Nash v Eastern Star Gas Ltd

The charge 23The defendant in an amended application for order was charged with a breach of s 8(2) of the Occupational Health and Safety Act 2000 ("OHS Act") by failing to "Ensure that people, other than employees of the Defendant, in particular, Mr Bruce Austin, were not exposed to risks to their health or safety arising from the conduct of the Defendant's undertaking while they were at the Defendant's place of work...". 24The particulars of the charge were: "THE RISK 1. Bruce Austin was exposed to the risk that he would be struck by a recoiling polyethylene pipeline causing him injury and the Defendant by its acts and omissions particularised below failed to eliminate or control the risk. PARTICULARS OF CONTRAVENTION 2. The Defendant failed to check that the safe work method statements and safety documentation provided by Austerberry Directional Drilling Services Pty Limited (ADD) were specific to the task (which involved the installation of a polyethylene pipe under Bohena Creek (Site) using horizontal directional drilling) (Task) to be performed and took into account all of the activities likely to be performed and specified controls for those activities. 3. The Defendant failed to ensure that the persons and entities involved in the Bohena Creek project, and in particular ADD, were adequately informed and instructed to stop work immediately when a work activity was to be carried out being an unplanned activity for which no risk assessment or safe work method had been prepared and not to commence work further work until the Defendant was informed and appropriate safety procedures were prepared and documented. 4. The Defendant failed to ensure that the level of supervision which it had arranged to be provided by Greene Pipeline Services Pty Limited to ADD at the Site was adequate to ensure that the activities it carried out in relation to the Task were undertaken safely in accordance with the Defendant's safe systems of work." 25The defendant pleaded guilty to the offence, as charged. 26Having received evidence and heard submissions from the parties on 19 August 2013, I was satisfied that the defendant was guilty of the offence. Accordingly, I convicted the offender of the offence, as charged. It follows that this judgment is concerned with the question of penalty.

Prosecutor's evidence 27Mr I Taylor of senior counsel who appeared with Ms J McDonald of counsel for the prosecutor, tendered an agreed statement of facts ("ASF") which provided: "Certain facts have been agreed with the Prosecution for the purposes of plea only. These Agreed Facts are made for the purposes of proceedings related to No. IRC 1293 of 2011 only and are not to be used as evidence against Santos, ESG, its related parties, directors, officers or employees in any other proceedings. INTRODUCTION 1. At all material times, the Prosecutor was a government official (Investigator) appointed under section 127 of the Mine Health and Safety Act 2004 and thereby by section 47A of the Occupational Health and Safety Act 2000 (OHS Act) taken to have been appointed as an inspector under the OHS Act and authorised by section 106 of that Act to institute proceedings in this matter. 2. At all material times the Defendant Eastern Star Gas Limited (ACN 094 269 780) (ESG) was a publically listed corporation whose registered office is level 7, 51-57 Pitt Street, Sydney, NSW, 2000 and the holding company for a group of companies, including Eastern Energy Australia Pty Ltd ACN (009 321 662) (EEA), that undertake coal seam gas exploration in NSW. On or about 17 November 2011, Santos Limited (ACN 007 550 923) acquired the shares in ESG and, as such, ESG became a subsidiary of Santos Limited on or about that date. On 30 November 2012 ESG's name was changed to Santos NSW Pty Ltd. 3. As at 1 August 2009 ESG was an employer, and employed more than 40 people. 4. At all material times Austerberry Directional Drilling Services Pty Ltd (ACN 081 885 083) (ADD) was a corporation with its registered office located at 93a Young Street, Carrington, NSW, 2294. 5. At all material times the sole director of ADD was Shayne Austerberry, who was concerned in the management of ADD. 6. At all material times the sole shareholder of ADD was a company called Directional Nominees Pty Ltd (ACN 074 568 657), the sole shareholder of which was Shayne Austerberry. 7. ADD provides services including installing pipelines using a trenchless technology called horizontal directional drilling (HDD). 8. ESG is a holder of Petroleum Assessment Lease 2 (PAL 2) and Petroleum Exploration Licence 238 (PEL 238). PAL 2 is geographically located within PEL 238. 9. The land the subject of PAL 2 and PEL 238 is located near Narrabri in NSW. 10. PAL 2 and PEL 238 are "petroleum titles" granted pursuant to the Petroleum (Onshore) Act 1991 (POS Act). ESG was the nominated "operator" of the titles, pursuant to the Petroleum (Onshore) Regulation 2007 and the Schedule of Onshore Petroleum Exploration and Production Safety Requirements published by the Department of Mineral Resources in August 1992. 11. Pursuant to section 128 of the POS Act the holder of a petroleum title must carry out all petroleum exploration operations and operations for the recovery of petroleum in the title area in accordance with the provisions of the OHS Act. THE WORKPLACE - THE BOHENA CREEK PROJECT 12. ESG required gas and water gathering pipelines to be installed on land within PAL 2 for what is known as the Bibblewindi West Production Pilot (Bibblewindi West Project). 13. The installation of the pipelines was part of petroleum exploration operations and/or operations for the recovery of petroleum and consequently was governed by the POS Act and accordingly was a "mining workplace" as defined in section 4 of the OHS Act. 14. ESG applied to and obtained from the Director General of the then Department of Primary Industry approval to construct the pipelines. 15. ESG either directly or via EEA contracted a Queensland based company, Greene Pipeline Services Pty Ltd atf GPO Trust, trading as GD Pipelines (ACN 643 583 248) (GD Pipelines) to install, as part of the Bibblewindi West Project, pipelines to either side of Bohena Creek, using standard trenching techniques. To complete the pipeline pipes needed to be installed under Bohena Creek. The pipeline was installed using HDD. In relation to this part of the Bibblewindi West Project ESG requested GD Pipelines to provide a site supervisor for the duration of the boring who would also assist with logistical support and help with the pull through of the pipeline, the final tie-in, and pressure tests. 16. HDD involves drilling a pilot hole using a directional drilling technique that allows control of direction and depth. A drill head is attached to metal rods (known as the "drill string") and guided towards a reception pit. Once the drill string arrives at the reception pit a reaming device is attached and the pilot hole is enlarged as the reaming bit is returned along the path of the pilot hole. Often the pipeline to be installed is dragged behind the reamer attached to a swivel. 17. HDD is common in the coal seam gas industry. Prior to 1 August 2009 ESG had engaged contractors whenever undertaking HDD works. HDD work requires specific skills. 18. ADD was engaged by EEA, on behalf of ESG, to install the pipe under Bohena Creek near Narrabri (Work Site) using HDD, in order to complete the pipeline already installed (or partially installed) by GD Pipelines (Bohena Creek Project). 19. Shayne Austerberry acted as the supervisor of the drill crew that undertook the Bohena Creek Project and was responsible for overseeing ADD's other drill crews. As the sole director of ADD and as the supervisor of the drill crew at the Work Site he was the person who made the relevant decisions as to ADD's acts and omissions at the Work Site. 20. In early 2009 ADD had undertaken two other similar jobs for ESG, as a sub-contractor to a company called Adtech FRP Pipelines, which had installed a fibreglass pipeline for ESG from Bibblewindi to Wilga Park some six months earlier (Adtech Job). 21. The initial inquiry for the work required for the Bohena Creek Project was made to Bob Reynolds of ADD, by Brett Langley, Manager Surface Engineering for ESG. At around this time, Mr Langley and Mr Reynolds undertook a site visit, including to investigate the terrain and area in which the Bohena Creek Project work was to be undertaken. 22. Following a site inspection by Mr Reynolds on 21 April 2009, ADD provided a quotation to ESG dated 20 July 2009 to install the pipeline for a total cost of $312,827.46 (Quotation). The Quotation stipulated that the: (a) pipe would be supplied by ESG; (b) fusion joining and debeading was to be done by ESG; (c) full site access was to be supplied by ESG; (d) water was to be supplied by ESG. 23. The Quotation attached to it ADD's "Terms & Conditions of Trade". 24. On 21 July 2009 ESG's wholly owned subsidiary company, EEA, issued a handwritten purchase order to ADD for the Bohena Creek Project, which accepted ADD's quotation (Purchase Order). The Purchase Order was requested by Erhart Stockhausen, Senior Petroleum Engineer for ESG and signed by Peter Lansom, Executive Director Operations for ESG. Mr Stockhausen sent the Purchase Order by email on 22 July 2009 to Mr Reynolds and Wayne Hunt of ADD. 25. Mr Stockhausen's email of 22 July 2009 stated: "GD Pipelines will be providing a Supervisor on behalf of ESG for the job to assist with coordination and preparation for the job. Note that all personnel will require an induction at the Narrabri office before entering the forest as conditions on site have changed, and I'm assuming some people won't have the normal ESG induction anyway." 26. ADD orally engaged, by telephone, a company known as Applied Soil Technology Pty Limited (ACN 068 177 677) (AST) to provide, at an hourly rate, a vacuum service for the Bohena Creek Project to suck mud out of the borehole to be drilled by ADD and remove it from the site, namely a vacuum tanker, a prime mover to tow the tanker and an operator. ADD had used AST on at least seven previous occasions prior to 1 August 2009. 27. AST orally engaged The Saver Guys Pty Ltd (ACN 125 166 832) (TSG) to help AST carry out its part of the Bohena Creek Project. Bruce Austin, who was 57 years old at the time of the accident, was the sole director and shareholder of TSG. The principal business activity of TSG was the provision of services requiring a prime mover, in particular earthmoving. All work undertaken by TSG was undertaken by Mr Austin or his son, Adam Austin. 28. AST engaged TSG to provide its prime mover to tow AST's vacuum truck, to assist in the removal of mud from the Work Site and to provide an operator of the prime mover and AST's vacuum truck. The operator was Mr Austin. 29. The Work Site was ADD's and ESG's "place of work" and the Bohena Creek Project was ADD's and ESG's "undertaking" within the meaning of section 8(2) of the OHS Act. EVENTS LEADING TO THE ACCIDENT 30. ADD, that is, its employees Mr Austerberry, Robert Milne, Ken Anderson and Michael Anderson arrived at the Work Site on or about Wednesday 29 July 2009. They were shown around by Mr Dan Roulston, an employee of GD Pipelines who had been appointed by GD Pipelines to be the site supervisor. 31. ESG had requested GD Pipelines to provide a site supervisor for the duration of the Bohena Creek Project who was to organise accommodation, inductions in Narrabri and final site preparation. An email from Mr Stockhausen of ESG to Ryan Maloney of GD Pipelines dated 21 July 2009, stated that ESG "would still like GD Pipelines to provide a site supervisor for the duration of the boring as well be part of the GD mobilisation to help with the pull though" and requested that the site supervisor stay "in regular contact with John Higgins (Site Manager) regarding issues and updates." GD Pipelines had experience in managing drilling sub-contractors including those who had expertise in HDD. 32. The pipeline for the Bohena Creek Project was already welded up and lying on the ground at the Work Site ready to be installed when the ADD crew arrived. The length of pipeline required to be installed under the creek was approximately between 280 metres and 350 metres. 33. The pipeline was constructed from 200mm high density polyethylene pipeline (DN200 PN8 SDR21 PE100 Metric Pressure Pipe Series 1) manufactured by PPI Corporation Pty Limited. 34. It is not uncommon for a pipeline to become stuck while being pulled into a drilled hole using HDD techniques, the causes of which are many and various. The cause of the pipeline at the Work Site becoming stuck has not been determined, but the primary theory is that the ground conditions changed causing what is commonly referred to as a "hydraulic lock". 35. When a polyethylene pipeline of 200mm diameter is pulled in circumstances where one end is underground and becomes stuck, for instance due to hydraulic lock, then, as the pipeline is pulled it stretches and energy builds in the pipeline such that if the end being pulled is released the pipeline will recoil along its length and as it recoils it will move. 36. A polyethylene pipeline of 200mm diameter is a hard and heavy object, in the manner of a solid plastic. Accordingly when it moves there is a risk of injury to any person who might be struck by that hard heavy object. 37. ADD spent the first day on site setting up equipment. The entry and exit holes for the pipeline had already been prepared, apparently by GD Pipelines. ADD used star pickets and orange barrier mesh to fence off the two pits, two metres from the hole. 38. Mr Austin arrived at the Work Site on or about Thursday 30 July 2009. He set up the vacuum truck near the ADD drilling equipment. 39. Drilling began for the installation of the water pipe, on the western side of the creek, on Thursday 30 July 2009. On that day: (a) Mr Milne operated the drilling machine; (b) Mr Austerberry guided the drill head using the electronic sounder; (c) Mr Michael Anderson mixed the drilling mud and put it into the reservoir that ran into the drilling machine; (d) Mr Ken Anderson kept the bore logs; (e) Mr Roulston of GD Pipelines provided a 3 km water line and regularly refuelled the pump to supply water for drilling and periodically checked on what was happening at the site; (f) there was no work for the vacuum truck so Mr Austin helped with the mud mixing and site clean-up. 40. By the end of Thursday 30 July 2009 the pilot hole beneath the creek had been completed. 41. On or before 31 July 2009 ESG's safety officer, Tom Bennett, provided Messrs Michael and Ken Anderson and Mr Austin with an ESG induction at ESG's Narrabri office. This had been organised by Mr Roulston. Mr Austerberry and Mr Milne did not undergo an induction at this time. They had received an induction by ESG in January 2009 when ADD had done the Adtech Job and ESG and ADD regarded such induction as still being current. 42. On Friday morning 31 July 2009 the ADD crew, on the eastern side of Bohena Creek, attached a reamer to the drill string (also known as drill rods) using an adaptor designed and manufactured by Mr Austerberry and using a swivel, shackles and a pipecap attached the pipeline and thereafter began reaming the hole and simultaneously pulling in the pipeline. 43. Sometime between 12:00pm and 3.00pm Mr Milne, who was on the western side of the creek and who was pulling out the drill rods with the reamer and pipe attached, noticed the pipeline had become stuck and was no longer being pulled through the borehole. After Mr Milne recovered the remaining drill rods from the borehole, which measured around 120 metres, it was discovered that the reamer was no longer attached to them. He observed that the thread adaptor from the drill rods to the reamer had failed and it appeared that the reamer was still attached to the pipe under the ground. 44. Mr Austerberry decided to try and pull the pipeline out from under the ground (the Activity). By doing this the reamer may have been retrieved. The reamer was owned by ADD and it is understood would have cost approximately $20,000 to replace. 45. Neither ADD nor Mr Roulston informed ESG that the Activity was to take place. Therefore ESG was not aware that the Activity was being conducted. ESG did not at any stage give any directions or otherwise make any request to ADD or GD Pipelines in relation to the recovery of the pipeline or the Activity. 46. In an interview conducted by Inspector Paul Raftery on 14 October 2009 Mr Ken Anderson, a member of the ADD work crew, stated that on the day before the incident, he had had a conversation with Mr Austin while the retrieval work was being carried out. Mr Anderson said to the Inspector that he had seen Mr Austin walk up to the entrance of the drill hole and had then called out to Mr Austin not to go there and that he should come back and stand with him, some 10 - 15 metres from the hole as if the pipe broke anything could happen. He said to the Inspector that he then told Mr Austin that to be safe he needed to be 10 to 15 metres away from the entrance of the drill hole. 47. ADD did not have a documented safe work procedure or method (SWP) for the Activity and no job safety analysis or risk assessment for the Activity was conducted by ADD, either during or prior to the Bohena Creek Project, although Mr Austerberry had performed the procedure a dozen or so times in his career, Mr Milne had been involved in pulling pipelines out previously and Mr Michael Anderson had seen the procedure performed once in Darwin. 48. The Activity commenced on 31 July 2009 using a sling attached to the end of the pipeline and a backhoe owned by GD Pipelines and later a WesTrac Caterpillar 320C hydraulic excavator operated by Mr Austerberry. 49. All attempts on Friday 31 July 2009 to get the pipe moving were unsuccessful. On each attempt the pipe collapsed where it had been tied causing the sling to come off. Each time it failed gently, with no recoil. Ultimately the outer sheath of the sling failed. When this occurred, attempts to pull out the pipe were abandoned. 50. Mr Austerberry then took the excavator to the middle of the creek, to a position where, based on the number of drill rods that had been recovered, the ADD crew suspected the reamer and front end of the pipe were located, and began to dig, with the objective being to dig up the reamer and disconnect it from the pipeline, which would make pulling the pipeline back out easier. While Mr Austerberry was digging in the creek, sand and water flowed back into the hole making the process difficult. Some drilling mud was found, but not the pipeline. As it was getting dark it was decided to back-fill the hole and try again on the next day, Saturday. The ADD crew, including Mr Austin, left the site at around 4.30pm - 5.30pm. 51. On the morning of Saturday 1 August 2009 Ken and Michael Anderson left Narrabri to return home. Messrs Austerberry, Milne, Roulston and Austin returned to the Work Site to attempt to recover the pipeline and reamer. 52. A small pipe of about 100 - 110mm diameter was placed inside the 200mm pipeline already under the creek using a sling and a backhoe. The small pipe had a beacon inside it, so its position could be detected from the creek surface. Once the beacon had been pushed to what was believed to be the end of the pipeline digging in the creek began, with Mr Austerberry and later Mr Austin, operating the excavator. 53. The attempt to dig up the reamer was unsuccessful and at around 1.30pm - 2.30pm it was abandoned. Mr Austerberry then decided they should have a further attempt at pulling out the pipeline (which continues to be referred to as 'the Activity' in this statement). Mr Austin drove the excavator over to the eastern side of the creek so the Activity could begin. Meanwhile Mr Roulston commenced back filling the hole in the creek using GD Pipeline's backhoe. THE ACCIDENT 54. According to Mr Austerberry, before the Activity commenced on Saturday 1 August 2009, a toolbox talk was held during which those present discussed where they were going to dig the hole in the creek. At that time, Mr Austin stated "everybody's got to keep out the bloody road." There are no documents recording this tool box talk. 55. The bunting across the front of the entry pit from which the pipeline protruded was pulled down before any pulling commenced so that it did not get in the way. However, the bunting that was placed at the sides of the pit remained. 56. Using a 10 millimetre, two legged chain that was on-site to be used to lift the drill rods onto the truck used to transport them, Mr Milne tied one leg of the chain in a clove hitch knot around the pipe and placed the other leg of the chains around a bucket tooth on the excavator and choke hitched it back over the chain. 57. The chain was a lifting chain. The chain's intended use was not to pull something. It had a breaking strength less than the pulling power of the excavator. 58. Mr Austin then started operating the excavator, approximately 2 - 4 metres from the end of the pit. He moved the arm and bucket of the excavator, the pipe may have moved a little bit and then the chain broke. The other leg of the chain was then attached as before by Mr Milne. The pipe was again pulled. It moved about a metre before shearing off the pipe. The chain was reattached one or more times but sheared off the pipe each time. 59. Mr Austin then suggested placing a piece of wood inside the pipe to prevent the pipe crushing and shearing. This was done by Mr Milne, using a chainsaw to cut a suitably sized piece of wood. Placing wood inside a pipe to stop the pipe collapsing while it was being pulled was not a procedure that ADD had ever used before. It was successful in stopping the pipe shearing and the pipe started to move as Mr Austin drove the excavator backwards. 60. After about 35 metres of pipe had been extracted, Mr Milne suggested Mr Austerberry take over driving the excavator as Mr Austin was having difficulty going straight while driving backwards. 61. When Mr Austerberry took over the excavator he told Mr Austin to go and sit on a log which was located about 17m from the pipeline in a southerly direction from the location where Mr Austerberry had taken over driving the excavator form Mr Austin. There was at least one tree between the log and the pipeline. Mr Austerberry and Mr Milne both observed Mr Austin heading in the direction of the log, but neither observed him reach his designation and no one watched him to ensure that he stayed at the designated point. 62. Mr Austerberry then drove the excavator back while being directed by Mr Milne. Mr Milne was watching the movement of the excavator and did not turn around to look at the progress of the pipe out of the pit or to observe what Mr Austin was doing. 63. Initially Mr Austerberry was driving the excavator while looking straight down at the pipeline, however he ultimately turned around (away from the pit) to see where he was going. 64. At a distance of about 145 metres from the entry pit, at approximately 3.45pm, the chain broke (for the second time that day) and the pipeline recoiled. 65. Mr Austerberry and Mr Milne retrieved the broken chain set and walked back towards the entry pit with the intention of cutting the pipe and re-pulling whatever remained. They called to Mr Austin and received no reply. A short time later they found Mr Austin lying on the ground adjacent to the entry pit and inside the bunting around the pit, with his head facing a southerly direction, right up against the barricade. 66. Mr Austin was given first aid and an ambulance called. The ambulance officers arrived and treated Mr Austin at the site around 4.20pm before transporting him to the highway at approximately 5.00pm, arriving about 5.20pm. He was then transferred to a helicopter ambulance, but due to difficulty stabilising Mr Austin the helicopter did not leave the scene until approximately 6.30pm. The helicopter proceeded to transport Mr Austin to Tamworth Hospital, arriving at approximately 7.15pm. Mr Austin was subsequently transferred to John Hunter Hospital in Newcastle and was admitted at around 4.50am on 2 August 2009. On 4 August 2009 it was found that there was negligible neurological recovery and after the ventilator was removed, Mr Austin died from his injuries around 5.30pm. The autopsy found that the direct cause of death was a closed head injury and that Mr Austin had suffered an intra cerebral haemorrhage, an extradural haemorrhage around the upper spinal cord, and a laceration involving the left earlobe. 67. Video and photos of the scene taken after the accident show that the pipeline had come to rest in a wide arc over seven metres away from the pit. There was a spot on the bowed pipeline which has been wiped clean of some mud. This part of the pipe was taken and tested by the Division of Analytical Laboratories. Mr Austin's DNA was found on that part of the pipe that had been taken and tested. 68. Mr Austin's death was caused by him being hit in the head by the pipeline as it recoiled following the failure of the chain being used to pull it from the ground. 69. The contract for the Bohena Creek Project consisted of the Quotation and the Purchase Order (Bohena Creek Contract). A copy of the Quotation is at Annexure 1. A copy of the Purchase Order is at Annexure 2. 70. At the time of the accident ESG had a contractor management procedure that was recorded in a document entitled "Contractor Management Procedure" dated 20 September 2008 (Contractor Management Procedure). A copy of the Contractor Management Procedure is at Annexure 3. 71. ESG's nominated "Site Representative" (as referred to in clauses 4.6 and 5 of the Contractor Management Procedure) for the Bohena Creek Project was Mr Langley who was based in Brisbane. Mr Langley visited the Bibblewindi West Project a number of times, but neither he nor another ESG representative visited the Work Site when ADD were undertaking the Bohena Creek Project. 72. ADD's nominated "Contractor Representative" (as referred to in clause 4.9 of the Contractor Management Procedure) for the Bohena Creek Project was Mr Reynolds, who did not work at the Work Site during the conduct of the Bohena Creek Project. Mr Austerberry had arranged for Mr Reynolds to visit the Work Site prior to work commencing for the purposes of checking on access and the nature of the pipeline to be installed. 73. ESG did not: a. provide ADD with a copy of the Contractor Management Procedure; b. ensure that ADD had documentary evidence of appropriate risk assessments having been undertaking for tasks, in particular for the Activity; c. ensure that ADD had appropriate SWPs for all the tasks being conducted on site and in particular the Activity; d. ensure that ADD had evidence and records of appropriate training programs having been provided to all personnel; and e. complete the "Checklist for Bringing Major/Minor Contractor to Site" as provided in Appendix 1 to the Contractor Management Procedure. 74. ESG obtained copies of ADD's OHS documents, including approximately 42 SWPs, from Adtech arising from ADD's engagement by Adtech for the Adtech Job. ESG made no inquiries or requests for further documentation directly to ADD and ADD did not provide ESG with any OHS related documentation as a result of its engagement to undertake the Bohena Creek Project. 75. No-one from ESG checked whether the ADD safe work method statements and safety documentation it had obtained from Adtech were specific to the task to be performed at the Work Site. 76. No-one from ESG made enquiries of ADD prior to the incident to ascertain whether the ADD safe work method statements and safety documentation that it had obtained from Adtech addressed all the activities likely to be performed on the Bohena Creek Project and specified controls for those activities. 77. Contrary to the Contractor Management Procedure, Mr Reynolds, as Contractor Representative failed to ensure that the Activity was subjected to hazard identification and risk management process and consequently no SWP for the Activity was recorded and approved by Brett Langley. 78. Mr Roulston of GD Pipelines was present at the Work Site on both the day of the incident and the day prior. Mr Roulston did not report back to ESG that the Activity, being work for which there was not SWP, was to be undertaken or was being undertaken, nor was ESG made aware of any written risk assessment or safe work method for the Activity. 79. The Contractor Management Procedure required contractors to undergo an ESG site induction prior to undertaking work at its sites. The ESG induction consisted of a PowerPoint presentation (Induction Presentation) followed by an exam (Induction Assessment). The Induction Presentation and Induction Assessment were conducted by ESG's Safety Officer based in Narrabri. A copy of this presentation is at Annexure 4. 80. The induction presentation contained information about the SLAM process (Stop, Look, Assess, Manage) being a mental-only process designed to identify and control work place hazards; job safety analysis (JSA); and HAZOBs (Hazard Observation). The presentation stated that a JSA should be completed in the following instances: a. where there is no formal procedure in place and an element of risk has been identified; b. where a procedure exists but an element within the procedure has changed; and c. where a procedure does exist but the task itself has not been performed for some time, making the task unfamiliar to personnel. No attempt was made by ESG to ascertain whether ADD was in fact undertaking JSAs in the above circumstances or at all. 81. Other than that which was said at the induction, noted above, ESG did not require ADD by contractual term, nor did ESG instruct or inform persons who were working at the Work Site, that work was to be stopped immediately when a work activity was to be carried out that was an unplanned activity for which no risk assessment or safe work method had been prepared and not to commence further work until ESG was informed and appropriate safety procedures were prepared, documented and approved by ESG. 82. Mr Austin completed a Site Induction Assessment on 31 July 2009, after he had already spent a day at the Work Site. Mr Ken Anderson completed a Site Induction Assessment on 31 July 2009. Mr Michael Anderson's Site Induction Assessment is undated. There is no indication on Mr Austin's Induction Assessment that anyone marked or looked over his answers - he was not allocated a score out of 44 - but it was signed by Mr Bennett and Mr Austin. 83. Mr Higgins, was ESG's "Site Manager" based in Narrabri. Mr Higgins was aware of the work which ADD was undertaking via the weekly operations meetings which he was involved in. At no stage did Mr Higgins, Mr Bennett or another ESG representative, visit the Work Site while ADD was undertaking work on the Bohena Creek Project. 84. No employee of ESG visited the Work Site on 1 August 2009. ESG was unaware that the Activity was taking place either on 31 July 2009 or 1 August 2009 because no employee of ESG attended the Work Site on those days and it had not been reported to ESG by either ADD or GD Pipelines' employee, Mr Roulston. 85. While the Contractor Management Procedure required the Site Representative to complete ongoing assessments of contractor's safety and health capabilities according to criteria specified in the Contractor Management Procedure, ESG had no policy as to how often ESG personnel would visit contractors on site and no formal system for monitoring or checking that a contractor like ADD was undertaking toolbox talks and risk assessments. 86. ESG did not monitor or check that at the Work Site ADD was undertaking toolbox talks, risk assessments or completing JSAs. ESG did not monitor or check whether ADD at the Work Site was applying its SWPs nor whether ADD had trained or informed those doing the work as to the content of those SWPs. 87. Further to the matters set out at paragraphs [30] and [31], ESG did not take steps to ensure that Mr Roulston had been informed that ESG's safe system of work required ADD to: a. have documentary evidence of appropriate risk assessments having been undertaken for all tasks; b. have appropriate SWPs for all the tasks being conducted on site; c. complete a JSA where there was no formal procedure in place and an element of risk has been identified. 88. ESG did not communicate with Mr Roulston directly. ESG relied on GD Pipelines to instruct Mr Roulston as to his duties. Mr Austerberry after the incident said that Mr Roulston was "like a site supervisor". After the incident Mr Roulston described his role to be one of facilitation and identified the supervisor of the work being done on the day of the incident to be Mr Austerberry." 28Mr Taylor also tendered what was described as the prosecutor's tender bundle. It contained the following documents: (1)ADD quotation for directional drilling 20 July 2009. (2)ESG/EEA purchase order 21 July 2009. (3)the defendant's "Contractor Management Procedure" dated 20 September 2008. (4)ESG's Powerpoint Induction Presentation. (5)2 videos: Schematic video of horizontal directional drilling together with NSW Police video of PAL 2 incident scene which were played during the proceedings. (6)20 colour photographs taken by Inspector Steve Millington, Inspector Glynn Macdonald, Dan Roulston and Mr Tom Bennett showing the worksite, the polyethylene pipeline, the excavator, the pit area, and the log and surrounding bush. (7)PAL 2 Plan. (8)Locality plan of incident. (9)Amended Survey Plans - Bibblewindi West Lateral Pilot Project PEL 238 - Bohena Creek Pipeline Crossing. (10)Email from the defendant to ADD attaching purchase order 22 July 2009. (11)Email from the defendant to GD Pipelines 21 July 2009. (12)Email from the defendant to GD Pipelines dated 22 July 2009. (13)Bruce Austin's Site Access Authorisation Form and Site Induction Assessment. (14)Robert Milne's Site Access Authorisation Form and Site Induction Assessment. (15)Shayne Austerberry's Site Access Authorisation Form and Site Induction Assessment. (16)Robert Milne's Site Access Authorisation Form and Site Induction Assessment. (17)Ken Anderson's Site Access Authorisation Form and Site Induction Assessment. (18)Michael Anderson's Site Access Authorisation Form and Site Induction Access. (19)Certificates of OHS convictions.

Defendant's evidence 29Ms W Thompson of counsel, who appeared for the defendant, read an affidavit of David Bruce Bailey sworn 2 August 2013. Mr Bailey is currently employed by Santos as the Manager of Operations, Energy NSW. 30Mr Bailey set out his responsibilities, his personal background, and the nature of Santos' business. He stated that Santos had been involved in coal seam gas exploration in north western New South Wales since 2008 and had its Energy NSW Operations Centre in Narrabri. He dealt with Santos' acquisition of the defendant and stated that at present, Santos has approximately 20 employees and between 20 - 40 contractors working at Narrabri. 31Mr Bailey stated that Santos accepted responsibility for the acts and omissions of the defendant that contributed to the incident. He expressed Santos' and its management's deepest sympathy to the family of Mr Austin. He stated that he did not have any firsthand knowledge of ESG's operations, or any of the safety management systems it had implemented at the time of the incident. 32Following Santos' acquisition of ESG, Mr Bailey stated that approximately 50 employees of the defendant became employees of Santos. However, Santos did not adopt any of the defendant's policies or procedures regarding workplace health and safety. Rather, persons employed or engaged to carry out work for, or on behalf of, the defendant were required to comply with Santos' workplace health and safety policies and procedures. Contractors engaged to perform work on PEL 238 were separately engaged by Santos under new contracts for service and as per Santos' contractor management procedures. 33Santos operates on the premise that all workplace injuries are preventable and strives for the highest standard of occupational health and safety. 34Mr Bailey stated that Santos has a Health and Safety Policy, endorsed by Santos' Chief Executive Officer, Mr David Knox, which sets out an overview of how Santos encourages best practice in health and safety management. A copy of the policy was annexed to the affidavit. 35Santos has an Environment Health and Safety Management System ("EHSMS") across the organisation which is compliant with AS/NZS 4801: Occupational Health and Safety Management Systems. Santos measures its safety performance by reference to the Total Recordable Case Frequency Rate ("TRCFR"), which is defined as the number of Recordable Cases (medical treatment and lost time injuries) per million hours worked. This measurement applies to both Santos' employees and contractors. 36Mr Bailey described Santos' EHSMS stating that it consisted of 18 individual management standards, which define the requirements for the systematic management of environment, health and safety hazards. 37The Management Standards address a range of topics, including Training and Competency; Hazard Identification, Risk Assessment and Control; Contractor and Supplier Management and Operations Integrity. 38The EHSMS06 requires, among other matters that: "(a) employees and contractors to only perform unsupervised tasks where they have the skills, experience or competency to perform such tasks without harm; (b) any personnel working at or visiting a Santos site to undergo an appropriate environmental health and safety (EHS) induction (that is, a general Santos induction, a site/premises-specific induction, an activity/location-specific induction or a visitor induction specific to each site or premises, as applicable); and (c) supervisors to visit Santos' worksites regularly to verify compliance with applicable standards and to ensure that their team has the required skills, experience and training." 39Mr Bailey stated that Santos' Managing EHS Risks Policy provided for hazard identification and risk management processes to be implemented in compliance with AS 4801, to ensure that risks are reduced to as low as reasonably practicable. A copy of the Managing EHS Risks Policy was attached to the affidavit. In summary, it requires all personnel who carry out work for, or on behalf of, Santos to complete a "job hazard analysis" ("JHA") prior to commencing a task, where the relevant task is not a routine low-risk task; there is no documented risk assessment for the task; or there are other material risks, which may present when the work is conducted but which would not be covered in an existing documented risk assessment. 40The JHA for a particular task requires a breakdown of the steps involved; the hazards; controls for each identified hazard and details of the worker responsible for each control. Approval is required for what is described as a "level 6 manager". In addition to completing JHA checks, Santos requires its personnel to use a number of other hazard identification, risk assessment and control tools, including the "Stepback Prompt Form", used to guide a process by which personnel identify any hazards which may arise from undertaking any task both prior to commencing, upon completion of that task and the "Residual Risk Assessment Form", which is an additional risk control used where a residual risk is determined to not be as low as reasonably practicable. 41The EHSMS also sets out the requirements for relevant hazard studies to be conducted at defined points during the life of all Santos projects; formal workplace inspections to be scheduled and any corrective actions taken to address hazards identified through the workplace inspections and managing the behavioural aspects of environment, health and safety performance improvement. 42Santos also has a Contractor and Supplier EHS Management (EHSMS10) which sets out the procedures and requirements for the engagement of contractors to perform work for, or on behalf of, Santos. A copy was annexed to the affidavit. It requires all contractors and sub-contractors performing work for, or on behalf of, Santos to have appropriate EHS management systems in place to prevent harm to Santos and contractor personnel, the public, the environment and Santos' business interests. 43Prior to selection of an appropriate contractor, the scope of work proposed to be performed is risk assessed to determine the level of EHS assessment required for the potential new contractor. Contractors must be appropriately pre-qualified prior to being awarded work. The type of EHS prequalification process required will be determined based on the type of work being proposed. 44In managing contractors performing major contract work, a Santos site representative is appointed to ensure that work carried out by the contractor is in accordance with the EHS Management Plan. Where a contractor is required to prepare and follow an EHS management plan, they must provide an audit schedule to ensure that their EHS management plan is effective. In addition, the assigned Site Contract Representative is required to review the contractor's audit reports and conduct random sample audits on the job to verify the effectiveness of the contractor's audits. A copy of the Santos Contractor EHS Management Plan Template was annexed to the affidavit. 45Mr Bailey stated that Santos has in place a governance structure for managing its major contracts. This provides for a Contract Sponsor, who is accountable for the overall contract performance; a Contract Representative, who is responsible for executing the contract in line with Santos' requirements and a Site Representative, who is typically located on-site and is responsible for executing the contract in line with the agreed terms and conditions. A copy of Santos' Contractor Meeting Agenda Template was annexed to the affidavit. 46For major contracts, Santos has implemented a Joint Management Team ("JMT"), which comprises representatives from Santos and the contractor, who meet periodically to review the contractor's performance, with a specific focus on EHS. It also has an Integrated Working Team ("IWT"), which comprises representatives from Santos and the Contractor, who meet regularly to review the execution of work, with a strong focus on EHS performance. 47Mr Bailey stated that in his experience the contract to perform HDD work for Santos would generally be treated as a major contract, and therefore be subject to the process referred to above. A HDD contract would generally be characterised as a "major contract" because it is reasonable to expect that the contract value would exceed $500,000 and the risk level would be moderate or higher. 48Mr Bailey also described Santos' Management Standard EHSMS11: Operations Integrity ("EHSMS11") which was annexed to the affidavit. This Standard deals with Operations Integrity and sets out the systems and tools that are required to manage process safety risks, and applies to all facilities operated by Santos, including those where day-to-day operations are sub-contracted to an operating company. This policy emphasises the need for maintaining effective lines of defence to prevent the occurrence of and mitigate the consequence of, a major incident. 49Mr Bailey set out the key and operational and behavioural requirements of the policy. His evidence was that Santos' EHSMS are to be used in conjunction with applicable legislative and regulatory requirements, relevant Australian Standards and other planning and work control mechanisms developed by Santos, such as the Work Permit Procedure ("WP Procedure"). A copy of the WP Procedure was annexed to the affidavit. 50In summary, it is designed to assist personnel working on Santos installations to carry out work in accordance with safe working practices. The WP Procedure seeks to ensure that work sites are inspected and all necessary precautions are taken before work commences; the work scope is clearly defined and is performed only on the specified equipment, which has been correctly prepared for the work to be carried out; hazards have been identified and controls put in place to mitigate inherent risks. For example, where a work permit is required to carry out certain work, it must set out the work to be undertaken; the work being done is monitored and that any work precautions taken are adequate. 51The WP Procedure is subject to review by Santos' Work Permit Steering Committee every three years to ensure its currency and consistency with other Santos systems and procedures, work health and safety legislation and Australian Standards, as amended from time to time. 52Mr Bailey described Santos' corporate citizenship stating it has a widespread community support program and has invested approximately $40 M in community partnerships since 2004. Santos' focuses is community support in six key areas: "(a) education and youth; (b) the environment; (c) arts and culture; (d) health; (e) community wellbeing; and (f) Indigenous matters." 53Santos supports a number of organisations and events, including the Australian School of Petroleum at the University of Adelaide; the University College London School of Energy Resources Australia; Royal Institution of Australia; Adelaide Zoo; Starlight Children's Foundation; Asthma Foundations; Royal Flying Doctors Association; the Smith Family; Santos Tour Down Under; and Yalari Aboriginal Scholarships. 54Mr Bailey stated that Santos has a strong culture of employee volunteering and fundraising, including 421 employees volunteering 2038 hours at 18 Santos-sponsored events in 2010. Santos staff in the Cooper Basin raised approximately $100,000 each year for the Royal Flying Doctor Service; and Adelaide-based staff raised $37,000 for the Cancer Council South Australia during the 2011 Santos Tour Down Under. 55Santos has supported a number of programs to improve workplace health and safety, including its foundation partnership to establish the IFAP Work Safety Culture in Adelaide. IFAP is an independent, not-for-profit organisation that provides workplace health and safety and risk management solutions to workplaces. Santos also provides sponsorship of the keynote address by process safety expert Professor Andrew Hopkins (School of Social Sciences, ANU) at the 2010 Chemeca Conference.

Relevant principles 56The Full Bench in Morrison v Coal Operations Australia Ltd (No 2) [2005] NSWIRComm 96; (2005) 141 IR 465 succinctly summarised the principles to be applied in determining sentence for an offence under the OHS Act. Their Honours stated at [8] - [15]: "[8] The overall approach to be followed in relation to the determination of sentence is to be found in the first instance within the statutory provisions of the Crimes (Sentencing Procedure) Act 1999 and in particular, in relation to these proceedings, ss 3A Purposes of Sentencing and 21A Aggravating, mitigating and other factors in sentencing. [9] In R v Way (2004) 60 NSWLR 168 it was emphasised that the provisions of the Crimes (Sentencing Procedure) Act referred to above are not to be construed as representing "a departure from settled principles of sentencing practice, or an abandonment of the discretion that is essential to any system calling for individualised justice". As was said at [59]: '[I]t is clear that the legislative policy ... so far as that can be discerned from the legislation itself, was not to create a straight jacket for judges ... but rather [was] intended to provide "further guidance and structure to judicial discretion.' [10] The starting point for consideration as to penalty is the objective seriousness of the offence. That is a well established sentencing principle and was conclusively affirmed in the Full Bench decision in Lawrenson Diecasting Pty Ltd v WorkCover Authority (NSW) (1999) 90 IR 464 at 474 as follows: '[I]t is important to reiterate that the primary factor to be considered when a judicial officer is determining the appropriate sentence to impose is the objective seriousness of the offence charged. In case of prosecutions under the OH&S Act, this proposition has often been expressed by saying that the "true measure of penalty lies in the nature and quality of the offence" ... [11] The principle of foreseeability as a factor in determining the objective seriousness of an offence as part of the sentencing process was considered in the Full Bench decision in Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) ("Capral") 49 NSWLR 610 at 646; 99 IR 29 at 62 as follows: 'The question of foreseeability is relevant to the assessment of the seriousness of the offence. We consider that the appropriate approach is that of Walton J, Vice President, in Department of Mineral Resources of NSW (McKensey) v Kembla Coal and Coke Pty Ltd (1999) 92 IR 8 at 27: Whilst the reasonable foreseeability of an accident may not be relevant to the question of liability under the Act (see Drake Personnel Ltd t/a Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432), the degree of foreseeability is a significant factor to be taken into account when assessing the level of culpability of the defendant. The existence of a reasonably foreseeable risk to safety which is likely to result in serious injury or death is a factor which will be relevant to the assessment of the gravity of the offence.' [12] On the issue of foreseeability, the Full Bench in Capral also stated at 646; 62 - 63: 'The existence of a reasonably foreseeable risk of injury will necessarily result in the offence being more serious in nature. However, the absence of foreseeability does not necessarily render the offence as being nominal or not serious. In this regard the relevant approach is that set out in the judgment of Wright J, President, in Ferguson v Nelmac Pty Ltd [1999] 92 IR 188 (at 209 - 210) in these terms: '... reliance on "hindsight" must be seen in an appropriate perspective in terms of culpability. It is a relevant consideration but the very terms of s 15 impose an obligation on an employer which is not confined to the taking of precautions only when there are warnings or signals of danger or when experience indicates that a risk to safety has arisen and requires remedy. So much is clear from the structure and language of the section which is premised on the requirement to 'ensure ... health, safety and welfare at work' and the decided cases which make plain the nature of the obligation.' [13] It is also necessary to consider the damage and injury suffered in the context of the evidence and "in light of the principles which have been laid down in relation to the relationship between the seriousness of injuries which have been suffered, or which may have been suffered, and the gravity of the offence" (Capral at 650; 66). On that point the Full Bench in Capral stated: 'We consider that the relevant principle can be stated in this way. The gravity of the consequences of an accident, such as the damage or injury, does not, of itself, dictate the seriousness of the offence or the amount of penalty. However, a breach where there was every prospect of serious consequences might be assessed on a different basis to a breach unlikely to have such consequences. The occurrence of death or serious injury may manifest the degree of seriousness of the relevant detriment to safety: Tyler v Sydney Electricity (1993) 47 IR 1 at 5, Inspector Hannah v Wonar Pty Ltd (1992) 34 AILR 377 at 378, Watson v Southern Asphalters Pty Ltd (1996) 83 IR 446 at 456, Wong v Melinda Group Pty Ltd (1998) 82 IR 118 at 131, WorkCover Authority of New South Wales v Albury City Council (1999) 90 IR 397 at 408 - 409, Lawrenson Diecasting Pty Ltd (at 476), WorkCover Authority of New South Wales (Inspector Ankucic) v McDonald's Australia Ltd (at 428) and WorkCover Authority (NSW) v Walco Hoist Rentals Pty Ltd (No 2) (at [22]).' [14] The principles of general and specific deterrence are also relevant in sentencing. The approach to be taken on that issue was also dealt with in some detail in Capral at 643 - 645; 59 - 62. Without detailing all that the Full Bench had to say we consider the approach to deterrence in the sentencing process is encapsulated in the following passage from the Full Bench in Capral at 644; 60 as follows: '[B]oth aspects of deterrence are matters which should normally be given weight of some substance in the sentencing process; and although there may be exceptional cases (see, for example, Workcover Authority (NSW) v Walco Hoist Rentals Pty Ltd (No 2) [2000] NSWIRComm 39; (2000) 99 IR 163 at [40]- 43]) we would expect such cases to be very rare, and where the relevant circumstances were held by the sentencing judge to be established, the judge must indicate with some precision the circumstances which had led to the exceptional course being adopted.' [15] In the context of the above well established sentencing principles it will also be necessary to have regard to those general matters going to aggravation, mitigation and other factors identified in s 21A of the Crimes (Sentencing Procedure) Act relevant to the respondents before the Full Bench. As was said in R v Way at [56]: '[I]t is not to be overlooked that there is a well established body of principles that have been developed by the courts over a long period of time. By providing guidance in the form of a list of aggravating and mitigating factors in s 21A, the Parliament did not intend to overrule or disturb those principles or restrict their application. In so far as those principles refer to factors, whether objective or subjective, that affect the "relative seriousness" of the offence, they are expressly preserved by s 21A(1)(c).' "

Consideration 57Mr Taylor and Mrs Thompson agreed that the primary consideration, as set out in the above principle, requires a determination of the objective seriousness of the offence. This involves examining the nature and quality of the offence as set out in the ASF and the evidence. 58The defendant was the holder of a petroleum lease at the worksite and had subcontracted the installation of pipelines for the purpose of petroleum exploration operations to ADD. The defendant had also either directly or via EEA contracted GD Pipelines to install as part of the Bibblewindi Project, pipelines to either side of Bohena Creek, using standard trenching techniques. 59On 27 July 2009, the defendant forwarded an email to GD Pipelines advising that it had engaged ADD to carry out the creek bores and stated: "... we would still like GD Pipelines to provide a site supervisor for the duration of the boring as well [as] be part of the GD mobilisation to help with the pull through, the final tie-in, and pressure tests. The GDP supervisor is to organise everything for the boring such as accommodation, inductions from Tom Bennett in Narrabri before entering the forest, final site preparation, etc, as well as staying in regular contact with John Higgins (Site Manager) regarding issues and updates." 60GD Pipelines had experience in managing drilling sub-contractors including those who had expertise in HDD. 61On 22 July 2009, the defendant again forwarded an email to GD Pipelines advising: "... additional costs associated with site instructions and delays from the original cost estimate will be accepted to the original PO-11585. This includes the Creek Bore supervision, and the remob to finalise the tie-ins and pressure tests. These items will need to be broken out separately in the invoices. ... The variations requiring separation will most likely be some items listed in the "site instructions" of each weekly report." 62In essence, this prosecution concerns the failure of a principal to adequately oversee and supervise work undertaken by a subcontractor. Although the defendant had systems of work that were capable of ensuring safety, it failed to adopt its own procedures to check that there were safe work methods in place in respect of the activities being undertaken at the site. It did not attend the site and it did not take the necessary steps to ensure that there was proper supervision. 63The first particular in the amended application for order refers to the failure to check whether there were safe work method statements that were adequate and relevant for the work that was going to be undertaken. There was no safe work method statement for the task that caused the accident. That is, in respect of circumstances where a pipe became stuck in the ground. The evidence discloses that this occurs in the industry from time to time. 64The agreed statement of facts provide that the defendant did not specifically request ADD to provide safe work method statements for this work, but rather received 42 safe work method statements from a previous job and did not take any steps to check whether these were appropriate and relevant to the work being undertaken at the Bohena Creek worksite. It was also an agreed fact that the defendant had a mandated contractor inspection checklist, but it was not completed. 65Mrs Thompson submitted that there was no evidence to support any contention that the defendant systematically approached the task of obtaining safe work method statements from its contractors as a "tick the box" exercise. I accept that there was no evidence to suggest that the safety systems the defendant had in place were not implemented appropriately in relation to other work performed on its behalf by other subcontractors. The prosecutor accepted that the evidence was limited to this incident. 66Mrs Thompson acknowledged that ADD did not provide the defendant with any documentation in relation to the risk assessment of the systems of work and control measures to be used for the task. However, counsel submitted that some steps were nevertheless taken by ADD to ensure the safety of the persons at the site. Those steps were summarised as initially placing star pickets and bunting around the entry and exist to the pit hole and the adjacent area. 67On the day of the incident some of this bunting was removed. The evidence does not enable a finding to be made that the bunting was placed around the pit because of the risk of a recoil of the pipe. The bunting was clearly placed around the pit to mark it off, from a safety perspective, as a hole had been dug which was partly filled with water. 68The second point raised by Mrs Thompson was that ADD provided a warning on Friday 31 July 2009 to Mr Austin of the danger in entering the area cordoned off because of the potential for the pipeline to recoil. 69In an interview conducted by Inspector Paul Rafferty of WorkCover, Mr Ken Anderson, a member of the ADD work crew, stated that on the day before the incident, he had had a conversation with Mr Austin while the retrieval work was being carried out. Mr Anderson said to the Inspector that he had seen Mr Austin walk up to the entrance of the drill hole and had then called out to Mr Austin not to go there and that he should come back and stand with him some 10m - 15m from the hole as if the pipe broke, anything could happen. He said to the Inspector that he then told Mr Austin that to be safe he needed to be 10m - 15m away from the entrance of the drill hole. Accepting that this statement was made, ADD did not have a documented safe work procedural method for the removal of the pipeline and no job safety analysis or risk assessment for the activity was conducted by ADD. Although Mr Austerberry had performed the procedure a dozen or so times in his career, in my view, the statement by Mr Anderson was neither sufficient, nor an appropriate instruction to enable Mr Austin to understand the nature of the risk on the following day. 70The next point raised by Mrs Thompson was the holding of a toolbox meeting on the day of the incident during which everyone was instructed to "keep out [of] the bloody road". Agreed fact 54 stated that "...before the Activity commenced on Saturday 1 August 2009, a toolbox talk was held during which those present discussed where they were going to dig the hole in the creek. At that time, Mr Austin stated "everybody's got to keep out [of] the bloody road." 71In my view, and I find, the toolbox talk was directed to the risks associated with digging the hole in the creek, in an attempt to locate and remove the pipe and the reamer. It was only later in the day that a decision was made to attempt to pull the pipe out of the ground after the digging had failed to recover the reamer. I agree with Mr Taylor's submission that no great significance should be placed on the words used by Mr Austin on 1 August 2009 as being words which were also to be understood to be referring to the exercise of pulling the pipe out of the ground. Such a decision had not been made at the time that the words were spoken. 72The next point raised by Mrs Thompson was that Mr Austin was directed to go to an area well beyond the reach of any recoil of the pipe just prior to the incident occurring. The agreed statement of facts and the evidence does not state that the reason Mr Austin was told to go and sit on the log was because of a view that there was a risk of the pipe recoiling. There is no evidence that suggests why Mr Austin was told to sit on the log which was located approximately 17m from the pipeline. In my view, an inference can be drawn that Mr Austin was being given this instruction which he would have understood to have been directed at his safety. 73The second particular addresses the failure to maintain control of the site by failing to instruct and inform subcontractors to stop work when an unplanned activity is taking place. Such work should not recommence without first informing the principal and without having ensured that a proper risk assessment process was in place for the unplanned activity. 74The defendant quite properly identified that there was an induction undertaken by the majority of the workers shortly before the date of the incident which dealt with the need for a job safety analysis. However, there was a failure to properly instruct workers and ADD was required, as a subcontractor, not to embark on tasks for which there was no safe work method statement. 75I agree with the prosecutor's submissions that the failure to have a documented Job Safety Analysis ("JSA") process in respect of the removal of the pipe gave rise to an "ad hoc approach" to that task where different methods were being tried, including using chains that were at the site for an entirely different purposes. In addition, the activity of endeavouring to remove the pipe from the ground continued even after the chain had broken in circumstances where there was a clear and obvious risk arising from the stored energy if the chain broke again, which it did. 76It is clear from the evidence that these pipes are elastic and it is the elastic quality of the pipes which created the risk. Stored energy of any type is always a risk in a workplace, whether it be electricity, water stored under pressure, or oil in a hydraulic system. All stored pressure creates a risk to health and safety, particularly where the stored pressure has the capacity to be released suddenly with unpredictable results. 77The third particular deals with the failure to provide proper supervision and goes to the core of the breach of the OHS Act. There is a fundamental duty on a principal to ensure that a worksite is properly supervised and to ensure adequate supervision. This did not occur in this case. The defendant should have ensured that there was present at the site a supervisor who was charged with the responsibility of ensuring safety. Questions such as "is there a safe work method statement for this task?"; "what are the risks involved?"; "how can those risks be controlled?"; "should there be an exclusion area in case of the risk of a recoil of the pipe?", and, "can another work method be utilised?" are some of the questions that should have been asked by a supervisor. 78The agreed statement of facts describe the site supervisor as Mr Roulston and also make clear that ADD's work was being supervised by Mr Austerberry. I have earlier set out the only relevant evidence between the defendant and GD Pipelines in respect of the provision of a supervisor. The emails do not make specific comment in respect of safety issues, or the specific measures that must be undertaken if GP Pipelines' or ADD's systems are to be adopted. Although Mr Roulston was appointed the site supervisor, the evidence was that there was no direct communication between the defendant and Mr Roulston. 79In an email from the defendant to ADD dated 22 July 2009, the defendant stated: "GD Pipelines will be providing a Supervisor on behalf of ESG for the job to assist with coordination and preparation for the job. Note that all personnel will require an induction at the Narrabri office before entering the forest as conditions on site have changed, and I'm assuming some people won't have the normal ESG induction anyway." 80This email contains no reference to safety issues. Mr Roulston when interviewed after the incident, said that he thought his role involved "facilitating" and that he had not understood that his role was supervision. 81If a corporation is to adopt an approach of contracting out supervision at a site, then it is incumbent upon it to ensure that supervision is being properly carried out. This may involve audits. The defendant had, in its paper systems, a roll for auditing and for checking. However, what it did not do was to comply with its own systems and that included a failure to carry out any checking of safety issues at the site. 82Mrs Thompson conceded that there was a foreseeable risk, that when a pipeline become stuck in the ground and attempts were made to pull the pipe out of the ground, the risk of the pipeline recoiling arose. Counsel correctly, in my view, submitted that the risk did not materialise until the ADD crew attempted to retrieve the detached reamer by pulling the pipeline out of the ground by attaching a chain, which was not suitable for the task, to an excavator for the purpose of the excavator attempting to pull the pipe out of the ground. 83Mrs Thompson did not submit, nor did the defendant seek to rely upon the fact that the actions of Mr Austin on the day operated to minimise its liability under the OHS Act. 84The defendant accepted that s 8(2) of the OHS Act placed an obligation on it to be proactive in ensuring the health and safety of non-employees whose health and safety may have been affected by its undertaking. 85In Nash v Austerberry Directional Drilling Services Pty Ltd [2013] NSWIRComm 37, I found at [106] that taking into account the measures available to ADD and the obvious foreseeability of the risk, that the contravention by ADD was "an objectively serious offence which lies in the mid-range of seriousness." 86I also determined that when viewing the actual contribution of ADD to the risk to Mr Austin's health and safety that: "The contribution to the incident fell substantially on the shoulders of the defendant [ADD]. It bore the overwhelming obligations and responsibilities for safety at the site in respect of the retrieval of the pipe. ..." 87I adopt these findings in this matter. 88Mrs Thompson submitted that when one takes into account the serious nature of the risk and the measures available to the defendant to guard against the risk, its contravention could be seen as an objectively serious offence that at its highest would fall in the mid-range of seriousness. 89The foreseeability of the risk is a factor to be taken into account when assessing the level of culpability of the defendant: Capral Aluminium Ltd v Workcover Authority of New South Wales [2000] NSWIRComm 71; (2000) 49 NSWLR 610 at [81] - [82]; (2000) 99 IR 29. 90An offence may be characterised as a serious offence where there is an obvious or foreseeable risk to safety against which appropriate measures were not taken in circumstances where such measures were available and feasible: Lawrenson Diecasting Pty Ltd v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 464 at 476. 91Pursuant to s 21A of the Crimes (Sentencing Procedure) Act 1999 , the occurrence of death may manifest the degree of seriousness of the relevant risk: see Maddaford v CSR Limited and Mulgoa Quarries Pty Ltd [2004] NSWIRComm 337 at [17] - [18] and Capral Aluminium Ltd at [94] - [95]. 92In my view, the risk was obvious and foreseeable, particularly in circumstances where the chain had broken once on 1 August 2009 and there was a significant risk that it would brake again given that the same chain was being used. It was also obvious and foreseeable that there was a risk of injury to any person at the site if struck by a recoiling pipeline, if the chain again broke. When the chain broke for the second time, approximately 145m of pipeline had been extracted from the ground. 93It will be a serious offence where there is an obvious and foreseeable risk to safety against which appropriate measures were not taken. In this matter, simple and effective measures were available which would have identified or otherwise reduced the risk to Mr Austin's health and safety. The stuck pipe could have been left in the ground; a clear exclusion zone could have been established; adequate information could have been provided to Mr Austin about the danger of standing within the exclusion zone area; clear instructions could have been given to Mr Austin to stay outside the exclusion zone. Furthermore, the pipe could have been cut prior to 145m of it was extracted from the ground to minimise any risk of recoil. 94For these reasons I find that the offence was objectively serious and falls within the mid-range of seriousness.

General deterrence 95Both counsel accepted that there was a need for general and specific deterrence to be included in any penalty. Mrs Thompson noted the observations made in Nash v Austerberry (at [107] - [108]) that there was a need to draw attention to the risks associated with the task of HDD if that activity was not properly controlled and that the risk of a pipeline recoiling is a risk that requires awareness within the mining industry and general gas and petroleum exploration community. 96Mr Taylor submitted that general deterrence had significance in this case. Firstly, because it highlighted the need for principals to do more than establish a paper system on occupational health and safety. Senior counsel submitted that it was all very well to have documented systems and procedures in place, but persons and entities who engage subcontractors to undertake work on their behalf must ensure that work is undertaken safely by: (a)checking that the subcontractor will utilise a safe method of work for each planned activity; (b)informing and instructing subcontractors to stop work immediately when an unplanned activity is to be undertaken until the method of work for that activity is assessed by the principal to be safe; and (c)adequately supervising subcontractors to ensure that work is being done safely. 97I agree with these submissions. 98In Inspector Nikolovski v McCrudden (No 2) [2011] NSWIRComm 73, [2011] 207 IR 385 (at [27]), Haylen J stated that a principal's failure to enforce the safety rules adopted, including by appropriate supervision, will be regarded as a critical aspect of the principal's breach. I respectfully agree. 99I consider that it is appropriate to draw attention to the importance of principals taking adequate steps to ensure the health and safety of workers, particularly where high risk activities are undertaken such as in the petroleum and coal seam gas industries. The circumstances that give rise to the risk, that is pipelines becoming stuck in the ground while being installed using HDD, are not uncommon. This makes it important for those companies that use HDD to ensure that measures to control or eliminate any risk are implemented. Employers and contractors should be constantly vigilant of the need to ensure the proper establishment of exclusion zones when there is an obvious and foreseeable risk from which workers should be protected if a pipeline recoils when it is pulled from underground under pressure. As I observed in Nash v Austerberry Directional Drilling Services, the procedure adopted in removing the pipe and the way the contractors approached that task should be discouraged. I include a component in the penalty for general deterrence.

Specific deterrence 100On 17 November 2011, Santos acquired the shares in the defendant. I accept, in light of the evidence of Mr Bailey, that this is not a case which calls for the imposition of some additional significant punishment aimed at deterring this defendant from further offending against the OHS Act and/or for the purpose of compelling the defendant's attention to occupational health and safety issues, so that persons are not exposed to risks to their health and safety. 101The prosecutor submitted that specific deterrence is still relevant in circumstances where Santos is in the business of oil and gas exploration and production and is the largest producer of natural gas for the Australian market. Presently, it has approximately 20 employees and between 20 - 40 contractors working in the Narrabri area. The attitude of Santos to workplace safety and procedures are relevant to specific deterrence. I note that the EHSMS of Santos were implemented to all of this defendant's operations. These EHSMS address what were clearly gaps in the defendant's contractor management systems. In light of the comprehensive nature of the EHSMS systems now in place, I am satisfied that the same or a similar incident should not occur again. I include a component in the penalty for specific deterrence.

Section 21A of the Crimes (Sentencing Procedure) Act 1999 102The prosecutor relied on the following matters as aggregating factors provided by s 21A(2): "(g) the injury, emotional harm, loss or damage caused by the offence was substantial"; and (ib) the offence involved a grave risk of death to another person or persons."

Subjective factors 103The following subjective factors are relied on by the defendant to mitigate the offence pursuant to s 21A(3): "(e) the offenders' lack of a record for previous convictions, (f) the offender was a person of good character, (g) the offender is unlikely to reoffend, (i) remorse shown by the offender for the offence, and the offender has provided evidence accepting responsibility for the offence, (j) the offender was not fully aware of the consequences of his or her actions because of the offender's age or any disability, (k) the plea of guilty, (m) assistance by the offender to law enforcement authorities." (i) the offender has provided evidence that he or she has accepted responsibility for his or her actions, and (ii) the offender has acknowledged any injury, loss or damage caused by his or her actions or made reparation for such injury, loss or damage (or both),"

Remorse and contrition 104The defendant, through the evidence of Mr Bailey, expressed its sympathy to the family of Mr Austin and accepted responsibility for its acts and omissions that contributed to the incident.

Measures taken after the incident 105I note that Santos did not adopt any of the OHS policies and procedures that were used by the defendant, but instead implemented its own policies which are comprehensive and detailed. A categorisation of work or activity as high risk or low risk is the starting point in Santos' EHSMS. Mr Bailey's evidence was that the task of HDD would be regarded under the EHSMS to be a moderate-high risk activity and as such it would be treated as a "major contract". In respect of a major contract, a contract sponsor, a contract representative and a site representative are appointed. 106As I have already observed, the role of the contract representative is to ensure the contract is completed in accordance with Santos' safety requirements in the EHSMS. Contractors are encouraged to attend a pre-start EHS workshop so that the contract representative can actively consult with the contractor to ensure that they understand the EHSMS systems before commencing work. 107A site representative is responsible for overseeing that the contract is carried out in accordance with the EHSMS systems as well as the subcontractor's safety management plan which is periodically audited. 108Mr Bailey's evidence also highlighted training and competency requirements under the EHSMS Management Standard, a work permit procedure, hazard identification and that risk assessments were conducted in accordance with "Managing EHS Risks Policy". All personnel who carry out work at a Santos worksite are required to complete a job hazard analysis that breaks down the steps for each task and specifies the control measures to be used and the person responsible for implementing the controls. It is appropriate that I take these policies and procedures into account. I do so noting that such policies were not in place at the time of the incident. 109Mr Taylor submitted that Santos' reputation and its occupational health and safety procedures were not relevant to a determination of sentencing of the defendant. In my view, Santos' OHS policies are of some significance in determining the appropriate penalty and in assessing whether there is a likelihood that a similar incident would occur in the future.

Plea of guilty 110The prosecutor accepted that the plea of guilty was entered at the first opportunity after the application for order was amended. It acknowledged that the amendments were more than minor amendments. In accordance with the principles in R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 and Cameron v R [2002] HCA 6; (2002) 209 CLR 339 at [75], I find that the defendant is entitled to a discount of 25 per cent as a result of the utilitarian benefits offered by the plea.

Co-operation 111I find that the defendant co-operated with the Department of Primary Industries during its investigation and that it is appropriate to take this matter into account in determining penalty. I also find in accordance with the evidence that the defendant was not a company that disregarded safety matters before the incident. 112I am satisfied that in accordance with the evidence of Mr Bailey, Santos has demonstrated a commitment to local communities near its operations and also to various charities, as well as supporting and funding programs to improve the health and safety of workers. As I have already observed, while Santos was not the entity in control of the defendant at the time of the incident, Santos' reputation as a good corporate citizen is of some relevance in the determination of the overall penalty as a relevant subjective factor.

Austerberry Directional Drilling Services Pty Ltd and parity 113ADD was convicted of an offence under s 8(2) of the OHS Act arising from Mr Austin's death. It was fined $170,000 and was ordered to pay costs (at [142]). 114Mr Taylor submitted that the offence to which ADD was convicted and fined was one that gave rise to the same risk of injury, which was the subject of this prosecution. However, counsel conceded the nature of the breaches was quite different. ADD was the entity primarily responsible for undertaking the activity and did so, Mr Taylor submitted, in circumstances where: "a. it was safer to leave the pipeline underground, drilling a new hole and installing another line of pipe; b. it failed to take any, or any adequate steps to identify the risks associated with the Activity. In particular it failed to conduct and record a risk assessment before it proceeded with the Activity; c. it failed to devise, document and communicate a safe work method for the Activity; d. it failed to establish an effective exclusion zone; e. it continued to undertake the Activity even after the chain being used to pull the pipeline broke for the first time; and f. it failed to take appropriate steps to prevent the pipeline recoiling." 115Mr Taylor further acknowledged that the defendant on the other hand, was not directly involved in the incident. The prosecutor accepted that its failures, as principal, concerned a breakdown in checking, informing, instructing and supervising its subcontractors in order to prevent such a risk arising. 116Both counsel agreed that while the charges arose from the same incident, the principle of parity did not arise since the nature of the breaches was quite different. I agree with this submission. 117Mr Taylor further submitted that there was no requirement on the court to impose the same sentence where the culpability was different between defendants. 118In Inspector Dall v Ullrich [2012] NSWIRComm 87, Walton J, Vice-President held at [88] - [89]: "[88] The principle of parity has a distinctly different operation to the principle of totality, although both principles ultimately have as their purpose the avoidance of a justifiable sense that an injustice has occurred. Justice Kirby in Postiglione v The Queen (1997) 189 CLR 295 (at 341) described the distinction in the context of the overall process of sentencing as follows: The sentencing judge must first reach a conclusion as to what seems to be the appropriate sentence having regard to the maximum fixed by Parliament for the worst case and the norm that is appropriate to the objective criminality of the case. The judge must then adjust that sentence, where appropriate, for the factors personal or special to the offender, discounted by any relevant considerations (for example co-operation with authorities or absence of remissions). But it still remains for the judge to look back at the product of these calculations and discounts. It is then that the sentencing judge must consider whether the resulting sentence needs further adjustment. It may do so because it is out of step with the parity principle requiring that normally like cases should be treated alike. Or it may offend the totality principle because, looking at the prisoner's criminality as a whole, the outcome is, in its totality, not "just and appropriate". The last-mentioned conclusion will the more readily be reached where the judge comes to the conclusion that the outcome would be "crushing" and, as such, would not hold out a proper measure of hope for, and encouragement to, rehabilitation and reform. (See also McHugh J at 306 and 313). [89] The principle of parity was succinctly stated in the joint judgment of Dawson and Gaudron JJ in Postiglione (at 301-302) as follows: The parity principle upon which the argument in this Court was mainly based is an aspect of equal justice. Equal justice requires that like should be treated alike but that, if there are relevant differences, due allowance should be made for them. In the case of co-offenders, different sentences may reflect different degrees of culpability or their different circumstances. If so, the notion of equal justice is not violated. On some occasions, different sentences may indicate that one or other of them is infected with error. Ordinarily, correction of the error will result in their being a due proportion between the sentences and there will then be equal justice. However, the parity principle, as identified and expounded in Lowe v The Queen, recognises that equal justice requires that, as between co-offenders, there should not be a marked disparity which gives rise to "a justifiable sense of grievance". If there is, the sentence in issue should be reduced, notwithstanding that it is otherwise appropriate and within the permissible range of sentencing options. Discrepancy or disparity is not simply a question of the imposition of different sentences for the same offence. Rather, it is a question of due proportion between those sentences, that being a matter to be determined having regard to the different circumstances of the co-offenders in question and their different degrees of criminality." 119While I accept that the culpability of the defendants in this matter is different, this does not necessarily mean that the court should impose a significantly different sentence. As I have observed, it would be wrong for the court in law and principle, to engage in some form of apportioning the overall penalty between ADD and the defendant. Each committed offences which, while different, I have found were objectively serious offences which gave rise to the same risk of serious injury occurring. 120Furthermore, although the charges are brought under the same section of the OHS Act, the particulars of the charges and the circumstances surrounding the respective contraventions differ such that the principle of parity does not, in my view, arise.

Victim impact statement 121Mrs Ann Austin, the wife of Mr Austin, read a victim impact statement to the court. Mrs Austin stated that she was present in court to honour her wonderful husband. She outlined her life with her husband prior to his accident. They were married for 38 years and raised 5 children - 3 daughters and 2 sons. They had 8 grandchildren as the time of Mr Austin's death. Another 3 grandchildren have since been born. 122Mrs Austin spoke of family celebrations, holidays and weekend getaways with family and close friends and said that Mr Austin was the glue that bound the family together. Although she has tried, it has been difficult to carry on these family traditions. Family gatherings have become breakfast in a park for a couple of hours or one or two of the family meeting for dinner. 123Mrs Austin also spoke of her husband as being a hardworking, intelligent, compassionate, honest, loving, healthy man who was positively passionate about his life. 124Mrs Austin described the circumstances of being initially told of Mr Austin's accident at work and upon her arrival at the hospital, where she was informed by the doctor that her husband's injuries were not life-sustainable. Her world was shattered in that moment. She recalled her son then holding her and putting a coat around her and her daughter Kelly collapsing in a chair. At the time of the accident her youngest daughter Lauren and her 4 year old son Angus, were two weeks into a European holiday after the death of her own husband only 12 months prior to the incident. Their trip was cut short by 5 weeks. 125Mrs Austin spoke of the family gathering at the hospital. Christie, Adam, Ben, Kelly, Lauren and their families and making the decision to turn off Mr Austin's life support. This decision will haunt her for the rest of her life. She told of her feelings of panic and uncontrollable grief. 126Mrs Austin detailed the impact that her husband's violent death had on her as falling into five categories of health, finance, social, psychological and family. She suffers sleeplessness, horrific nightmares, has developed appetite change, and experiences headaches. 127Financially, her world has collapsed. She has had to sell the family property and move to a very small affordable house, which was not the retirement life that she and her husband had expected. She spoke of being lonely and fearing growing old alone. 128Socially, she found that a lot of people she thought were friends did not want to talk to her about the loss of her husband as they could not deal with her grief. She has found herself avoiding people, unable to go out alone, not answering the phone and for a time, experiencing a lack of interest in other people. She said her son had told their solicitor that not only did the family lose their father, but they have also lost the mother they had always known. 129Her psychological impact has included, at various times, sadness, crying, guilt and fear, anger, swearing, depression and an inability to stop thinking about her husband's death. She has had great anxiety and mood swings and, at times, feels abandoned and angry. She has attended counselling and has said that she will never forget the lack of communication at the time of the accident, particularly that no-one bothered to speak to them from the defendant or ESG. No-one would tell them what happened to Bruce for weeks after he died. 130The family impacts include having Christmas without her husband, together with birthdays and anniversaries. 131Mrs Austin stated that she became angrier when the investigation report was released because it was clear that the issues that contributed to her husband's death should have been addressed in the planning and assessment of the task being conducted at the time of the incident. The realisation to her and her family that occupational health and safety policies were not put in place was devastating. She said that she was trying to understand through a cloud of confusion why the rules that were already in place were ignored and asked how she could explain this to her grandchildren. 132Mrs Austin concluded by stating that she had difficulty coping with what she perceived as a cavalier attitude of ESG, a lack of information from the police and a lack of contact with her from the defendant. She felt their collective behaviours were inexcusable and downright arrogant. She said her family deserved to be told why their lives had changed forever in a timely and dignified manner and that the system OF post death processes (including those of the defendant and the police) need to be changed so that families are fully informed in every part of that process and not just left to suffer, hopefully in silence. 133The Court of Criminal Appeal in R v Mansour [1999] NSWCCA 180 and Hunt CJ at CL in Previtera (1997) 94 A Crim R 76 (at 84 - 85) stated that the Court in sentencing may bear in mind a victim impact statement and have regard to the particular effect of the deceased on members of the family. However, the Court should not give these considerations weight in determining the sentence imposed: Inspector Glass v Foamex Polystyrene Pty Ltd [2004] NSWIRComm 100 at [43]. See also Inspector Simpson v Tomago Aluminium Co Pty Ltd (unreported) Haylen J 27 April 2004 Matter No IRC 5351 of 2003); Inspector Sharpin v A Team Concrete (Aust) Pty Ltd [2004] NSWIRComm 182 at [138] where I observed: "Victim impact statements presently serve two distinct purposes. In the case of family victims, where a family member has died as a result of a breach of the Occupational Health & Safety Act 2000, it provides an opportunity for the family to express their feelings of grief and loss, and allows proper public respect to be paid to these feelings. In cases where there has not been a death, not only does the victim impact statement provide an opportunity for the victim to have proper public respect paid to their pain and suffering, but it also has a role to play in the determination of the appropriate sentence to be imposed by the Court. The statement will explain to the Court the extent of the impact the crime has had on the victim's life." 134The court extends its deepest sympathy to Mrs Austin, Christie, Adam, Ben, Kelly, Lauren, their families and friends.

Maximum penalty 135The maximum penalty in respect of the defendant, who has no prior convictions, is $550,000. Taking into account the seriousness of the offence, and the subjective factors referred to earlier, I impose a fine of $120,000. 136The prosecutor seeks a moiety and costs which I propose to grant.

Orders 137I make the following orders: (1)The offence is proven and a verdict of guilty is entered. (2)The defendant is convicted of the offence, as charged. (3)The defendant is fined an amount of $120,000 with a moiety thereof to the prosecutor. (4)The defendant shall pay the prosecutor's costs of the proceedings in an amount as agreed or, if agreement cannot be reached, as assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 September 2013