Environment Protection Authority v Multiplex Constructions Pty Ltd
[2000] NSWLEC 6
•03/24/2000
Land and Environment Court
of New South Wales
CITATION: Environment Protection Authority v Multiplex Constructions Pty Ltd (ACN 008 687 063) [2000] NSWLEC 6 PARTIES: PROSECUTOR:
Environment Protection Authority
DEFENDANT:
Multiplex Constructions Pty LtdFILE NUMBER(S): 50010 of 1999 CORAM: Lloyd J KEY ISSUES: Construction & Interpretation - Environmental Offences :- criminal offence - oil spill by employee of sub-subcontractor to defendant - whether defendant caused pollution - whether control by defendant - vicarious liability - whether defendant had non-delegable duty.
Construction & Interpretation:- "causes"
"cause"
"caused".LEGISLATION CITED: Clean Waters Act 1970, s 16(1), (2)
Interpretation Act 1987, s 30(1)
Occupational Health & Safety Act 1993
Protection of the Environment Operations [Savings & Transitional] Regulations 1988 cl 17(1)CASES CITED: Adelaide Corporation v Australasian Performing Rights Association (1928) 40 CLR 481;
Alphacell Ltd v Woodward [1972] AC 824;
Attorney-General v Geothermal Produce NZ Ltd [1987] 2 NZLR 348;
Australian Iron & Steel Pty Ltd v Environment Protection Authority (1992) 29 NSWLR 497 CCA;
Bartonshill Coal Co v McGuire (1858) 3 Macq 300;
Bathurst City Council v Environment Protection Authority (1995) 89 LGERA 79;
Boral Roof Tiles Ltd v O’Brien (Court of Appeal, 15 December 1994, unreported);
Broad v Parish (1941) 64 CLR 588;
Brownlie v State Pollution Control Commission (1992) 27 NSW 78;
Burnie Ports Authority v General Jones Pty Ltd (1994) 179 CLR 520;
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41;
D & F Estates & Ors v Church Commissioners for England & Ors [1989] 1 AC 177;
Dalton v Angus Co (1881) 6 App Cas 740;
Darling Island Stevedoring & Lighterage Co Ltd v Long (1957) 97CLR 36;
Davie v New Merton Board Mills Ltd [1959] AC 604;
Dorset Yacht Co Ltd v Home Office [1970] AC 1004;
Environment Agency v Empress Car Co (Abertillery) Ltd [1998] 2 WLR 35; [1998] AllER 481 HL;
Environment Protection Authority v Munters Pty Ltd (1998) 98 LGERA 279;
Environment Protection Authority v Snowy Mountains Engineering Corporation Ltd (1994) 83 LGERA 51;
Gibb v Federal Commissioner of Taxation (1956) 118 CLR 628;
Hetherington v Mirvac Pty Ltd [1999] NSWSC 443;
Honeywill & Stein Ltd v Larkin Brothers Ltd [1934] 1 KB 191; [1933] AllER 77;
Humberstone v Northern Timber Mills (1949) 79 CLR 389;
Karatzidis v Victorian Railways Commissioner [1971] VR 360;
Kondis v State Transport Authority (1984) 154 CLR 652;
Lomas v Peek [1947] 2 AllER 574;
Louinder v Stuckey [1984] 2 NSWLR 354;
Majury v Sunbeam Corporation Ltd (1974) 1 NSWLR 659;
May v O’Sullivan (1955) 92 CLR 654;
Miller v Williams (1990) 53 SASR 82;
Mount Albert Borough Council v Johnson [1979] 2 NZLR 234;
Mousell Bros v London & North Western Railway [1917] 2 KB 836;
Northern Sandblasting Pty Ltd v Harris (1995) 188 CLR 313; (1997) 71 ALJR 1428; 146 ALR 572;
OConnor v Commissioner for Government Transport (1984) 100 CLR 255;
Perl Exporting Ltd v Camden LBC [1984] 154 CLR 652;
R v Winson [1969] 1 QB 371;
Re Newland (1997) 98 A Crim R 455 CCA;
Regina v Lonie & Anor [1999] NSWCCA 319;
Rickard v Smith (1861) 142 ER 535;
Rylands v Fletcher [1866] LR 1 Ex.265;
Smith v Lewis (1945) 70 CLR 256;
State Pollution Control Commission v Taylor Woodrow (Australia) Pty Ltd (1997) 101 LGERA 226;
Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16;
Stoneman v Lyons (1975) 8 ALR 173;
Taylor Woodrow Homes Builders Pty Ltd v Chitarra (Full Court of Supreme Court of Western Australia, 30 December 1994, unreported);
Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715;
Torrette House Pty Ltd v Berkman (1940) 62 CLR 637;
Vabu Pty Ltd v The Commissioner of Taxation (Court of Appeal, 6 September 1996, unreported);
Whitham v Shire of Bright [1959] VR 790;
Wilsons and Clyde Coal Co Ltd v English [1938] AC 57; [1937] 3 AllER 628;
Clean Waters Act 1970 s 16(1),(2);
Environmental Offences & Penalties Act 1989;
Interpretation Act 1987 s 30(1);
Occupational Health & Safety Act 1993;
Protection of the Environment Operations (Savings and Transitional) Regulations 1998 cl 17(1);
Protection of the Environment Operations Act 1997 s 215, Sch 5;
Adelaide Corporation v Australasian Performing Rights Association (1928) 40 CLR 481;
Alphacell Ltd v Woodward [1972] AC 824;
Attorney-General v Geothermal Produce NZ Ltd [1987] 2 NZLR 348;
Australian Iron & Steel Pty Ltd v Environment Protection Authority (1992) 29 NSWLR 497 CCA;
Bartonshill Coal Co v McGuire (1858) 3 Macq 300;
Bathurst City Council v Environment Protection Authority (1995) 89 LGERA 79;
Boral Roof Tiles Ltd v O’Brien (Court of Appeal, 15 December 1994, unreported);
Broad v Parish (1941) 64 CLR 588;
Brownlie v State Pollution Control Commission (1992) 27 NSW 78;
Burnie Ports Authority v General Jones Pty Ltd (1994) 179 CLR 520;
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41;
D & F Estates & Ors v Church Commissioners for England & Ors [1989] 1 AC 177;
Dalton v Angus Co (1881) 6 App Cas 740;
Darling Island Stevedoring & Lighterage Co Ltd v Long (1957) 97CLR 36;
Davie v New Merton Board Mills Ltd [1959] AC 604;
Dorset Yacht Co Ltd v Home Office [1970] AC 1004;
Environment Agency v Empress Car Co (Abertillery) Ltd [1998] 2 WLR 35; [1998] AllER 481 HL;
Environment Protection Authority v Munters Pty Ltd (1998) 98 LGERA 279;
Environment Protection Authority v Snowy Mountains Engineering Corporation Ltd (1994) 83 LGERA 51;
Gibb v Federal Commissioner of Taxation (1956) 118 CLR 628;
Hetherington v Mirvac Pty Ltd [1999] NSWSC 443;
Honeywill & Stein Ltd v Larkin Brothers Ltd [1934] 1 KB 191; [1933] AllER 77;
Humberstone v Northern Timber Mills (1949) 79 CLR 389;
Karatzidis v Victorian Railways Commissioner [1971] VR 360;
Kondis v State Transport Authority (1984) 154 CLR 652;
Lomas v Peek [1947] 2 AllER 574;
Louinder v Stuckey [1984] 2 NSWLR 354;
Majury v Sunbeam Corporation Ltd (1974) 1 NSWLR 659;
May v O’Sullivan (1955) 92 CLR 654;
Miller v Williams (1990) 53 SASR 82;
Mount Albert Borough Council v Johnson [1979] 2 NZLR 234;
Mousell Bros v London & North Western Railway [1917] 2 KB 836;
Northern Sandblasting Pty Ltd v Harris (1995) 188 CLR 313; (1997) 71 ALJR 1428; 146 ALR 572;
OConnor v Commissioner for Government Transport (1984) 100 CLR 255;
Perl Exporting Ltd v Camden LBC [1984] 154 CLR 652;
R v Winson [1969] 1 QB 371;
Re Newland (1997) 98 A Crim R 455 CCA;
Regina v Lonie & Anor [1999] NSWCCA 319;
Rickard v Smith (1861) 142 ER 535;
Rylands v Fletcher [1866] LR 1 Ex.265;
Smith v Lewis (1945) 70 CLR 256;
State Pollution Control Commission v Taylor Woodrow (Australia) Pty Ltd (1997) 101 LGERA 226;
Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16;
Stoneman v Lyons (1975) 8 ALR 173;
Taylor Woodrow Homes Builders Pty Ltd v Chitarra (Full Court of Supreme Court of Western Australia, 30 December 1994, unreported);
Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715;
Torrette House Pty Ltd v Berkman (1940) 62 CLR 637;
Vabu Pty Ltd v The Commissioner of Taxation (Court of Appeal, 6 September 1996, unreported);
Whitham v Shire of Bright [1959] VR 790;
Wilsons and Clyde Coal Co Ltd v English [1938] AC 57; [1937] 3 AllER 628;
Chin B, Losing Control: The difference between employees and independent contractors after Vabu v Commissioner of Taxation (1996) 34 Law Society Journal (No 10), p 52.;
Kirby J, On the writing of judgements, 64 ALJ 691.DATES OF HEARING: 27/10/99; 28/10/99; 08/11/99; 10/11/99; 12/11/99; 15/11/99; 16/11/99; 17/11/99; 18/11/99; 19/11/99; 22/11/99; 23/11/99; 24/11/99; 25/11/99; 26/11/99; 29/11/99; 30/11/99; 01/12/99; 02/12/99; 07/12/99; 08/12/99; 09/12/99; 10/12/99; 13/12/99; 14/12/99; 15/12/99; 16/12/99 DATE OF JUDGMENT:
03/24/2000LEGAL REPRESENTATIVES: DEFENDANT:
PROSECUTOR:
J C Kelly (barrister)
AND
T Howard (barrister)
SOLICITORS:
S. Garrett
I S Lloyd QC
AND
M H Baird (barrister)
SOLICITORS:
Minter Ellison
JUDGMENT:
Contents
Paragraph
Introduction 1
The charge 14
A preliminary question of jurisdiction 19
The early works agreement 23
The design and construct contract 33
The sub-subcontract between the defendant and McConnell Dowell 42
The sub-contract between McConnell Dowell and Moltoni 79
Consideration of the contractual milieu
The early works agreement between Wharf Developments
Pty Ltd and the defendant 80
The design and construct contract (between Wharf Developments
Pty Ltd and the defendant) 90
The sub-subcontract between McConnell Dowell and Moltoni 110The subcontract between McConnell Dowell and the defendant 98
The defendant’s knowledge of the pipeline and its contents 111
The amount of the spill 122
Evidence allegedly demonstrating control by the defendant 127
Consideration of the abovementioned evidence 182
Other documentary evidence 192
The prosecutor’s submissions 207
The defendant’s submissions 216
Consideration of the issues 229
Issue (1): Did the defendant pollute the waters of Woolloomooloo
Bay or place, cause or permit the pollutant to be placed in a
position where it fell or was likely to fall into those waters. 230Issue (2): Vicarious Liability 274
Other issues 313Issue (3): a non-delegable duty 293
Conclusion 317
ENVIRONMENT COURT Coram: Lloyd J
OF NEW SOUTH WALES Decision date: 24/03/00
Environment Protection Authority
Applicant
v
Multiplex Constructions Pty Ltd (ACN 008 687 063)
Respondent
JUDGMENT
HIS HONOUR:
Introduction
1. In 1941 the Royal Australian Navy constructed two large underground marine fuel oil bunkers on the eastern side of the Domain adjoining Lincoln Crescent, on the western side of Woolloomooloo Bay. The bunkers were large, each having a capacity of about 4,000,000 gallons (US) and constructed so as to be bomb-proof, with massive reinforced concrete walls and a substantial reinforced concrete roof supported by a large number of steel columns. The top of the roof was covered with turf.
2. The Domain bunkers were used for the fleet base at Garden Island. There was a pumping station in Lincoln Crescent next to the bunkers and a fuel oil pipe line was laid from the pumping station under Lincoln Crescent and around the shore of Woolloomooloo Bay to the fleet base. A branch pipe line was constructed under the Finger Wharf in Woolloomooloo Bay, with further sub-branches to wharves 6 and 7 (on the eastern side of the Finger Wharf) and wharves 8 and 9 (on the western side of the Finger Wharf).
3. In 1993 the State Government decided to allow an exclusive private development of the Finger Wharf, together with wharf 11 (which lies between Lincoln Crescent and the bay). It did so by way of a development agreement dated 24 August 1993 made between the Maritime Services Board of New South Wales (as it was then called) in its capacity as landowner and a developer, Wedderlight-Delmo Pty Ltd. By the development agreement the Maritime Services Board granted to the developer the exclusive right to develop and manage the re-development of both wharf 11 and the Finger Wharf into a mix of residential units, shops and a hotel, together with an associated marina. The agreement provides for the strata subdivision of the completed project and leases of the separate lots and common property for a term of 99 years from the lease commencement date.
4. The decision of the State Government to lease the public waters of Woolloomooloo Bay for an exclusive private development is somewhat surprising. (The exclusive nature of the development is illustrated by the recent sale of one unit at the end of the Finger Wharf for, I understand, $9,000,000.) The redevelopment involved replacing almost every stick of timber in the Finger Wharf. In particular, it involved the replacement of the existing timber piles and headstocks (or bearers) upon which stood the structure of the wharf.
5. As a result of a novation agreement dated 15 December 1994, a change of company name and the enactment of the Ports Corporation and Waterways Management Act 1995, the parties to the development agreement became the Marine Ministerial Holding Corporation in lieu of the Maritime Services Board (as owner of the area to be developed at Woolloomooloo Bay) and relevantly the Wharf at Woolloomooloo Pty Ltd in lieu of Wedderlight-Delmo Pty Ltd.
6. The Wharf at Woolloomooloo Pty Ltd is a company in which Walker Corporation Ltd owns 50% of the shares and Masklyon Pty Ltd, a company controlled by Multiplex Constructions Pty Ltd (“the defendant”), owns the remaining 50% of the shares. The development is in essence a joint venture between Walker Corporation Ltd and the defendant.
7. By an agreement dated 31 October 1997, which is not in evidence, the Wharf at Woolloomooloo Pty Ltd engaged Wharf Developments Pty Ltd to design, construct and complete the works which are the subject of the development agreement.
8. Wharf Developments Pty Ltd as principal entered into two agreements with the defendant as contractor. The first agreement was for services diversion and early work (“the early works agreement”). The early works agreement which was tendered in evidence is undated, but it provides that the contractor shall commence the works on 19 May 1997.
9. The second agreement, which was also tendered in evidence, is also undated but appears to have been made on or about 31 October 1997 (“the design and construct contract”). Under the design and construct contract the principal engaged the contractor to design, construct and complete the works to satisfy the obligations of the principal to the Wharf at Woolloomooloo Pty Ltd. The relationship between the early works agreement and the design and construct contract is explained by clause 65 of the latter:
The parties agree that the Contract applies retrospectively to all work undertaken by the Contractor which is work under the Contract and applies whether the work was undertaken (or should have been undertaken) prior to or after the date of this Contract.
....
The parties acknowledge that:
(a) by letter dated 29 August 1997 they entered into an agreement for the performance by the Contractor of certain early works, including service diversions (“the Early Works”);
(b) the Early Works form part of the work under the Contract to be performed by the Contractor in accordance with the terms of the Contract;
(c) the agreement between the parties for the Early Works is determined at the date of this contract and the parties shall have no further rights, entitlements, liabilities or obligations under that agreement (including accrued rights or liabilities) and the rights, entitlements, liabilities and obligations of the parties with respect to the Early Works are from the date of the Contract governed exclusively by the Contract; ...
10. A subcontract agreement dated 5 December 1997 was made between the defendant as contractor and McConnell Dowell Constructors (Australia) Pty Ltd (“McConnell Dowell”) as subcontractor. The subcontract agreement describes the following works to be performed by McConnell Dowell under the heading “ Description of works ”:
Provide labour, materials and equipment so as to replace and modify the wharf at Woolloomooloo sub-structure including but not limited to demolition, construction and reinstatement of existing piles, apron structure, pool piles, plant room, roadway restoration and the like all in accordance with performance specification drawing and contract documents.
11. Although the subcontract agreement is dated 5 December 1997, it was signed on 12 December 1997 and the date for its commencement is stated as being 3 November 1997. By clause 36 thereof the subcontract applies retrospectively to all work undertaken by McConnell Dowell, being work under the subcontract, whether undertaken prior to or after the date of the subcontract.
12. McConnell Dowell entered into what might be described as a sub-subcontract with a demolition contractor, Moltoni Corporation Pty Ltd (“Moltoni”) for the demolition and disposal of the Finger Wharf deck, the supporting headstocks and girders and the underdeck piping. Moltoni was also to dispose of the timber piles after they had been extracted by others. This sub-subcontract was entered into as a result of conversations and correspondence which took place between Mr Craig Beveridge of McConnell Dowell and Mr R C Moltoni of Moltoni between June 1997 and 7 November 1997.
13. On 25 February 1998 Mr C Manihera, a workman employed by Moltoni, was operating a demolition excavator on the Finger Wharf to remove headstocks and bearers. In the course of removing a headstock, a section of the pipe under the wharf was knocked and then fell into the water. The pipe contained oil, which also spilled into the water. The quantity of oil which spilled into the water has been variously estimated at between 30,000 and 90,000 litres. For reasons to which I later refer, I find that the quantity of oil that went into the water was probably about 40,000 litres.
The Charge
14. The defendant is charged with an offence against the Environmental Offences & Penalties Act 1989 in that it did pollute waters contrary to s 16(1) of the Clean Waters Act 1970. The defendant admits that there was an act of pollution of the waters of Woolloomooloo Bay. The defendant denies, however, that it polluted the waters. The defendant denies liability for the act of an employee of a sub-subcontractor to a subcontractor. This is the first case of which I am aware in which a criminal charge has been brought against a defendant which is three entities removed from the act itself. None of the many authorities cited by counsel are cases in which liability has been found to exist in circumstances such as this.
15. I set out s 16 of the Clean Waters Act so far as is relevant. The deeming provision in subsection (2) of s 16 is also relied upon by the prosecutor:
Prohibition of pollution of waters
(2) Without limiting the generality of subsection (1), a person shall be deemed to pollute waters if:16.(1) A person shall not pollute any waters.
(a) the person places any matter (whether solid, liquid, or gaseous) in a position where:
and the matter would, had it been placed in any waters have polluted or have been likely to pollute those waters.
(i) it falls, descends, is washed, is blown or percolates; or
into any waters, on to the dry bed of any waters, or into any drain, channel or gutter used or designed to receive or pass rainwater, floodwater or any water that is not polluted, or causes or permits any such matter to be placed on such a dry bed in such a drain, channel or gutter,(ii) it is likely to fall, descend, be washed, be blown or percolate,
...
(7) Any person who contravenes the provisions of this section is guilty of an offence against the Environmental Offences and Penalties Act 1989.
16. The prosecutor identified five issues, any one of which, it is submitted, if resolved beyond a reasonable doubt in favour of the prosecutor makes the defendant guilty of the offence. The five issues, as I understand them, which the prosecutor submits are each satisfied are as follows:
(i) The defendant was directly responsible for the offence by reason of the control exercised by it over the works which were being carried out on the wharf. Such control was exercised with the knowledge that the defendant had of the existence of the pipeline and of the fact that it contained oil.
(ii) The defendant was the occupier of the wharf and hence the pollutant was under the control of and in the possession of the defendant, so that when the pollutant got into the water it did so as a direct result of where it is. That is to say, it was the act of the defendant which placed the pollutant in the water. The prosecutor relies in support of this issue on Majury v Sunbeam Corporation Ltd (1974) 1 NSWLR 659.
(iii) The defendant is vicariously liable for the acts and omissions of McConnell Dowell and/or Moltoni and of Moltoni’s employee, Mr Manihera.
(v) The defendant was under a non-delegable duty of care to ensure that there was no pollution of the waters of Woolloomooloo Bay from pollutant in the pipe line. On this issue the prosecutor relies, in particular, on Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520.(iv) The deeming provision, subsection (2) of s 16, makes the defendant directly liable: the defendant either caused or permitted the pollutant to be placed in a position where it fell or descended, or was likely to fall or descend, into the water.
17. It is apparent that there is some overlapping of these issues. There is also some overlapping of the evidence which relates to each issue.
18. The prosecutor concedes that no single piece of evidence adduced in this case is sufficient to establish the guilt of the defendant. The prosecutor relies upon the cumulative effect of the whole of the evidence to establish the guilt of the defendant. This includes an examination of the various contractual documents (to which I have briefly referred); other documentary material evidencing the respective roles of and arrangements between the various parties involved in the project; further documentary material which is said to evidence the control exercised by the defendant over the works; and the general conduct of the defendant both before and after the spill on 25 February 1998. The evidence is voluminous, as might be expected in a case which occupied some six weeks of hearing time. In addition to the substantial documentary evidence, there is some 1350 pages of transcript, 12 substantial affidavits, together with detailed written submissions (particularly by the defendant) and the citing by counsel of some several dozen authorities.
A preliminary question of jurisdiction
19. The Clean waters Act 1970 and the Environmental Offences and Penalties Act 1989 were repealed on 1 July 1999. However, liability for offences committed under legislation which is subsequently repealed continues: s 30(1) Interpretation Act 1987.
20. The Court has jurisdiction under the Protection of the Environment Operations Act 1997 (Chapter 8, s 215) to deal with offences against that Act. Schedule 5 of the Act (specifically clause 10) enables regulations to be made to extend Chapter 8 (with modifications, if any) to proceedings in connection with any repealed Act or Regulation (in respect of offences committed against the Act or Regulation before its repeal or in respect of any other matter that continues to have any force or effect); and those Regulations may also make provision for the continued operation of any such repealed Act or Regulation to those proceedings.
21. Clause 17(1) of the Protection of the Environment Operations (Savings and Transitional) Regulation 1998 extends Parts 8.2 and 8.4 of the Act (which includes s 215) to proceedings in connection with a repealed Act in respect of offences committed against a repealed Act before its repeal. This provision applies whether the proceedings were pending on the commencement of the Act (as is the present case) or whether the proceedings are instituted after that commencement. Clause 17(2) effects such modifications as are necessary for the purpose of applying those Parts to any such proceedings.
22. Thus, not only does liability for offences committed under the repealed legislation continue, but the Court continues to have jurisdiction to deal with such offences.
The early works agreement
23. This agreement was not in force at the time of the offence. It had been replaced and superseded by the design and construct contract between Wharf Developments Pty Ltd and the defendant. I was thus inclined to the view that the early works agreement is of no relevance. The prosecutor, however, relies upon it as evidencing the control which the principal authorised the defendant to exercise over the activities on the Finger Wharf and as evidencing a continuous course of conduct by the defendant by which it exercised such control. Having regard to clause 65 of the design and construct contract (to which I have referred in paragraph 9 above) and to the purpose for which the prosecutor relies upon the early works agreement, I accept that the agreement may have some marginal relevance.
24. The agreement describes the works as “ services diversion and early works as defined in the scope of works (Annexure “A”)” . Annexure “A” to the agreement and which is headed “Scope of Works” states ( inter alia ):
The Services Diversion package as described herein shall be limited to sewer diversion, stormwater diversion, electrical diversion and Telstra diversion.
The Early Works Package as described herein, shall be limited to wharf 11 bulk and detail excavation, wharf 11 dewatering, piling, brick retaining walls and demolition, in addition the early works package shall be deemed to include Asbestos and Hazardous Material removal from the existing Finger Wharf.
25. Clause 1.0 of the Scope of Works document is headed “ Services Diversion ”. The clause then states:
Simply stated, the diversions will re-route existing stormwater, sewer, Telstra and Energy Australia (33KV) around the site following the direction of Lincoln Crescent and Cowper Wharf Road.
26. Clause 2.6 of the Scope of Works document is headed “ Asbestos and Hazardous Materials Finger Wharf ”. The clause then states:
Generally in accordance with hazardous materials report prepared by New Environment, and date 21 May 1997, remove all hazardous material from finger wharf including, but not limited to asbestos, PCB and the like.
2.6.1 Prepare method statements and authority approvals including, but not limited to EPA and WorkCover Authority.
2.6.2 Isolate site and prepare materials including, scaffolds, decontamination centres and the prior to commencement on site.
2.6.3 Remove from site in an approved manner any hazardous material generally in accordance with hazardous materials.
2.6.4 Provide all data sheets including locations and signed transfer sheets from locations, all materials are transferred to.
2.6.5 Prior to disestablishment allow New Environment to inspect site and remove remaining hazardous material.
2.6.6 Obtain certification from New Environment that all hazardous material has been removed from site.
2.6.7 Disestablish site and obtain certification from EPA and WorkCover Authority of site decontamination.
27. The reference in clause 2.6 to the report prepared by New Environment is a reference to a report headed “ Hazardous Materials Survey Report ” prepared by New Environment Management and Technology Pty Ltd dated 21 May 1997. There is no mention in that report of oil or oil residues in any pipeline.
28. Clause 2(c) of the Special Clauses of the agreement provides:
(c) In addition to complying with all relevant requirements of the Pollution Control Legislation in respect of the Works, [the defendant] must:
(i) ensure that all practical measures are taken to prevent the processes plant and equipment used in carrying out the Works from causing directly or indirectly any adverse affect or alteration of the environment;
...
(iii) provide appropriate training and information to personnel to assist them in understanding and carrying out their responsibilities under the Pollution Control Legislation;
...
(vi) establish a proper system (“System”) to ensure compliance with all Pollution Control Legislation by the Proprietor and its agents and subcontractors during the course of the Works and ensure that this is adequately supervised;
(vii) review and monitor procedures under the System to ensure that it is operating effectively and complies with the Pollution Control Legislation.
...
29. Clause 4 of the Special Clauses is headed “ Clean-up ” and provides as follows:
If any damage or pollution of the environment occurs which are caused by the Works[ the defendant] must at the cost of the Proprietor (except if caused by a breach of the [defendant]):
(a) rectify the damage or pollution and undertake any clean-up operations necessary to restore the damaged or polluted area so as to comply with all Pollution Control Legislation; and
(b) pay any fine or damages levied under the Pollution Control Legislation or determined by any Governmental Agency.
30. Clause 6 of the Special Clauses is headed “ Removal of Rubble etc ” and provides as follows:
[The defendant] must clear away and remove all waste materials and rubble arising from the Works and will ensure that no waste materials, rubble, rubbish, oil, spirits or inflammable fluids are discharged into or allowed to flow into or are deposited into Woolloomooloo Bay from, or onto any land joining, the Development Area.
31. It is convenient if I now set out my conclusions on the effect of the early works agreement. It is to be noted that there is no mention in clause 1.0 of the scope of works document of the diversion or re-routing of any oil pipeline. Next, clause 2.6 of the Scope of Works document requires the removal of hazardous materials from the Finger Wharf “ generally in accordance with the hazardous materials report prepared by New Environment, and date 21 May 1997 ” ... . Since there is no reference in that report to oil or oil residues in any pipeline there is no requirement, in my opinion, under clause 2.6 for the defendant to remove oil or oil residues from any pipeline in accordance with the hazardous material report.
32. Clauses 2(c), 4 and 6 of the Special Clauses refer to obligations of the defendant in respect of, caused by, or arising out of “ the works ”. The works are relevantly those described in the Scope of Works document. Those works are certain specified services diversion, which do not include any work relating to the oil pipeline, and the removal of hazardous materials under clause 2.6 in accordance with the hazardous materials report prepared by New Environment, which report contains no reference to the removal of oil or oil residues in any pipeline. I am not at all satisfied, and am certainly not satisfied beyond a reasonable doubt, that these clauses relate to other than such work as specified in the Scope of Works document. That is to say, I am not satisfied that they impose upon the defendant any contractual obligation or responsibility for anything outside the Scope of Works, such as responsibility for oil or oil residues in the pipeline. The reference in clause 6 of the Special Clauses to oil, spirits or inflammable fluids is, I think, a reference to oil, spirits or inflammable fluids arising from the works, such as spills from or arising from the use of machinery employed in and about the works. Contrary to the prosecutor’s submission, I do not therefore regard the early works contract as having the relevance which the prosecutor suggests that it has. If it has any evidentiary value at all, it is exculpatory of the defendant.
The design and construct contract
33. I have briefly referred to this contract in paragraph 9 above. Clause 9 allows the contractor, with the agreement of the principal, to assign or subcontract the whole or any part of the work under the contract. Clause 9.3, a clause upon which the prosecutor relies, provides:
Agreement of tenderers, any review of the scope of works and selection of subcontractors under this clause 9 shall not relieve the contractor from any liability or obligation under the contract. Except where the contract otherwise provides, the contractor shall be liable to the principal for the acts and omissions of subcontractors and employees and agents of subcontractors as if they were acts or omissions of the contractor.
34. Clause 12.1 provides that the contractor accepts total responsibility for and assumes the risk of the conditions of and relating to the site, including but not limited to physical conditions on the site or its surroundings, the existing building and “ hazardous chemicals, substances or other material (including but not limited to asbestos ”. Clause 12.4 provides:
The contractor, prior to the date of the contract, was required to fully investigate the site and actual and potential site conditions. The contractor warrants that it has carried out this investigation and that the site and the existing building and other improvements on the site are suitable for the execution of the work under the contract.
35. Under clause 27.1, the principal gave to the contractor access to and possession of the site. Clause 27.2 provides that the principal, the Marine Ministerial Holding Corporation and the mortgagee bank and any of their agents and employees are able to have access to the site for any purpose, after giving reasonable notice to the contractor. Clause 27.2 also provides that the contractor shall permit the execution of work on site by persons engaged by the principal and shall co-operate with them and co-ordinate the contractor’s work with their work.
36. Under clause 4.1(e) the contractor undertook and warranted to the principal that it would execute and complete the work so that the works, when completed, would comply with all legislative requirements. The term “legislative requirements” is defined in clause 2 as including:
(a) Acts, Ordinances, regulations, by-laws, orders, awards and proclamations of the Commonwealth and the State or Territory in which the work under the Contract or any part thereof is being carried out;
(b) the Building Code of Australia;
(c) certificates, licences, consents, permits, approvals and requirements of organisations having jurisdiction in connection with the carrying out of the work under the Contract; and
(d) fees and charges payable in connection with the foregoing.
37. Clause 14.1 requires the contractor to satisfy all legislative requirements and, in so doing, to obtain all necessary development and building approvals required in order to complete the work under the contract. Clause 15 requires the contractor to provide all things and take all necessary measures to protect people and property, avoid unnecessary interference with the passage of people and vehicles and prevent nuisance and unreasonable noise and disturbance. Clause 15 also provides:
The contractor must indemnify the principal for and against all claims, demands, proceedings, damages, costs and expenses whatsoever connected with noise, disturbance, or pollution arising out of the execution of the works.
38. Under clause 16.1 the contractor is responsible for the care of the whole of the work under the contract (including the existing building) from the date of commencement of the work under the contract to 4 pm on the date of the issue of practical completion. Under clause 16.2 the contractor is responsible for the reinstatement or rectification of any loss or damage which occurs to the work under the contract so that such work conforms in every respect to the provisions of the contract. Under clause 17.1 the contractor must indemnify the principal against (a) loss of or damages to property of the principal, including existing property in or upon which the work under the contract is being carried out; and (b) claims by any person against the principal in respect of personal injury or death or loss of or damage to any property, arising out of or as a consequence of the carrying out by the contractor or its agents, sub-contractors or employees of the work under the contract.
39. Clause 25 requires the contractor to personally superintend the execution of the work under the contract or, at all times when work under the contract is taking place, to have a competent representative present on the site. (Pursuant to this clause the contractor appointed a representative on the site, Mr A Scionti.)
40. Clause 38 requires the contractor to keep the site and work clean and tidy and to regularly remove rubbish and surplus material. Clause 39 provides that if urgent action is necessary to protect the work under the contract or other property or people and the contractor fails to take the action, the representative of the principal may take the necessary action at the contractor’s cost.
41. Clause 50(a) provides that the contractor shall procure that “ all waste materials and rubble arising from the Works is cleared away and removed from the Site and no waste materials, rubble, rubbish, oil, spirits or inflammable fluids are discharged into or allowed to flow into or are deposited into Woolloomooloo Bay from, or onto any land adjoining the Site .
The subcontract between the defendant and McConnell Dowell
42. I have set out (in paragraph 10 above) the description of the works. One of the contract documents forming part of the subcontract is headed “Specification and Scope of Works for Piling, Substructure and Substructure Remedial Works” prepared for the Wharf at Woolloomooloo Pty Ltd by Robert Bird and Partners Pty Ltd and dated June 1997. An addendum to the Specification, based on a meeting between the contractor and the subcontractor on 30 October 1997 describes the scope of work as follows:
The subcontractor shall provide all labour, materials and equipment and all things necessary, so as to replace and rectify Woolloomooloo Finger Wharf sub-structure including but not limited to the demolition, construction and reinstatement of existing piles and apron structure, plant room, pool piles and structural concrete slab, structural connections, underpinning, piles protection, miscellaneous and ancillary items and the like so as to compete [sic] a fully fit for purpose sub-structure all in accordance with performance specifications, drawings and subcontract agreement.
The same document continues:
The subcontractor acknowledges that it accepts all risks associated with but not limited to:
(a) Design and construction of Substructure piling including but not limited to existing timber piles.
(b) Construction and design development of apron slabs and decking as designed and specified by Robert Bird and Associates.
(c) Design and construction of structural and non-structural connections.
(d) Construction and Design development of Wharf 6 Heritage Wharf.
43. The same document contains the following statement ( inter alia ):
The subcontractor shall be responsible for any obstructions encountered in completing the works including but not limited to piling works.
44. Clause 2 of the subcontract is headed “ Scope of Contract ”. Clause 2(a) is an acknowledgment that the subcontractor “ has perused and has actual knowledge ” of all contract documents, including the development agreement (to which I have referred in paragraphs 3 and 5 above), the head contract (defined as the contract between the Wharf at Woolloomooloo Pty Ltd and Wharf Developments Pty Ltd) and any additional documents comprising those agreements .
45. Clause 2(b) obliges the subcontractor to “ do all things necessary to enable and ensure performance by the Contractor of its obligations and enjoyment by the Contractor of its rights and advantages under the Development Agreement and the Head Contract .”
46. Under clause 2(c) the subcontractor agrees to indemnify the contractor “ against all losses and liabilities arising from any conduct or omission by the Sub-Contractor which amounts to or results in default by the Contractor under the Development Agreement or the Head Contract .
47. Clause 2(e) states that the Scope of Works “ shall be deemed to include all items of work necessary or convenient for their proper execution and completion and the effective and efficient use and operation of the Principal Works although not specifically called for by the Contract Documents ”. Clause 2(e) also requires the subcontractor to keep the contractor “ informed in writing of all matters it might need to know for its purposes including any relevant time constraints and without limiting the generality of the foregoing, the Sub-Contractor shall do all things appropriate to enable the Contractor to notify and make any claims in respect of delay and/or Variations ” .
48. Clause 3A(f) provides that if the subcontractor has design obligations in relation to the works, it must submit such design documentation to the contractor for approval. The clause then continues:
Neither the Contractor nor its agents or consultants owe a duty to the Sub-Contractor to review anything submitted by the Sub-Contractor for errors, omissions or compliance with the Sub-Contract. No comments, reviews, rejection of or approval by the Contractor, its agents or consultants relieves the Sub-Contractor from, or alters or affects the Sub-Contractor’s obligations under the Sub-Contract or otherwise.
49. Clause 6(a) relevantly provides:
If the Sub-Contractor shall:
...
(ii) fail to proceed with the Works consistently, diligently, expeditiously and in a safe, proper, workmanlike and competent manner to the satisfaction of the Contractor and the [Contractor’s] Representative; or
(iii) refuse or neglect to comply to the satisfaction of the Contractor with any instruction from the Contractor; or
....
THEN the Contractor may give the Sub-Contractor notice in writing specifying the default and if such default shall continue for two (2) days after the receipt of such notice the Contractor may, without prejudice to any other rights and remedies it may have, terminate this Agreement.
50. By clause 7(b) the subcontractor agrees at its own expense “ to comply with all laws and with all requirements of all authorities in any manner relating to the Works or their execution ”; and will not assign, charge or sub-let the contract or any portion thereof without the consent of the contractor.
51. Clause 14 requires the subcontractor to remove all debris and rubbish resulting from the subcontractor’s work “ in accordance with the Contractor’s instruction and to the satisfaction of the Contractor within 24 hours of its creation, failing which the Contractor may cause it to be removed at the cost of the Sub-Contractor ” .
52. Clause 15 provides:
The Sub-Contractor shall attend meetings as required and comply with directions and instructions given by the Contractor’s supervisory staff only, all to the satisfaction of the Contractor.
53. Clause 16 provides that the subcontractor shall not assign or subcontract this agreement without the consent of the contractor being first obtained.
54. Clause 20 provides:
The Sub-Contractor shall be responsible for co-ordinating the execution and the location of the Works and working with all other Sub-Contractors and adequate protection of its equipment, materials, Works and adjoining or affected works for the extended duration of the Principal Works, and shall allow for all time and costs associated with the requirements of this clause.
55. Clause 23 states:
Before arranging deliveries of materials to the Site the Sub-Contractor must advise the Site personnel sufficient time in advance so that delivery time can be allocated.
56. Clause 24 provides:
The Sub-Contractor accepts all responsibility for and assumes all risk of and associated with conditions of, affecting or relating to the Site and its environs (“Site Conditions”). Site Conditions include, but are not limited to:(a) Risk of conditions
(i) physical conditions on the Site or its surroundings, including but not limited to artificial things and the existing building;
(ii) climatic and weather conditions relating to the Site;
(iii) the means of access to and around the Site;
(v) water, sub-surface and geotechnical conditions of the Site.(iv) hazardous chemicals, substances or other material (including but not limited to asbestos); and
The Sub-Contractor acknowledges that:(b) Acknowledgment by Sub-Contractor
(i) the Contractor has made available to the Sub-Contractor material and information relating to the Site and to the Site Conditions (‘Site Information’);
(ii) the Site Information may not be complete and/or accurate;
(iii) the Contractor does not guarantee and makes no representation as to the completeness or accuracy of the Site Information;
(iv) the Contractor has advised the Sub-Contractor to make and rely on its own inquiries; and
(v) the use of the Site Information is at the Sub-Contractor’s own risk.
57. Clause 25 is headed “ Site Rules ”. It provides ( inter alia ) that the subcontractor’s employees must complete site registration forms prior to commencing work on the site; all such employees must be supplied by the subcontractor with appropriate safety equipment; the subcontractor must give the contractor at least 24 hours’ notice before inducting personnel on the site and must not induct construction workers unless such notice has first been given; and the subcontractor must give the contractor at least 48 hours’ notice before the commencement of any labour or of subcontractors of the subcontractor in relation to the works.
58. Clause 26 is headed “ Safety ” and lists a number of items and matters relating to safety for which the subcontractor must seek and obtain the contractor’s approval before commencing work on the site. Those matters include a site safety plan, a safe work method statement, a general and task induction policy, a first aid procedure and record, a rehabilitation policy and a plant/equipment register.
59. Clause 27 is headed “ Environmental Protection ” and it states:
The Sub-Contractor must ensure that no materials, pollutants or the like enter harbour waters and shall take steps to ensure that its actions do not cause or contribute to pollutants within the environment including harbour waters.
60. Clause 28 contains a number of special provisions, including:
(d) This Agreement represents the whole of the Agreement between the parties and there are no other Agreements, arrangements, understandings or representations between them touching the subject matter of this Agreement. The Sub-Contractor warrants that is [sic] has relied only on its own enquiries and investigations for all its purposes and not on anything communicated to it by the Contractor or the Proprietor .
61. Clause 30 requires the sub-contractor to attend meetings on the site from time to time as required by the contractor for the purpose, among other things, of co-ordinating the works, programming and planning.
62. Clause 33 provides that the subcontractor will do everything in the performance of its obligations under the subcontract in a way which will accommodate the contractor’s obligations under the design and construct contract; and the subcontractor must comply with any directions given by the contractor for that purpose.
63. The Third Schedule to the subcontract lists the following services provided by the contractor to the site: toilets, electricity, access lighting and water.
64. Forming part of the subcontract is a number of special conditions, some of which are said by the prosecutor to be relevant. The first is Special Condition 1.01:
Employee Registration
The Sub-Contractor shall provide the Contractor with written notification of the names of each of its employees, including particulars of the union membership ... Any employees proposed to be employed on site, shall complete an application for employment form and provide the Contractor with a copy ... No workmen will be permitted on site until they have attended and satisfactorily completed and approved Safety Induction Course ...
65. Special Condition 1.03 provides:
Supervisor
The Sub-Contractor shall provide a permanent full-time Supervisor, authorised to receive and issue instructions, approved by the Contractor, for the duration of the project.
66. Special Condition 2 is headed “ Site Safety ”. Special Condition 2.02 provides:
The Sub-Contractor shall provide a detailed description of safety systems and procedures that it intends to apply on site, for the purpose of carrying out the Works .
This is followed by a list of what is to be included in the Safety Method Statement. It seems that this condition is intended to supplement clause 26 of the subcontract, which I have noted in paragraph 58 above.
67. Special Condition 2.03 sets out health and safety site rules, for example:
It is important that materials and waste are stacked in safe locations. All exits, walkways and stairwells must be kept clear at all times. Unsafe conditions must be reported immediately to the Contractor’s Foreman, Site Manager or Safety Co-Ordinator.
68. Special Condition 2.04 refers to the attendance by all employees to an approved Safety Induction Course. Special Condition 2.05 refers to the service by employees on the Safety Committee.
69. The Specification and Scope of Works prepared by Robert Bird & Partners Pty Ltd describes in detail the scope of the work, the manner in which it is to be done and the standards which it must satisfy. There is no mention in the document to the pipeline.
70. I have referred in paragraph 42 above to the addendum to the Specification and Scope of Works. It is to be noted that the reference to “ miscellaneous and ancillary items and the like ” is an expansion of the description of works set out earlier in the subcontract and which I have quoted in paragraph 10 above. The prosecutor relies, in particular, on the additional words.
71. The contractual documents include a Project Productivity Agreement. Clause 1.0 describes the objectives as follows:
The primary objective of this agreement is to provide a frame-work for Multiplex and its sub-contractors to manage those issues relating to productivity/performance payments in a manner that complies with the NSWs government’s Code of Practice and Multiplex’s contractual and legal obligations.
72. Clause 1.1 states that additional objectives of the agreement are to improve productivity by initiatives aimed at ( inter alia ) OHS&R, which I take to be a reference to occupational health and safety.
73. Clause 11 of the Project Productivity Agreement sets out a procedure for settling disagreements over safety issues. It includes a provision that the contractor will nominate, in order of priority, the areas to be inspected by the representatives of the Safety Committee as safety rectification work is completed. The clause also provides, however, that any disagreement between the contractor and the Safety Committee shall be determined by the recommendation of a WorkCover inspector.
74. The subcontract agreement also contains schedules which set out the programme of the works; that is to say, the dates upon which each component of the works will be commenced and will be completed. The schedules contain no reference to the pipeline under the wharf nor any reference to the removal of oil or oil residues from the pipeline.
75. I have described in paragraphs 42 to 74 above the provisions of the subcontract which I consider to be of relevance to the issues in this case. The prosecutor in its submissions appeared to accept the proposition that the subcontract does not clearly delineate who had control over the site and the works to be performed under the subcontract. For this reason the prosecutor relies on what occurred on the site in practice. I will presently refer to the documentary and other evidence on the issue of control. Before doing so, however, I should refer to one document which can be conveniently described at this point and then I shall refer to the sub-subcontract between McConnell Dowell and Moltoni.
76. On 14 November 1997 McConnell Dowell sent to the contractor a memorandum which read as follows: “ Please find attached this memorandum, copies of our method statements and job safety analysis for both demolition and tube steel piling works ”. The first attachment to the memorandum is a copy of a Hazard Identification Register. This identifies various hazards and the recommended action relating to each such hazard. One of the identified hazards is “ Explosion ” and the recommended action is “ no oxy cutting ”. Another identified hazard is “ Pollution ” and the recommended action is “S ilt curtain in place. Ensure pipe end seal ”. The Hazard Identification Register also identifies various “ basic job steps ” and potential accidents or hazards relating to each job step are also identified. One of the job steps is “R emoval of timber ” and the potential accident or hazards relating thereto are “ falling debri [sic]”, “ crushing ”, “ falling into water ” and “ falling ”. Another basic job step listed is “R emoval of concrete units ” and the listed hazards relating thereto are “ falling debri [sic] ”, “crushing” , “ falling into water ” and “ falling through concrete ”. Yet another basic job step listed is “ Removal of oil/fuel pipes ”, for which the listed hazards are “ explosion ” and “ pollution ”.
77. Also attached to the memorandum of 14 November 1997 is a document headed “ Preliminary Method Statement for Demolition Works ”. This document includes the following statements:
10. The headstocks have steel holding stirrups, one on each side of the pile which will be oxycut to allow lifting off of the headstock.
11. Any piles that are already broken off will remain attached to the headstock and removed as a unit.
12. Removal of oil pipes involves disconnection of the pipes at one point then pulling the pipeline towards the work area and cutting on the work deck with hydraulic shears. This will eliminate fire and explosion risks as well as totally controlling oil spillages from pipe residues.
78. The prosecutor submits that the memorandum of 14 November 1997 and the attached method statements and job safety analysis were sent to the contractor pursuant to cl 26 of the subcontract, which requires the subcontractor to seek and obtain the contractor’s approval of a “ Safe Work Method Statement ” ( inter alia ) and pursuant to Special Condition 2.02 which requires the subcontractor to provide a safety method statement of safety systems and procedures that it intends to apply on the site.
The sub-subcontract between McConnell Dowell and Moltoni
79. In early October 1997 Mr Craig Beveridge, McConnell Dowell’s Project Manager, invited Moltoni to submit a tender to undertake the demolition of certain parts of the Finger Wharf. By letters dated 6 October, 10 October and 1 November 1997 Moltoni submitted a preliminary proposal to McConnell Dowell to carry out works which essentially involved the dismantling and removal of the wharf deck and supporting headstocks and girders.
80. According to Mr Moltoni, on 5 November 1997 Mr Beveridge telephoned Mr R C Moltoni (Moltoni’s Managing Director) and said:
“We have decided to award you the contract provided you agree to do the following extra work as part of the demolition. We want you to be responsible for disposing the timber piles after they have been extracted and loaded by McConnell Dowell, providing penetrations in the concrete deck for piling access and removal and disposal of the under deck piping.”
In relation to the piping I said: “Yes, we will remove the piping. Do the pipes have any oil residue in them?”
Beveridge said: “We have been told by Multiplex that the pipes have been drained by the Navy.”
I said: “OK”.
81. The abovementioned statement of Mr Beveridge was admitted as a statement of what was said to Mr Moltoni but not as to the truth of the statement. The reference by Mr Beveridge to the removal and disposal of under deck piping was, according to Mr Moltoni, the first occasion that this had been discussed.
82. On 6 November 1997 McConnell Dowell sent a facsimile transmission to Moltoni confirming its intention to utilise Moltoni’s services, noting the price and describing the scope of work, which included “ the demolition and disposal of the existing under deck piping ”. The facsimile goes on to request Moltoni to complete and return the site induction forms together with its various method statements as soon as possible. The facsimile concludes by congratulating Moltoni on its successful bid.
83. On 7 November 1997 Moltoni sent to McConnell Dowell its work method statement, which incudes the following:
REMOVAL OF OIL PIPES. Pipes will be removed in several operations. This will involve disconnection of the pipes at one point then pulling the pipeline towards the work area and cutting on the work deck with hydraulic shears. This will eliminate fire and explosion risks as well as totally controlling oil spillages from pipe residues.
84. According to Mr Moltoni the reference above to “ pipe residues ” reflects his understanding at the time of preparing the method statement, that notwithstanding Mr Beveridge’s previous advice that the pipes had already been drained, there may nonetheless be an accumulation or surface coating of oil at the elbows or bends of the pipes which could cause major problems such as fire and explosion risks when heating the pipes during oxy-acetylene cutting.
85. On 14 November 1997 Mr Moltoni, Mr S King (Moltoni’s General Manager) and Mr D Blair (Moltoni’s Site Foreman) inspected the site in more detail, including an inspection of the pipes underneath the wharf. Immediately after this inspection Mr Moltoni had a conversation with Mr Beveridge which he described as follows:
I said: “ There are a lot more pipes than I thought. Are you absolutely certain that the pipes are clean so there will be no spillage because our method statement provides for the pipes to be sheared and removed.”
Beveridge said: “Multiplex have informed us that the pipes have been drained.”
86. Again, the statement of Mr Beveridge above was admitted as a statement of what he said and not as to the truth of the statement.
87. Shortly after the meeting and inspection on 14 November 1997 Mr Moltoni prepared a document headed “ Woolloomooloo Wharf Demolition ” which briefly outlined the method to be adopted by Moltoni in carrying out the works. The relationship between this document and the work method statement described in paragraph 83 above is unclear since only the front page of the document is in evidence. (Mr Moltoni was unable to locate the rest of the material forming the document.) The front page of the document includes the following statement:
Moltoni Corporation has been contracted by McConnell Dowell to dismantle the timber and concrete deck wharf structure.
88. After the oil spill which occurred on 25 February 1998, Moltoni sent a letter to McConnell Dowell dated 4 March 1998 as follows:
RE: OIL PIPE REMOVAL TO FINGER WHARF
We write to clarify our position with regard to the above, following the recent oil spill incident.
We are currently undertaking works for McConnell Dowell, at the above referenced site.
No demolition work was programmed or being carried out on the pipe at the time of the incident.
Our scope of works is as stated in the MacDow letter of intent of 6 November 1997. Item five includes removal and disposal of underdeck piping. This was an addition to our quoted works; our quote 6 October 1997 along with other concessions in final negotiations.
This portion of the works was accepted on the basis that the lines were drained and purged of oil and gases and would be removed by Moltoni ONLY AFTER CERTIFICATION THAT PURGING WAS COMPLETED.
Our method statement revision 1 clearly employs mechanical removal systems and does not at any time undertake to address oil/gas collection and line purging, as this was to be done by others.
The issue was further addressed on site on or about 14th November when myself and Stephen King discussed in detail the methodology for the various site works.
89. According to the evidence of Mr Moltoni, Moltoni amended its work plan to take account of a changed circumstances, namely the fact of the oil spill and the fact that the pipes contained oil. According to Mr Moltoni, had Moltoni been informed that the pipes contained oil it would have been possible to take this into account by amending the work plan and then working according to the plan. This would have involved purging the pipe and then removing the purged pipe in sections. According to Mr Moltoni, Moltoni was not contracted by McConnell Dowell to conduct any inspections of the Woolloomooloo Finger Wharf nor was it contracted to purge the pipe.
Consideration of the contractual milieu
The early works agreement between Wharf Developments Pty Ltd and the defendant
90. I have set out in paragraphs 31 and 32 above my conclusions on the effect of the early works agreement. Shortly stated, this agreement requires the defendant to carry out services diversion “ limited to sewer diversion, stormwater diversion, electrical diversion and Telstra diversion and the removal of asbestos and hazardous material from the Finger Wharf ”. As to the removal of asbestos and hazardous material the agreement requires the defendant to remove all hazardous material from the Finger Wharf, including but not limited to asbestos, PCB and the like “ generally in accordance with hazardous material reports prepared by New Environment ”. As noted in paragraph 27 above, there is no reference to oil or oil residues in any pipeline in the report headed “ Hazardous Materials Survey Report ” prepared by New Environment Management & Technology Pty Ltd. I am not satisfied that this agreement imposed any contractual obligation or responsibility on the defendant for anything outside the scope of works (described in paragraph 24 above). In particular it does not impose on the defendant any contractual obligation or responsibility for oil or oil residues in the pipeline.
The design and construct contract (between Wharf Developments Pty Ltd and the defendant )
91. Under clauses 9.3 and 12.1, being provisions upon which the prosecutor relies, the contractor (the defendant) is not relieved from any liability to the principal for the acts and omissions of subcontractors and employees and agents of subcontractors and accepts responsibility for an assumes the risk of the physical conditions of the site, including the existing building and hazardous substances. This explains the existence of many of the provisions in the subcontract between the defendant and McConnell Dowell, namely, to ensure that McConnell Dowell complied with the defendant’s obligations to its principal, Wharf Developments Pty Ltd.
92. Although, pursuant to clause 27.1, the contractor has “ access to and possession of the site ”, it is not exclusive possession. Clause 27.2 reserves to the principal, to the Marine Ministerial Holding Corporation and to the mortgagee bank and any of their agents and employees access to the site for any purpose. Moreover, clause 27.2 requires the contractor to permit the execution of work on the site by persons engaged by the principal and to co-operate with them and co-ordinate the contractor’s work with their work. Thus, whilst the defendant was pursuant to the design and construct contract an occupier of the wharf, it was not the sole or only occupier.
93. It might be thought that clause 4.1(e), together with the defined term “ legislative requirements ” in clause 2, requires the contractor to execute and complete the work in accordance with all legislative requirements, including the Clean Waters Act . I do not think that the clause can be construed in this way. It requires the contractor to execute and complete the work so that “ the works, when completed ” would comply with all legislative requirements. The clause is directed to ensuring that the completed works will comply; that is to say, the physical structure in its completed state will comply with legislative requirements.
94. The requirement under clause 15 for the contractor to indemnify the principal for and against all claims etc connected with noise, disturbance or pollution arising out of the execution of the works does not, in my opinion, mean that it is thereby to be regarded as criminally liable for such occurrences. It is a provision which merely protects the principal if the principal is found liable for any such occurrence. Thus, as I understand the operation of the clause, if the principal is fined for a pollution offence arising out of the execution of the works, then clause 15 would operate to require the contractor to pay the amount of such fine to the principal by way of indemnity. I read clause 17.1 in the same way.
95. Clause 16 relates to “ work under the contract ”. It is to be noted that there is no mention in the contract of the pipeline, neither is there any reference to the contents thereof. The “ work under the contract ” does not, therefore, include the removal of the pipeline or its contents. Clause 16 requires the work under the contract to conform to the provisions of the contract.
96. Clause 39 is a provision which is designed to meet the kind of pollution incident which occurred on 25 February 1998. Urgent action was necessary and even if the contractor was not responsible for the incident which resulted in the need for urgent action, this clause required the contractor to take the action which in this case it did, namely to take steps immediately to stop the flow of oil into Woolloomooloo Bay and to effect a cleanup. This clause does not, however, make the contractor criminally liable for such incidents.
97. Clause 50(a) may be compared with clause 6 of the Special Clauses in the early works agreement, which I have set out in paragraph 30 above. For the same reasons to which I refer in paragraph 32 above, this clause refers to the obligations of the contractor arising from “ the works ”, which do not include any work relating to the removal of the pipeline or its contents. I repeat what I have said in paragraph 32 above and what I have said there applies equally, in my opinion, to this clause.
The subcontract between the defendant and McConnell Dowell
98. It is to be particularly noted that neither the description of the works (which I have set out in paragraph 10 above), the Specification and Scope of Works prepared by Robert Bird & Partners Pty Ltd, nor the expanded description of works in the addendum to the specification (which I have noted in paragraph 42 above) make any reference to the pipeline or its removal, nor is there any express reference to the contents of the pipeline. If it was intended that the removal of the pipeline and its contents form part of the subcontract, then it must be implied from the expanded definition of the scope of works in the addendum to the specification, which I have noted in paragraph 42 above, or from cll 2, 2(b) or 2(e) of the subcontract, noted in paragraphs 44, 45 and 47 above..
99. As noted in paragraph 70 above, the prosecutor relies upon the reference to “ miscellaneous and ancillary items and the like ” in the description of the Scope of Works which I have set out in paragraph 42 above. A reading of the whole of the Specification and Scope of Works documents and its addendum, however, does not support the prosecutor’s assertion. There is, for example, a detailed description of the means by which the headstocks are fixed to the piles and the method by which they are to be removed. There is no detailed description, or any description, however, of the means by which the pipeline is attached to the underside of the wharf nor the method by which it or its contents is to be removed. There is no evidence in this case, either expert or non-expert, to the effect that the removal of the pipeline or its contents is or was necessary so as to complete a fully fit for purpose sub-structure.
100. As mentioned in paragraph 98 above, cll 2 and 2(b), described in paragraphs 44 and 45 above, are also relevant in this context. The head contract (between The Wharf at Woolloomooloo Pty Ltd and Wharf Developments Pty Ltd) is not in evidence. There is thus nothing to suggest that there is any requirement of that contract which refers to the removal of the pipeline or its contents. There is nothing in the design and construct contract between Wharf Developments Pty Ltd and the defendant which requires the removal of the pipeline or its contents. Neither is there any evidence to suggest that the removal or the pipeline or its contents is necessary or convenient for the purpose of clause 2(e), described in paragraph 47 above.
101. The acceptance by the subcontractor of all risks associated with the works (noted in paragraph 42 above), its responsibility for any obstruction then encountered (noted in paragraph 43 above), together with the indemnity under clause 2(c) (noted in paragraph 46 above) is, if anything, exculpatory of the defendant.
102. The prosecutor relies upon a number of provisions as evidence of the control exercised by the defendant over the subcontractor’s work. These relate particularly to safety (clauses 6(a), 14, 15, 25, 26, Special Conditions 1.01, 1,03, 2.02, 2.03, 2.04 and clause 11 of the Project Productivity Agreement are examples); and to programming, sequencing or scheduling (clauses 20, 23, 30, 33 and the schedules which set out the programme of works are examples). None of these conditions, however, show that the defendant exercised direct control over the subcontractor as to how it did its work but rather show the defendant’s role as being one of co-ordinating and checking what was actually being done. Other provisions of the subcontract, to which I have not referred, show the defendant as checking and testing the work; that is to say, ensuring that the work was being done in accordance with the subcontract. These are, in my opinion, no more than provisions designed to ensure that the defendant was getting what it was paying for. Clause 33 is clearly a clause which falls into this category.
103. Other provisions of the subcontract are exculpatory of the defendant. I refer to the subcontractor’s acceptance of all risks associated with the works (noted in paragraph 42 above), its responsibility for any obstructions encountered (noted in paragraph 43 above), and to clauses 2(c), 3A(f), 7(b), 20, 24 and 27 (noted in paragraphs 46, 48, 50, 54, 56 and 59 above). In view of these provisions I am not satisfied beyond a reasonable doubt that under the provisions of the subcontract the defendant was relevantly in control of the site and of the works which were being performed by Mc Connell Dowell and by McConnell Dowell’s sub-subcontractor, Moltoni, when the pipe was broken. Neither am I satisfied beyond a reasonable doubt that the provisions of the subcontract create a liability on the defendant for the offence under s 16(1) of the Clean Waters Act. It is therefore necessary to look to evidence outside the terms of the subcontract to see whether any liability attaches to the defendant.
104. I should also refer at this point to the memorandum of 14 November 1997 and the attached method statements and job safety analysis sent by the subcontractor to the contractor, to which I have referred in paragraphs 76-78 above.
105. The prosecutor submits that the defendant by approving the method statement became liable for the oil spill for the following reasons: the hazard was identified; the method of dealing with the hazard was identified; the removal of the oil/fuel pipes was identified together with the potential hazard; and a specific method of removal of the oil pipes is described.
106. The removal of the oil pipes described in the method statement sent by the subcontractor to the defendant is the first indication in any document with which the defendant is concerned that the pipes were to be removed. It seems that the subcontractor for reasons known only to itself, thought that the pipeline should be removed and had asked Moltoni to remove and dispose of it. The reason why the subcontractor included the removal of the pipes in its sub-subcontract with Moltoni is not explained. No one from McConnell Dowell and no one from Robert Bird & Partners Pty Ltd gave evidence. It may merely have been more convenient for McConnell Dowell to have the pipeline removed so that it could more easily go about performing its work without it getting in the way. There may be other reasons. Whatever the reason, in the absence of evidence from anyone from McConnell Dowell or from Robert Bird & Partners, one can only speculate.
107. The method statements and job safety analysis is not described as a “ safe work method statement ” within the meaning of clause 26 of the subcontract, neither is it described as a “ Safety Method Statement ” within the meaning of Special Condition 2.02. There is no evidence from anyone to say what the purpose was in sending this material to the defendant. There is nothing in the evidence to show that the defendant “ approved ” the method statements or otherwise expressed a view as to their suitability. There is evidence which suggests that both McConnell Dowell and Moltoni were experts in their fields. It is equally reasonable to suppose that the defendant was relying upon their knowledge and expertise in relation to the manner in which their work was to be done; and that the method statements and job safety analysis were forwarded to the defendant merely for its information. In that event clause 3A(f) of the subcontract (which I have set out in paragraph 48 above) would apply.
108. Moreover, there is no evidence which suggests that the method statements and job safety analysis are inadequate. There is oral evidence, to which I later refer, by Messrs Moltoni, King and Blair that the work method statements complied with the relevant Australian Standard for demolition. If the work method statements were furnished to satisfy the requirements of clause 26 and Special Condition 2.02, then there is no evidence to suggest that the hazards are not properly identified, that the recommended action is inappropriate, or that the work methods are inappropriate. McConnell Dowell and Moltoni are designated to implement the appropriate action and to carry out the particular work.
109. For the reasons described in paragraphs 106 to 108 above, I have and continue to entertain a reasonable doubt that the forwarding of the work method statements and job safety analysis to the defendant make the defendant liable for the manner in which the work described therein is carried out and thus liable for the offence under s 16(1) of the Clean Waters Act. Neither am I satisfied beyond a reasonable doubt that, if it can be said that the defendant tacitly or inferentially approved the work method statements, it thereby became liable for the offence.
The sub-subcontract between McConnell Dowell and Moltoni
110. It is clear that McConnell Dowell asked Moltoni to remove and dispose of the pipeline and that Moltoni agreed to do so. Moreover, as appears from paragraph 83 above, Moltoni prepared and sent to McConnell Dowell a work method statement which included a description of the manner of removal of the pipes. The work method statement clearly allows for the management or control of “ oil spillages from pipe residues ”. It is clear that both McConnell Dowell and Moltoni were aware that the pipeline was there and that it may have contained, at the very least, oil residue. There is also evidence to which I later refer (and which I accept) that it is industry practice to treat all pipelines as charged unless it is established to the contrary. There is no evidence that anyone physically checked the pipeline to see whether it contained any oil, in which case the industry practice should have been observed by those who were working on or around the pipeline, namely McConell Dowell and Moltoni. None of the evidence surrounding the sub-subcontract or the work to be performed thereunder implicates the defendant.
The defendant’s knowledge of the pipeline and its contents
111. In the early 1990s - precisely when is not established by the evidence - the Domain bunkers were decommissioned. In early 1997 - again, precisely when is not established by the evidence - the Department of Defence employed TWCA Pty Ltd to carry out the cleaning and remediation of the Domain bunkers. It seems that TWCA Pty Ltd engaged Beralon Pty Ltd as its contractor to carry out the actual work of remediation which, I understand, included the use of high pressure water jets for cleaning out all oil and oil residues. It seems that Beralon Pty Ltd then subcontracted the work to another firm, Gardner Perrott.
112. In May 1997 Gardner Perrott commenced the work on the Domain bunkers. Mr K Welsh and Mr N Nordstrom were employed by Gardner Perrott. Mr Welsh gave evidence. He recalled seeing work being undertaken across the road (at Wharf 11) and seeing the name “Multiplex” on the fence, on a building and on hard hats and flak jackets worn by workmen on site. On 15 July 1997 Mr Welsh saw that an excavator, which had been digging in Lincoln Crescent, had apparently fractured a large cast iron pipeline under the road. The pipeline appeared to contain bunker oil. The pipeline appeared to come from the bunkers and went in the direction of Cowper Wharf Road. Mr Welsh saw Multiplex employees attend to the broken pipe.
113. Mr Nordstrom also saw the broken pipe. He thought that the pipe contained a residue of bunker oil and it appeared to have been flushed with kerosene or a cutting stock, which he describes as a derivative of diesel and used to break down heavy oils such as bunker oil. Mr Nordstorm also saw repairs made to the broken pipe.
114. The defendant called evidence from Mr S Brubaker, a self-employed excavator operator, who had been excavating for sewer trenches in Lincoln Crescent in May, June and July 1997. In the course of doing so Mr Brubaker exposed what he described as a concrete encased steel pipeline, but which was not broken. The presence of the pipeline was reported to the defendant’s employees “ because they were in charge of the site ”. One of those employees was Mr Brett Levy. There is other evidence that Mr Levy was the defendant’s foreman on the site. A piece of the concrete encasement to the pipe had, according to Mr Brubaker, flaked off the pipe. Because of the proximity of the pipeline to the location of the sewer trench, the excavation work had to be continued by hand.
115. Mr Levy’s diary was tendered in evidence. It contains entries of who was employed on the project each day and notes of what was done each day. There is no reference in the diary to any broken pipe in Lincoln Crescent.
116. The prosecutor submits that Mr Brubaker, or some other subcontractor of the defendant, broke the oil pipeline in Lincoln Crescent, being the oil pipeline which runs from the Domain bunkers to the Garden Island fleet base. The prosecutor further submits that the defendant became aware of the break and of the fact that the pipeline contained oil.
117. The prosecutor also tendered a plan which was in the defendant’s site office at Wharf 11 and which shows a number of services in the vicinity, including an “ existing underground navy fuel (oil) pipeline ” from the pumping station in Lincoln Crescent, along Lincoln Crescent and Cowper Wharf Road to the fleet base, with a branch pipeline along the Finger Wharf. The prosecutor submits that the defendant was thus aware of both the presence of the pipeline and the fact that it contained oil.
118. I do not have to resolve the disputed evidence between Mr Welsh and Mr Nordstrom, on the one hand, and Mr Brubaker and the evidence contained in Mr Levy’s diary, on the other hand. There is other evidence, which is undisputed and which establishes that the defendant was aware of the existence of the pipeline and of the fact that it contained oil.
119. It seems that possibly as a result of the discovery of the pipeline in Lincoln Crescent the defendant made appropriate inquiries, which resulted in a facsimile sent by TWCA Pty Ltd to the defendant on 28 May 1997. The facsimile reads as follows:
Attached is a diagram showing the extent of the current pipeline. It should be assumed that there is still furnace fuel oil remaining in the pipeline.
They have no objection to Multiplex capping off segments of the pipeline under its jurisdiction so long as the following criteria are met:The position of the Commonwealth regarding the existing oil supply pipeline is as follows:
Control includes the power of deciding 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. The existence of control is not the only criteria to determine the relationship. Other relevant matters include the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and the provision for holidays, the deduction of income tax and the delegation of work by a putative employee: ...
288. In that case, Talbot J found that the contractor was responsible for the operation of the heating system, the defendant did not effect any direct or real control over the manner in which the contractor undertook his work and there was no evidence of control or direction by the defendant over the contractor. Talbot J held that the prosecutor had not proved beyond reasonable doubt that the defendant was vicariously liable for the acts of the contractor.
289. In Environment Protection Authority v Munters Pty Ltd it was alleged that the defendant, which operated a factory at North Albury, placed or caused to be placed a pollutant into waters. Pearlman J was satisfied beyond reasonable doubt that the pollutant was placed in a position on the defendant’s premises where it descended into a drain and thence into an open channel. The critical question identified by her Honour was whether the defendant placed or caused to be placed the pollutant in the relevant position. The evidence was that Mr Cutajar, who owns and drives a prime mover, was under contract with Brambles (Tanker Division) to deliver a bulk load of resinox to the defendant’s premises. He was directed by an employee of the defendant to back the tanker up to a bunded area in which there was a storage tank. Mr Cutajar joined two hoses from the tanker. The defendant’s employee placed the hose into a manhole in the storage tank. Mr Cutajar then commenced decanting the liquid. Resinox leaked from a drip at a join in the hoses. Pearlman J said (at 288-289):
The prosecutor contended that the employees of the defendant exercised sufficient control over the actions of Mr Cutajar sufficient to make the defendant liable for any spill that might have occurred as a result of Mr Cutajar’s actions.
However, the evidence does not support such a conclusion. Mr Cutajar was an independent contractor, under contract to Brambles to collect and deliver a load of resinox. The only direction given by the employees of the defendant to Mr Cutajar was where to park his tanker. Apart from placing the hose in the appropriate storage tank, the employees had nothing to do with the decanting operation. Mr Monahan and Mr Schreiber said they were not present during the decanting operation. No directions were given to Mr Cutajar as to how he should carry out the decanting operation, nor as to the time when he should commence or terminate that operation, nor was he supervised during that operation. Furthermore, when Mr Cutajar observed the drip from the join in the hoses, he approached Mr Schreiber inside the factory building, and asked for a bucket which was given to him. Mr Cutajar acted on his own in regard to his endeavours to contain the drip.
In summary, I am not satisfied beyond reasonable doubt that the defendant caused the spill of resinox when transferring the liquid on 20 June, and I am not satisfied beyond reasonable doubt that, if the spill was caused by Mr Cutajar, he was acting under the control or direction of the defendant so as to make the defendant liable for the spill.
290. In applying the principles which emerge from all the abovementioned cases to the facts in the present case, I am led to the conclusion that the main factor (although not the only factor) on which vicarious liability has been founded, that of control and direction, is absent. Unlike the case of State Pollution Control Commission v Australian Iron & Steel Ltd , the evidence in this case does not satisfy me beyond a reasonable doubt that the defendant exercised detailed control over the manner of the doing of the work which led to the oil spill. Unlike the case of Environment Protection Authority v Taylor Woodrow (Australia) Pty Ltd , the evidence in this case does not satisfy me beyond a reasonable doubt that the defendant was supervising the works or instructing the subcontractor or the sub-subcontractor in and about the construction of the works. Like the case of Environment Protection Authority v Snowy Mountains Engineering Corporation Ltd , the evidence in this case suggests that the defendant did not effect any direct or real control over the manner in which the work which led to the oil spill was undertaken, neither does the evidence suggest that the defendant exercised control or direction over the subcontractor or sub-subcontractor. Like the defendant in Environment Protection Authority v Munters Ltd , the evidence in this case suggests that the directions given by the defendant were in relation to what should be done but not how the work should be carried out; the employees of Moltoni were not supervised by the defendant; and Moltoni’s employees took their instructions from either Mr Blair or from employees of McConnell Dowell.
291. I have referred throughout this judgment to the detailed facts. Some of those facts which demonstrate an absence of the element of control and direction on the part of the defendant include ( inter alia ): the defendant’s site office was at the northern end of Wharf 11 in Lincoln Crescent in February 1998; Moltoni, as noted above, received no instructions from the defendant, although the defendant’s safety officers would give directions consistent with the duties of the safety committee under the relevant legislation; Moltoni only spoke to Mr Beveridge during the tendering process and not to the defendant; Moltoni did not check the status of the oil pipeline with the defendants because its contract was with McConnell Dowell; the area in which Moltoni was working was barricaded by Moltoni; the hazard identification register was completed by McConnell Dowell; the work method statement was prepared by Moltoni; when work was being carried out in the vicinity of the pipeline Mr Blair reported that fact to Mr Petracca of McConnell Dowell; there is an absence of evidence of control or direction by the defendant over the work being performed by Moltoni; such evidence as is adduced suggests that McConnell Dowell exercised control and direction over the work being performed by Moltoni; and both McConnell Dowell and Moltoni’s tender documents refer to their respective expertise in the area of demolition and in particular in relation to wharf demolition.
292. I thus conclude that I am left with a reasonable doubt that the defendant is vicariously liable for the act of pollution which occurred in this case.
Issue (3): a non-delegable duty
293. As the defendant pointed out in submissions, this head of liability has not previously been applied to give rise to criminal liability for an offence such as s 16(1) of the Clean Waters Act.
294. The concept of a non-delegable duty is, like vicarious liability, a child of the law of torts. As with vicarious liability, it is, I think, necessary to consider the nature of the duty and the circumstances which must exist to give rise to such a duty.
295. A principal will be liable for the negligence of an independent contractor if either:
(b) the principal is under a non-delegable duty (which I discuss below).(a) the principal failed to exercise reasonable care in choosing a competent independent contractor ( Torrette House Pty Ltd v Berkman (1940) 62 CLR 637); or
(The evidence in the present case shows that the defendant as principal has satisfied the first requirement. That is to say, the defendant exercised reasonable care in choosing a competent independent contractor.)
296. A non-delegable duty is one which cannot be renounced or delegated. A non-delegable duty is a higher, more stringent personal duty to ensure that reasonable care is taken. In many situations, an employer’s duty of care does not extend beyond the general common law duty to exercise reasonable skill and care in engaging employees and contractors or in supervising work conditions or methods. The common law duty will usually be met by engaging a competent contractor to perform certain work which requires a specific skill or expertise which the employer does not have ( D & F Estates & Ors v Church Commissioners for England & Ors [1989] 1 AC 177). In other situations a principal will have a wider personal duty to use reasonable care. Such a duty cannot be delegated to either an employee or to an independent contractor.
297. The classes of case in which a non-delegable duty may arise are not closed. It is clear, however, that there must be a particular relationship between the parties whereby it is appropriate to impose the duty, such a relationship usually involving the key elements of control or supervision as having been undertaken by the principal ( Rylands v Fletcher [1866] LR 1 Exch 265, Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520, Kondis v State Transport Authority ). In Burnie Port Authority v General Jones Pty Ltd , Mason CJ, Deane, Dawson, Toohey and Gaudron JJ said (at 550):
It has long been recognised that there are certain categories of case in which a duty to take reasonable care to avoid a foreseeable risk of injury to another will not be discharged merely by the employment of a qualified and ostensibly competent independent contractor.
298. By way of example, if a principal engages an independent contractor to do particular work which involves a particular risk, of which the principal is or can reasonably be assumed to be aware, the principal may have a personal responsibility to instruct the contractor as to the nature of the risk and to supervise the work to be done ( Attorney-General v Geothermal Produce NZ Ltd [1987] 2 NZLR 348 CA).
299. The notion of a non-delegable duty of care was introduced as long ago as 1937 in England in Wilsons and Clyde Coal Co Ltd v English [1938] AC 57, [1937] 3 All ER 628 in which it was held that the duty to provide adequate supervision and a safe system of work is non-delegable. (Earlier references to the concept of a non-delegable duty are, however, found in Pickard v Smith (1861) 142 ER 535 and Dalton v Angus Co (1881) 6 App Cas 740.)
300. I have referred (in paragraph 297 above) to the recognition by the High Court that a non-delegable duty of care is a duty which arises because a person engages another to perform work and becomes liable for the negligence of the person thus engaged, notwithstanding that the person who owes the duty has exercised reasonable care in engaging that person (see also Stevens v Brodribb Sawmilling Co Pty Ltd at 32, per Mason J and Northern Sandblasting Pty Ltd v Harris at 1435). The duty may arise notwithstanding that the person who has been engaged is an independent contractor for whom the person owing the duty would not be vicariously liable. Similarly, in Kondis v State Transport Authority it was held that a non-delegable duty is a duty which arises in certain circumstances where a principal who engages another (such as a contractor) to undertake work is liable for the negligence of the person engaged notwithstanding that the principal exercised reasonable care in the selection of the person engaged.
301. A non-delegable duty is not generated by the foreseeability of an incident which results in a tort. It is the relationship of proximity between the parties which gives rise to a non-delegable duty ( Northern Sandblasting Pty Ltd v Harris at 1446). In Burnie Port Authority v General Jones Pty Ltd , Mason CJ, Dean, Dawson, Toohey and Gaudron JJ said (at 551): “ Viewed from the perspective of the person to whom the duty is owed, the relationship of proximity giving rise to the non-delegable duty of care in such cases is marked by special dependence or vulnerability on the part of that person ( The Commonwealth v Introvigne (1982) 150 CLR 258 at 271, per Mason J)”.
302. A principal will be liable for the negligence of anyone who is engaged to carry out the principal’s duty to provide safe equipment in a safe system of work for employees ( Wilson & Clyde Coal Co Ltd v English; Kondis v State Transport Authority ). If the principal reasonably delegates the duty to provide a safe system of work to a qualified employee or independent contractor, however, he is less likely to be held liable for the torts of that employee or of the servants of the independent contractor to whom the duty is delegated ( Whitham v Shire of Bright [1959] VR 790).
303. In Stevens v Brodribb Sawmilling Co Pty Ltd the plaintiff argued that there are two exceptions to the rule that a principal is not liable for the negligence of independent contractors: (a) in the case of extra-hazardous activities and (b) where the principal is in breach of a non-delegable duty. As to (a) the leading case on this issue is Honeywill and Stein Ltd v Larkin Brothers (London’s Commercial Photographers) Ltd , in which it was held that when a person employs another to carry out work of an extra-hazardous character, there is a duty to take special precautions to ensure safety. Such a duty cannot be delegated to independent contractors. It should be noted, however, that the English cases on this aspect of vicarious liability have not been followed in Australia. In Stevens v Brodribb Sawmilling Co Pty Ltd Mason J said (at 30) that this exception “ has no place in Australian law ”. As to (b) it was held that the facts in that case were essentially different from those of cases in which such a duty has been found to exist and the question did not arise for consideration.
304. On the question of non-delegable duty the case of Northern Sandblasting Pty Ltd v Harris appears to suggest that there is a trend to broadening the class of relationship in which such a duty may arise . In Northern Sandblasting the High Court held, by majority, that a landlord of a residential property had a duty of care to his tenants to inspect and maintain the premises to ensure that the electrical wiring is not faulty and that the premises are safe. It was also held by majority that the negligence on the part of the electrician, who was engaged by the landlord to fix a stove on the premises and which might foreseeably cause injury to the tenants, did not impose a non-delegable duty on the landlord. Only Toohey and McHugh JJ held that the landlord had a personal, non-delegable duty to the tenants to ensure that due care was reasonably exercised in the repair of the stove. This duty, according to the minority, could not be delegated to the electrician. The basis for a finding of a non-delegable duty in this case was the special vulnerability and dependence of the child plaintiff, who was severely injured as a result of the faulty wiring and negligently repaired stove. Moreover, McHugh J held that it did not make any difference that only a licensed person could, by law, carry out the repairs and stated that when the electrician negligently repaired the stove “ he caused the landlord to breach the duty it owed to the plaintiff ” (at 1457). According to the majority, the landlord was able to delegate its duty of care (to detect faulty wiring and to maintain the premises in a safe condition) owing to the tenants by engaging a competent professional electrician who could be expected to have the necessary expertise and experience to detect the faulty wiring and to repair the stove independently of the landlord’s supervision and control.
305. I return to the question of whether the duty to ensure a safe system of work is a non-delegable duty. In the case of employers, there is a duty imposed upon the employer to make reasonable arrangements to ensure that the workplace and the systems of work are reasonably safe (see, for example, Karatzidis v Victorian Railways Commissioner [1971] VR 360). In Hetherington v Mirvac Pty Ltd [1999] NSWSC 443 the plaintiff alleged negligence arising out of a breach of a duty of care owed by the developer/head contractor to provide a safe system of work. The plaintiff was a tiler who had been injured when he fell through fibro sheeting onto a concrete floor on a construction site. The system of contracting on the site was complex. The plaintiff was an employee of a sub-subcontracting company to Mirvac Pty Ltd (the head contractor). The contractual situation was thus not dissimilar to the present case. The plaintiff sued Mirvac in negligence alleging breach of its duty to provide a safe system of work. Wood CJ at CL said that “ had Mirvac or Boral [the subcontractor] been directly involved in the co-ordination or supervision of the works, or had the works been carried out by subcontractors in close physical proximity, or had there been any suspicion that this roof possessed any special risk, then liability might have ensued ”. Wood CJ at CL held that the sub-subcontractor was competent to control its system of work without the supervision of either Mirvac or Boral. Furthermore, the plaintiff was not in a position of particular vulnerability, which may give rise to a non-delegable duty as in Northern Sandblasting Pty Ltd v Harris . Wood CJ at CL found that the plaintiff had knowledge of the dangers of stepping onto unsupported fibro. His Honour concluded that any obligation to provide a safe place or system of work, or suitable plant and equipment rested directly on the plaintiff’s employer, that is to say, on the sub-subcontractor.
306. In Kondisv State Transport Authority an independent contractor dropped part of a crane on an employee of the principal. The High Court held that the employer had breached its duty to provide a safe system of work because it had failed to supervise the operation of the crane and to instruct the employee not to stand under the jib of the crane during its operation. The duty to provide a safe system of work was held to be a non-delegable duty. Mason J said: “ There is some element in the relationship between the parties that makes it appropriate to impose on the defendant a duty to ensure that reasonable care and skill is taken for the safety of persons to whom the duty is owed ” (at 687). This element was referred to in Burnie Port Authority v General Jones Pty Ltd (at 551) as the “ central element of control ”, whereby there exists a special relationship between the parties to ensure that due care is exercised.
307. As noted in the statement quoted (in para 306) above from the judgment of Mason J in Kondis v State Transport Authority , the existence of a non-delegable duty of care may be dependent upon the particular relationship between the parties. For example, where an employer engages an independent contractor to carry out his own personal duties which might usually be done by its own employee, the duty of care owed is more likely to be non-delegable ( Davie v New Merton Board Mills Ltd [1959] AC 604 at 646, cited in Kondis v State Transport Authority at 683). In such circumstances the duty cannot be delegated to a competent, independent contractor even although the principal is certain that the contractor has the necessary expertise to carry out the work for which it is engaged ( Kondis v State Transport Authority at 679). On the other hand, if an independent contractor is engaged to perform work in a specific way, the principal cannot be held vicariously liable in negligence for injury sustained by employees of the independent contractor incurred in the course of carrying out that work ( Boral Roof Tiles Ltd v O’Brien , Court of Appeal, 15 December 1994, unreported).
308. The common law also imposes a duty on a principal to warn and supervise where unusual or unexpected risks are reasonably foreseeable ( O’Connor v Commissioner for Government Transport (1984) 100 CLR 255).
309. In Taylor Woodrow Homes Builders Pty Ltd v Chitarra (Full Court of Supreme Court of Western Australia, 30 December 1994, unreported) the Court held (by majority) that a principal owed a duty of care to an employee of a contractor to warn the employee of additional risk of personal injuries involved in the use of a new building material used for the roof of a domestic house. The Court below had found that the duty to warn had been breached because of the proximity of the relationship between the principal and the employee of the contractor and the existence of a duty of care not to put the employee of the contractor at risk. Counsel for the appellant submitted that the appellant did not supervise the work of the employee of the contractor: it “ merely checked progress ”. The building site was under the control of the contractor and it was “ common practice in the industry for roofing carpenters to inspect timber supplied and was not common practice for the person ordering the timber to inspect it ”. In spite of this evidence two of the three judges held that the principal was responsible for the safety of the employee of the independent contractor.
310. In my opinion the prosecutor has not established beyond reasonable doubt that the circumstances of the present case give rise to a non-delegable duty of care on the part of the defendant. I have previously referred to the fact that the defendant exercised reasonable care in engaging a competent subcontractor having a specific expertise in demolition work and, in particular, in the demolition of wharf structures. The sub-subcontractor had a similar specific expertise. That, however, is not determinative of whether a non-delegable duty exists. It is a factor, however, which makes it less likely that a principal will be held liable under this heading. The duty does exist if there is a special dependence or vulnerability on the part of the person exposed to the risk. This appears to be an essential ingredient of the duty. No such special dependence or vulnerability has been demonstrated in the present case. In the absence of such evidence then it seems to me that, like the landlord in Northern Sandblasting Pty Ltd v Harris , the defendant in this case was able to delegate its duty of care to those who could be expected to have the necessary knowledge and expertise to carry out the demolition work independently of the defendant’s supervision and control.
311. As to the non-delegable duty to provide a safe system of work, the defendant engaged McConnell Dowell as a competent experienced contractor to carry out a particular task. I have noted above that McConnell Dowell was aware of the industry practice to treat all pipelines as being “live”. Neither McConnell Dowell nor Moltoni were in a position of special dependence or vulnerability which may give rise to a non-delegable duty (cf Northern Sandblasting v Harris ). Moreover, Moltoni, as an independent, competent sub-subcontractor was responsible for its own system of work and the way in which the work it was contracted to do should be carried out. Given the nature of the contractual relationship between the defendant and Moltoni and the industry practice and the lack of proximity (physical or otherwise) between the head contractor and the sub-subcontractor, I conclude that the defendant did not owe a non-delegable duty to provide a safe system of work. That is to say, the necessary elements which give rise to the duty now asserted by the prosecutor have not been established and, accordingly, have not been breached.
312. As to the duty to warn, in the present case the evidence shows that the defendant was aware of the existence of the pipes and of the fact that there was oil in the pipes. The defendant was also thus aware of the possible risk of the pipes leaking oil into the water in the course of the demolition of the original wharf structure. This knowledge does not, however, necessarily translate into a duty to warn of the foreseeable risk involved. In the present case both McConnell Dowell and Moltoni were also aware of the risk. I have noted above that they were aware of the industry practice to treat all pipe lines such as that with which this case is concerned, as being “live”. Since both McConnell Dowell and Moltoni were aware of the industry practice they should and could have reasonably foreseen the possibility of oil spilling in the event that the pipes were disturbed and taken the necessary precautions to prevent pollution from occurring. Moreover, in the present case the hazard identification register prepared by McConnell Dowell on 14 November 1997 clearly identifies the risk of both explosion and pollution arising from the removal of the oil/fuel pipe lines, the risk of falling debris occurring during the removal of timber and of concrete units and the work method statement also prepared by McConnell Dowell on or about the same date refers to the risk of fire and explosions as well as oil spillage in the course of removal of the oil pipes. I have also previously referred to the work method statement furnished by Moltoni to McConnell Dowell on 7 November 1997 in which Moltoni recognises the need to totally control oil spillage from pipe residues. In my opinion, both McConnell Dowell’s knowledge and Moltoni’s knowledge of the industry practice and of the risk of oil being present in the pipe line relieves the defendant in this case of any duty to warn them of that risk.
Other issues
313. I have referred to the prosecutor’s submission that the involvement of the defendant in the post-spill cleanup and related conduct of the defendant is evidence of a consciousness of guilt. I have also referred to possible explanations for such conduct, including that the defendant was merely acting as would any “ good citizen ” in such an event; and that the defendant would be naturally anxious to avoid any delay to its programme of works. I also note, in this context, the effect of cl 39 of the design and construct contract to which I have referred in paras 40 and 96 above.
314. The obligation of the prosecutor, in a case such as this, is to exclude all reasonable hypotheses consistent with the innocence of the defendant. The guilt of the defendant should not only be a rational inference but it should be the only rational inference that could be drawn from the circumstances ( Environment Protection Authority v Munters Ltd , at 287, per Pearlman J). I do not think that the only rational inference that could be drawn from the defendant’s conduct is a consciousness of guilt as alleged by the prosecutor. The prosecutor has not excluded other plausible explanations for the post-spill actions of the defendant. I reject the prosecutor’s submission as to the inference which should be drawn from the circumstances.
315. I next refer to the prosecutor’s submissions that a defendant cannot contract out of criminal liability; and specifically that a defendant cannot avoid liability for an offence under the Clean Waters Act by the provisions of a contract. In my opinion, however, where a defendant’s liability is dependent upon obligations said to arise pursuant to a contract, it is not a question of contracting out of criminal liability. In another way, if the defendant’s liability for a criminal offence is said to arise as a consequence of contractual obligations, such as design, supervision, control and direction, but such obligations are absent, then no criminal liability arises. That is to say, there is no criminal liability to contract out of. That is the case here. The criminal liability of the defendant is said by the prosecutor to be based on, inter alia , its contractual obligations. The prosecutor, however, has not established that the contractual obligations on the part of the defendant give rise to criminal liability in the first instance. I reject the prosecutor’s submission.
316. I next refer to the prosecutor’s submissiion that since no one from the defendant gave evidence, it may be legitimate to more readily draw an inference of guilt. Reference was made by the prosecutor to May v O’Sullivan . That is a case, however, which concerned the consequences of a defendant’s failure to call evidence once there was a case to answer. In my opinion I am required to refrain from speculation as to why no one from the defendant was called and to refrain from speculation as to what evidence they might have given ( Re Newland (1997) 98 A Crim R 455 CCA, per Gleeson CJ at 462). I am required to decide the case only on the evidence which is before the Court. Bearing in mind that the prosecutor throughout carries the onus of proving the guilt of the defendant beyond reasonable doubt, I draw no inference from the failure of the defendant to call any representative of the defendant.
Conclusion
317. For all the foregoing reasons I find that the prosecutor has failed to establish beyond reasonable doubt that the defendant is guilty of the offence as charged. Accordingly the defendant must be acquitted and the summons dismissed.
318. In accordance with the prosecutor’s request, however, I refrain from making formal orders in order to enable it to consider its position. I stand the matter over for seven days for mention or for the making of formal orders.
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