Comcare v John Holland Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Comcare v John Holland Pty Ltd [2014] FCA 1191

Citation: Comcare v John Holland Pty Ltd [2014] FCA 1191
Parties: COMCARE v JOHN HOLLAND PTY LTD (ACN 004 282 268), JOHN HOLLAND GROUP PTY LTD (ACN 050 242 147) and JOHN HOLLAND RAIL PTY LTD (ACN 009 252 653)
File number(s): WAD 45 of 2014
Judge(s): SIOPIS J
Date of judgment: 7 November 2014
Catchwords: INDUSTRIAL LAW – fatal injury to an employee working on an engineering site – contravention of s 16(1) and s 18(1) of the Occupational Health and Safety Act 1991 (Cth) – early admission by respondents of contraventions of the Act – contrition expressed by respondents – respondents cooperated with the applicant before and after the commencement of the proceeding – whether respondents should get a discount of up to 25% in respect of the early admission of contraventions of the Act - whether the application of an arithmetical discount of that nature accords with principles to be applied in imposing a civil penalty in respect of contraventions of the Act.
Legislation: Federal Court of Australia Act 1976 (Cth) s 37M.
Occupational Health and Safety Act 1991 (Cth) ss 16(1), 18(1)
Workplace Relations Act 1996 (Cth) ss 400(5), 792
Cases cited: Barbaro v The Queen (2014) 305 ALR 323
Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336
Australian Competition and Consumer Commission v Safe Breast Imaging Pty Ltd (No 2) [2014] FCA 998
Comcare v John Holland Pty Ltd (No 2) [2009] FCA 1515
Comcare v John Holland Pty Ltd [2012] FCA 449
Comcare v John Holland Rail Pty Ltd (2009) 188 IR 415
Comcare v Commonwealth (2007) 163 FCR 207
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Tax Practitioners Board v Su [2014] FCA 731
R v Thompson (2009) 49 NSWLR 383
Comcare v Post Logistics Australasia Pty Ltd (2012) 207 FCR 178
Cameron v The Queen (2002) 209 CLR 339
Comcare v Post Logistics Australasia Pty Ltd (2008) 178 IR 200
Comcare v Transpacific Industries Pty Ltd (2012) 129 ALD 486
Comcare v Post Logistics Australasia Pty Limited [2011] FCA 1422
Date of hearing: 9 September 2014
Date of last submissions: 18 September 2014
Place: Perth
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 106
Counsel for the Applicant: Mr M Howard SC
Solicitor for the Applicant: DLA Piper Australia
Counsel for the First, Second and Third Respondents:

Mr H Dixon SC and Mr A Gotting
Solicitor for the First, Second and Third Respondents:

Norton Rose Fulbright

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

WAD 45 of 2014
BETWEEN:

COMCARE
Applicant
AND:

JOHN HOLLAND PTY LTD (ACN 004 282 268)
First Respondent

JOHN HOLLAND GROUP PTY LTD (ACN 050 242 147)
Second Respondent

JOHN HOLLAND RAIL PTY LTD (ACN 009 252 653)
Third Respondent

JUDGE:

SIOPIS J

DATE OF ORDER:

7 NOVEMBER 2014

WHERE MADE:

PERTH

THE COURT DECLARES THAT:

Pursuant to Schedule 2 Part 1 of…

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Details
Case
[2014] FCA 1191
Decision Date

CaseChat Overview and Summary

Comcare, the Commonwealth Government's workers compensation insurer, commenced proceedings against John Holland Pty Ltd and others in respect of the death of an employee, Mr Anthony Phelan, who was fatally injured at a railway construction site. The primary issue before the court was the determination of civil penalties to be imposed on the respondents for their admitted contraventions of the Occupational Health and Safety Act 1991 (Cth). The respondents admitted to contraventions of the Act and demonstrated contrition, cooperated with the investigation, and had implemented safety measures post-incident. The court was tasked with deciding whether an arithmetical discount of up to 25% should apply for the early admission of the contraventions, and if such a discount was consistent with the principles of imposing civil penalties under the Act.

The court considered the approach to penalty imposition in civil penalty proceedings, rejecting the notion of applying an arithmetical discount based on early admission, as seen in criminal law sentencing. Instead, the court favoured a more nuanced approach that focused on the statutory objectives of the Act, emphasizing the importance of workplace health and safety, and the need for practical measures to enhance safety rather than mere deterrence. The court highlighted that penalties should reflect the statutory purposes and provide appropriate incentives for compliance.

The court found that the respondents had taken significant steps to cooperate with the investigation and had implemented safety measures post-incident. However, the court determined that these factors, while relevant, did not warrant a reduction in the penalty beyond what was already considered appropriate under the circumstances. The court imposed a civil penalty of $180,000 on each respondent, reflecting the seriousness of the contraventions and the need to uphold the statutory objectives of the Act.

The court's decision underscored the importance of a balanced approach to penalty imposition that considers both the statutory objectives and the specific circumstances of the case, while also ensuring that penalties serve as a meaningful deterrent and incentive for compliance with occupational health and safety laws.

Orders

Orders of the court

3. The first respondent pay a civil penalty in the sum of $180,000.

4. The third respondent pay a civil penalty in the sum of $180,000.

5. The first and third respondents pay the applicant’s costs.

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

Background

Background to the litigation

At trial, the parties’ submissions were directed to the penalties which should be imposed upon the first and third respondents in respect of their admitted breaches of the Act.BACKGROUND On 30 December 2011, the first respondent was engaged in sinking railway lines to and from Perth Central train station and carrying out associated works. It engaged employees and contractors to carry out the works at that site. The first respondent was in effective control of the employees and the contractors who were engaged at the site. One of the contractors working at the site was the deceased, Mr Anthony Phelan, a 63 year old man. Whilst working at the site, Mr Phelan was under the control of the first respondent, and an employee of the first respondent for the purposes of the Act. Among the vehicles at the site was a modified JCB Fastrac 3185 agricultural tractor. The tractor had been modified by the third respondent in 2009 at a workshop in Kewdale, by adding to the base of the vehicle a further set of four metal wheels for the purpose of permitting the tractor to operate on a set of railway tracks. These wheels were referred to as “hi-rail wheels”. There was a cylindrical drum, called a “friction drum“, which was attached to and protruded from the centre of each of four metal hi-rail wheels. The modifications also included the addition of a hydraulic system operated by two levers in the tractor’s cabin for the lowering and raising of the hi-rail wheels. The modified tractor was capable of being driven on an ordinary road using its conventional tyre wheels and also as a vehicle to be driven on railway tracks using its hi-rail wheels. In that case, of course, the conventional front and rear road wheels would be in a position elevated from the ground. The conversion of the vehicle from its capacity to operate normally on road surfaces to one that operated on railway tracks involved a process known as “on-tracking”. This process involved the hi-rail wheels being hydraulically lowered into place onto the railway tracks, and the road wheels being raised into a position whereby the tyres of the road wheels were in contact with the friction drums which were attached to and protruded from the hi-rail wheels. When the vehicle was in rail operation mode, the vehicle’s brakes were operated by applying the brakes for the road wheels which then acted via the friction drums on the hi-rail wheels to slow or stop the vehicle. As mentioned, the process of converting the vehicle from rail operation to normal road operation was known as “off-tracking”. By this process, the hi-rail wheels were raised. In the course of that process, the road wheels lost contact with the hi-rail friction drums as the hi-rail wheels and attached friction drums were moved out of the way and the road wheels were progressively lowered on to the normal ground surface. In order to maintain the braking capacity of the vehicle during the off-tracking or on‑tracking process, it was necessary to raise or lower the front hi-rail wheels separately from the rear hi-rail wheels. The vehicle had the capacity to brake safely during this process if the front hi-rail wheels were moved into the correct position separately to the rear hi-rail wheels.

Evidence

Evidence Before The Court

In relation to the issues raised by the High Court decision of Barbaro v The Queen (2014) 305 ALR 323 (Barbaro), I agree with the views expressed by Middleton J in Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336, and adopted also by Barker J in Australian Competition and Consumer Commission v Safe Breast Imaging Pty Ltd (No 2) [2014] FCA 998, that Barbaro is to be distinguished from cases, such as this, dealing with the imposition of a civil penalty.THE EVIDENCE OF MR CIPOLLA At the time of affirming the affidavit, Mr Cipolla was employed by John Holland Group Pty Ltd and was the acting group general manager, health, safety and environment for the John Holland Group of companies, of which the first and third respondents are, and were, member companies. Mr Cipolla said that he had been employed in a managerial capacity relating to safety within the John Holland Group for 11 years. Mr Cipolla expressed his deepest sorrow and regret on behalf of the respondents at the death of Mr Phelan and the hardship created for his family and friends, as well as workers on the project generally. Mr Cipolla also deposed that the John Holland Group of companies had facilitated the provision of financial assistance and counselling to the family of Mr Phelan and counselling to other workers present at the site at the time of the fatal incident. Mr Cipolla deposed that immediately after the incident, the John Holland Group had commenced an investigation. Mr Cipolla also identified the safety failures which the investigation revealed had contributed to the fatal incident. Mr Cipolla deposed comprehensively to the extensive occupational health and safety systems operated by the respondents before the fatal incident for the purpose of demonstrating that each respondent was conscientious in seeking to protect the health and safety of its employees, and complying with its obligations under the Act. Mr Cipolla said that in the calendar years ending 31 December 2012 and 31 December 2013, the companies in the John Holland Group had spent in excess of $67 million and $59 million on health and safety measures respectively. Mr Cipolla also identified a number of John Holland Group projects and personnel who had either won or been a finalist in a number of safety awards. Mr Cipolla also referred to an audit carried out by the applicant during February and March 2013 of a number of the John Holland Group’s operations including the City Rail project. The applicant’s audit was to assess legislative compliance and effectiveness of the John Holland Group’s safety policies, procedures and management systems. The audit report recorded, said Mr Cipolla, that out of 112 applicable criteria, there was 100% compliance by the John Holland Group. Mr Cipolla deposed to a number of actions which the respondents had undertaken since, and in response to, the fatal accident. These included decommissioning the hi-rail vehicle, removing the hi-rail components and selling the vehicle. Further, said Mr Cipolla, additional engineering controls were implemented in respect of hi-rail vehicles, including controls that preclude the front and rear wheels being raised simultaneously, controls that preclude the levers from being operated simultaneously and controls that ensure that hi-rail vehicles possess secondary “braking capabilities”.

Decision

Reasons for decision

However, in my view, the Full Court decision in the Post Logistics appeal does not endorse or support the adoption, by analogy with criminal law sentencing canons, of an arithmetical discount approach to the imposition of a penalty for a contravention of the Act, in respect of an early admission of the contravention. I prefer to follow the approach endorsed by the Full Court in the Post Logistics appeal, even though the Full Court did not there refer to the observations made in Mornington Inn. This is because the Post Logistics appeal is concerned specifically with the imposition of penalties for contraventions of the Act, whereas Mornington Inn is not.THE FULL COURT DECISION IN POST LOGISTICS The Full Court in the Post Logistics appeal considered the approach to be taken in imposing a penalty in civil penalty proceedings for a contravention of the Act. In that case, an employee was walking next to a forklift vehicle being driven by Mr Cox, an employee of Post Logistics Australasia Pty Ltd holding a roll of shrink wrap which was attached to an object on a pallet which was being moved by the forklift vehicle. The employee, Ms Borg, was walking too close to the forklift vehicle with the consequence that the forklift vehicle ran over her foot and she suffered a broken toe. The primary judge imposed a penalty of $80,000. In imposing that penalty, the primary judge, Buchanan J, observed:[35]An area as important as workplace health and safety should be accompanied by the greatest level of practicality which can be brought to bear on the ultimate task of providing a safe working environment. Nobody sets out to create an unsafe workplace. I entertain great doubt whether concepts of deterrence are appropriate in the context of a case such as the present. What is involved is the necessity to reinforce a positive obligation of protection rather than to emphasise an obligation not to commit a civil wrong. It is unnecessary, in my view, for the Court, when giving effect to the statutory objectives in the OHS Act, or when fixing a punishment for a particular breach, to do so by reference to “deterring” somebody from such a breach. Adoption of a concept such as this from the criminal law risks becoming a ritual incantation deflecting attention from what is a practical issue — namely, how to provide appropriate incentive and encouragement (as well as punishment) to enhance workplace safety. The applicant, Comcare, appealed. One of the grounds of appeal was that the primary judge had failed to have regard to the concept of deterrence in imposing the penalty. The Full Court (Rares, Cowdroy and Griffiths JJ) considered the appropriate approach to imposing a penalty in respect of contraventions of s 16 of the Act. The Full Court observed that in determining the penalty, primacy should be given to the particular statutory context, and that the objects and purposes of the Act were central to determining the factors that were relevant to take into account. The penalty imposed, said the Full Court, should be one which gives effect to the statutory purpose. The Full Court observed at [43]:Deterrence, both general and specific, is a fundamental purpose of the role of civil pecuniary penalties. First, the object in s 3(g) of the OH&S Act evinced a legislative intention to provide for effective remedies where the obligations imposed by s 16 on an employer, such as the respondent, were not met.

Ratio Decidendi

Legal Principle Established

Further, the parties agreed that the first and third respondents had cooperated with the investigation of the fatal incident undertaken by the applicant.PROPOSED DECLARATIONS The parties handed up an agreed minute of declarations which they submitted that the Court should make. The proposed declarations are in the following terms:The Court declares that, pursuant to clause 2(1)(a) of Schedule 2 Part 1 of the Occupational Health and Safety Act 1991 (Cth) (the “Act”):1on about 30 December 2011, the First Respondent breached s 16(1) of the Act in that it failed to take all reasonably practicable steps to protect the health and safety at work of its employee, Anthony Phelan, by its use of the Vehicle (registration number 1DAI 982) where it had:1.1failed to identify the hazards relating to the Vehicle namely that:1.1.1the Vehicle could have its front and rear road wheels or hi‑rail wheels, raised simultaneously;1.1.2when the Vehicle had its front and rear road wheels raised simultaneously in an off-tracking, the Vehicle would not have braking capability;1.1.3the controls in the cabin of the Vehicle were not suitably identified, nor able to be readily and conveniently operated, such that the operator of the Vehicle was not aware that when the hi-rail levers were pushed into the float detent position the hi-rail wheels were not lowered and there was nothing to indicate to the operator that the Hi-Rail wheels were not being lowered;1.2failed to appropriately or adequately train the operator of the Vehicle who:1.2.1had not received any formal or specific training in relation to the operation of the Vehicle;1.2.2had not been advised that pushing the Hi-Rail Lever too far forward to lower the hi-rail wheels (so that it was in the float detent position) would result in an effective loss of function;1.2.3had been advised by the day shift operator that the Vehicle could be off-tracked more quickly by raising both sets of hi‑rail wheels at the same time;1.2.4had not been specifically instructed that he should not raise the front and rear road wheels simultaneously when off‑tracking the Vehicle;1.3failed to ensure that there was a spotter in place at the place of the off-tracking of the Vehicle and also at the place where Mr Phelan (the deceased) was cleaning the rail tracks.The Court declares that, pursuant to clause 2(1)(c) of Schedule 2, Part 1 of the Act:2in about 2009 the Third Respondent breached:2.2s 18(1)(a) of the Act in that it failed to take all reasonably practicable steps to ensure that the Vehicle was designed and constructed to be safe to be used by employees in that it had:2.2.1not ensured that the Vehicle was incapable of having its front and rear road wheels or hi-rail wheels raised simultaneously;2.2.2not removed or disabled the redundant function of the float detent position for the hydraulic levers;2.2.3not ensured that the signage inside the cabin of the Vehicle was accurate as it related to the functions of the lever positions;2.3s 18(1)(c) of the Act by not informing the First Respondent of adequate information as to the necessary conditions to ensure the Vehicle would be safe for employees and without risk to their health, namely that:2.3.1the Vehicle could have its front and rear road wheels or hi‑rail wheels, raised simultaneously;2.3.2when the Vehicle had its front and rear road wheels raised simultaneously in an off-tracking, the Vehicle would not have braking capability;2.3.3operators of the Vehicle should be trained so as not to raise the front and road rear wheels simultaneously in off-tracking the Vehicle;2.3.4the controls in the cabin of the Vehicle were not suitably identified, nor able to be readily and conveniently operated, such that the operator of the vehicle would not be aware that when the hi-rail levers were pushed into the float detent position the hi-rail wheels were not lowered and there would be nothing to indicate to the operator that the hi-rail wheels were not being lowered.