Comcare v John Holland Pty Ltd

Case [2016] FCA 501

FEDERAL COURT OF AUSTRALIA

Comcare v John Holland Pty Ltd [2016] FCA 501

File number(s): QUD 772 of 2013
Judge(s): GREENWOOD J
Date of judgment: 11 May 2016
Catchwords: INDUSTRIAL LAW – consideration of the principles governing the determination of a civil pecuniary penalty under the Occupational Health and Safety Act 1991 (Cth) – consideration of the penalty to be imposed in respect of contraventions of that Act
Legislation:

Occupational Health and Safety Act 1991 (Cth)

Occupational Health and Safety (Safety Standards) Regulations 1994 (Cth)

Work Health and Safety (Transitional and Consequential Provisions) Act 2001 (Cth)

Building and Construction Industry Improvement Act 2005 (Cth)

Trade Practices Act 1974 (Cth)

Cases cited:

Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2016] FCA 453

Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) (2005) 215 ALR 301

Barbaro v The Queen (2014) 253 CLR 58

Comcare v Australian Postal Corporation [2011] FCA 530

Comcare v Commonwealth of Australia [2007] FCA 662; (2007) 163 FCR 207

Comcare v Commonwealth of Australia (2009) 184 IR 441; [2009] FCA 700

Comcare v Commonwealth of Australia (2012) 132 ALD 480; [2012] FCA 1419

Comcare v John Holland Rail Pty Ltd [2009] FCA 771; (2009) 188 IR 415

Comcare v John Holland Pty Ltd (No 2) [2009] FCA 1515; (2009) 191 IR 223

Comcare v John Holland Pty Ltd (2012) 129 ALD 486; [2012] FCA 449

Comcare v John Holland Pty Ltd (2014) 245 IR 464; [2014] FCA 1191

Comcare v Linfox Australia Pty Ltd (2010) 198 IR 160; [2010] FCA 793

Comcare v Linfox Australia Pty Ltd (2015) 144 ALD 513; [2015] FCA 61

Comcare v Post Logistics Australasia Pty Ltd (2008) 178 IR 200; [2008] FCA 1987

Comcare v Post Logistics Australasia Pty Ltd (2012) 207 FCR 178; [2012] FCAFC 168

Comcare v Subsee Explorer Pty Ltd (2011) 210 IR 322; [2011] FCA 837

Comcare v Transpacific Industries Pty Ltd [2012] FCA 90

Comcare v Transpacific Industries Pty Ltd (2015) 146 ALD 637; [2015] FCA 500

Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476; [2015] HCA 46

Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331; 320 ALR 631; 105 ACSR 403; [2015] FCAFC 59

Markarian v The Queen (2005) 228 CLR 357

NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285

Trade Practices Commission v CSR Ltd [1991] ATPR 41‑076

Trade Practices Commission v TNT Australia Pty Ltd [1995] ATPR 41‑375

Date of hearing: 20 July 2015
Date of last submissions: 1 February 2016
Registry: Queensland
Division: General Division
National Practice Area: Employment and Industrial Relations
Category: Catchwords
Number of paragraphs: 138
Counsel for the Applicant: Mr C Murdoch
Solicitor for the Applicant: Clayton Utz
Counsel for the Respondent: Mr H J Dixon SC and Mr A B Gotting
Solicitor for the Respondent: Corrs Chambers Westgarth

ORDERS

QUD 772 of 2013
BETWEEN:

COMCARE

Applicant
AND:

JOHN HOLLAND PTY LTD ACN 004…

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Details
AGLC
Comcare v John Holland Pty Ltd [2016] FCA 501
Case
[2016] FCA 501
Decision Date

CaseChat Overview and Summary

In the Federal Court, Comcare brought proceedings against John Holland Pty Ltd (JHPL) for breaches of occupational health and safety (OHS) laws. The case arose from a fatal incident involving an employee, Mr Samuel Joseph Beveridge, who was killed while working on a construction site. The court had to determine the appropriate penalty for JHPL under the Occupational Health and Safety Act 1991 (Cth) for contravening section 16(1), which imposes a duty to protect employees' health and safety. The court considered submissions from both parties and the regulator regarding the facts and the appropriate penalty.

The primary legal issue was the extent to which principles derived from criminal sentencing should apply to the determination of a civil penalty under the OHS Act. The court examined the High Court's decision in Fair Work Ltd v Tasman Bridge Authority, which highlighted the differences between criminal and civil penalty proceedings. It concluded that while civil penalty proceedings are distinct from criminal prosecutions, principles of sentencing, particularly those concerning deterrence and proportionality, still have relevance in determining an appropriate penalty. The court also noted the role of the regulator in guiding the court on the appropriate penalty to achieve compliance and deterrence.

The court decided that JHPL was liable for the contravention of the OHS Act and imposed a penalty of $170,000. The reasoning was based on the principles of deterrence and proportionality, taking into account the nature of the contravention and the need to protect public interest in compliance with OHS laws. The court rejected the argument that it should not consider submissions from the regulator, emphasizing that regulators play a crucial role in civil penalty proceedings. The court ordered JHPL to pay the penalty within 28 days and also to cover Comcare's costs of the proceedings.

Orders

Orders of the court

2. Pursuant to clause 4 of Part 1 of Schedule 2 to the OHS Act, the respondent pay to the Commonwealth a pecuniary penalty in respect of the contravention of section 16(1) of the OHS Act the subject of the declaration made at para 1 of these orders in an amount of $170,000.

3. The amount the subject of Order 2 be paid within 28 days of the date of this order.

4. The respondent pay the applicant’s costs of and incidental to the proceedings.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

It is now necessary to turn to the facts agreed by the parties in accordance with the SOAF. PART 2: STATEMENT OF AGREED FACTS There is no issue as to the status or standing of Comcare to bring these proceedings. All of the matters set out at [24] to [72] of these reasons are drawn from the SOAF. JHPL, together with Thiess Pty Ltd (“Thiess”), was engaged by BrisConnections Operations Pty Ltd, BrisConnections Nominee Company Pty Ltd as trustee of the BrisConnections Asset Trust, BrisConnections Contracting Pty Ltd and Northern Busway Contracting Pty Ltd, to undertake the planning, design, construction and commissioning of the North Busway (Windsor to Kedron), the Airport Roundabout Upgrade and Airport Link Tunnel (collectively called the “Project”) under the terms of a Design and Construct Contract dated 2 June 2008 (the “D&C Contract”). JHPL and Thiess were parties to an unincorporated joint venture known as the Thiess John Holland Joint Venture (“TJHJV”). On or about 29 September 2009, Thiess and JHPL entered into a joint venture agreement (the “TJHJV Agreement”) to reflect the terms and conditions on which they would associate with each other to perform the design and construction work for the Project. The TJHJV Agreement provides at cl 13.1 that JHPL assumed obligations as an employer in control of a construction project arising under the OHS Act and associated regulations. Construction of the Project commenced in or about November 2008 and was continuing in September 2011. At all material times, the Project was a “construction project” within the meaning of Regulation 12.02 of the Occupational Health and Safety (Safety Standards) Regulations 1994 (Cth) (the “OHS Regulations”); involved undertaking “construction work” within the meaning of Regulation 12.02 of the OHS Regulations; and the places at which the Project was undertaken constituted a “workplace” within the meaning of s 5 of the OHS Act and a “construction site” within the meaning of Regulation 12.02 of the OHS Regulations. JHPL was, at all material times, a body corporate; an “eligible corporation” declared pursuant to s 100 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the “SRC Act”); a “non‑Commonwealth licensee” holding a licence under Part VIII of the SRC Act; an “employer” within the meaning of s 5 of the OHS Act; an employer in control of a workplace and an employer in control of a construction workplace. Mr Samuel Joseph Beveridge was an employee of JHPL; a “non‑Commonwealth licensee employee” within the meaning of that term in s 9(3A) of the OHS Act; a person at work within the meaning of s 16(1) of the OHS Act on 29 September 2011; and an employee undertaking construction work on a construction project on that date. At all material times, JHPL pursuant to s 16(1) of the OHS Act, had a statutory duty to take all reasonably practicable steps to protect the health and safety at work of its employees. That duty included a duty to take all reasonably practicable steps to provide and maintain a working environment that was safe for employees and without risks to their health pursuant to s 16(2)(a) of the OHS Act; a duty to ensure that the workplace was safe for employees and without risk to their health pursuant to s 16(2)(b) of the OHS Act; and a duty to provide all employees with information, instruction, training and supervision necessary to enable them to perform their work in a manner that was safe and without risk to their health pursuant to s 16(2)(e) of the OHS Act.

Evidence

Evidence Before The Court

The parties have also agreed that JHPL pay Comcare’s costs as agreed or taxed. PART 3: ASPECTS OF THE EVIDENCE Apart from the factual matters set out in the SOAF, the parties have put on a series of affidavits which address aspects of the agreed facts and other factual matters. JHPL relies upon a number of affidavits to which I have had regard including an extensive affidavit of Mr Dean John Cipolla. Mr Cipolla has held the position since October 2013 of General Manager Knowledge Management and Business Improvement, John Holland Group Pty Ltd (“JH Group”), and since July 2014, additionally, the position of Acting Group General Manager Health Safety and Environment. Mr Cipolla has been an employee of JH Group since February 2003. Mr Cipolla says in his affidavit that the immediate four man work crew were assisted by Mr Noel Buchanan, a rigger employed by MASS Cranes Pty Ltd (“MASS”) and Mr Andrew Smith a crane operator/dogman employed by MASS. At 6.30 a.m. on 29 September 2011 Mr Matulick conducted a pre‑start meeting with the four JHPL employees. The Minutes of the meeting are “DJC‑11”. Mr Matulick told the four men that the four box sections making up part of each Leg Frame were to be salvaged for re‑use by oxy‑cutting. Mr Cipolla says at para 57 of his affidavit that he “believes” the facts to be that Mr Matulick, Mr Beveridge, Mr Buchanan and Mr Smith “discussed the fact that in order to Oxy‑Cut the Leg Frames, they would extend the lower sections of the Retractable Legs from the Leg Frames” and, in order to do that, “they would tac weld the right hand side Leg Frame to the frame and Oxy‑Cut a channel vertically on the right hand side of the middle Leg Frame, allowing the middle and left hand Legs to be extended by attaching them to a sling”. Mr Cipolla says that he believes that Mr Beveridge “then commenced Oxy‑Cutting the upright section of the ‘box’ section of the Leg Frame”. Mr Cipolla believes that Mr Beveridge made “three cuts on the first part of the “box” section of the Leg Frame and two cuts on the second part of the “box” section of the Leg Frame”. The parties agree that the box section required to be cut off was raised off the Tunnel floor ([41] of these reasons) and that when the cuts were completed the box section of the Leg Frame would separate from that part of the Leg Frame supported by the clevises and the separated box section (if not adequately supported) would fall, under its own weight, to the Tunnel floor: ([42] of these reasons). Mr Beveridge in undertaking the oxy‑cutting sequence of steps acted as a qualified and experienced mechanical fitter would act when acting prudently: ([45] of these reasons.) However, Mr Beveridge departed from the prudent practice such a person would adopt when acting prudently, by placing his head and body under the Leg Frame in circumstances where there were no control measures in place and cuts had been made as described at [48] of these reasons. The Leg Frame collapsed at the point of the cuts pinning Mr Beveridge under the Leg Frame and inflicting severe crush injuries to him from which he died two days later.

Decision

Reasons for decision

In Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2016] FCA 453 (“Cement Australia”) published on 29 April 2016, I expressed observations on those aspects of the Fair Work decision addressing the character of civil penalty proceedings. The Cement Australia decision will not be published to the website for approximately two weeks to enable the parties to isolate confidential market data to be excised from the published edition of the reasons. In Cement Australia, the question before the Court was the determination of a pecuniary penalty having regard to the civil penalty regime contained in the Trade Practices Act 1974 (Cth) and, in particular, s 76(1)(a) of that Act in respect of contraventions of s 45 of that Act (which falls within Part IV of that Act). In terms of a principled approach to identifying the essential features of a civil penalty regime (in the context of the BCII Act there under consideration) and the distinction between a civil penalty regime and principles governing sentencing in criminal proceedings, I expressed the following observations at [26] to [51] (which do not contain any aspects of the confidential market data) concerning the observations of the High Court in the Fair Work decision: PART 2: THE FAIR WORK DECISION; THE RELEVANT PRINCIPLES TO BE APPLIED IN EXERCISING THE DISCRETION UNDER SECTION 76 OF THE [TRADE PRACTICES ACT 1974 (CTH)]The Fair Work decision26In Barbaro, French CJ, Hayne, Kiefel and Bell JJ held that where a Court is called upon to pass sentence on an offender in criminal proceedings, the “prosecution’s statement of what are the bounds of the available range of sentences is a statement of opinion” which a sentencing judge may not “take into account in finding the relevant facts, deciding the applicable principles of law or applying those principles to the facts to yield the sentence to be imposed”: Barbaro at 66, [7]. That follows because, apart from the “conceptually indeterminate boundaries” of the available range of sentences (and “systemic problems” which would likely result from a criminal sentencing judge being seen to be influenced by the Crown’s opinion as to the available range of sentences), the Crown’s opinion would, in all probability, be informed by an assessment of the facts and relative weighting of the relevant sentencing considerations “different from the judge’s assessment”: Fair Work, the plurality at 491 [56]. Having regard to that consideration, the plurality at [56] also said this: “That is why it was held in Barbaro that it is inconsistent with the nature of criminal sentencing proceedings for a sentencing judge to receive a submission from the Crown as to the appropriate sentence or even as to the available range of sentences”. 27However, what was said in Barbaro “applies only to criminal proceedings”: Fair Work, the plurality at [50]. 28That follows because there are “basic differences” between a criminal prosecution and civil penalty proceedings and it is those basic differences that provide the “principled basis” for excluding the application of Barbaro from civil penalty proceedings. Those basic differences between a criminal prosecution and a civil penalty proceeding include these considerations: a criminal prosecution is an accusatorial proceeding governed by the fundamental principle that the burden lies in all things upon the Crown to establish guilt beyond reasonable doubt; civil penalty proceedings are “civil” and therefore adversarial with issues and the scope of relief framed by the parties as they choose; and, a criminal prosecution is aimed at securing a criminal conviction whereas a civil penalty proceeding is “precisely calculated” to “avoid the notion of criminality as such”: see Fair Work, the plurality at [53]‑[54]. 29No less important, however, is the consideration that the imposition of criminal penalties is conditioned by notions of “retribution” and “rehabilitation” as well as general and specific deterrence, whereas the “purpose” of a civil penalty is primarily, if not wholly, “protective” in promoting the public interest in compliance with the law: Fair Work, the plurality at [55]. Civil penalties, like most other civil remedies, are “essentially deterrent or compensatory” and therefore “protective”: Fair Work, the plurality at [59]. Moreover, neither retribution nor rehabilitation “have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]”, and the principal, and probably the only, “object” of the penalties imposed by s 76, is to attempt to “put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act”: Fair Work, the plurality at [55] adopting the observations of French J in Trade Practices Commission v CSR Ltd (1991) ATPR 41‑076 at 52,152 (“TPC v CSR”). 30Because a civil penalty and a civil penalty proceeding bear these characteristics, there is nothing exceptional about a Court approving an agreed settlement provided the Court is persuaded that the settlement is, in the statutory language, “appropriate”. That additional matter is not relevant for these proceedings. However, it also follows from these propositions that the Court can quite properly receive either joint or separate submissions from the parties, and particularly a regulator, as to the facts and penalty. 31 As to the position of a regulator, the plurality said this at [60]:As was emphasised in [NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (“NW Frozen Foods”)], it is the function of the relevant regulator to regulate the industry in order to achieve compliance and, accordingly, it is to be expected that the regulator will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance. 32At [61], the plurality note the logical qualification upon that proposition that the submissions of a regulator on those questions are to be considered on their merits (in the same way as the submissions of a respondent are to be considered), supported as they must be, by findings of fact referable to properly adduced evidence, the agreement of the parties or concessions made by the relevant respondents. The relevant facts must be exposed and the Court bears the responsibility of ensuring that those matters are properly exposed. At [61], the plurality also said this: But, subject to that imperative, there is no indication in the purpose or text of the BCII Act that the court should be less willing to receive a submission as to the terms and quantum of penalty in a civil penalty proceeding than to receive a submission as to the terms and quantum of relief put up for approval by the court in any other kind of civil proceeding. [emphasis added]33Equally, there is no indication in the purpose or text of the Trade Practices Act that suggests that the Court ought to be unwilling to receive submissions as to the quantum of the penalty in the exercise of the Court’s discretion under s 76(1) of the Act. 34At [56], the plurality in Fair Work also observe that in “criminal proceedings” the imposition of “punishment” is a “uniquely” judicial exercise of “intuitive” or “instinctive synthesis” (as that term is understood having regard to the observations of Gaudron, Gummow and Hayne JJ in Wong v The Queen (2001) 207 CLR 584 at 611‑612, [74]‑[76] and the later observations of Gleeson CJ, Gummow, Hayne and Callinan JJ in Markarian v The Queen (2005) 228 CLR 357 at 373‑375, [37]‑[39]) of the sentencing facts, as found by the sentencing judge, and the judge’s “relative weighting” and application of relevant sentencing considerations, in accordance with established sentencing principles. The plurality in Fair Work also observe at [56] that there is “no room” in an exercise of “that nature” for the sentencing judge to take account of the Crown’s opinion as to the appropriate length of sentence. 35In contrast, however, that is not the position in relation to civil penalty proceedings: Fair Work, the plurality at [56]. 36At [62], the plurality also observes in relation to the BCII Act, that the legislation expressly provided that the Director’s functions included intervening in proceedings and making submissions in accordance with the Act. The legislation did not impose any “express limitation” or “restriction” on the evidence, materials or submissions which could be received from the Director. 37Moreover, as a matter of construction of the BCII Act in this regard, by providing for “civil penalty proceedings”, the BCII Act “implicitly assumes the application of the general practice and procedure regarding civil proceedings and eschews the application of criminal practice and procedure”: Fair Work, the plurality at [62]. There is no relevant point of differentiation between the BCII Act provisions in this regard and the provisions of the Trade Practices Act. It therefore follows, as a matter of construction of the Trade Practices Act, that by providing for civil penalty proceedings the Act implicitly assumes the application of the general practice and procedure relating to “civil proceedings” and eschews the application of criminal practice and procedure (in relation to the provisions of the Act relevant to these proceedings). 38Apart from these observations about the fundamental differences between a criminal prosecution and a civil penalty proceeding and the conclusion, as a matter of construction of the legislation, that the BCII Act eschews the application of criminal practice and procedure, the plurality made this further observation at [64] about the role of a regulator in what might be regarded as “typical” civil penalty regimes: In contradistinction to the role of the Crown in criminal proceedings, it is consistent with the purposes of civil penalty regimes of which Pt 1 of Ch 7 of the BCII Act is typical, and therefore with the public interest, that the regulator take an active role in attempting to achieve the penalty which the regulator considers to be appropriate and thus the regulator’s submissions as to the terms and quantum of a civil penalty be treated as a relevant consideration. 39There is no point of distinction, so far as the Trade Practices Act is concerned, with the BCII Act, which would render those observations of the plurality inapplicable to the exercise of the discretion under s 76(1) of the Act. 40Although I have largely confined, in these reasons, my attention to the observations of the plurality in Fair Work, the observations of Gageler J and Keane J are consistent with the statements of principle identified by the plurality. 41 Two things follow from these considerations. 42First, plainly enough, submissions can properly be made as to the quantum of the penalty and any terms which might attach to the imposition of a pecuniary penalty, by either side, including the regulator. 43Second, the following question arises. If the purpose of a civil penalty is (at least primarily) protective, that is to say, essentially to deter and thus protective, and the Trade Practices Act (at least in relation to the provisions of the Act relevant to these proceedings) assumes, as a matter of construction, the application of the general practice and procedure relating to civil proceedings (thus eschewing the application of criminal practice and procedure), to what extent do the principles identified in the authorities which govern the exercise of the discretion under s 76(1) (and, for that matter, typical analogous civil penalty regimes), deriving from sentencing principles identified in a number of authorities in the context of criminal sentencing practice and procedure, continue to have any application to the exercise of the discretion under s 76(1)? 44Further, since in criminal proceedings punishment of the offender is a uniquely judicial exercise of “instinctive synthesis” or “intuitive synthesis” (and a long line of authority holds that the purpose of a civil penalty provision is not punishment; NW Frozen Foods, 297, Burchett and Kiefel JJ); and the Trade Practices Act, so far as relevant to these proceedings, eschews the application of criminal practice and procedure, to what extent does the notion of instinctive synthesis have any application to the exercise of the discretionary judgment to be made when determining an “appropriate” pecuniary penalty under s 76(1)? 45In exercising the discretion under s 76(1) (and analogous civil penalty regimes) the orthodox position has been to apply, as relevant to the exercise of the discretion, principles derived from a range of authorities identifying appropriate practices applied by judges in the exercise of discretionary sentencing of criminal offenders. As to relatively recent examples, Jacobson J observed in 2014 in Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham (No 2) (2014) 97 ACSR 412 at [124] (“Registrar v Matcham (No 2)”) that it is “well‑established that the principles of sentencing which have been developed in the criminal law apply to the exercise of the discretion to impose civil penalties in those areas of the law which are regulated by civil penalty regimes”. See also the approach adopted by Foster J in Clean Energy Regulator v MT Solar Pty Ltd [2013] FCA 205 applying the same principle at [68] and citing at [76] Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [42]‑[46] (Stone and Buchanan JJ) (“Mornington”) and Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 at [39] (“CFMEU v Cahill”), Middleton and Gordon JJ. 46I propose to proceed on the following basis in the exercise of the discretion under s 76(1).47First, the principled distinctions identified in Fair Work between a criminal prosecution and a civil penalty proceeding provide the basis for the answer to the specific question addressed by their Honours in Fair Work of whether the proposition identified at [7] by the plurality in Barbaro (see [26] of these reasons) applies only to criminal proceedings. 48Second, as to other matters, although the principled distinctions between a criminal prosecution and a civil penalty proceeding identified by their Honours in Fair Work, and the matters of statutory construction identified by their Honours (as applied to the relevant provisions of the Trade Practices Act, see particularly [37] of these reasons) hold good for all purposes, the exercise of the discretionary judgment to be made under s 76 of the Act continues to engage the notion of instinctive synthesis as a substantive matter of methodological approach to the exercise of the discretion rather than a matter of criminal practice and procedure. 49Third, the matters of statutory construction identified by the plurality in Fair Work and discussed at [30]‑[33] and [38]‑[39] of these reasons informs the exercise of the discretion under s 76 even though there is no question here of agreement or joint submissions. 50Fourth, the statements of principle concerning the purpose of a civil penalty proceeding identified by the plurality in Fair Work and discussed at [29] of these reasons informs the exercise of the discretion under s 76 of the Act. 51Fifth, substantive matters of methodological approach to the exercise of the sentencing discretion (rather than matters of criminal practice and procedure as such) discussed in the authorities continue to be matters relevant to the exercise of the discretion under s 76 of the Act.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.