretion at first instance in this case was, on the evidence before the Commissioner, so clearly in favour of a finding that the dismissal was harsh that the decision to dismiss Mr Lawrence's application for an unfair dismissal remedy constitutes a manifest injustice that engages the public interest. We are satisfied that there is a public interest in grant of permission to appeal and grant that permission. The appeal then proceeds as a re-hearing. [my emphasis]'

[409] As a consequence of finding no valid reason for the applicants' dismissals and that their dismissals constituted a 'manifest injustice', I am satisfied that their dismissals were 'harsh, unreasonable and unjust' within the meaning of s 387 of the Act.

[410] Earlier, I mentioned that Mr Kennedy had argued that the applicants had been denied procedural fairness in a number of respects. These included:

a) the allegations against the applicants were general and lacked specific detail as to what it was said that they had done wrong in respect to the LOTO procedure. See: Wright v Telstra Corporation Limited [2003] AIRC 292;

b) the applicants were not afforded a proper opportunity to respond to the allegations; and

c) Sydney Water had decided to dismiss the applicants in the letter of 20 August 2012 prior to giving them an opportunity to respond.

[411] Despite Mr Kennedy's robust submissions, I am not persuaded to the view that the applicants were denied procedural fairness of such significance or gravity that, on its own, a finding of unfairness would be warranted in this case.

[412] Sydney Water, like most public authorities, has a well established and prescriptive approach and procedure for dealing with disciplinary matters (see cl 6.10 of the Agreement). On one view, this creates 'a rod for its own back', in that any departure from the strict prescription, no matter how inconsequential, will be ratcheted up to be characterised as a denial of procedural fairness. In my view, this will often be a misdescription of the reality. Generally, it has been held that where a failure to afford procedural fairness, or natural justice, is such as it would have had, or likely to have had overturned or modified the decision to dismiss, this would form a sound basis for a conclusion that the dismissal was unfair.

[413] From my perspective, this is an unremarkable conclusion from the various authorities which deal more specifically with procedural matters, such as:

• the employer giving clear and specific warnings about an employee's performance or conduct such as to include a warning that their employment may be at risk for any further breaches;

• ensuring the employee knows the specific nature of the allegations against him/her;

• providing the employee with a reasonable opportunity to prepare a defence for their alleged poor performance or conduct;

• ensuring the employer has an 'open mind' to considering the employee's explanations. In other words, not prejudging the outcome or deciding the outcome prior to giving serious consideration to any explanations or mitigating circumstances;

• allowing the employee to have a support person present during any disciplinary meeting; and

• the employer being prepared to weigh up other mitigating factors such as age, years of service, employment record and the economic impact of the dismissal on the employee and his/her family.

[414] Moreover, it is trite to observe that these considerations are precisely the sort of matters contemplated in ss 387(b)-(e) of the Act. Of course, these matters must be applied in a practical and commonsense way: See Gibson, supra above. Their application should be measured against those matters which are set out in ss 387(f) and (g) of the Act relevant to the size of the enterprise and the absence or otherwise of dedicated human resource management specialists or expertise.

[415] In returning to the specific procedures adopted by Sydney Water in this case, a number of conclusions can be made. These are:

a) the applicants were formally advised of the procedure they were alleged to have breached on 24 July 2012 and were dismissed on 5 September 2012 - an intervening period of six weeks;

b) the applicants were suspended on full pay from 24 July 2012;

c) both applicants responded to the allegations in writing on 29 July 2012. They address each specific allegation and give no indication they do not understand the allegations such as being unable to respond to them;

d) both applicants attended disciplinary meetings on 30 July 2012 and were given an opportunity to respond to the allegations;

e) the report prepared by Michael Cox, dated 2 August 2012, details the applicant's responses to the allegations. He recommends termination of employment. The report is endorsed by two HR/IR persons and approved on 17 August 2012;

f) both applicants were advised of the outcome of the investigation and invited to provide a response;

g) further meetings were held with both applicants on 22 August 2012;

h) on 30 August 2012, Management made a site visit to the reservoir arising from the additional information provided by the applicants on 22 August;

i) a supplementary report was prepared by Mr Mossman on 30 August 2012. The applicants were found to have lied to the investigators. The recommendation for termination was affirmed;

j) at all relevant times, the applicants were represented and supported by their Union;

k) as experienced electricians they would have been well aware of what was alleged against them. This conclusion seems borne out by the fact that they vigorously contended that they had not been in breach of the LOTO procedure; and

l) there was no evidence that the applicants or their Union representative, in four meetings with Management expressed uncertainty or a lack of clarity of what it was they were accused of doing.

[416] In addition, I do not accept that Sydney Water had made a decision to dismiss the applicants prior to 5 September 2012. References in earlier letters to their terminations were recommendations only, at that point. It was to impress on the applicants the seriousness of the view which Sydney Water took of the matter. It would be silly to think an organisation such as Sydney Water, would so explicitly decide to dismiss an employee, without giving them an opportunity to respond. They were given an opportunity to respond, not once, but three times. Indeed, Mr Mossman took over the investigation at the express request of Mr Hayward, who believed Mr Cox would bring a predetermined view to the final outcome.

[417] Sydney Water investigated the applicants' belated claims that they had 'isolated' the box' and 'removed the tails out of the supply' on top of the reservoir and found these claims to be untrue. However, it is not readily apparent from their termination letters, that Sydney Water relied on the applicants' untruthfulness to justify their dismissals. In a final report, dated 3 September 2012, Mr Mossman said:

'Further investigations indicate this is not true. ... Additionally, the issue of 'accessing the roof to 'isolate'' had never been raised in the disciplinary process until 22 August. The fact that a new explanation was raised at the last moment goes against the credibility of that explanation, and their credibility in general.'

[418] Mr Kennedy submitted that Mr Mossman knew or suspected the applicants had lied, but had not expressly put this allegation to them in the investigation (presumably a complaint of procedural unfairness). In my view, it is unnecessary and pointless to put an admission to an employee. It is only confirming the obvious. A failure to do so cannot possibly amount to a procedural fault. There is no prejudice to the employee. Confirming an admission would not ordinarily alter the investigation or result in a different outcome.

[419] In one sense, it is irrelevant that the applicants' admissions were not put to them or referred to expressly in their dismissal letter. This is so because if the applicants' dishonesty had only become known post the dismissals, the authorities make plain that facts which existed at the time of dismissal, and which come to light after dismissal, may justify the original dismissal as not 'harsh, unjust or unreasonable': See: Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359; Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1989) 166 CLR 245; Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1; Lane v Arrowcrest Group Pty Ltd (1990) 27 FCR 427.

[420] In their evidence, both applicants admitted to lying in the investigation, by concocting a false story that they had removed the 'tails' from the top of the reservoir; (in light of Sydney Water's subsequent inquiries, it is difficult to see how they could have done otherwise). Mr McGrath's culpability is probably greater than Mr Hayward's because he had convinced Mr Hayward to lie for them both. Their explanations were as follows:

'Because we'd been told that basically we were going to be sacked and I was just collateral damage because I was working with Paul, pretty much just to nip it in the bud. We were told it was a technical error and didn't do the policy properly. ... We were under pressure at the time. ... When you're told that you're going to be sacked and they're feeding information out to people and effectively done something wrong. ... I regret lying now. ... It wasn't a planned lie. It just happened on the spur of the moment on the day of our investigation. ... [I]f I thought we were going to get a fair hearing and he [Mr Cox] wasn't judge and jury then I would have told the truth. ... I can't do anything about it now. I'm coming here now. I'm telling the truth. It's all I can do. ... I told one lie in my life, why would you think I was going to do another again? My whole perception of this job now is totally different. If I was faced with this situation again, I wouldn't do the job. I'd call my supervisor and say, "I cannot do this policy."'

'[I made up a lie about pulling the tails] [b]ecause I was so frightened of what this, my history, I had 41 years of bliss and then I had this what happened to me in the previous one year and it's just unbelievable what was happening to me. ... We [the applicants] work as a team and that lie was for both of us because we know that was how it was done. ... I was influencing [Mr Hayward] in his decision to say yes. ... I don't feel - if you know my background or if you know my religious belief and whatever else, I don't lie. I have got a big background that way. ... I am very sorry for it because look, my unblemished record prior to this it's - I can't see where Sydney Water have - I've done a year and a half of acting and all of a sudden now because of okay, wrongly, the implementation was, I was still sought after to say that I did it wrong and I know I did it right and everyone was saying I did it wrong and if anything, I haven't, I did it right to what the requirements of HPS049 requires.'

[421] There is no doubt Sydney Water, in its cross examination of the applicants and in its submissions, relies on the applicant's admissions of dishonesty as to:

a) defeating the argument that they had not breached the LOTO procedure because it would have been unnecessary to concoct a story if they had done nothing wrong;

b) justifying the decision to dismiss the applicants for serious misconduct; and

c) demonstrating that the necessary trust and confidence in the employment relationship could not be restored. Orders for reinstatement or reemployment would therefore be inappropriate. I shall come back to this matter later when considering remedy.

[422] There is some logic to Mr Brus' submission that if the applicants believed they had not breached the LOTO procedure, it would not have been necessary for them to concoct the story about the tails on the top of the reservoir and to lie during the investigation.

[423] In my opinion, the applicants' dishonesty is no unimportant or trivial matter. It is one of the matters I have taken into account, pursuant to subsection (g) of s 387 of the Act. It must be emphasised that employees have a duty to cooperate with an employer's investigation of their conduct. It is paramount to getting to the bottom of the allegations and may go to mitigating against an otherwise more serious outcome if the misconduct is found to have occurred. Where an employee deliberately sets out to lie during an investigation, it is even more serious than a lack of cooperation or failure to disclose relevant information. It could well be viewed as misconduct of itself. However, from my observations of the applicants, I accept their contrition was genuine and heartfelt. I further accept their explanation that they 'panicked'. Nevertheless, had they not lied in the investigation, there may well have been a different outcome in this case.

[424] In this respect, I refer to a decision of the Full Bench of the AIRC in Telstra Corporation Ltd v Streeter [2008] AIRCFB 15. The majority said at paras [14]-[15] and [20]:

'[14] Ms Streeter was unco-operative and dishonest with Telstra during the investigation. In response to questions asked of her, she denied activities she knew had occurred or stated that she had "no comment". She also claimed a lack of memory with respect to certain activities. As Senior Deputy President Hamberger points out, Ms Streeter concedes she lied to Telstra during the investigation.

[15] Ms Streeter's dishonesty would have been of little relevance to Telstra if her activities had had no effect at her work and were not likely to have any effect at her work. However, it appeared her activities had caused difficulties at her work and were likely to cause difficulties at her work in the future. In the circumstances, we think Telstra's questions of Ms Streeter during its investigation were reasonable. Ms Streeter needed to be honest with Telstra about her activities, notwithstanding their inherently personal nature, so that Telstra could determine and take appropriate action to deal with the difficulties.

[20] We think the restricted view his Honour adopted of Ms Streeter's obligation for honesty in her employment led him into error of the type set out in House v King. Stock or cash are only a part of the matters Ms Streeter needed to be honest about to maintain the necessary relationship of trust and confidence between Telstra and herself. Whether the matters were personal or not, Ms Streeter had an obligation to answer Telstra's reasonable inquiries honestly. In the circumstances, we do not see that the necessary relationship of trust and confidence can be compartmentalised as his Honour has done.'

[425] William C, in Thompson v John Holland [2012] FWA 10363, after referring to the above Full Bench decision, said at para [151]:

'[151] I find then that the applicant's refusal to answer direct questions as to whether he had recorded other private workplace conversations was a failure to be open and honest and cooperative when the respondent was asking reasonable, pertinent questions and consequently this was also a valid reason for his dismissal.'

[426] Two further matters require comment. Firstly, as to the claim of Mr Hayward that his FRM was faulty on 16 May 2012, Mr Cox believed he was being dishonest to cover up his failed reporting of the job. FRM entries earlier in the day disclosed no fault. Mr Hayward reported the fault to Mr Filipic (who confirmed he had raised the complaint) later in the morning of 16 May 2012. While not much turns on this matter, it seems plain that Mr Hayward would not have known about Mr Murdoch's visit to the site the next day or that he would be later accused of breaching the LOTO procedure. In other words, there was absolutely no reason why Mr Hayward would have concocted a story about a faulty FRM so soon after the incident itself and with no knowledge of its consequences.

[427] Secondly, as to the warning given to Mr McGrath in May 2012 over the Wiley Park incident, I do not consider that it is relevant in the context of the decision to dismiss him for an alleged serious safety breach. Let me explain. There were some very curious features of the Wiley Park incident. First and foremost, what on earth was Management doing (more correctly, not doing)in being unaware its employees were attending and purchasing stores and equipment for a supposedly decommissioned site? While I accept some Supervisors were disciplined, the procurement of certain items by Mr McGrath were in fact approved by them. Secondly, it is a very odd coincidence that on the same day as the substantive incident, 16 May 2012, the letter giving Mr McGrath a warning was said to have been given to him (which he denies). This was almost three months after he was informed of the Wiley Park investigation.

[428] Moreover, in my view Mr McGrath has a legitimate complaint that the initial recommendation was for a written warning (2 May 2012), but somehow, after a long interregnum, Mr Cox, who signed the disciplinary letter believed it was a first and final warning (16 May 2012). Mr Cox agreed his understanding was wrong and a warning was a less severe action than a first and final warning. While I have difficulty in accepting that Mr McGrath did not know the outcome of this investigation, because he actually attended Bondi and returned Sydney Water property, the fact is the disciplinary action remains outstanding because Mr McGrath had appealed the decision and understandably, there has been no outcome. Presumably, if he is reinstated, his appeal remains a 'live' issue for determination. In that context, it cannot be relevant to the decision to dismiss him.

[429] This brings me to consider the underlying theme of this case as speculated by the applicants and pressed by Mr Kennedy - that Sydney Water had targeted two long serving employees for dismissal in order to avoid future redundancy payments. A number of things must be said about this submission. While the present uncertainty (and indeed, this very issue is the subject of dispute proceedings before another member of the Commission) might have raised legitimate concerns in the applicants' minds, in reality, their concerns are predicated on a number of hypothetical assumptions. These are:

a) as Sydney Water made clear, there is no guarantee, undertaking or expectation that all employees affected by the outsourcing will be able to volunteer for redundancy. Indeed, this is the opposite of what is intended;

b) it was put that Thiess is intending to reengage all of the affected employees with ongoing employment and a guarantee of redundancy for 12 months;

c) the affected employees seem to be under the impression that they will be able to access genuine redundancy entitlements when the work is outsourced, even if they are re-engaged by Thiess.

[430] I find it deeply troubling that employees, when faced with an outsourcing proposal, see it as an opportunity for a cash windfall, rather than accept comparable alternative employment; even more so where there is a preservation of entitlements, continuity of service and, in some cases, cash incentives to transfer. Redundancy is viewed with enthusiasm, even relish. Generous redundancy packages often prove to be a 'double edged sword' in so far as preserving jobs and employment are concerned. Like sick leave, I do not see redundancy benefits as entitlements. Redundancy should never be seen as a means of securing a financial windfall, when a positively acceptable and comparable job is the available alternative. This is my very strong philosophical view, underpinned by the beneficial and historic purpose of redundancy pay, which is that employees, who do not accept comparable alternative employment, have no claim to redundancy entitlements. This view is reinforced by s 120 of the Act, which permits an employer to apply for a reduction in an obligation to pay the National Employment Standards (NES) of redundancy pay (or pay nothing at all) if 'the employer obtains other acceptable employment for the employee' (s 120(1)(b)(i)). I accept, of course, that the argument of what is 'comparable' employment will often be in contest.

[431] Obviously the redundancy amounts for the individuals are substantial. However, they are inconsequential for a large public authority with a recent history of making large redundancy payments to genuinely redundant employees. To my mind, the theory that this was all about saving money for Sydney Water is fanciful. It is unhelpful to the applicants' case because it directs attention away from establishing the real reason for the applicants' dismissals.

[432] In addition, it stretches credulity to suggest that Sydney Water would have either planned a conspiracy of entrapment or availed itself of the convenient opportunity to construct a set of circumstances, on and after 16 May 2012, to 'set up' the applicants for their downfall. The incident prompting the allegations might have simply gone unnoticed had it not been for a fault alarm being activated and Mr Murdoch being called out to investigate what was then thought to be a fault. To suggest that this was all part of a foreseen plot or some form of capitalisation on an unforeseen opportunity is, to my mind, quite implausible and without any sound evidentiary base.

[433] Mr Kennedy further asserted that Mr Murdoch had a double motive to assist Sydney Water's case against the applicants; firstly, that he had had a falling out with Mr Hayward after a long friendship and, secondly, he was seeking to be selected for a new Field Technician's position. While there may be some superficial attraction to this assertion, I think it is to draw a long bow to suggest that Mr Murdoch wanted to cause harm to Mr Hayward. I say this because, firstly, it was mere coincidence that Mr Murdoch was called to the site to investigate a fault. At that time, he could not possibly have known that the applicants had performed the job. Secondly, there was some emphasis given to Mr Barna's evidence that he may have told Mr Murdoch it was the applicants who had performed the job. Mr Murdoch has no recollection of being told at that point. Be that as it may, Mr Murdoch could not possibly have foreseen that disciplinary action and dismissal was going to be the end result. Nevertheless, while I find it unnecessary to make findings as to the credit of Mr Murdoch, I am bound to observe that I did not find him a particularly persuasive or confident witness. His evidence was unduly defensive and self-serving.

[434] The applicants seek reinstatement to their former positions without loss of continuity and payment of lost wages. Reinstatement is hotly opposed by Sydney Water, based in part on the applicants' admitted dishonesty during the investigation. Determining a remedy for unfair dismissal is governed by the provisions of Ch 3, Part 3-2, Div 4 of the Act, which is as follows:

390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person's reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

(1) An order for a person's reinstatement must be an order that the person's employer at the time of the dismissal reinstate the person by:

(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or

(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person's employer at the time of the dismissal; and

(b) that position, or an equivalent position, is a position with an associated entity of the employer;

the order under subsection (1) may be an order to the associated entity to:

(c) appoint the person to the position in which the person was employed immediately before the dismissal; or

(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:

(b) the period of the person's continuous service with the employer, or (if subsection (1A) applies) the associated entity.

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:

(a) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for reinstatement; and

(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.

(1) An order for the payment of compensation to a person must be an order that the person's employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer's enterprise; and

(b) the length of the person's service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

(3) If the FWC is satisfied that misconduct of a person contributed to the employer's decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person's dismissal.

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period - the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.

To avoid doubt, an order by the FWC under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.'

[435] It will be immediately apparent that determining a remedy for an unfairly dismissed employee essentially involves a preliminary finding by the Commission that it is satisfied that reinstatement is inappropriate. It is only then can the Commission move on to consider compensation as the alternative to reinstatement; See: Holcim (Australia) Pty Ltd v Serafini [2011] FWAFB 7794.

[436] There is little doubt from the legislative scheme, that the primary remedy for unfair dismissal is reinstatement. This arises from both the requirement on the Commission to positively find that reinstatement is inappropriate and from the express objects of Part 3-2 of the Act (s 381(1)(c)) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

[437] The well known authority dealing with the practicality of reinstatement is that found in Perkin v Grace Worldwide 72 IR 186, where a Full Bench of the Industrial Relations Court of Australia said at pages 191-192:

'If the Court were to adopt a general attitude that such a reluctance destroyed the relationship of trust and confidence between employer and employee, and so made reinstatement impracticable, an employee who was terminated after an accusation of wrongdoing but later succeeded in an application under the Division would be denied access to the primary remedy provided by the legislation. Compensation, which is subject to a statutory limit, would be the only available remedy. Consequently, it is important that the Court carefully scrutinise any claim by an employer that reinstatement is impracticable because of a loss of confidence in the employee.

Each case must be decided on its own merits. There may be cases where any ripple on the surface of the employment relationship will destroy its viability. For example the life of the employer, or some other person or persons, might depend on the reliability of the terminated employee, and the employer has a reasonable doubt about that reliability. There may be a case where there is a question about the discretion of an employee who is required to handle highly confidential information. But those are relatively uncommon situations. In most cases, the employment relationship is capable of withstanding some friction and doubts. Trust and confidence are concepts of degree. It is rare for any human being to have total trust in another. What is important in the employment relationship is that there be sufficient trust to make the relationship viable and productive. Whether that standard is reached in any particular case must depend upon the circumstances of the particular case. And in assessing that question, it is appropriate to consider the rationality of any attitude taken by a party.

It may be difficult or embarrassing for an employer to be required to re-employ a person the employer believed to have been guilty of wrongdoing. The requirement may cause inconvenience to the employer. But if there is such a requirement, it will be because the employee's employment was earlier terminated without a valid reason or without extending procedural fairness to the employee. The problems will be of the employer's own making. If the employer is of even average fair-mindedness, they are likely to prove short-lived. Problems such as this do not necessarily indicate such a loss of confidence as to make the restoration of the employment relationship impracticable.'

[438] Mr Brus submitted that the nature of the safety breach and the applicants' dishonesty to the investigators, was such as to render reinstatement inappropriate, because Sydney Water had lost trust and confidence in the applicants. However, I note that there was little supporting evidence from Sydney Waters' witnesses that corroborated this submission. In any event, the views of management are not the only matters which are relevant in this context. In this respect, I refer to Regional Express Holdings Limited t/a REX Airlines v Richards [2010] FWAFB 8753, where the Full Bench said at para [26]:

'[26] Whenever an employer dismisses an employee for misconduct, assuming the employer is acting honestly, there is an implied loss of trust and confidence in the employee. If it is subsequently found that the termination was harsh, unjust or unreasonable, it is appropriate to consider whether the relationship can be restored if the employee is reinstated. That question cannot be answered solely by reference to the views of management witnesses. All of the circumstances should be taken into account. In this case there is a number of relevant matters. They include the fact that not all of the conduct alleged against the respondent has been proven, the respondent's apparently unblemished record in the performance of his flying duties over a period of 14 years, the fact that the misconduct is not directly related to the performance of the respondent's professional duties as a first officer and Rex's failure to pursue any substantial disciplinary action against another pilot who, it is alleged, has been guilty of misconduct at least as serious as that of which the respondent was accused. The significance of the last consideration is that the pilot in question is still carrying out the full range of his duties, despite allegations of conduct of a kind which, in the respondent's case, is said to have led to an irrevocable loss of trust and confidence. Assuming a positive approach on both sides we find there is a reasonable chance that the employment relationship can be restored with the necessary level of mutual trust [my emphasis].'

[439] I consider the following factors militate in favour of a finding that reinstatement of the applicants would not be inappropriate:

• the applicants have long and unblemished safety records;

• Sydney Water is a relatively large employer with over 4,700 employees;

• the applicants' fellow workers, who might be said to be more closely interested in not working with an employee who is derelict in terms of safety, all gave evidence that they would have no difficulty working alongside either of the applicants;

• the incident involved a single job on 16 May 2012;

• the paucity of compelling evidence as to a loss of trust and confidence in the applicants;

• there was no evidence to demonstrate that the applicants would not comply with all of Sydney Water's policies in the future; and

• there is unlikely to be a very long employment relationship between the applicants and Sydney Water when Thiess takes over the electrical/mechanical work in the near future.

[440] Against this, I have given earnest deliberation as to whether the applicant's dishonesty effectively nullified all of the above matters and, accordingly, reinstatement would be inappropriate. As I said earlier, their dishonesty constituted, of itself, misconduct. However, I accept that:

• the applicants were 'panicked' by what appeared to be happening to them;

• they were contrite and very much regretted their dishonesty;

• there was no evidence of their dishonesty in any other respect. The lie can be genuinely viewed as a 'one-off';

• it takes some courage to admit in a public Court that one has lied to their employer and brought their reputation into disrepute.

[441] That said, this issue cannot be ignored. However, I propose to deal with it in another way. I have in mind the approach adopted by the majority in Lawrence where it was said:

'[44] We think it appropriate that there be a deduction from the amount ordered pursuant to s.391(3) to reflect a material sanction for Mr Lawrence's misconduct. We have decided that there should be a deduction equivalent to three months' salary (an amount in the order of $30,000) from the amount ultimately ordered. In this way the importance of the respondent's policies will be vindicated and no other employee ought be able take any comfort from this decision that breaches of the 'isolation' Policy will do other than expose them to serious consequences. It ought be unnecessary to say that this is a case that, in terms of outcome, turns on its own particular facts.'

See also: Nguyen v IGA Distribution (Vic) Pty Ltd [2011] FWA 3354.

[442] In balancing all the relevant factors in this case, I find that reinstatement of both applicants is not inappropriate. The applicants were dismissed over seven months ago. I am unaware of any specific remuneration they have earnt since then. In any event, pursuant to s 391(2) of the Act, I propose to make an order for lost remuneration of three months pay only. This will send a strong message to the workforce that employees must not only cooperate with disciplinary investigations, but be open, frank and honest during such investigations.

[443] Further, I propose to make orders pursuant to s 391(2) of the Act to maintain the continuity of the applicants' employment, as if their dismissals had not occurred on 5 September 2012. Orders giving effect to my conclusions will be issued contemporaneously with this decision.

[444] Finally, reinstatement of the applicants shall be effected within 14 days of today or such earlier time as may be agreed by the parties. The parties are to agree on the precise dollar terms of my limited orders for lost remuneration. Any disagreement may be referred back to the Commission for final determination.

Mr J Kennedy, Solicitor, with Mr D Weizman, for the applicants.

Ms E Brus, Counsel, instructed by Mr A Doughman, Solicitor, for the respondent.

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