Environment Protection Authority v McConnell Dowell Constructors (Aust) Pty Ltd - [2003] NSWLEC 70

No judgment structure available for this case.

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Reported Decision: 128 LGERA 240

Land and Environment Court

of New South Wales

CITATION: Environment Protection Authority v McConnell Dowell Constructors (Aust) Pty Ltd [2003] NSWLEC 70

PARTIES:
PROSECUTOR
Environment Protection Authority
DEFENDANT
McConnell Dowell Constructors (Aust) Pty Ltd

FILE NUMBER(S): 50009 of 1999

CORAM: Pearlman J

KEY ISSUES: Environmental Offences :- pollution - waters - vicarious liability - independent contractor - power of control - direct authorisation

LEGISLATION CITED: Clean Waters Act 1970 s 16(1)

CASES CITED: Australian Iron & Steel Pty Ltd v Environment Protection Authority (1992) 29 NSWLR 497;
Christmas v Nicol Bros Pty Ltd (1941) 41 SR 317;
Darling Island Stevedoring and Lighterage Company Ltd v Long (1957) 97 CLR 36;
Environment Protection Authority v Multiplex Constructions Pty Ltd (2000) 112 LGERA 1;
Environment Protection Authority v Munters Pty Ltd (1998) 98 LGERA 279;
Environment Protection Authority v Norco Co-operative Ltd [2000] NSWLEC 35;
Environment Protection Authority v Snowy Mountains Engineering Corporation Ltd (1994) 83 LGERA 51;
Environment Protection Authority v Taylor Woodrow (Australia) Pty Ltd (1997) 101 LGERA 226;
Ex parte Falstein; Re Maher and Anor (1948) 49 SR 133;
Hollis v Vabu Pty Ltd (2001) 207 CLR 21;
Kondis v State Transport Authority (1984) 154 CLR 672;
McConnell Dowell Constructors (Aust) Pty Ltd v Environment Protection Authority (2000) 50 NSWLR 127;
Scott and Ors v Davis (2000) 204 CLR 333;
State Pollution Control Commission v Australian Iron and Steel Ltd (1992) 74 LGRA 387;
Stoneman v Lyons (1975) 133 CLR 550;
Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715;
Torette House Pty Ltd v Berkman (1939-1940) 62 CLR 637

DATES OF HEARING: 04/11/2002; 05/11/2002; 06/11/2002; 07/11/2002; 08/11/2002; 11/11/2002; 12/11/2002; 13/11/2002; 14/11/2002; 19/11/2002; 20/11/2002; 21/11/2002; 22/11/2002; 26/11/2002; 27/11/2002; 29/11/2002; 06/12/2002

DATE OF JUDGMENT:
03/31/2003

LEGAL REPRESENTATIVES:

PROSECUTOR
Mr D A Buchanan SC with Mrs J C Kelly (Barrister)
SOLICITORS
Environment Protection Authority
DEFENDANT
Mr J L Glissan QC with Mr G B Newport (Barrister)
SOLICITORS
Doyles

JUDGMENT:

50009 of 1999

Pearlman J
31 March 2003

ENVIRONMENT PROTECTION AUTHORITY

Prosecutor

v

McCONNELL DOWELL CONSTRUCTORS (AUST) PTY LTD

Defendant

Judgment

Introduction

1 In February 1998, a quantity of oil and part of a pipeline fell into the waters of Woolloomooloo Bay during the re-development of the Finger Wharf. This case concerns a criminal prosecution for pollution arising out of that incident.

2 The defendant, McConnell Dowell Constructors (Aust) Pty Ltd, has been charged with an offence against the Environmental Offences and Penalties Act 1989 in that it polluted waters contrary to s 16(1) of the Clean Waters Act 1970. The defendant has pleaded not guilty to the charge.

3 Although the statutes under which the defendant has been charged have now been repealed, it is common ground that this Court has jurisdiction to hear and determine the charge (see Environment Protection Authority v Multiplex Constructions Pty Ltd (2000) 112 LGERA 1 at pars 19 – 22; Environment Protection Authority v Norco Co-operative Ltd [2000] NSWLEC 35 at pars 7 – 8).

4 The prosecutor’s case is that the defendant is vicariously liable for the action of its subcontractor, Moltoni Corporation Pty Ltd (“Moltoni”) which caused the section of pipeline and the contents of the pipe to fall into the water.

The incident

5 I am satisfied beyond reasonable doubt of the following facts.

6 The Finger Wharf (“the site”) was originally a wooden structure extending in a northerly direction into Woolloomooloo Bay from Cowper Wharf Roadway. It comprised wooden piles, upon which sat wooden headstocks. Running perpendicular to the headstocks were wooden bearers, and upon them was concrete decking. The wharf superstructure sat on top of the wharf, with an apron of deck around it on its western, northern and eastern sides. Underneath the superstructure but on top of the concrete deck was a roadway running the full length of the wharf, with a short transverse portion halfway along the wharf which was open at the sides.

7 Multiplex Constructions Pty Ltd (“Multiplex”) was under contract, through a complex set of arrangements not presently relevant, to develop the Finger Wharf. In general terms, this involved the demolition of the existing wharf and its reconstruction as a wharf containing a hotel, residential apartments, shops and restaurants, a boardwalk and a marina. Multiplex entered into a subcontract with the defendant to carry out certain works, in particular, the demolition of the wharf structure. In turn, the defendant subcontracted with Moltoni, a Western Australian corporation, to demolish the wharf sub-structure. I shall return later to consider the terms of the two subcontracts in more detail, but suffice it to say at this stage that the demolition work in which Moltoni was involved was the removal of the concrete decking, the bearers and headstocks, some of the wooden piles and underdeck piping. In order to lift the bearers and headstocks, Moltoni sometimes utilised an implement called a grapple which was attached to an excavator; at other times, the bearers and headstocks were lifted by means of a chain attached to the excavator arm.

8 On 25 February 1998, Moltoni was engaged in removing the bearers and headstocks from the eastern side of the wharf substructure. For this purpose, its employee, Mr C Manihera, was operating the excavator. At about 3:30 pm, a bearer being removed by a chain attached to the excavator slid along the headstocks and hit a pipeline situated underneath the deck. This caused a section of the pipeline to dislodge from its position, and part of that section fell into the water below. The oil in the pipeline spilled into the water.

9 In making the findings I have set out in par 8, I have had regard to a conflict in Mr Manihera’s evidence. In his affidavit sworn on 28 October 1999, he said that a headstock was being lifted and it swung and hit the oil pipe. However, in the incident report which he filled in, he said that “… timber slid along headstocks, striking oil line”. It is unclear when this incident report was completed by him, but it was certainly completed closer to the date of the incident than his affidavit. Furthermore, his incident report is corroborated by the incident report filled in by Mr D Blair, Moltoni’s operations manager, apparently on the same day as the incident occurred. Accordingly, I accept the version set out in Mr Manihera’s incident report.

10 Evidence was given by Mr R J Fadel, who was the site manager for Multiplex, and by Mr A Stewart, who was Multiplex’s project manager, that, after the spill had occurred, Multiplex took over the control of the site. Various authorities and experts were called in to arrange for a clean up of the spill. There was some dispute between Multiplex and the defendant as to the latter’s responsibility for the ultimate removal of the oil pipes, but eventually the defendant assumed that responsibility. After the site had shut down for a time following the spill, work continued, the spill was cleaned up and the oil pipes removed.

The nature of the proceedings

11 The prosecutor has made two important concessions in these proceedings. First, it relies entirely upon vicarious liability as a basis for the defendant’s alleged commission of the offence and it expressly disavows any reliance upon breach of a non-delegable duty of care. Secondly, it concedes that, in carrying out work on the site, Moltoni was acting as an independent contractor, engaged under subcontract by the defendant as principal.

12 In these circumstances, two issues arise. They are as follows:

(1) The precise nature of the legal doctrine of vicarious liability and the basis, if any, upon which it applies in criminal proceedings; and
(2) Whether the prosecutor has established beyond reasonable doubt the facts and circumstances which would render the defendant vicariously liable for the act and conduct of Moltoni as an independent contractor.

13 The cases put on behalf of the prosecutor and defendant respectively may, in the light of these two issues, be shortly summarized as follows.

14 Mr Buchanan SC, appearing for the prosecutor, put the following propositions:

(1) Although there is, generally, no vicarious liability in criminal law, nevertheless a statutory offence may be of a type which is recognised as capable of being committed vicariously. The offence under s 16(1) of the Clean Waters Act with which the defendant is charged is such an offence.

(2) The general rule is that there is no vicarious liability for the conduct of an independent contractor.

(a) circumstances where the principal has the power of control over the work of the independent contractor; or

15 Mr Glissan QC, appearing for the defendant, submitted that the doctrine of vicarious liability was not known to the common law of crime. Even if it does apply in criminal law, however, the general rule applies, that is, that a principal is not liable for the act of its independent contractor. At common law, there are but two exceptions to the general rule. The first involves breach of a non-delegable duty of care, a basis which in this case is not relied upon by the prosecutor. The second involves direct authorisation of the act the subject of the alleged offence. In this case, in Mr Glissan’s submission, there is no evidence of any such direct authorisation, and hence the defendant must be acquitted. Any question of the power of control arises only at the threshold, that is, in the determination of whether, in the facts and circumstances of a particular case, a person is a servant (under a contract of service), or an independent contractor (under a contract for service). In this case, no such question arises because of the prosecutor’s concession that the relationship between the defendant and Moltoni was one of principal and independent contractor.

16 The defendant raises two other matters in the alternative. The first is a contention that vicarious liability cannot arise in a “three-tier” situation; that is, the defendant cannot be vicariously liable where its liability is asserted to arise from the vicarious liability of another, in this case, the vicarious liability of Moltoni for the act of its employee, Mr Manihera. Secondly, the defendant also raises the defence of honest and reasonable mistake of fact.

The relationship between the defendant and Moltoni

17 In order to determine whether or not the defendant is vicariously liable for the act or conduct of Moltoni, it is necessary to examine the total relationship between them (Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at pars 44 – 45). It is convenient to set out the facts and circumstances of that relationship before turning to the applicable law.

(a) The contract between the defendant and Multiplex

18 The defendant was engaged by Multiplex under a contract (“the Multiplex subcontract”) to “replace and rectify the wharf at Woolloomooloo sub-structure including but not limited to demolition, construction & reinstatement of existing piles, apron structure, pool, piles, platform, roadway … & the like …”. At least part of the Multiplex subcontract comprised a written document dated 5 December 1997. That written document provided, amongst other things, that the defendant would carry out all work strictly in accordance with Multiplex’s current construction programme. Clause 16 forbade the defendant to subcontract without the written consent of Multiplex. Clause 20 made the defendant responsible for co-ordinating the execution and location of the works it contracted to carry out and for working with all other sub-contractors. The defendant also assumed, under cl 24, responsibility for all risks relating to the conditions of the site, including hazardous chemicals and substances. Clause 27 required the defendant to ensure “… that no material, pollutants or the like enter harbour waters …” and to take all steps “… to ensure that its actions do not cause or contribute to pollutants within the environment including harbour waters”.

(b) The main “players”

19 The defendant’s project manager on the site was Mr C Beveridge and he figures prominently in the recital of the facts and circumstances underlying these proceedings. However, at the time of the hearing, Mr Beveridge was in Hong Kong and it appears that he had evinced an attitude of non-cooperation and reluctance to give evidence in the proceedings. Consequently, he was not called to give evidence by either the prosecutor or the defendant. The prosecutor sought, however, to tender a record of interview given by Mr Beveridge to an officer of the prosecutor, Mr Callaghan. The defendant opposed the tender. For the reasons which I gave during the course of the proceedings, I ruled, under s 87 of the Evidence Act 1995, that the record of interview, although hearsay, was admissible as an admission by the defendant, but I excluded it under s 137 of the Evidence Act upon the basis that its probative value was outweighed by the danger of unfair prejudice to the defendant.

20 Mr Robert Moltoni was the managing director of Moltoni, and he was the principal witness for the prosecution. He said that Moltoni had been engaged in a contract for the demolition of a wharf at Fremantle. Through that project, Mr Moltoni had met Mr Lodge who had subsequently become an employee of Multiplex. Mr Lodge brought Mr Moltoni’s attention to the Finger Wharf project, which led to the negotiations and ultimate establishment of the subcontract between the defendant and Moltoni to which I refer in par 7.

21 There were employees of both the defendant and Moltoni on the site. One of the defendant’s employees was Mr M Petracca, who was engaged as a site engineer. Another was Mr J Mion, who was the defendant’s general foreman on the site.

22 Mr Moltoni was present on the site on many occasions during the course of Moltoni’s demolition work. Moltoni’s operations manager was Mr Blair, and the excavator was, as I have earlier stated, operated on the day of the incident by Mr Manihera.

(c) The subcontract between the defendant and Moltoni

23 Mr Moltoni came to Sydney with the intention of exploring the possibility of winning a subcontract for demolition works at the Finger Wharf. He visited the site office of Multiplex at the Finger Wharf, inspected a plan of the wharf, and paced out the wharf structure. Subsequently, he met Mr N Jones, an employee of the defendant, and was introduced to Mr Beveridge.

24 After inspecting the plan of the wharf, and pacing out its dimensions, but before any written documentation had been furnished to Moltoni by the defendant, Mr Moltoni had discussions with Mr Beveridge, and offered to do the demolition work for a price of $960,000. However, in the ensuing period, Mr Moltoni revised his quotation, principally because the defendant offered to provide an off-site location for the storage of materials, and because Mr Moltoni was able to find a market for the disposal of the timber.

25 Against that background, Moltoni made a preliminary proposal to the defendant in a document dated 6 October 1997. It relevantly provided as follows:

We are pleased to offer our services and preliminary proposal to perform the above referenced works.

Moltoni will:

1. Supply experienced personnel to manage and perform the works to our quality standards, AS 2601 1991 and relevant legislation.
2. Supply all plant and equipment to remove, dismantle and dispose of debris, timbers and/or salvage including:

(a) remove concrete deck to entire raised aprons (wharves) and wharf ramp;
(b) remove all headstocks, girders and debris to same except South East Wharf No 6 timber structure to remain.

3. Perform all works in sequence with piling and M-D forwards works.

4. Removal of the decking and timbers will be progressive. No allowance has been made for remobilisation to remove isolated sections.

5. Provide all statutory insurances including $A10M public liability insurance.

6. Employ and maintain safe systems of work.

McConnell Dowell will:

1. Allow all reasonable access to the work areas and a safe working zone, to be agreed, for demolition operations to be performed in isolated zones.

2. Agree to methods proposed by Moltoni.

3. Provide an area of land to store all of the salvageable timbers at no charge.

4. Pay Moltoni the sum of $875,000 for the scope of works as viewed at site, and generally discussed. A schedule of works to be agreed. The scope does not include penetrations for piling or removal of the redundant piles.

Our equipment will include but not be limited to 1 new 30 tonne excavator with hydraulic attachments. 1 x 12 tonne excavator with attachments. Front end loader and forklift.
We have discussed the proposed works with WorkCover and require no notice approvals to undertake the work. We are able to commence works within 7 days of your notice to mobilise.

26 Moltoni followed that preliminary proposal with a letter to the defendant dated 10 October 1997 in order to “update our position” with regard to Workcover approval, the appointment of a Sydney contract administrator and the lack of industrial difficulties or wages disputes. On 31 October 1997, the defendant furnished Moltoni with a draft construction programme and sought its confirmation, as part of the tender evaluation, that it was able to adhere to the targets indicated. Mr Moltoni sent a handwritten fax to Mr Beveridge (apparently in reply to the draft construction programme), which was received by the latter on 31 October 1997, and in which Moltoni made some comments about the proposed timetable and its ability to commence the work.

27 On 5 November 1997, Mr Moltoni and Mr Beveridge had a phone discussion. According to Mr Moltoni, Mr Beveridge announced that the defendant had decided to award the subcontract to Moltoni, provided Moltoni agreed to do extra work. The extra work comprised, first, disposing of the timber piles once extracted, secondly, providing penetrations of the concrete decking for piling access, and thirdly, removing and disposing of the under deck piping. Mr Moltoni’s evidence continued as follows:

Q Did you then say in relation to the piping “Yes we will remove the piping. Do the pipes have any oil residue in them?”
A Yes we did.

…

Q Did Beveridge respond to that?
A Yes, he said that the pipes had been cleaned by the Navy, as I remember at the time.

Q Did he say to you anything about where he’d learnt that from?

A He learnt that- he said that he had been told by Multiplex that they had been cleaned by the Navy.

28 There was tendered in evidence a handwritten document dated 6 November 1997, and headed “Demolition Checklist – Moltoni”. According to the evidence of Mr Callaghan, this was handed to him by Mr Beveridge as representing a page of Mr Beveridge’s diary. Whether it reflects a conversation between Mr Beveridge and Mr Moltoni on that or some other date, or whether it was Mr Beveridge’s notes preparatory to the making of a counter-offer, is unclear. It notes a number of items of demolition work, states “Supply all method statements, risk analysis, permits” and is endorsed with the figure “$860,000”. In view of the fact that the letter sent by the defendant to Moltoni on the following day (see par 29) refers to a price of $860,000 being offered by Moltoni, I infer that this handwritten document reflects the conversation on 5 November 1997 between Mr Beveridge and Mr Moltoni to which I have referred in par 27.

29 On 6 November 1997, the defendant sent a fax to Moltoni, the material parts of which were as follows:

We confirm our earlier advice of our intention to utilise the services of your company in respect to the aforementioned works.

We note your firm lump sum price of $860,000 being for, but not limited to, the following scope of works:

1. The demolition and disposal of all concrete slabs, with the exception of the central roadway;
2. The demolition and disposal of all timber below the existing floor levels, with the exception of the Wharf 6 structure,
3. The demolition and disposal of timber walls to the central roadway,
4. The disposal of timber piles to be removed by others, including necessary cranage,
5. The demolition and disposal of existing under deck piping,
6. The provision of deck penetrations for piling as required,
7. The removal to site store of various items required to be retained by the head contractor, including mooring bollards and various timber sections,
8. To work in a safe manner in accordance with all applicable legislation, regulations etc and in order to meet our zero accident goal for the project. To that end, providing work method statements and supporting information, as and when required,
9. To dispose of all materials in a manner reflecting the project recycling policy and give advice as to same,
10. To make payment to all site employees a project allowance of $1.85 per hour in accordance with the site agreement,
11. To conduct all works in accordance with our current construction programme.

So as to provide a quick start to the project, can you please complete the following site induction forms and return together with your various method statements as soon as possible.

30 There was no evidence of a written document which constituted a formal acceptance of this counter-offer, but it may be inferred that it was accepted orally, because Moltoni commenced its demolition work on the site.

31 I find that the subcontract between the defendant and Moltoni (“the Moltoni subcontract”) was constituted by the terms and conditions discussed between Mr Moltoni and Mr Beveridge on 5 November 1997 and by the offer made by the defendant on 6 November 1997, orally accepted by Moltoni. In particular, I find that it was a condition of the Moltoni subcontract that the scope of works to be undertaken by Moltoni included the removal of the oil pipes underneath the deck subject to a condition that those pipes would be clean and purged of any contents. I find also (because it is relevant to the question of the power of control of the defendant over the actions of Moltoni) that Moltoni’s proposal that the defendant “agree to methods proposed by Moltoni” (see par 25) was not an express term of the Moltoni subcontract.

(d) The ongoing relationship

32 In order to establish the requisite power of control (see par 14), the prosecutor relies upon the ongoing relationship between the defendant and Moltoni during the course of the latter carrying out its demolition work. The prosecutor focussed upon separate components of that conduct, and, although those components overlap to some extent, it is convenient to review the evidence generally along the same lines. But it will be necessary to have regard to additional evidence about the relationship between the defendant and Moltoni.

33 Mr C Rech is the construction team response acting co-ordinator of the WorkCover Authority of New South Wales, and he gave expert evidence about issues relating to the demolition of structures. He stated that an important step involving the demolition of any structure includes the identification of potential hazards. By the term “hazard”, he meant, amongst other things, risk to the environment. The requirement for identification of hazards was also part of the Australian Standard 2601 (par 1.7.2.3).

34 Responsibility for the identification of hazards was expressly cast upon the defendant under the Multiplex subcontract, but no similar responsibility was a term of the Moltoni subcontract. The defendant discharged its contractual responsibility to Multiplex in this regard, in part at least, by furnishing to Multiplex a demolition checklist (which contained a reference to the shutting down of all utility services, the protection and stability of structures and a check for explosive and flammable material) and by preparing a written safety management system for demolition. There was no evidence of any such documentation prepared for the defendant by Moltoni.

35 The defendant prepared a hazard identification register dated 14 November 1997. Mr Petracca gave evidence that the preparation of that register was the task of the defendant’s engineer, although the evidence of Mr S King, who was the general manager of Moltoni, was that subcontractors, including Moltoni, had an input into the preparation of the register. Mr Moltoni’s evidence was that the management of utility services was not within the scope of the Moltoni subcontract but was a task of the defendant.

36 As I have previously pointed out, cl 24 of the Multiplex subcontract cast upon the defendant the responsibility for all site conditions. No similar contractual responsibility was imposed by the defendant upon Moltoni under the Moltoni subcontract.

37 It may be accepted that the defendant’s responsibility in this regard was considered important by Multiplex, because it wrote to the defendant on 27 February 1998, complaining that the defendant had carried out work contrary to work method statements and design assumptions, thus jeopardising structural stability. It requested some formal pre-demolition documentation, including a pre-demolition check list. On 3 March 1998 the defendant sent a note to “all engineers, foremen” asking them to complete a pre-demolition checklist prior to the commencement of any demolition work “[I]n order to satisfy recent requests from Multiplex …”. The form contained spaces for completion as to area of work, operation proposed, work proposed, approval by the defendant, and inspection by “RPB”, presumably a reference to Robert Bird and Partners, Multiplex’s structural engineers.

38 The site was occupied at all relevant times by the defendant and a number of its subcontractors. Mr Moltoni gave evidence that there were numerous “trades” involved (he complained to Mr Beveridge from time to time about the difficulties this caused in his endeavour to isolate those parts of the site in which Moltoni was working). It may be assumed that the subcontractors on site included those for whom the defendant sought approval of Multiplex in a letter dated 11 November 1997. They included, apart from Moltoni, Auspile Pty Ltd (for north building piling); Houben Marine Contracting (for storey post piling); Sure Welding Australia Pty Ltd (for site welding) and Hardcastle and Richards (for consulting engineering services).

39 There is evidence that the defendant possessed relevant engineering expertise, or obtained it by engaging appropriate subcontractors. This evidence is to found, first, in the reference to Hardcastle and Richards in the letter to which I have referred in the preceding paragraph; secondly, in the letter written by Multiplex on 17 February 1998, (par 37 above), referring to the preparation of design assumptions, and thirdly, two faxes, dated respectively 4 March 1998 and 9 March 1998, in which the defendant provided engineering advice to Multiplex about elements of the work it was undertaking.

40 However, Moltoni possessed no such engineering expertise. Mr Moltoni stated that he himself had no engineering qualifications, and that the sole expertise of Moltoni and its personnel was in demolition.

41 Clause 25 of the Multiplex subcontract was headed “Safety”. It cast an obligation upon the defendant to provide itemised information, including a “safe work method statement”. It required the defendant to obtain the approval of Multiplex to each of the items, and not to commence execution of works on the site unless that written approval had been obtained.

42 Item 8 of the written part of the Moltoni subcontract (refer par 29) provided as follows:

8 To work in a safe manner in accordance with all applicable legislation, regulations etc and in order to meet our zero accident goal for the project.

To that end, providing work method statements and supporting information, as and when required

.

43 Apparently in compliance with this requirement, Moltoni furnished to the defendant a document (“the Moltoni method statement”) entitled “method statement” and dated 7 November 1997. It contained a number of work descriptions under various headings. (According to Mr Moltoni, one of the items in the Moltoni method statement, relating to cutting the oil pipes with hydraulic shears, was changed at his own instigation after further under deck investigation. He noted that change, in handwriting, on a copy of the Moltoni method statement, and furnished it to the defendant).

44 Mr Petracca said that the Moltoni method statement was used as a guide to the preparation of the defendant’s own method statement to be furnished to Multiplex in compliance with the defendant’s contractual obligation. The defendant provided a work method statement (“the McConnell Dowell method statement”) to Multiplex under cover of a letter dated 28 November 1997.

45 It is apparent, from a comparison of the Moltoni method statement with the McConnell Dowell method statement, that the latter incorporated in terms many of the provisions of the former. However, the McConnell Dowell method statement also included items not appearing in the Moltoni method statement. The additional items were directed to safety matters, and included such things as the shutting off of utility services, protection of adjacent areas from debris, the erection of barricades, and restriction of access to working areas. Only one of these additional items was directed to the manner in which the demolition was to be physically carried out by Moltoni. The Moltoni method statement contained a provision that the wharf timbers would be pulled or levered off without cutting the pins. The McConnell Dowell method statement added a provision that, should cutting be required, the area shall be ‘wetted down’ prior to the commencement of the work.

46 Having regard to the respective contractual obligations and the terms of each of the method statements, it is obvious that the McConnell Dowell method statement was not a set of instructions or directions from the defendant to Moltoni in relation to the manner in which the latter was to carry out its work. Rather, the McConnell Dowell method statement set out the responsibilities (for the purpose of safety) which the defendant undertook to Multiplex. The Moltoni method statement had the same purpose. It set out, for the purpose of safety, the work methods which Moltoni proposed.

47 An inference may be drawn from the respective work method statements that, in respect of safety matters, the defendant had power to direct or control the manner in which Moltoni did its work. The oral evidence corroborates that inference. Thus, Mr Fadel said that the procedure would be for him to notify Mr Beveridge of a safety issue, and for Mr Beveridge to go to the subcontractors on that issue, but he said that he would expect anybody on site to give instructions regarding a serious breach of safety. Mr Petracca was of the same opinion. He said that he had a responsibility for safety and he gave directions to subcontractors on that issue. Mr Blair confirmed this position. He said that employees of Moltoni would not take instructions from anybody but himself or Mr Moltoni, unless it was a safety issue, in which case the instruction would come from the safety officer. The McConnell Dowell method statement was monitored for compliance in the interests of safety. That was one of the tasks of a Multiplex employee, Mr B G Belton, Multiplex’s general foreman. According to his diary record for 5 December 1997, he spoke to Moltoni to express concern about the manner in which Moltoni was removing slabs from the wharf not in accordance with the McConnell Dowell method statement. He stated, in cross-examination, that he felt he was able speak directly to Moltoni on the matter because it was a safety issue.

(e) The demolition supervisor

48 Mr Mion was employed by the defendant as a demolition supervisor. He did not give oral evidence, but an affidavit which he swore on 8 August 2001 was formally read.

49 Mr Mion said that he was “in charge of all demolition work” and that one of his main tasks was “to supervise the … demolition contractors”. He made out a weekly work programme for the subcontractors, including Moltoni, its purpose being to set the work to be done each day. He discussed the programme with Mr Beveridge, and it was then given, every Monday morning, to the subcontractors.

50 Mr Mion stated that, on some occasions, he gave verbal directions to Moltoni employees about where to work and when to do that work, but he did not instruct them as to how to do the work.

51 Sequencing of the works on the site, or scheduling, or co-ordination, in the sense of directing and controlling who did what, where and when, was a critical matter. It was critical because there was an obligation upon the defendant to meet the construction programme, and because there were a number of contractors working on the site at the same time. Mr Rech acknowledged that sequencing of work was critical, and Mr Petracca said there was a critical path that had to be followed. Mr Moltoni said Moltoni “worked to direction” so far as that concerned fitting in with other trades on the site, that is, “… because we don’t have an input into the bigger picture, we perform the works to their demands”.

52 The responsibility for sequencing was that of the defendant. Mr King stated that it was necessary for subcontractors to be co-ordinated so that they worked in a rational sequence, and that was the defendant’s responsibility.

53 The defendant discharged that responsibility by giving sequencing directions on a daily basis. Mr Moltoni said that those kinds of instruction were given “… every day and regularly throughout the day and there were regular changes to those instructions as well”. Mr Belton made various notes in his diary as to what Moltoni was doing and where, and he said that where and when Moltoni was working was “as required” by the defendant on a daily basis.

54 The prosecution submitted that there were three specific occasions where Moltoni changed its manner of work in response to a direction from the defendant.

55 The first related to deck penetrations. It was a term of the Moltoni subcontract that Moltoni would provide “deck penetrations for piling as required”, to provide clear access for the piling contractor to insert piles which would ultimately support the structure. Mr Moltoni gave evidence about Moltoni’s contractual obligation to provide deck penetrations for piling. He said that instead of making holes in the concrete for piles to be inserted, longitudinal strips of concrete were cut by another contractor and pulled up by Moltoni. He explained this in some detail as follows:

Q And how was that work done?
A In the very initial stage, in the initial stages it was done with a rock breaker making some holes big enough to put steel, steel casing through.

Q What was a rock breaker?
A With a rock breaker, a rock breaker is an oversized jackhammer fitted to an excavator.

Q Did that change?
A It did--

Q What did it change to?
A It changed to cutting the concrete, there was talk about cutting larger sections but in actual fact it was changed to cutting a strip out of the concrete.

Q Did Moltoni Corporation do any concrete cutting?
A No we didn’t

Q Who did that?
A McConnell Dowell employed people to do that.

Q Is it right to say that penetrations were made by this subsequent method?
A Yes that’s okay.

Q How was that done as far as Moltoni Corporation was concerned if you didn’t cut the concrete?
A Well a subcontractor, McConnell Dowell for want of a better word cut the concrete, organised to cut the concrete and we agreed to pull out the concrete portions that were created by this cutting process.

Q I want to ask you about the process by which that change occurred?
A Mm.

Q Did you do it of your own accord?

A No, what happened is there was a, the first idea was to make some holes because Craig had asked me to make in our discussions on, was it 5 November when he rang me in Perth, he said all you’ve got to do is make some holes for us to put the case ons

through so when this wasn’t working for the pile contractor who was working alongside us and we had to work in with them Craig and the pile contractor determined that the best thing they could do was cut a strip out and I said, well I’m not paying for it because I’ve picked up enough of this stuff if you want to cut the concrete you go ahead and cut it and we said we would assist by pulling the concrete out after some debate because I didn’t want to do that either. Notwithstanding that we did, we ended up pulling the concrete out …

56 The next matter concerned the support straps on the apron headstocks. On 8 April 1998, the defendant wrote to Moltoni stating: “During demolition of apron headstocks, can you please ensure that all support straps are fully cut … removal with the excavator, so as to minimise the possibility of damage to timber piles that are to be incorporated in the permanent works”. However, the evidence shows that this direction did not constitute a change in the manner of work. The Moltoni method statement contained the following item:

The headstocks have steel holding stirrups, one on each side of pile which will be oxycut to allow lifting off of the headstock.

57 In his oral evidence, Mr Moltoni said that, before the date of the letter, he had known of the need to retain certain pieces of the wharf for future works. He had discussed the subject matter of this letter early in the project with Mr Beveridge, and the letter came as no surprise to him. He did not classify that subject matter as a change of the manner of work. Nor did Mr Blair. He said that Moltoni would have done its utmost to keep the piles intact because that was Moltoni’s professional and proper way.

58 The third matter was the evidence given by Mr Mion that, before the pollution incident, he had had conversations with Mr Moltoni and Mr Blair in which it was agreed that the proposed method of removing the pipeline was for a sling to be placed around it to support it before cutting. It was to be slung out of position using the excavator as a crane. I do not, however, accept that this evidence demonstrates a direction to Moltoni from the defendant to change its method of work. At its highest, it simply indicates that Moltoni proposed a work method for the pipeline removal, with which Mr Mion agreed.

(f) The relationship generally

59 In giving oral evidence, Mr Moltoni differentiated between a “turnkey” contract and a subcontract. He said:

Very simply, turnkey is where we work direct for a client and we undertake the full responsibility of those works and a subcontract arrangement is where we’re working for a builder under the direction of a builder doing you know a portion of the works.

60 He regarded the Moltoni subcontract as a subcontract under which the defendant was the “builder” with full responsibility for the works on the site, and Moltoni was engaged to carry out specified demolition as part of those works.

61 As to the “builder’s directions”, Mr Moltoni had this to say:

Q … You say that McConnell Dowell via these people gave instructions to Moltoni Corporation staff on site?

A Mm

Q What did Moltoni Corporation staff such as yourself do in response to receiving these instructions?
A Let me make a differentiation between, can I expand?

Q Yes please
A Between instructions, there are always two kinds of instructions you get, those that they have a right to give and those that they don’t--

Q So far as you’re concerned?
A Well possibly so

Glissan: Perhaps if he could just answer.

A As a subcontractor, if they tell us to stop work on that area, don’t take out that pile move on, move up and so on we must comply, we must carry out the works to their schedule and to their demands because we don’t have an input into the bigger picture, we perform the works to their demands. In respect of them telling us how to cut timber or how to drive our machine that is not their area and from time to time, you know, we would have a dispute about other issues but in terms of the process and the areas that we were to work in and so on we follow their instruction of course.

62 Later, in cross-examination, Mr Moltoni expanded upon his understanding of the relationship between Moltoni and the defendant. The following evidence emerged:

Q But your concern as the independent contractor doing the demolition was that you would do the demolition according to your own method?
A Yes

Q When you did it it didn’t matter to you in the sense that you’d fit in with other contractors?
A We had to fit in with the other contractors.

Q And that’s something that happens on almost every job where there is multiple contractors working together?
A We don’t do a lot of those kinds of works, very few in fact.

Q But where you have done them, that’s what happens?
A Yes, you work to direction.

Q The works have to be coordinated together and the direction that you talk about when you say you work to direction is to make sure that the job moves according to the critical path that the head--
A No, I mean work to direction

Q But using your own methods?
A Correct, yes

Q So that you method is the method that’s used for doing the work, when you do it, where you do specific things--
A Let me put it to you very simply. If you ask me to remove that item, [referring to a glasses case on the ledge of the witness box] whether I pick it up with that or whether I push it aside the method is mine but the instruction is yours.

Q So I say remove it?
A Mm, exactly

Q And then you decide how?

A That’s right.

63 Mr Blair also gave evidence about his understanding of the relationship between Moltoni and the defendant. He said that Moltoni had to “work along” with the defendant, and that the defendant would “tell us what areas we could work in and what areas we could pull up during the day”. In cross-examination, he said:

Q … So if anybody had questions from Moltoni Corporation their instruction was to come to you?
A That’s correct.

…
Q Any you would tell then what to do?
A Yes, basically, yes.

Q And they wouldn’t take instructions on what to do by way of how to do the work from anybody but you or Mr Moltoni?
A Unless it was a safety issue.

Q Unless it was a safety issue and there was a safety officer?
A Yes

Q And that happened from time to time?

A Yes, that was happening from time to time.

64 Mr Blair was asked questions in cross-examination concerning the load bearing capacity of the working deck. He gave the following evidence:

Q But you made your own decisions about whether you moved your machine--
A Yes

Q --to a spot because you had to make sure it was safe?
A A lot of times on that we had a plan like that and we’d mark out which pylons were missing and stuff like that so we knew where to walk our machines.

Q So you established your own method of safely positioning your machines?
A That’s correct

Q And you put them into that position and where it wasn’t safe you’d make your own decision that it wasn’t safe and you made some alternative arrangement?

A That’s correct.

(g) Mr Petracca’s evidence

65 Immediately prior to the pollution incident there were conversations between Mr Manihera, Mr Petracca and Mr Beveridge. Mr Petracca gave evidence about those conversations, and there was a conflict between that evidence and statements made in later documents.

66 In his evidence in chief, Mr Petracca said that, on the day of the incident, Mr Mahihera got out of the excavator and came to see him, Mr Petracca. Mr Manihera said: “We’ve come across a pipe, what do we do?” Mr Petracca and Mr Manihera then looked at the pipe and followed its location north and east under the apron of the deck. Mr Petracca then said: “Just don’t touch it and I’ll go and find out, I’ll go and see Craig Beveridge to find out what to do”. Mr Manihera went back to the excavator, and Mr Petracca went to where Mr Beveridge, Mr Jones and another person (he could not recall who it was) were in conversation. He drew Mr Beveridge aside and said to him: “Chris has come across a pipe, looks like it serviced a ship. Could be diesel, crude oil. What do you want us to do?”. According to Mr Petracca, Mr Beveridge said; “The reservoir has been emptied by Multiplex, continue work”. Mr Petracca went back to Mr Manihera and said: “I saw Craig Beveridge. He said that the reservoir has been emptied, to continue work”. While walking back to the office, Mr Petracca felt the wall shaking. He ran back to where Mr Manihera was, and saw that the pipe and its contents had fallen into the water.

67 Mr Petracca completed an incident report either in the afternoon of the day the incident occurred or the next morning. Relevantly, under the heading “summary of event”, the incident report contained the following:

As Moltoni was demolishing in the area between pile grid 109-100 Eastern Building, they located a pipe 450mm. The excavator driver from Moltoni then approached myself (Michael Petracca – Project Eng.) and asked what do we do about this pipe. I then approached the Project Manager Craig Beveridge and we decided that we would first consult with Multiplex to see what the content of the pipe was. Moltoni then proceeded with Demolition in the area as a piece of timber fell on the pipe, due to the weight of the pipe and the age of the connections the connections failed in a domino fashion. The pipe was full of oil which was spilled into the water. The approximate length of the failure was 120m.

68 Mr Petracca said that he filled in the incident report in consultation with Mr Beveridge. Mr Petracca also said that the words “… we decided that we would first consult with Multiplex to see what the content of the pipe was …” were not true, but he inserted them in the incident report on the instruction of Mr Beveridge. He considered, however, that the remainder of the incident report was accurate.

69 The next relevant document was a statement made by Mr Petracca on 8 August 1998 apparently for an insurance assessor. The following are the relevant paragraphs:

4. On Wednesday 25 February 1998 I was working on site when an employee of the subcontract firm named Chris Manihera approached me.

5. He said words to the effect, “We’ve come across a pipe, we’re not sure what to do with it and what’s in it?

6. I therefore decided to report this matter to Craig Beveridge who is my employer’s Project Manager.

7. I came across Craig Beveridge whilst he was in discussion with Neil Jones, our State Manager and David Hudson, a Superintendent and General Foreman.

8. Craig Beveridge advised me not to touch the pipeline and to tell the subcontractor to work around it.

9. He also recommended that I report the matter to Brendan Bolton who is the Site Foreman for Multiplex.

10. I returned to where Chris Manihera was working and said words to the effect, “Leave the pipe where it is but continue to remove the timbers”.

70 Mr Petracca said that he and Mr Beveridge and Mr Manihera got together before any statements were made to the insurance assessor and discussed the incident so as to get consistent versions. Mr Petracca went on to say that paragraph 8 of the statement was not correct, and was not what Mr Beveridge had told him. Nor did he say the words to Mr Manihera which are set out in paragraph 10 of the statement.

71 Mr Petracca was extensively cross-examined on the contents of the incident report and the statement in comparison with his present evidence. He was not, however, shaken in his recollection that what he was told by Mr Beveridge was that “… the reservoir has been emptied and continue work”, and that he repeated words to that effect to Mr Manihera. He maintained his stance that the recital of what was said, both in the incident report and in the statement, was incorrect. He said that he knew as he wrote them that the words he wrote in the incident report, namely, that “… we decided that we would first consult with Multiplex to see what the content of the pipes was …” were incorrect. He went on to say that the fact that they were incorrect had been on his conscience since then, and now, under oath, he was stating correctly what was said.

72 Mr Manihera was not called to give oral evidence, but his affidavit sworn on 28 October 1999 was formally read. In par 15, he stated:

15 As we were working, I saw the pipes. I went to speak with a young man called Mike. I understand that he worked for McConnell Dowell. I said to him: “What do I do?”. He said: “Leave them don’t touch them.” I also said to Dave Blair words to the effect of : “What should I do?”. He said: Leave them, don’t touch them till I get back to you.” I cannot remember if I spoke to Mike or Dave first.

73 Mr Manihera’s affidavit is silent as to any other conversation, with Mr Petracca or with Mr Blair. His evidence simply continued by stating, in par 16, “We worked near the pipes and we chained up the last headstock, pulled it, it swung around and it clipped the main pipe …”.

74 I am satisfied beyond reasonable doubt that the correct version of the conversations is that first put forward by Mr Petracca in a statement made to the prosecutor in September 2000 and repeated in the witness box under oath, despite the fact that the incident report was written on or immediately after the day of the incident and the statement made not very long after that. Mr Petracca’s explanations for the different versions have a ring of truth about them. He was a new graduate engineer, and his employment with the defendant was his first job. It is plausible that he would consult with Mr Beveridge, as project manager, in filling in the incident report, and that he and Mr Beveridge and Mr Manihera would endeavour to be consistent in their statements to the insurance assessor. It is also plausible that the matter had been on Mr Petracca’s conscience, as he said, especially in view of the prosecution of the defendant in which he was to be called to give evidence under oath. I make the finding, therefore, that the instruction given by Mr Beveridge to Mr Petracca and repeated by the latter to Mr Manihera was as he now states, namely, “… the reservoir has been emptied by Multiplex, continue work”.

(h) Oil in the pipes

75 I have found, in par 31, that it was a term of the Moltoni subcontract that the condition upon which Moltoni undertook to remove the pipes was that they were free of oil.

76 Mr Moltoni conceded, in examination in chief, that, on an inspection underneath the deck (after Moltoni had commenced work on the site), he saw a lot more pipes than he had anticipated, but this was not “a big issue” because the steel was recyclable and they would accordingly “take care of themselves in terms of costs”. He said, however, that, after he had seen the number of pipes, he had a conversation with Mr Beveridge and asked him “… to be absolutely certain that the pipes were purged and clean”. Mr Moltoni said that he had had “approaching a dozen” conversations with Mr Beveridge about oil in the pipes. On each occasion, he had said words to the effect of “What about the oil pipe?” Mr Beveridge had replied: “Multiplex have told us it’s clean”. Mr Moltoni also said that it was “definitely not” part of the Moltoni subcontract that Moltoni would remove the contents of any oil pipe.

77 In cross-examination Mr Moltoni said that he wanted written assurance from Mr Beveridge that the pipes were empty of oil, but he never received such an assurance. Mr Beveridge continued to tell him that he, Mr Beveridge, knew that the pipes were empty because he had been told by Multiplex that they had been cleaned by the Navy. Mr Moltoni went on to say that he was not prepared to rely on this, that he wanted “an unqualified statement …” from Mr Beveridge, and that, before Moltoni got to the point of removing the pipes, he would have required “some form of testing or some form … that something was guaranteed it wouldn’t have oil in it”.

Vicarious liability

78 I turn now to consider the applicable law.

General considerations

79 The general rule is that there is no vicarious liability at all in the criminal law, and none in tort, for the conduct or act of an independent contractor. It has been recognised, however, that the rule is “general”, that is, it is subject to qualifications and exceptions (Torette House Pty Ltd v Berkman (1939-1940) 62 CLR 637 at 647; Stoneman v Lyons (1975) 133 CLR 550 at 562 – 563).

80 So far as concerns vicarious liability in criminal law, it has been held that the legislature may, expressly or by necessary implication, create a criminal offence for which a person can be found vicariously liable. Section 16(1) of the Clean Waters Act is such an offence. It may operate to make a master vicariously liable for the conduct of his employee or servant – Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715 at 720. However, in this case, it is expressly conceded by the prosecution that the relationship between the defendant and Moltoni was not that of master and servant but one of principal and independent contractor.

81 Ex parte Falstein; Re Maher and Anor (1948) 49 SR 133 was cited by Mr Buchanan as authority for the proposition that there can be vicarious liability in the criminal law for the conduct of an independent contractor if that person is an agent. In that case, Jordan CJ said, at 143:

It was contended that the authorities which justify the attribution of vicarious liability for the acts of agents restrict the rule to agents who are servants and that it does not extend to agents who are independent contractors. It is sufficient to say that the decision of the Divisional Court in

is inconsistent with this.

82 The possibility that a principal might be vicariously criminally liable was recognised, at least by implication, by Spigelman CJ in the first of the two cases which were stated to the Court of Criminal Appeal in the earlier part of these proceedings, McConnell Dowell Constructors (Aust) Pty Ltd v Environment Protection Authority (2000) 50 NSWLR 127, where his Honour noted, at par 41 that “[v]icarious liability is a direct liability. The acts of the servant or agent are taken to be the acts of the employer, or, in this case, the head contractor…”.

83 However, as was pointed out by Gleeson CJ in Scott and Ors v Davis (2000) 204 CLR 333 at par 14, the term “agent” begs the question. It leaves unanswered what is meant by the term, and it is not the conduct or act of every “agent” which might render a principal vicariously liable. In the same paragraph of his judgment, Gleeson CJ made clear the sense in which the term is to be used in the vicarious liability context. His Honour referred to the explanation proffered by Jordan CJ in Christmas v Nicol Bros Pty Ltd (1941) 41 SR 317 at 319 – 320, namely that, in relation to a principal, an agent is a person “… acting for him and with his authority in some matter in respect of which he had the right to direct and control his course of action”.

84 In this context, the position of the prosecution was made abundantly clear by Mr Buchanan in par 19 of his principal written submissions as follows:

If the conduct is the act of an employee then, as a matter of law, control is assumed and the focus moves to a secondary test of whether the employee was acting in the course of his or her employment. If the conduct is that of an ‘independent’ contractor then (subject to whether there was direct authorisation of the offending conduct) the contractor is a principal in the work he or she does unless there was a sufficient power of control over the work they did which rested in the defendant as to make the defendant vicariously liable for the contractor’s conduct.

85 It is on this point that the parties are at issue in regard to the applicable principles. Mr Glissan submitted that there are only two exceptions to the general rule that a principal is not liable for the act of an independent contractor. The first is direct authorisation of the particular conduct, and the second is breach of a non-delegable duty of care. The second exception is not relied upon by the prosecution. In Mr Glissan’s submission, the test of the power of control is relevant only to distinguish between a contract of service and a contract for service. It is applied to categorise the relationship between the particular parties, and if, as a consequence of the application of that test, the person is found to be an independent contractor, then that puts an end to a claim based on vicarious liability, unless the facts and circumstances fall within either of the two exceptions.

86 Nevertheless, I prefer the analysis submitted by Mr Buchanan. I say that for three reasons. First, it pays due regard to the rationale for the modern approach to the doctrine of vicarious liability. Secondly, it is consistent with a line of cases in this Court where vicarious liability has been considered in the context of a strict liability offence. And, thirdly, it may, properly understood, be a distinction without a difference.

87 As to the first reason, I note, with respect, that the judgment of the majority of the High Court in Hollis v Vabu Pty Ltd. At par 36, their Honours said:

Two further points should be made. The first is that it is one thing to appreciate the considerations which in modern times support the doctrine of vicarious liability; it is another to select particular terms which provide the criterion of liability in a given case. Secondly, examination is required of the content of those terms. That content will reflect, from the facts of case to case, the particular force given to the considerations supporting the doctrine of vicarious liability. Terms such as “employee” and “independent contractor” and the dichotomy which is seen as existing between them, do not necessarily display their legal content purely by virtue of their semantic meaning.

88 After referring, in par 41, to the Canadian decision of Bazley v Curry [1999] 2 SCR 534, their Honours continued in par 42 as follows:

In general, under contemporary Australian conditions, the conduct by the defendant of an enterprise in which persons are identified as representing that enterprise should carry an obligation to third persons to bear the costs of injury or damage to them which may fairly be said to be characteristic of the conduct of that enterprise.

89 Their Honours went on to state, in par 43, that these notions “… also influence the meaning to be given today to “control” as a discrimen between employees and independent contractors”.

90 As to the second reason, I turn to the line of cases in this Court. In each case the prosecutor had sought to establish that a principal was vicariously liable in criminal law for the act of an independent contractor. These cases have a common thread, and that is that, in each of them, the Court determined the defendant’s liability by reference to whether or not the defendant exercised sufficient control over the conduct or act of the independent contractor.

91 In State Pollution Control Commission v Australian Iron and Steel Ltd (1992) 74 LGRA 387, the defendant was charged with a number of offences (including a breach of s 16(1) of the Clean Waters Act). AIS engaged a contractor, WGE Boilermakers (WGE), to remove certain pipes. An employee of WGE cut the pipe and oil escaped. Cripps J noted, at 394, that an employee of AIS “… exercised or purported to exercise, detailed control over the manner of the doing of the work …” by the employees of WGE, and, on the basis that AIS not only claimed the right to control but purported to control the work, his Honour concluded that AIS was vicariously liable for the act of WGE through its employee. The conviction of AIS went on appeal on another point (see Australian Iron & Steel Pty Ltd v Environment Protection Authority (1992) 29 NSWLR 497) but Abadee J, in delivering the judgment, with which the other members of the Court of Criminal Appeal (Carruthers and Badgery-Parker JJ) substantially agreed, quoted with apparent acceptance (at p 503 – 504) the findings of vicarious liability made by Cripps J.

92 In Environment Protection Authority v Snowy Mountains Engineering Corporation Ltd (1994) 83 LGERA 51, the defendant was charged under s 16(1) of the Clean Waters Act in relation to the escape of heating oil from a fuel bunker. Talbot J found (at 56) that the person responsible for the maintenance of the boiler and heating system, Mr Quan, was an independent contractor. At 56 – 57, his Honour made findings of fact by reference to whether the defendant effected “… any direct or real control over the manner in which [Mr Quan] undertook those responsibilities …” and concluded, at 57, that the defendant was not vicariously liable for the actions of Mr Quan.

93 Environment Protection Authority v Taylor Woodrow (Australia) Pty Ltd (1997) 101 LGERA 226 was another prosecution under s 16(1) of the Clean Waters Act relating to the overflow of water, soil and sediment from a coffer dam. The dam had been constructed by a contractor to the defendant. Lloyd J found, at p 245, that the defendant both itself and by its agent, a firm of engineers, was involved in the design and supervision of the relevant works, and “… directed the contractor in and about the construction …” of the works. The defendant was held to be vicariously liable for the offence.

94 In Environment Protection Authority v Munters Pty Ltd (1998) 98 LGERA 279, also a prosecution under s 16(1) of the Clean Waters Act, the charge against the defendant was based on circumstantial evidence but was dismissed on the basis that the prosecutor had failed to establish that the defendant caused or permitted the particular liquid to escape into the relevant waters. An issue arose, however, as to whether, if the spill had occurred as a consequence of the actions of a tanker driver decanting the liquid at the defendant’s premises, the defendant would be vicariously liable for that driver’s act. I found, at 288, that the driver was an independent contractor, but went on to hold, at 289, that, if he had caused the spill, the defendant would not be vicariously liable, because the driver was not “… acting under the control or direction of the defendant…”.

95 Environment Protection Authority v Multiplex Constructions Pty Ltd, to which I have referred in par 3, was a prosecution of Multiplex under s 16(1) of the Clean Waters Act arising out of the incident at the Finger Wharf which is the subject of these present proceedings. Amongst other bases of liability, the prosecutor put forward a case for the vicarious liability of Multiplex for the act or conduct of Moltoni in causing the fall of the pipe into the water and the discharge of oil from the pipe. Lloyd J discussed the relevant principles at length in pars 274 – 289, concluding, at 280, that liability for the acts of an independent contractor may arise if the particular work was done subject to the principal’s “control and direction”.

96 As to the third reason, it seems to me that the point of diversion between the competing legal submissions in this case, (that is, whether the power of control test is applicable to determine the liability of a principal for an independent contractor, or whether it is applicable merely to determine whether the person whose conduct is in issue was an independent contractor or a servant), is a distinction without a difference. That point was made by Associate Professor Zada Lipman in an article entitled “Vicarious Liability for Independent Contractors” (2000) EPLJ 427 at 431 where, by reference to the cases I have set out in pars 92 – 96, the learned author said:

The pre-eminent test in determining when a principal will be liable for an offence by an independent contractor is that of control…the policy rationale for holding a principal liable for the acts of an independent contractor in circumstances where control is exercised, is that the relationship is in substance no different from an employer/employee relationship.

The content of the control test

97 It is one thing to say that the power of control test is applicable to determine the liability of a principal for an independent contractor, it is quite another to define with precision the content or ambit of that test.

98 In the recent case of Scott v Davis, the High Court has set out the relevant principles. In that case the defendant was the owner of a plane. The appellants were a son and his parents. One of the appellants requested the defendant to allow the son to have a joy ride in the plane. The respondent asked a person who was a licensed pilot to fly the plane. The pilot did so, and the plane crashed, killing the pilot and seriously injuring the son. The appellants sued the respondent in negligence. The issue in the case was whether the defendant was vicariously liable for the negligence of the pilot who was not the defendant’s employee nor authorised by the defendant to carry out the negligent act.

99 After quoting a passage from the judgment of Jordan CJ in Christmas v Nicol Bros to which I have referred in par 83 above, Gleeson CJ continued as follows (in pars 14 and 16):

The reference to the right to direct and control the driver’s course of action cannot be taken to include a reference to a right which is not, in practice, capable of being exercised … It may be noted that Jordan CJ did not merely apply the question-begging label “agent”, he went on to explain what he meant by it.

…

The pilot was not the agent of the respondent in the sense explained in the above passages. At the time of the pilot’s negligent act, the respondent was not in a position to assert a power of control over the manner in which the pilot was flying the aeroplane. The pilot was neither in fact, nor in law, subject to his direction and control at the critical time.

100 Hayne J also referred to direction and control (par 311). His Honour pointed out, at par 301, the nature of the bargain between the parties. He said:

… vicarious responsibility of A, who contracts with B for B to perform a task, is much affected by the nature of the contract which those parties make. If A stipulates that he or she will have the right to control the way in which B performs the task, it likely that A will be held to be vicariously responsible for the negligence of B in the course of performance of that task. By contrast, if A stipulates only for the performance of the task and, under the agreement, A has no

right to control how B does it, A will ordinarily not be vicariously responsible for

B’s negligence.

101 It is also useful to note that Callinan J, in discussing the conditions necessary to establish the liability of the owner of a motor car for the acts of its driver, pointed, in par 357, to “… the reality of an actual power of control”. His Honour continued, in the same paragraph, by stating that “[t]he existence of a power of control can be of no relevance unless its exercise is, or is likely to be effective”.

102 Guided by these statements from the judgments in Scott v Davis, it is possible to understand the precise content of the power of control test. That test involves a right to direct and control a course of action, in circumstances where the right is capable of exercise and is, or is likely to be, effective. It relates to the manner in which the independent contactor undertakes the course of action, that is, the way in which the tasks are to be performed or how they are to be carried out.

103 In the line of authority in this Court to which I have referred in pars 91 – 95, the power of control test described in this way has been applied (the emphasis is mine). Thus, in SPCC v Australian Iron & Steel, Cripps J, at p 394, referred to “… detailed control over the manner of the doing of the work …” by the independent contractor. Talbot J approached the matter in a similar way in Environment Protection Authority v Snowy Mountains Engineering Corporation where he considered, at p 55, whether the defendant effected “… any direct or real control over the manner in which …” the independent contract undertook his work, and had regard to “… what must be done, the manner of its doing, the means to be employed, the time when and the place where it shall be done”. In Environment Protection Authority v Taylor Woodrow, Lloyd J referred, at p 245, to the principal’s direction of the independent contractor “… in and about the construction …” of the works. In Environment Protection Authority v Munters at pp 288 – 289, I approached the issue of the control or direction of the independent contractor by reference to how the independent contractor was to carry out his task and whether he was supervised in the performance of it. Similar considerations were applied by Lloyd J in Environment Protection Authority v Multiplex at pars 290 – 291.

Direct authorisation

104 One of the exceptions to the general rule that a principal is not vicariously liable for the act of an independent contractor is where the principal directly authorises that act. In Stoneman v Lyons, Mason J said at p 573:

For the purposes of trespass the act of an independent contractor does not become the direct act of the defendant unless he orders to be done the act which constitutes the trespass, some act which comprises that act, or some act which leads by physical necessity to the trespass.

105 In the same case, at p 562, Stephen J described in the exception in similar terms. Mason J had, at p 573, cited Darling Island Stevedoring and Lighterage Company Ltd v Long (1957) 97 CLR 36. In that case, Kitto J, at p 65, referred to “… a specific command to do the act complained of, or to do something necessarily involving that act …”.

106 In Kondis v State Transport Authority (1984) 154 CLR 672, Brennan J said, at p 692:

… liability can arise from a direct authorization of the tortious act. If I prevail upon the driver of a taxi to drive dangerously, I cannot escape liability for the consequences by pointing to the general employment of the driver to the owner of the taxi.

Consideration of the evidence

107 I have outlined the evidence in this case in detail. I turn to consider whether that evidence establishes beyond reasonable doubt that the defendant was vicariously liable for the act of Moltoni in relation to the fall of the pipeline into the water and the spill of its contents.

The power of control

108 Moltoni was engaged by the defendant to undertake a portion of the overall works which the defendant had contracted to carry out on the site. Moltoni was truly in the position of a subcontractor, fitting in with a number of other subcontractors on site, all of whom were engaged on various portions of the overall works.

109 In this scenario, the defendant was “the builder”. It had responsibility for the whole of the works for which it had contracted with Multiplex. To fulfil its contractual obligations to Multiplex, the defendant assumed control of the site, including coordination of the whole of the works, compliance with the overall construction programme, hazard identification, safety measures, and engineering specification. Consequently, it was in a position to, and did, direct Moltoni as to what had to be done, when it had to be done and where it had to be done. But the defendant did not have the power or authority to control or direct how Moltoni carried out its demolition work. Moltoni was engaged as a skilled demolition contractor, with experience in wharf demolition. Its task was to use that skill and experience to carry out a portion of the overall works for which the defendant was responsible.

110 In the context I have outlined, Mr Moltoni’s evidence of his understanding of the relationship between Moltoni and the defendant is compelling. He understood that Moltoni was required to comply with instructions as to what work to do, when to do it and where it was to be done; but the defendant had no power to direct Moltoni as to the manner in which the work should be carried out. He illustrated this in a telling manner – by laying his glasses case on the ledge of the witness box, and stating that, if directed to move it, it was his choice alone whether it was moved by pushing it away or by lifting it up. But Mr Moltoni was not alone in this understanding of the relationship between the defendant and Moltoni. It was corroborated by Mr Blair, and it was also reflected by Mr Mion when he outlined the tasks for which he was responsible.

111 Thus, Moltoni alone decided how to lift the bearers and headstocks, whether to use a chain or a grapple, how to lift the concrete strips and where to position its machines whilst carrying out its work.

112 Safety was a critical component of all works on the site, whether carried out by Multiplex, or by the defendant, or by any of the defendant’s subcontractors. Instructions about safety measures and precautions could be given by anyone to anyone, and they could extend to the manner in which particular work was carried out. Mr Moltoni, Mr Blair, Mr Petracca, Mr Mion, Mr Fadel and Mr Stewart all gave evidence to this effect.

113 And it is in the safety context that the provision of work method statements must be understood. The Moltoni subcontract explicitly provided that they were to be furnished in a safety context to meet the goal of zero accidents. The work method statement furnished by Moltoni to the defendant, and incorporated with additions into the work method statement furnished by the defendant to Multiplex, cannot be regarded, as I have earlier found, as a set of directions and instructions from the defendant to Moltoni.

114 There were two instances where the defendant appears to have exercised a power to direct Moltoni in a course of action, but, on close examination, neither of them could be so categorised. The first concerned the wetting down of areas before cutting and the second was the direction from Mr Petracca to Mr Manihera to “continue the work”. These matters have to be understood in the context of the defendant’s overall responsibility for safety and coordination. The first was a safety measure. There is no direct evidence that the defendant actually directed Moltoni to wet down areas before cutting, but it may be inferred that the defendant was in a position to give that direction. It was not, however, a direction as to how Moltoni should carry out its demolition work; it was, rather, a safety instruction, in the same manner as a requirement for personnel to wear buoyancy vests while working on site. Secondly, the direction given by Mr Petracca to Mr Manihera related to safety and co-ordination. It was given in the context that Mr Manihera was uncertain what to do having come across the pipe. It was a direction that fell within the power of the defendant to tell Moltoni what to do and where to do it; but it did not amount to a direction to Moltoni as to how to carry out its demolition tasks.

115 There was evidence of one single instance in which the defendant issued directions to Moltoni about the manner of the latter’s work. That concerned deck penetrations. Initially, Moltoni carried out this work by using a rock breaker. This did not fit in with the defendant’s responsibilities for co-ordination and safety, that is, it did not meet the piling contractor’s requirements and the need to avoid spall going in to the water. Hence Mr Beveridge asked Mr Moltoni to change the method from rock breaker to cutting and lifting strips of concrete. Mr Moltoni refused to carry out the cutting of the concrete, but he did agree to lift it out. Consequently, Moltoni’s task changed.

116 I have found that, in matters of safety, every operator on the site, from Multiplex to the defendant, to Moltoni and other subcontractors, had responsibilities and could be directed as to how they went about their work in the interests of safety. I have also found one incident where the defendant actually directed Moltoni to change its manner of work (that is, cutting and lifting strips of concrete instead of using a rock breaker). But these findings are limited. The first related only to safety, and the second was a single, isolated instance. It is, however, the total relationship that must be considered (Hollis v Vabu at pars 44 – 45). The defendant engaged Moltoni as a skilled operator in a specialised field of work. The principals of Moltoni considered that they alone decided upon the method or manner in which Moltoni would carry out that work. They held that view despite the fact that it was not an express term of the Moltoni subcontract. Furthermore, the site was a “multi-contract” site, with many contractors working on the site at the one time. As the “builder” in such a situation, the defendant had a large scale task of sequencing and coordination. It could, and did, direct what was to be done, where it was to be done, and when it was to be done. It could not, so far as Moltoni was concerned, direct it as to how it was to be done.

117 Having regard to those matters in their totality, I am not satisfied beyond reasonable doubt that the defendant had a power to control or direct the manner in which Moltoni performed the works it had undertaken sufficient to render the defendant vicariously liable for the act or conduct of Moltoni in relation to the pollution incident.

Direct authorisation

118 The prosecutor contended that the direction “continue work” given by Mr Petracca to Mr Manihera mounted to direct authorisation of the conduct which caused the pollution event.

119 The pollution event involved the bearer (as it was being lifted by the chain attached to the excavator) sliding along the headstock and it hitting the pipe, thus causing a section of the pipe to fall into the water and to discharge its contents. The direction to “continue work” was not a direct authorisation of the pollution event. The “work” at the relevant time was the removal of the headstocks and bearers, it was not the removal of the pipe. The “work” did not lead by physical necessity to the pollution event (Stoneman v Lyons), nor was the “work” something which necessarily involved the pollution event (Darling Harbour) nor was the pollution event a consequence of the “work” (Kondis). No doubt there may have been a risk that the bearer might hit the pipe, since the bearer was able to slide on the chain and the “work” was being carried out in proximity to the pipe. But the cases which I have cited require, as I respectfully understand them, more than a mere risk that the consequent event would occur – it needs to occur as a necessary result of the authorised conduct.

120 I am not satisfied beyond reasonable doubt that the direction “continue work” amounted to direct authorisation of the conduct which caused the pollution event.

Conclusion

121 I am not satisfied, according to the criminal standard of proof, that the defendant is guilty of the offence with which it is charged. It should, accordingly, be acquitted.

122 This conclusion makes it unnecessary to for me to deal with the two other matters raised by the defendant in its defence (see par 16), namely, the question of “three-tier” vicarious liability and honest and reasonable mistake of fact.

123 However, before making formal orders, I propose to allow the prosecutor some time to consider its position. I stand the matter over for 14 days, that is to 9.30 am on 14 April 2003, for mention or for the making of formal orders.

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Citations

Environment Protection Authority v McConnell Dowell Constructors (Aust) Pty Ltd [2003] NSWLEC 70

Most Recent Citation

Environment Protection Authority v McConnell Dowell Constructors (Aust) Pty Ltd [2003] NSWLEC 156

Cases Citing This Decision

9

Chia v Ku-ring-gai Council [2021] NSWCCA 189

Walker Corporation Pty Ltd v Director-General, Department of Environment, Climate Change and Water [2012] NSWCCA 210

Manly Council v Leech [2015] NSWLEC 149

Cases Cited

11

Statutory Material Cited

1

Environment Protection Authority v Norco Co-Operative Limited [2000] NSWLEC 35

Environment Protection Authority v Multiplex Constructions Pty Ltd [2000] NSWLEC 6

Hollis v Vabu Pty Ltd [2001] HCA 44

CITATION:	Environment Protection Authority v McConnell Dowell Constructors (Aust) Pty Ltd [2003] NSWLEC 70
PARTIES:	PROSECUTOR Environment Protection Authority DEFENDANT McConnell Dowell Constructors (Aust) Pty Ltd
FILE NUMBER(S):	50009 of 1999
CORAM:	Pearlman J
KEY ISSUES:	Environmental Offences :- pollution - waters - vicarious liability - independent contractor - power of control - direct authorisation
LEGISLATION CITED:	Clean Waters Act 1970 s 16(1)
CASES CITED:	Australian Iron & Steel Pty Ltd v Environment Protection Authority (1992) 29 NSWLR 497; Christmas v Nicol Bros Pty Ltd (1941) 41 SR 317; Darling Island Stevedoring and Lighterage Company Ltd v Long (1957) 97 CLR 36; Environment Protection Authority v Multiplex Constructions Pty Ltd (2000) 112 LGERA 1; Environment Protection Authority v Munters Pty Ltd (1998) 98 LGERA 279; Environment Protection Authority v Norco Co-operative Ltd [2000] NSWLEC 35; Environment Protection Authority v Snowy Mountains Engineering Corporation Ltd (1994) 83 LGERA 51; Environment Protection Authority v Taylor Woodrow (Australia) Pty Ltd (1997) 101 LGERA 226; Ex parte Falstein; Re Maher and Anor (1948) 49 SR 133; Hollis v Vabu Pty Ltd (2001) 207 CLR 21; Kondis v State Transport Authority (1984) 154 CLR 672; McConnell Dowell Constructors (Aust) Pty Ltd v Environment Protection Authority (2000) 50 NSWLR 127; Scott and Ors v Davis (2000) 204 CLR 333; State Pollution Control Commission v Australian Iron and Steel Ltd (1992) 74 LGRA 387; Stoneman v Lyons (1975) 133 CLR 550; Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715; Torette House Pty Ltd v Berkman (1939-1940) 62 CLR 637
DATES OF HEARING:	04/11/2002; 05/11/2002; 06/11/2002; 07/11/2002; 08/11/2002; 11/11/2002; 12/11/2002; 13/11/2002; 14/11/2002; 19/11/2002; 20/11/2002; 21/11/2002; 22/11/2002; 26/11/2002; 27/11/2002; 29/11/2002; 06/12/2002
DATE OF JUDGMENT:	03/31/2003
LEGAL REPRESENTATIVES:	PROSECUTOR Mr D A Buchanan SC with Mrs J C Kelly (Barrister) SOLICITORS Environment Protection Authority DEFENDANT Mr J L Glissan QC with Mr G B Newport (Barrister) SOLICITORS Doyles