It was submitted that, on any analysis, these documents demonstrated significant control over the manner and operations of all seconded employees and that was consistent with the Joint Venture, and not the original employer, being the employer.
87 The project procedures covered matters of design and construction. Mr Burgmann believed that he did not need to consult anyone from the defendant because he had authority to approve the document. The procedures applied to Mr Burgmann and those acting on his behalf. Mr Burgmann's evidence was that he had attended design meetings and was satisfied that the design documentation "drew attention to the gas", but stated that it made absolutely clear that the contractor was to deal with it with the appropriate authority, being AGL.
88 Similarly, there were a number of controls exercised through the design procedures including that the design co-ordinator would be appointed by the design manager for the day-to-day actions of each design and documentation contract. The duties of the design co-ordinator included initiating services which were applicable. CWM's instruction procedures dealt with "construction start" and the scope of these procedures was stated to be "applicable to the superintendent, the superintendent's representative and the contract manager''. The "responsibilities" identified in the 1995 version were said to be those of the "construction manager" (the superintendent), the project manager or site manager (the superintendent's representative). The 1996 version stated that the responsibilities were to be those of the superintendent who was responsible for the "overall operation of this procedure" and added that the superintendent's representative was responsible for implementing the procedure.
89 In relation to the contract manager, under the heading "Procedure", it was stated that the contract manager was to arrange for the superintendent to issue a letter to the contractor, appointing the project manager or site manager as the superintendent's representative in accordance with Clause 2 of the general conditions of contract and stated the extent of authority delegated. In the 1996 version, the superintendent's representative was to immediately arrange for any service searches, to make contact with various SRA departments as appropriate, to advise them if the work was likely to involve movement, the relocation or upgrade of their services and to advise the programme of the works together with any assistance required. It was accepted that this was different from the 1995 version, which did not refer to service searches but, it was submitted, it was clear that this responsibility was for CWM before the explosion although not referred to in the procedure. In relation to industrial relations, it was stated that the purpose of the procedure was to outline the superintendent's responsibility for monitoring and co-ordinating industrial relations on active construction sites. Under the heading "Scope", it was said that the procedures were applicable to CWM staff who would administer and supervise the contract.
90 CWM's contract with SRA had obligations to ensure compliance with occupational health and safety legislation. In the 1995 procedures, the purpose was stated to be to set up safety measures and restrictions to be enforced on contractors working on station upgrading work. The scope of the procedure was "mainly" confined to special conditions of contract used, while the 1996 procedure stated that those procedures applied to all construction contracts for which CWM acted as superintendent. The 1995 procedure stated the need to comply with all relevant Acts and regulations including the Construction Safety Act and the Occupational Health and Safety Act and, where problems arose, they were to be referred to the superintendent for direction on procedures to be followed. The superintendent was to impose fines for breaches of the principal safety regulations.
91 It was submitted that Regulation 84 of the Construction Safety Act incorporated the need to comply with Australian Standard AS2601 of 1991 dealing with the demolition of structures. The work method statement delivered by Josef & Sons Pty Ltd stated that the demolition work was to comply with the Occupational Health and Safety Act, the Construction Safety Act and Australian Standard 2601-1991. Thus, it was submitted, the contract and the procedures required compliance with the Australian Standard. The standard referred to investigation of a site, including the identification of the type, location and extent of any underground service conduits or cables, or location of any hazardous material. There was reference to the need to identify and locate service supply mains (water, electricity, gas) and the extent of reticulation. There was a requirement to identify and locate underground services and their points of entry and exit from a site. It was submitted that no such identification had occurred or had been undertaken by anyone on this site.
92 It was submitted by the prosecutor that these procedures provided a level of governance over seconded employees and contractors. Mr Burgmann had clearly acknowledged that it was intended that these procedures be adhered to and it was part of his responsibility to see that responsibilities under the procedures were "brought home to every member of the Joint Venture".
93 It was submitted by the prosecutor that the defendant's approach appeared to be that the obligations of CWM under the contract with SRA were, in some way or other, truncated once the contract was entered into between SRA and Abigroup. In this way, it was submitted, the defendant attempted to avoid its obligation to "supervise". The defendant had clearly failed in its role as superintendent of the Abigroup contract. The role was, in fact, proactive and consistent with the duties of a joint venturer under its contract with SRA. Under the contract, the role of superintendent and his representatives was set out and, in particular, the superintendent was able to direct that all work was to be done in accordance with the contract. In this way, the contract included:
· underground services being identified prior to the commencement of
work on site;
· demolition being carried out consistently with AS2601;
· ·inspection of services that remain on site or adjacent to the site;
· inspection of services before disconnection;
· site management that required locations and details of necessary deviations and terminations;
· existing services required approval before excavation by machine within one metre of underground services.
In addition, the general conditions of the contract required compliance with statutory regulations, protection of persons and property, the power of the superintendent to object to and direct the contractor to remove any person employed by the contractor or sub-contractors who was incompetent or negligent in performance and the requirement of the superintendent to provide information to enable a contractor to set out the works.
94 An analysis of the operation of the Joint Venture was then conducted by the prosecutor to determine whether or not it was a partnership. It was submitted that the nature of the Joint Venture would influence the degree of criminal liability of the defendant to the extent that the defendant had control over its members and/or its employees, and it would also influence the degree of "vicarious liability" that the defendant would incur. There was no reason at law why a joint venture relationship could not be a partnership.
95 The following matters were relied upon as supporting a finding that the Joint Venture was, at law, a partnership:-
· equal control of the Management Committee;
· the policy of CWM was a matter of agreement of the Management Committee;
· equal profit sharing;
· the control exercised by a single person overarching all employees seconded, namely, that of Mr Burgmann as well as the control of the Joint Venture procedures;
· the equal acceptance of contractual liabilities under the contract with SRA;
· the Joint Venture acted as one entity.
96 An examination was then conducted of the employees engaged in the Joint Venture. Despite the fact that employees were seconded to the Joint Venture from the Joint Venture participants, the employees (in particular, Mr Dilly, Mr Sibley and Mr Willoughby) were under the substantial control of the Management Committee and its representative, Mr Burgmann. This relationship had to be seen against the legal liability of the Joint Venture in its contract with SRA to administer the contracts with Abigroup and others, such as Denton Corker Marshall. SRA was paying the Joint Venture a substantial sum to ensure that both these contracts were complied with - that is, the Joint Venture was engaged in project management.
97 While the defendant placed emphasis on the fact that the persons who worked for the Joint Venture remained employees of the original partners while at the same time working for the Joint Venture, the prosecutor submitted that Mr Burgmann was not simply an organisational head who acted in a fashion akin to a postbox for minutes of meetings or as some intermediary between Mr Dilly and the management board - rather, Mr Burgmann and the board had extensive management responsibilities on a day-to-day basis to ensure that the legal liabilities and responsibilities of the Joint Venture, and only the Joint Venture, were complied with.
98 It was submitted that the evidence of various persons working for the Joint Venture showed that they considered themselves firstly as employees of the Joint Venture and/or under the direction of the consultant's representative. Mr Dilly said that he worked for CWM as construction manager and that he did not report to anyone within Group One, but reported to Mr Burgmann. He did not recall reporting to anyone else and, at all times, he worked at the premises of the Joint Venture. He was appointed superintendent's representative under the contract between SRA and Abigroup. Mr Burgmann suggested in his evidence that the appointment was a "two-part nomination". The construction contract said that the principal (SRA) would nominate the superintendent, then, in a separate letter from SRA to the contractor (Abigroup) it was stated that the superintendent was the construction manager of CWM. When asked how the construction manager of CWM was appointed, Mr Burgmann stated that the construction manager was appointed by Group One under the Joint Venture agreement. It was submitted that that answer was deceptive because it was also clear that the construction manager was appointed under the contract between CWM and SRA.
99 Mr Dilly said that he made a recommendation that Mr Sibley be appointed his representative. Consistent with his earlier evidence, that he reported to Mr Burgmann, the inference was that the recommendation was provided to Mr Burgmann and not Group One. Mr Dilly had reported to Mr Burgmann because he was in charge of CWM and that Mr Burgmann could have a role in anything he liked. He had given evidence about letters concerning the explosion and CWM's involvement and stated that he would have sent a copy of the draft to Mr Burgmann for comment: he would not have written a document without first discussing it with Mr Burgmann. At no stage had he ever received any direction from a director of Group One. The prosecutor submitted that, whatever the exact nature of Mr Dilly's duties, central to his work was lack of supervision or control by his direct employer. Mr Dilly believed Mr Burgmann was his supervisor. All employees worked out of CWM's offices and reported to Mr Burgmann, not to their direct employer. Mr Burgmann provided instructions to Mr Willoughby as design manager. In that capacity, he was responsible for the performance of Denton Corker Marshall under its contract with SRA. He was administering the contract and ensuring that the construction tender documentation set out the relevant services.
100 It was significant that the defendant had a clear and equal participation in the board of management. Under the Joint Venture agreement, the Management Committee consisted of one member from each participant and it was to have full and complete power and authority with the participants directing the Management Committee, giving all approvals and making all decisions and determinations required or permitted to be given and made by the participants pursuant to the agreement with respect to the contract and the assets, including the power to supervise the activities of the Joint Venture. All approvals, decisions and determinations of a meeting of the Management Committee were to be made by simple majority vote of those at the meeting with each participant having only one vote. From the width of these powers the prosecutor submitted that the overarching power, that an employer might usually have over its employees, in fact, sat with this Management Committee. Not only did they share power equally but they shared it over non-employees.
101 While there were differences in the evidence of the witnesses, it was submitted that the evidence of Mr Patterson should be preferred as to the responsibilities of CWM. His evidence was that the Management Committee was delegated the day-to-day responsibility for safety so far as there was a requirement of the contract. He acknowledged that any representative of CWM visiting the site ought to have taken action if made aware of the existence of the charged gas line. Mr Patterson was the representative of Group One on the Management Committee, and stated that Mr Dilly and Mr Stewart attended the sites on behalf of CWM not Group One, and were in fact employees of CWM. They were acting in the capacity of project managers in accordance with the contract between CWM and SRA. Mr Sibley had considered that he was the project manager for CWM. There was also evidence of the need to have a rigorous approach to the management of the identification, protection and disconnection of existing services as required. The project manager would be responsible for the implementation, management and compliance with the project's existing services' procedures.
102 Importantly, Mr Willoughby's affidavit evidence attached the demolition specifications, stating that the demolition was to be carried out in compliance with AS2601. On 11 October 1995, a person under Mr Willoughby expressed concern about identifying underground services. Denton Corker Marshall wrote back on 21 November, after a site meeting with the Joint Venture, stating that the demolition of shops had commenced and also dealing with inground services investigations. It was noted that, when Mr Willoughby's attention was drawn to the lack of reference in the design documents to inground services, he stated that Denton Corker Marshall refused to put those references on the drawings and that he had not insisted that they do so. The prosecutor submitted that this was the most serious dereliction of duty on behalf of CWM.
103 Mr Burgmann had stated that he was satisfied that the design documentation drew attention to gas and that was the important issue. The prosecutor submitted that this was an acknowledgement of the fact that CWM did have a responsibility in relation to this issue and clearly failed, in a meaningful way, to discharge that responsibility.
104 While the defendant's plea accepted that there was a degree of control exercised, it did not indicate how the defendant was in control and to what extent it was in control of the premises. Criminal liability of the defendant could arise in a number of alternative ways. The prosecutor then dealt at length with the concept of vicarious liability and submitted that, on present authority, the defendant should be found vicariously liable for the acts and omissions of its non-employees.
105 In relation to the proper approach to sentencing, it was accepted that the maximum penalty applicable in each case was $500,000. The Act operated in a way so that it was the risk created by the defendant's failures that had to be assessed in considering the objective seriousness of the offence. As made clear by the Full Bench in the Abigroup case, the risk in relation to offences under the Act was a reference to the possibility of danger rather than present danger. Here, as a result of the first gas explosion at approximately 2.00 pm on 4 December 1995, two people were killed and at least 16 other people sustained burn injuries, some of them very serious. As a result of the second gas explosion at around 4.00 pm, approximately five Fire Brigade officers sustained burn injuries.
In relation to the issue of causation, the prosecutor accepted that there were intervening acts of other parties that led to the gaspipe being broken and the explosion off site. It was submitted that these acts were wholly predictable and usual for a building site. There was always going to be heavy machinery disturbing the surface of earth near the unmarked gas line. The prosecutor pointed out that, during the course of the plea, there was recorded in the transcript a further point of agreement, namely, that the defendant accepted as a fact that the failures in respect of these charges, to which it had pleaded guilty, "were an instigating cause of the risks which came to fruition on 4 December 1995 and had, as their consequences, the injuries to non-employees on that day".
106 The prosecutor submitted that the defendant's failure was a substantial cause of the risk of the breakage of the gaspipe and, further, that its failures were also a substantial cause of the actual breakage and the subsequent explosions. Reference was made to authority for the proposition that the Act did not concentrate only on the immediate cause of an accident and the risk that led to it but there was also a need for consideration of failures to provide and/or maintain a safe system of work as being the preceding link in the chain of causation.
107 From the material before the Court, including photographs and evidence of the dimensions of the site, it was submitted that this was a somewhat cramped building site for the operation of heavy machinery and that it was always anticipated that heavy machinery would be present on the site disturbing the surface of earth near the unmarked gaspipe. The end of the gaspipe was marked, as shown in photographs taken on 24 November 1995, and the evidence established that it was known that the gaspipe was charged. However, it entered onto the site to the point marked, of which several metres, at least, were not far below the earth's surface. The risk of breaking the pipe, causing a serious gas leak on or off the site was obvious, particularly after the marking and protection at the end of the pipe was removed. This aggravated the offence.
108 The need for general and specific deterrence was required, particularly having regard to the notorious reputation of the building industry concerning breaches of the Occupational Health and Safety Act 1983. The Court was urged to make a statement as to the responsibilities of each participant on a building site, rather than endorsing the "pass the buck" attitude adopted by the defendant.
109 In relation to subjective factors, the prosecutor conceded that the defendant was entitled to the benefit of subjective factors that tend to mitigate the objective seriousness of the offences. A plea of guilty might attract a greater degree of leniency, where the court was satisfied that the plea reflected contrition on the part of the defendant. Prior to addresses by the defendant, there did not appear to be any evidence of the defendant's contrition. In addition, the plea in this matter was offered at a very late stage and only after the prosecution had commenced and a number of days of hearing undertaken. Also, the plea was entered after all appeals and challenges had been determined in relation to various technicalities raised by the defendant. In those circumstances, a discount of five per cent would be reasonable, given the lateness of the plea and the limited concessions made as to the extent of liability once the plea was entered. It was accepted that the defendant had no prior convictions.
110 In relation to parity, it was common ground that the charges laid against the defendant arose from the facts and circumstances also giving rise to charges against Abigroup, Josef & Sons and Robert Josef. The decisions in those cases, including appeals, were before the Court. It was submitted that an examination of the other prosecutions showed an increase of fines over the period the offences occurred. Secondly, the Full Bench of the Commission considered that the objective seriousness of the offence was in the severe range. The Court was asked to take into account the fact that ss 15 and 16 offences in those matters covered the same acts and omissions but related to different groups of individuals: the total amount of the fine aggregated near the maximum.
111 In its submission, the defendant pointed out that the identification of control in the context of s 17 usually posed no problem where the practical or direct control of premises was obvious. In the present case, however, the control attributed to Ove Arup was a shared or indirect control by reason of its participation in the Joint Venture. The defendant's liability under s 17 was restricted to the time when the premises were under the defendant's control. The defendant's degree of control should be such that it could ensure safety by guaranteeing, securing or making certain of the condition of the premises: s 17 implied a sense of "directing action" or to "command", as opposed to mere "sway", "checking" or "restraint", an ability to compel corrective action to ensure safety adopting the approach in McMillan Britton & Kell Pty Ltd.
112 The control that Ove Arup was able to exercise was of a limited nature. Ove Arup & Partners was a single entity within CWM. In 1994, CWM had tendered to provide management services for building and civil works in relation to a station building and depot upgrading programme being conducted by SRA. On 29 July 1994, SRA Contract No 93336 (the project management contract) was awarded to each of the CWM participants in their corporate names. The upgrade programme involved building, refurbishing and upgrading works at 294 railway stations - only one part of that programme was conducted at Kogarah. Ove Arup did not exercise, nor was it in a position to exercise, direct control of the Kogarah construction site at which the explosion occurred. Nevertheless, for the purposes of the sentencing proceedings, Ove Arup accepted that, as a consequence of it being one of four participants making up the Management Committee of CWM, it had a degree of indirect control of the Kogarah construction site since, through the Management Committee, Ove Arup jointly with other CWM participants had power to control the superintendent and his representatives engaged at the construction site.
113 In relation to the upgrade programme, the defendant pointed out that SRA was, at all relevant times, the owner and occupier of Kogarah Railway Station at which the upgrade was being undertaken. SRA had developed the upgrade programme which involved major and minor works ranging from fencing to major repairs, modification and restoration of identified railway stations and buildings within the CityRail network. In or about 1993, SRA moved to outsource the management of all building and civil works under the upgrade programme to a project manager management and called tenders for the project management contract.
114 It was explained that, for the purposes of tendering for the project management contract, a number of corporate entities formed the Joint Venture CWM. Those corporate entities entered an agreement entitled "Stations Upgrade Joint Venture Agreement" and the participants were Group One Interiors Pty Ltd, EMTB, TMG and Ove Arup. The Ove Arup companies were considered a single entity within the Joint Venture, so that there were four members of CWM. CWM was not an incorporated entity. Accordingly, the Joint Venture was not a separate legal entity: its existence was solely the result of and due to the Stations Upgrade Joint Venture agreement.
115 Among the clauses of the Joint Venture agreement that were relevant was the provision that the four participants each had a 25 per cent interest in the Joint Venture - Ove Arup & Partners was only one entity within CWM, sharing in a 25 per cent interest. Further, the rights, duties, obligations and liabilities of the CWM participants were, in every case, several and not joint or joint and several. The relationship between the participants was specified as one of joint venture and nothing in the agreement was to be construed as constituting any of them as agent or partner for any of them or to create an agency or partnership for any purpose whatsoever. Except as specifically provided in the agreement, a participant did not have any authority to act for or to create or assume any responsibility or obligation on behalf of any other participant. The responsibilities and duties were divided amongst the participants so that Group One was responsible for construction management, Edwards Madigan was responsible for architectural and design management, TMG International was responsible for project management, rail systems and engineering and Ove Arup was responsible for project management and engineering. There was a four person Management Committee with equal representation from each of the four participants.
116 It was submitted that the Joint Venture agreement provided that the responsibilities and duties of each of the CWM participants were expressly delineated under Clause 7(2), where the responsibilities and duties were divided as described above. Ove Arup's only responsibility was in relation to "project management and engineering" and the only CWM participant directly responsible for construction management was Group One. The only CWM participant directly responsible for architectural and design management was EMTB.
117 In July 1994, SRA awarded the project management contract by naming each of the individual participants as a consortium, rather than using the name of the Station Upgrade Joint Venture or CWM. The Joint Venture agreement was incorporated in the project management contract so that all the provisions of the Joint Venture agreement and the tender material formed part of the contractual relationship between SRA on the one hand and Ove Arup, TMG, EMTB and Group One on the other hand. It was submitted that as a result of this approach, SRA accepted, as a matter of contract, that the Joint Venture agreement did not create a partnership or agency between the participants, that the rights, duties, obligations and liabilities of the participants were several only, that no CWM participant had any power or authority to create obligations or responsibilities on behalf of other participants and that the responsibilities and duties of the participants were as delineated to each individual participant.
118 As a practical matter, under the project management contract, the CWM participants variously performed the following tasks:
(i) identifying and recommending to SRA the priority of the stations on which upgrading work was to be undertaken, and the general nature of the work on each station;
(ii) calling for tenders from an SRA approved panel for the design of the specific upgrading work in question, vetting and making recommendations concerning the tender so received;
(iii) calling for tenders from an SRA approved panel for the construction of the specific upgrading work identified (based on the detailed design documentation) and vetting and making recommendations concerning the construction tender so received;
(iv) co-ordinating the activities of the Joint Venture personnel involved in all facets of the upgrading project and liaising with CWM Management Committee and SRA Station Upgrade hierarchy to maximise the efficient use of personnel, material, time and funds;
(v) monitoring the design work, culminating in the preparation by the designer of detailed design documentation for the specific upgrading of the work in question;
(vi) monitoring the work for compliance with the design, and fulfilling completion in a timely fashion and on budget; and
(vii) acting as superintendent of the construction contract between SRA and the successful tenderer and in that capacity certifying payments to contractors and the like.
119 It was submitted that Ove Arup played a role in relation to the tasks referred to in (i), (ii), (iii) and (iv). Ove Arup was not involved in the tasks identified in (v), (vi) and (vii). Under the Joint Venture agreement the task identified in (v) was the responsibility of EMTB, the task identified in (vi) was the responsibility of Group One and possibly EMTB, and the task identified in (vii) was the responsibility of Group One. It was submitted that the responsibility of Group One for matters of site safety was obvious, as a practical matter, given its expertise in the construction area and the role actually played.
120 The contract between SRA and Abigroup for the Kogarah upgrade dealt specifically with demolition work as well as inspections of services before disconnection or diversion and after reconnection or diversion. The contractor was to carry out the investigation of the structure on the site and prepare a work plan documented to include information about locations and details of necessary service deviations and terminations and obtain approval of the work plan by both the regulatory authority and the superintendent before commencing demolition and stripping work. A detailed construction programme was resubmitted to the superintendent for approval. Under the special conditions, the contractor was to take all possible steps to ascertain the location of all underground services (that is, cables, pipes and the like), to contact the superintendent before commencing work on the site and to inspect the location of all services in the presence of the superintendent.
121 The building contract provided for a superintendent with a variety of roles including the issuing of certificates of payment, authorising the commencement of and/or continuation of certain works, approving certain plants and programmes and inspections of service locations and other matters. It was submitted that the superintendent's role was triggered by the conduct of the contractor, such as the submission by the contractor of certain documents for the superintendent's attention or by the contractor notifying the superintendent of the need and reasons for the superintendent's attendance or attention. Under the specifications, the superintendent was to be the construction manager CWM. It was submitted that, as both a matter of fact and contractual responsibility, the "construction manager CWM" was either Group One or the person Group One employed to occupy that position. By letter of appointment given in August 1994, Mr Dilly was appointed to the staff of Group One in the capacity of "project manager, initially being assigned to the SRA Joint Venture Project as construction manager". Mr Dilly acted in the role of superintendent and was consistently addressed as and responded to the title "Construction Manager CWM". Ove Arup was not required to fulfil any obligations in respect of construction management under the terms of the Joint Venture Agreement or any other contract relevant to these proceedings and did not occupy the role of superintendent of the building contracts.
122 For the purpose of the present proceedings, Ove Arup did not dispute that the Kogarah Upgrade design specification drawings produced under the design documentation contract should have included the identification of the location of all gas supply lines connecting to the site, but failed to do so. It was not disputed that CWM design co-ordinator for the Kogarah Upgrade (Mr Mason) and the design manager (Mr Willoughby) were both aware of the omission of such particulars from the design drawings and that, although they requested Denton Corker Marshall to revise the drawings to include those particulars, they failed to ensure that the proper amendment and/or inclusion was undertaken by Denton Corker Marshall prior to the provision of the drawings to Abigroup.
123 In relation to the commencement of demolition and termination of the gas supply, the defendant pointed out that there were a number of entities and persons involved at the Kogarah Upgrade works including SRA, AGL, Abigroup and its site foreman Mr Bustamante, Josef, Josef & Sons Pty Ltd, Mr Adler an engineer employed (or sub-contracted) by Josef performing supervisory duties including directing the task of the excavator driver Mr Campbell who was an employee of Josef & Sons Contracting Pty Ltd. In November 1995 Abigroup had appointed Josef & Sons to perform demolition and excavation work at the site and on 10 November 1995. AGL was requested by a director of Josef to terminate the gas service to Shop 7 at the south-eastern extremity of the site prior to the demolition of Shops 3, 5, 7 and 9.
124 It was unclear whether a representative of Josef & Sons was present when the gas service was disconnected. However, Abigroup's site foreman (Mr Bustamante) was present and he had a discussion with the AGL employee concerning the location of the termination of the gas supply. The defendant submitted that it was not alleged that any person employed by CWM participants was present during the termination of the gas line nor was it alleged that anyone from CWM was ever notified of the impending gas terminations. Mr Dilly, the superintendent, and his representative Mr Sibley were aware of the presence of the charged gas line leading to the fish shop at the site at a time prior to 10 November 1995. Employees of Ove Arup did not and were not expected to or required to attend the site on 10 November 1995. No issues or concerns regarding the gas line were ever reported to Ove Arup or to Ove Arup's knowledge, to the Management Committee, at any time prior to the explosions on 4 December 1995.
125 In the period between 10 November 1995 and 4 December 1995 and after the termination of the gas supply, demolition and excavation work commenced at the site. Shortly after 10 November 1995, Abigroup constructed an earth blue metal ramp at the southern end of the site to enable vehicular access: apparently, the metal pipe housing the live yellow nylon gas line passed under or close to the vicinity of this ramp. The exposed end of the gas line was marked to bring it to the notice of the construction workers by Abigroup and/or Josef . An effort was made to notify others of its presence and to protect it from interference by the placement of star pickets, coloured bunting and two logs. Employees of Ove Arup did not and were not expected or required to attend the eastern construction site in the vicinity of the exposed gas line during the period 10 November 1995 to 4 December 1995. No issues or concerns regarding the presence or position of the gas line on the construction site were ever reported to Ove Arup, or to Ove Arup's knowledge, reported to the Management Committee, at any time prior to 4 December 1995. There was no dispute that both Mr Dilly as superintendent of the building contract and Mr Sibley as the superintendent's representative attended the site over that period.
126 On the day of the gas explosion on 4 December 1995, all workers were rostered off as it was a union holiday. There was no relevant representative of the SRA concerning the works and no representative of Abigroup or the superintendent of the building contract present on the site. Nevertheless, representatives of Josef & Sons attended the site on that day in order to complete excavation work and to remove machinery belonging to it from the site. Employees of Ove Arup did not and were not expected or required to attend the site on 4 December 1995. The presence or possible presence of employees of Josef Sons was not reported to Ove Arup or, to Ove Arup's knowledge, to any person connected with CWM at any time prior to the explosion on 4 December 1995. In fact, MrDilly was advised that the site was to be closed on that day.
127 It was accepted for these proceedings that, while performing work on the site the bucket of the excavator snagged the exposed gas line causing it to part at the elbow joint located on the footpath adjacent to the FAZ Amusement Centre, some 15 metres south of the construction site. At about 2.00 pm that afternoon, the escaped gas was ignited by an unknown source causing an explosion and fire in the amusement centre and that, at approximately 3.30 pm, a second gas explosion occurred.
128 The defendant submitted that only four entities or persons had direct control over the upgrade construction site. The first was SRA as the owner and occupier of the site, the second was Abigroup which had possession of the site for the purposes of conducting the building work under the building contract. It was submitted that Ove Arup was a stranger to both the contract between SRA and Abigroup and the demolition and excavation sub-contracted between Abigroup and Josef & Sons. Ove Arup had no standing to interfere with the performance or operation of either contract other than through the medium of the Management Committee. The third entity with direct control was Josef & Sons as the demolition sub-contractors appointed by Abigroup under the building contract. The fourth entity was Group One in its role as superintendent and in a different way as CWM construction manager, or through its employees Mr Dilly and Mr Sibley in both roles.
129 There was a clear division of responsibility between CWM participants as demonstrated by the terms of the Joint Venture agreement. The provisions of their agreement formalised the intention of the participants in that they would each bring specific skills to the Joint Venture and would come together collectively to provide the expertise and skills required to satisfy SRA's requirements in respect of the project management contract. This feature of the Joint Venture was demonstrated during the pre-registration and tender phases of the project management contract where the particular skills and expertise of the four participants were detailed. Ove Arup was to provide two civil engineers, a structural engineer, an electrical engineer, a building services and design engineer and an environmental engineer, whereas EMTB was to provide two design architects and Group One was to provide a building supervisor, a building project manager, a clerk of works/site manager, a construction manager and an operational activities and contracts manager. Any examination of these diverse skills of the proposed personnel would confirm what was said to be the "obvious intentions of the participants" to provide staff in accordance with the disciplines required of each pursuant to the provisions of the Joint Venture agreement.
130 This division also explained the way in which the Joint Venture was to operate with different Joint Venture participants using employees with expertise in a particular area in which the employee was to operate, subject to other determinations of the Management Committee. Employees were seconded to CWM. Further, the participants were reimbursed on the cost of each employee seconded to CWM by the participants. It followed that each participant intended and agreed that it would be responsible only for specific tasks or specific areas of expertise in any project and to that end each participant provided specialist personnel to ensure compliance with the unique requirements of its field of expertise.
131 As a matter of contractual responsibility and duty, the only CWM participant having obligations in relation to construction management was Group One. Its task included monitoring the construction works at the Kogarah Upgrade and other sites forming part of the upgrade programme for compliance with design for completion in a timely fashion and on budget. Acting as superintendent of the building contract between SRA and Abigroup at the Kogarah upgrade was also the responsibility of Group One. Ove Arup's role in relation to the project management contract this included: identifying and recommending to SRA the priority of the stations on which upgrading work was to be undertaken and the general nature of work at each station; calling for tenders from an approved panel for the design of specific upgrade work, vetting and making recommendations concerning the tenders received; calling for tenders from the approved panel for the construction of the specific upgrade work in question and vetting and making recommendations concerning the construction tenders and providing a consultant's representative, (Mr Burgmann), to co-ordinate and manage the activities of the Joint Venture personnel and to liaise with the CWM Management Committee, SRA representatives and others as required.
132 The defendant canvassed a variety of case law and specialist texts to reject the prosecution's submission that the Joint Venture was, in fact and law, a partnership and therefore jointly and severally liable for each other's obligations including obligations imposed under s 17 of the Act. By reference to those authorities, it was argued that the terms of the Joint Venture agreement itself and the way in which the tasks were divided between the participants supported a finding that the Joint Venture was not, in fact or law, a partnership. The law accepted that the term "Joint Venture" was not a technical term but recognised the existence of a species of business association separate and distinct from a partnership. It was significant that the undertaking of the Joint Venture was for a particular project of limited duration, rather than the formation of a relationship amongst participants to conduct an indefinite series of projects of certain descriptions. Nor could the Joint Venture be described as the usual principal commercial activity of the participants but was, rather, a particular collaborative extension of each of their commercial dealings. Joint property or part ownership was not of itself sufficient to create a partnership nor was the sharing of gross returns nor a share of profits of a business.
133 It was important that the participants in the business venture had expressly agreed that they were not agents for each other and did not have power or authority to bind each other and they were not jointly liable with each other for the debts, obligations and wrongs of the Venture. These matters were all addressed by the Joint Venture agreement providing evidence against a finding of partnership. The Joint Venture agreement expressly provided that the assets owned or acquired on behalf of the parties for the purpose of the Joint Venture were to be owned as tenants in common in accordance with their respective interests in the Joint Venture. It was also expressly agreed that any intellectual property made available by any participant of the Joint Venture was to revert to that party upon termination of the Joint Venture. Employees of the Joint Venture were to be seconded from the staff of the participants. Each participant was to be reimbursed by the Joint Venture for the costs of each employee seconded to the Joint Venture by the participant. An overall consideration of the Joint Venture arrangements therefore did not support a finding that the Joint Venture operated as a partnership.
134 Having submitted that the defendant had no direct control of the site or the design drawings for the site, it was then submitted that neither in fact nor in practice did the defendant exercise control of the construction site or the design process by its acts or omissions. Ove Arup did not attend the construction site from the date of commencement of the construction work to the date of the gas explosions and was not required or expected to do so. Ove Arup did not monitor the content of any design drawings concerning the site. Ove Arup was not aware of and did not participate in and had no right to participate in (apart from its position of equal representation on the Management Committee) the termination of the gas service on 10 November 1995; any discussions or determinations that took place concerning the presence of or the point of termination of the charge gas line; any decision to permit Josef & Sons or related entities to attend the site on 4 December 1995 and undertake work; the absence of safety officers or other representatives of SRA or Abigroup or the superintendent of the building site when Josef & Sons or related entities conducted excavation work on 4 December 1995; the conduct of the employees of Josef & Sons or related entities on site on 4 December 1995; any discussions or determinations which took place concerning omissions or inaccuracies relevant to any design drawings for the site; and any decision to permit incomplete or inaccurate design drawings for the site to be provided to either Abigroup or Josef & Sons.
135 To the extent that any participant within CWM had responsibility for such matters, that responsibility rested severally with Group One as construction manager or superintendent or, alternatively, as the employer of the construction manager or superintendent under the building contract. It also rested with EMTB as the design and documentation manager or, alternatively as the employer of the design manager under the design and documentation contract. No concerns regarding the presence of a gas line at or near the site or any omissions or inaccuracies in the design drawings were ever raised with either the Management Committee or Ove Arup by the superintendent or any other person prior to the gas explosions on 4 December 1995.
136 The defendant also denied that it had control of the site through having a primary role in CWM. The prosecutor had relied on the evidence of Mr Dilly, that he reported to Mr Burgmann in his role as superintendent and that he regarded Mr Burgmann as being in charge of CWM. The prosecutor also relied on the fact that Mr Burgmann was employed by Ove Arup and was seconded to the CWM as the consultant's representative and also acted as secretary at some meetings including meetings of the Management Committee. The defendant reiterated its general submission that Ove Arup and its employees had a limited and defined role within CWM.
137 Mr Dilly's evidence was inconsistent with CWM documentation and the intention of creating separate strands of expertise within which each CWM participant was to operate. Mr Dilly did not take instructions from Mr Burgmann concerning operational technical matters that were specific to any particular station or stations, and conceded that he could not recall Mr Burgmann ever giving him a direction or giving any assessment concerning his performance. Mr Sibley gave evidence that he never attended any site with Mr Burgmann nor had he ever sought any instruction from Mr Burgmann. Mr Dilly had no recollection of Mr Burgmann wanting to know what was occurring on any of the sites. All this material was inconsistent with the assertion that Mr Burgmann directed or supervised Mr Dilly's duties. Any reporting between Mr Dilly and other managers and Mr Burgmann was to provide a general overview of the progress of the works at the various stations that were part of the upgrade programme and did not relate to specific technical issues.
138 Mr Dilly gave evidence in the Abigroup prosecution, in which he said that he reported to a committee of partners from the Joint Venture for the purposes of day-to-day operations of the Joint Venture but at no time claimed he reported to Mr Burgmann. Mr Dilly's evidence in the present proceedings was to the contrary and he specifically denied reporting to anyone within Group One. Mr Dilly agreed that Mr Patterson, the director of Group One responsible for Mr Dilly's employment, attended CWMs office on a regular basis and there was a record of at least 10 visits by Mr Dilly to Group One's offices during 1995.
139 Mr Burgmann's formal role while seconded to CWM was that of "consultant's representative". The consultant's representative was appointed to manage the daily activities of the project team and to act as a single point of contact between the SRA and CWM for the day-to-day needs of SRA. That role was to facilitate discussions with the client (SRA) as a matter of sound commercial practice given the nature of the project management contract. Mr Burgmann's evidence was that his role was to co-ordinate the activities of the various Joint Venture staff and report to the Management Committee and the SRA. Mr Dilly reported to him in terms of progress and difficulties that might need to be addressed. Mr Burgmann's role was not to duplicate the role of the managers but rather to ask pertinent questions and review current projects for outstanding difficulties, documentation costs, etc. This was understandable when four different organisations were undertaking different responsibilities - it was necessary to bring all the strands together and report in a consolidated form.
140 The Court was urged to look at the "big picture" starting with the size of the programme. Mr Burgmann was never a construction or design supervisor in the way suggested by the prosecutor, that is, having an alleged duty to look over the shoulders of the various managers and direct their duties. Each manager was specifically engaged by the relevant Joint Venture participant as an expert in his own field of operation and, in turn, monitored the duties and results of a line of expert personnel operating in their own fields of expertise. The organisation was explained by reference to construction work as follows: Josef &Sons had Robert and Daniel Josef and Mr Adler (an engineer) supervising their demolition work: Abigroup then had the project manager Mr Bolger and the foreman Mr Bustamante to supervise both Josef & Sons and Abigroup construction work; CWM had Mr Sibley as the on-site project manager; SRA/CWM then had Mr Dilly as the superintendent/construction manager. The proposition that Mr Burgmann had the duty and responsibility to supervise long lines of supervisors in both areas was said to defy commercial construction reality. Ove Arup's remuneration was provided on the same basis as other CWM participants and did not reflect any special role for the defendant within CWM.
141 The defendant submitted that the only control it was able to exert for the purposes of s 17 of the Act, was control resulting from its inclusion as a member on the Management Committee operating under the Joint Venture agreement. Among the provisions dealing with the Management Committee was the statement that it had full and complete power and authority to give all approvals and to make all decisions and determinations required or permitted to be given or made by CWM participants pursuant to the Joint Venture agreement. The duties of the Management Committee under the Joint Venture agreement included doing all things necessary or advisable for the efficient and economic conduct of the project (being the work conducted for SRA) and to ensure that the Joint Venture carried out its duties and obligations in accordance with the project management contract and all applicable laws, regulations, orders and rules. The defendant acknowledged that the Management Committee could exercise power to play a role in the appointment of an appropriately qualified superintendent for the building contract; ensure that Group One and the superintendent performed their duties and obligations in accordance with all applicable laws and regulations; play a role in the appointment of an appropriately qualified architectural design manager; and, ensure that EMTB and the architectural design manager performed their duties and obligations in accordance with the building contract.
142 Any relevant control the defendant might have exercised through the Management Committee would not have been direct control of either the construction site at Kogarah or of overseeing the detailed design documentation - the defendant had one vote on the Management Committee comprising four representatives with separate responsibilities. Group One and the superintendent had responsibility for the Kogarah construction site, and EMTB and the architectural design manager had responsibility for overseeing the detailed design documentation. It was accepted that the Management Committee could play a role in the employment of staff in that the Joint Venture agreement allowed the Management Committee to make a determination regarding the employment of a person by one of the participants and it could require a participant to remove an employee from working on the upgrade programme if it was of the view that the employee's performance was unsatisfactory, in which case the participant was then required to find another person to assume the role. Notwithstanding these provisions, the primary responsibility for employing persons with required expertise rested with each participant. At no time did the defendant have any reason to believe that the persons engaged by either Group One or EMTB and seconded to CWM were other than suitable and sufficient qualified for their roles.
143 Mr Dilly was well experienced in the construction industry and should have been aware of the role he was required to perform. However, his evidence in the proceedings suggested that he lacked relevant experience to competently perform the duties and roles of either a construction manager or a superintendent, and that he had a deficient understanding of this function required of him and/or simply failed to properly perform the role for which he was engaged. It was only during the course of the proceedings that the defendant was made aware of the true extent of Mr Dilly's inability, inexperience or ineptitude to perform the duties as construction manager/superintendent. The deficiencies had not been drawn to the defendant's attention at a relevant time. The defendant, with the other CWM participants could have exercised the powers to have him removed. Group One would then have been required to identify and appoint a suitable person to fill that role. Similarly, if the defendant had known of inaccuracies and omissions in the Kogarah upgrade design drawings, then the defendant with the other three participants should have taken action to remedy those deficiencies.
144 The defendant's control over the superintendent's own design manager's performance was similarly limited. As a practical matter, the other three participants could not have been expected to have direct involvement in the other participants' performances, nor would the other three participants have knowledge of the technical aspects of the fourth participant's performance. This all followed from the separation of responsibilities and duties. There was no legal right to directly alter or rectify one participant's performance by the other participants as they were not in a partnership or an agency relationship with each other: the other participants' roles were limited, through the medium of the Management Committee, to directing another participant to rectify problematic performance. The Management Committee relied on a participant's manager to advise it of any problems within that participant's area of the programme. There was no overlapping of skills with a view to monitoring or supervising another participant's dedicated area of operation. The Management Committee's role was to facilitate the operation of the business and its client relationship with SRA and to permit the four participants to interact with a view to making decisions about the future conduct of CWM - the Management Committee was not an "arch expert body" set up to arbitrate on technical issues that arose within each participant's allocated area of expertise. In addition, there were numerous references in the evidence which could have led the Management Committee or the participants to conclude that Mr Dilly as superintendent and Mr Sibley as superintendent's representative were frequently noting, discussing and dealing with matters of safety at various railway station upgrade sites.
145 There was nothing in the correspondence that could lead the Management Committee or the consultant's representative or any of CWM participants to conclude that the design co-ordinator and the design manager were not satisfactorily fulfilling their roles by requiring the inclusion of all relevant safety references in the design drawings.
146 Working from the basis that the defendant had limited control of the construction site at Kogarah, the defendant submitted that, in the somewhat novel circumstances of the Joint Venture arrangement, the Court should adopt a four step sentencing strategy. Firstly, it was to be observed that the Joint Venture was one entity with its unity being achieved through the Management Committee; secondly, applying the approach of the High Court in Markarian v The Queen [2005] HCA 25, a global penalty should be determined for CWM's single entity consistent with the part that any or all of the various participants and their employees were perceived to have played in the offences. The principle of parity would apply in light of the concluded prosecutions against Abigroup, Josef & Sons and AGL noting that SRA's charges were dismissed. It was important that in the Abigroup and Josef & Sons prosecutions the trial judges observed that the most serious offences charged were those concerned with the incidents on 4 December 1995, but the defendant in this case did not face a charge in respect of that day; thirdly, to determine separately the degree of culpability of each of the Joint Venture participants by reference to the degree of control each was in a position to exercise over the Kogarah site in respect of the acts and/or omissions giving rise to the offences. That exercise was to be undertaken against the background of the Joint Venture agreement, spelling out the various areas of expertise and responsibility contractually assigned to each respective party and, secondly, the Joint Venture pre-registration and tender documents that clearly set out and advised SRA of the area of expertise of the various participants; fourthly, to impose a separate penalty, "derived from the CWM global penalty pool", on each of the four Joint Venture participants, commensurate with the perceived degree of culpability attaching to each and taking into account the evidence and matters put in mitigation on behalf of each participant.
147 In the sentencing exercise, CWM should be observed as being more remote from an intimate connection with any of the actual circumstances giving rise to the explosions than either Josef & Sons or Abigroup, with both these entities being "the hands on" participants in construction and demolition matters at the Kogarah site. Josef & Sons and/or Abigroup had the immediate responsibility for the disconnection and protection of the charged gas line as and from 10 November 1995 under their respective contracts and physically participated in the performance of the demolition and construction work. While it was accepted that CWM's superintendent should have been advised of the disconnection of the gas service, there is no evidence that such notification had been given. The disconnection of the gas line by an AGL employee was witnessed at least, and directed by the Abigroup foreman Mr Bustamante who should have known that the termination point would eventually fall within the construction site. There was evidence that CWM's superintendent Mr Dilly knew of the existence of the gas line to the fish shop prior to the demolition commencing and knew of the position of the disconnected gas line on the construction site after demolition of the shops and prior to 4 December 1995, having observed the star picket, bunting and logs. There was no evidence to suggest that any CWM participant or employee, beyond Mr Dilly and Mr Sibbley, had knowledge of the disconnection of the gas line prior to the explosions on 4 December 1995.
148 There is no evidence to suggest that any CWM participant had prior knowledge that Josef & Sons' employees were to perform work at the Kogarah site on 4 December 1995. It was accepted by the defendant for the purpose of the sentencing proceedings, Josef & Sons employee Mr Campbell was responsible for interfering with or snagging the charged gas line when operating an excavator at the Kogarah site on 4 December 1995, a day that was a union picnic holiday and when no work was scheduled to be performed at the site.
149 In relation to the application of the parity principles, the defendant pointed out that the penalties against Josef & Sons for offences on 10 November 1995 and between 10 November and 4 December 1995, amounted to $1,330,000: however, the actual penalty imposed for those offences after the principle of totality was applied was $810,000. Fines imposed in respect of charges relating to 4 December 1995 were irrelevant to the present assessment of penalty given that the charges on that date had been withdrawn and dismissed.
150 The defendant then addressed the prosecutor's submissions on parity, pointing out that the penalties imposed on Josef & Sons Construction Pty Ltd for the offences occurring on 10 November 1995 and between 10 November 1995 and 4 December 1995 while amounting to $1.33m were reduced to $810,000 after the application of the principle of totality. Fines imposed in relation to 4 December 1995 were irrelevant to the present sentencing exercise as the charges against the defendant referrable to that date had been withdrawn and dismissed. The defendant then provided a table which, for convenience is reproduced below, setting out the various charges and penalties imposed in relation Abigroup, AGL, and Josef & Sons in relation to the same set of circumstances at Kogarah Station.
Name of defendant Charge: Section and period Penalty prior to totality considerations Penalty imposed
$250,000 (50% of maximum) $175,000 (reduction of 30%)
Abigroup Section 15(1) - 10 November 1995 First instance decision Decision of Full Bench on appeal
of Kavanagh J
Section 16(1) - 10 November 1995 $250,000 (50% of maximum $175,000 (reduction of 30%)
First instance decision of Kavanagh J Decision of Full Bench on appeal
Section 15(1) - Between 10 November 1995 and 4 December 1995 $300,000 (60 % of maximum) $225,000 (reduction of 25%)
First instance decision of Kavanagh J Decision of Full Bench on appeal
Section 16(1) - Between 10 November 1995 and 4 December 1995 $300,000 (60 % of maximum) $225,000 (reduction of 25%)
First instance decision of Kavanagh J Decision of Full Bench on appeal
AGL Section 15(1). The particulars cover the period 10 November 1995 to 4 December 1995 $275,000 (55 % of maximum) $162,500 (reduction of about 41%)
Section 16(1). The particulars cover the period 10 November 1995 to 4 December 1995 $275,000 (55 % of maximum) $162,500 (reduction of about 41%)
JSC Section 15(1) - 10 November 1995 $300,000 (60 % of maximum) $175,000 (reduction of about 42%)
Section 16(1) - 10 November 1995 $300,000 (60 % of maximum) $175,000 (reduction of about 42%)
Section 15(1) Between - 10 November 1995 and 4 December 1995 $365,000 (73 % of maximum) $230,000 (reduction of about 37%)
Section 16(1) - 10 November 1995 and 4 December 1995 $365,000 (73 % of maximum) $230,000 (reduction of about 37%)