FEDERAL COURT OF AUSTRALIA

Comcare v The Commonwealth of Australia [2010] FCA 1331

THE COURT DECLARES THAT:

1.    On and around 15 October 2005, the Respondent (through the Department of Immigration and Citizenship) contravened subclause 2(1)(a) and subclause 2(1)(b) of Part 1 of Schedule 2 of the Occupational Health and Safety Act 1991 (Cth) (OHS Act) by reason of the Respondent having breached section 16(1) and section 17 of the OHS Act (the contraventions).

2.    The conduct that constituted the contravention was:

(a)    the Respondent did not conduct appropriate hazard identification and risk assessments regarding the use and suitability of the immigration response vessel (IRV) known as the Malu Sara as an appropriate vessel to be used by employees of the Respondent in the Torres Strait, in the conditions likely to be encountered by those employees;

(b)    the Respondent did not ensure that properly qualified oversight was given to its employees to ensure that the IRVs as constructed met the quality and standards required by the contract with the manufacturer and supplier;

(c)    the Respondent did not ensure that sufficient appropriate independent expert advice was sought as to the design and construction of the IRVs;

(d)    the Respondent did not have an appropriate system in place to satisfy itself that the tenderers for the construction and supply of the IRVs were appropriately skilled and qualified to undertake the manufacture and supply of the vessels;

(e)    the Respondent did not independently assess or verify:

i.    that the IRVs had been designed and constructed in accordance with the contract with the manufacturer and supplier or in accordance with the manufacturer’s assurances;

ii.    the IRV’s suitability for the purposes and environment in which they would be operating in the Torres Strait;

(f)    the Respondent did not conduct a sea trial or swamp test on the Malu Sara prior to its commissioning;

(g)    the Respondent did not ensure that the construction process for the Malu Sara was monitored by a qualified person;

(h)    the Respondent did not ensure that the Malu Sara, upon its supply, was appropriately inspected by an independent expert to ensure:

i.    it was manufactured and supplied according to the contract with the manufacturer and supplier;

ii.    it was manufactured and supplied to a standard that complied with AS1665, AS1799, and USL Code 2C;

iii.    it was water tight;

(i)    the Respondent’s systems for operation of the vessels were not appropriate to ensure that reported problems with the Malu Sara, particularly the seaworthiness of the vessel, were addressed and rectified in a timely and competent manner;

(j)    the Respondent did not take appropriate action to address and rectify the problems reported to it in relation to the Malu Sara after its commissioning;

(k)    the Respondent did not ensure the Malu Sara was fitted with appropriate communication, navigation and safety equipment before permitting it to be used;

(l)    the Respondent failed to provide adequate training, instruction and information to relevant employees about operation of the IRVs and associated safety, communication and navigation equipment;

(m)    the Respondent did not have appropriate procedures in place in the event of an emergency involving a vessel or a vessel becoming lost at sea;

(n)    the Malu Sara was unsound and unseaworthy and was not in a condition, both in relation to its structural design and condition, and in relation to the equipment and training provided to its crew, to safely undertake the voyage from Saibai Island on 14 October 2005, to an intended destination of Badu Island, which voyage was attempted by two employees of the Respondent in the course of their employment, and three members of the public;

(o)    the Malu Sara was not constructed in accordance with, and did not meet the standards prescribed by the contract with the manufacturer and supplier and in particular, it did not comply with material parts of AS1665, AS1799 and USL Code 2C.

3.    Substantially as a consequence of the above breaches the Malu Sara filled with water and sank on the voyage from Saibai Island to Badu Island and Wilfred Baira, Ted Harry, Valerie Saub, Flora Enosa and Ethena Enosa were cast into the water and consequently died on or about 15 October 2005 in the waters of the Torres Strait.

AND THE COURT ORDERS THAT:

1.    Pursuant to clause 4 of Part 1 of Schedule 2 of the Occupational Health and Safety Act 1991 (Cth) that the Respondent pay a pecuniary penalty of $242,000 within 28 days of judgment.

2.    The Respondent pay the Applicant’s costs to be taxed unless otherwise agreed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    On Saturday 15 October 2005 the Malu Sara, an aluminium patrol vessel commissioned by the respondent, sank in the waters of the Torres Strait. On board were Mr Wilfred Baira and Mr Ted Harry, both employees of the respondent, and three members of the public, namely Ms Valerie Saub, Ms Flora Enosa and Ms Ethena Enosa. On 26 October 2005, the body of Ms Flora Enosa was found. No other bodies have ever been recovered.

2    By an application filed 24 December 2009, the applicant sought:

(1)    A declaration under Schedule 2, Part 1 of the Occupational Health and Safety Act 1991 (Cth) (the OHS Act) that the respondent breached section 16(1) of the OHS Act.

(2)    A declaration under Schedule 2, Part 1 of the OHS Act that the respondent breached section 17 of the OHS Act.

(3)    An order pursuant to Clause 4 of Part 1 of Schedule 2 of the OHS Act that the respondent pay a pecuniary penalty in respect of the breach of sections 16(1) and 17 of the OHS Act.

(4)    An order that the respondent pays the applicant’s costs.

(5)    Such further or other orders as the Court deems fit.

3    On 15 June 2010 the parties filed a Statement of Agreed Facts. The respondent admits contraventions of s 16(1) and s 17 of the OHS Act and admits further that it is appropriate that it pay a pecuniary penalty pursuant to cl 4 of Pt 1 of Sch 2 of the OHS Act. The respondent also acknowledges that the imposition of a penalty towards the maximum available would be appropriate. No defence was filed by the respondent.

4    At the hearing on 15 November 2010, Mr Herbert for the applicant handed up a draft minute of order. The orders sought by the applicant are:

The Court declares that:

1.    On and around 15 October 2005, the Respondent (through the Department of Immigration and Citizenship) contravened sub-clause 2(1)(a) and sub-clause 2(1)(b) of Part 1 of Schedule 2 of the Occupational Health and Safety Act 1991 (Cth) (OHS Act) by reason of the Respondent having breached sections 16(1) and 17 of the OHS Act (the contraventions).

2.    The conduct that constituted the contravention was:-

(a)    The Respondent did not conduct appropriate hazard identification and risk assessments regarding the use and suitability of the immigration response vessel (IRV) known as the Malu Sara as an appropriate vessel to be used by employees of the Respondent in the Torres Strait, in the conditions likely to be encountered by those employees;

(b)    The Respondent did not ensure that properly qualified oversight was given to its employees to ensure that the IRVs as constructed met the quality and standards required by the contract with the manufacturer and supplier;

(c)    The Respondent did not ensure that sufficient appropriate independent expert advice was sought as to the design and construction of the IRVs;

(d)    The Respondent did not have an appropriate system in place to satisfy itself that the tenderers for the construction and supply of the IRVs were appropriately skilled and qualified to undertake the manufacture and supply of the vessels;

(e)    The Respondent did not independently assess or verify:

i.    that the IRVs had been designed and constructed in accordance with the contract with the manufacturer and supplier or in accordance with the manufacturer’s assurances;

ii.    the IRV’s suitability for the purposes and environment in which they would be operating in the Torres Strait;

(f)    The Respondent did not conduct a sea trial or swamp test on the Malu Sara prior to its commissioning;

(g)    The Respondent did not ensure that the construction process for the Malu Sara was monitored by a qualified person;

(h)    The Respondent did not ensure that the Malu Sara, upon its supply, was appropriately inspected by an independent expert to ensure:

i.    it was manufactured and supplied according to the contract with the manufacturer and supplier;

ii.    it was manufactured and supplied to a standard that complied with AS1665, AS1799, and USL Code 2C;

iii.    it was water tight;

(i)    The Respondent’s systems for operation of the vessels were not appropriate to ensure that reported problems with the Malu Sara, particularly the seaworthiness of the vessel, were addressed and rectified in a timely and competent manner;

(j)    The Respondent did not take appropriate action to address and rectify the problems reported to it in relation to the Malu Sara after its commissioning;

(k)    The Respondent did not ensure the Malu Sara was fitted with appropriate communication, navigation and safety equipment before permitting it to be used;

(l)    The Respondent failed to provide adequate training, instruction and information to relevant employees about operation of the IRVs and associated safety, communication and navigation equipment;

(m)    The Respondent did not have appropriate procedures in place in the event of an emergency involving a vessel or a vessel becoming lost at sea;

(n)    The Malu Sara was unsound and unseaworthy and was not in a condition, both in relation to its structural design and condition, and in relation to the equipment and training provided to its crew, to safely undertake the voyage from Saibai Island on 14 October 2005, to an intended destination of Badu Island, which voyage was attempted by two employees of the Respondent in the course of their employment, and three members of the public;

(o)    The Malu Sara was not constructed in accordance with, and did not meet the standards prescribed by the contract with the manufacturer and supplier and in particular, it did not comply with material parts of AS1665, AS1799 and USL Code 2C.

3.    Substantially as a consequence of the above breaches the Malu Sara filled with water and sank on the voyage from Saibai Island to Badu Island and Wilfred Baira, Ted Harry, Valerie Saub, Flora Enosa and Ethena Enosa were cast into the water and consequently died on or about 15 October 2005 in the waters of the Torres Strait.

AND THE COURT ORDERS THAT:

1.    Pursuant to clause 4 of Part 1 of Schedule 2 of the Occupational Health and Safety Act 1991 (Cth) that the Respondent pay a pecuniary penalty of $242,000 within 28 days of judgment.

2.    The Respondent pay the Applicant’s costs to be taxed unless otherwise agreed.

5    In oral submissions, the respondent indicated that it did not take issue with the formal matters contained in the draft minute of order. However the respondent did require the Court to exercise its discretion in relation to determining the quantum of penalty pursuant to cl 4 of Pt 1 of Sch 2 of the OHS Act. As a consequence, this remains the only issue outstanding in these proceedings to be determined by the Court.

6    Before turning to the submissions of the parties it is necessary to outline the background of these proceedings.

Background

7    The Department of Immigration and Citizenship (“DIAC”) is a Department of the Commonwealth of Australia. At all times relevant to these proceedings prior to 30 January 2007 DIAC was known as the Department of Immigration and Multicultural Affairs.

8    DIAC was and remains charged with the responsibility for managing immigration and border control through the Torres Strait. Movement Monitoring Officers (“MMOs”) were recruited by DIAC to assist in patrolling the reefs and islands of the region. The MMOs used immigration response vessels (“IRVs”) to conduct such patrols.

9    Towards the end of 2002 Mr Garry Chaston was appointed as DIAC’s regional manager on Thursday Island. In February 2004 Mr Chaston put a business case to DIAC to replace the existing fleet of vessels with new IRVs. Expenditure for the new IRVs was approved. The procurement of the new IRVs remained the primary responsibility of Mr Chaston but he was assisted by Mr Paul Nemes, DIAC’s senior contract adviser. Mr Chaston also consulted Mr Greg Hellessey who was a qualified marine engineer, the MMOs and a range of other government agencies.

10    After advertising, eight tenders were received. Criteria for assessment of the tenders were settled by Mr Chaston and Mr Nemes, and a team was established to evaluate each tender received. Subsequently, Subsee Explorer Pty Ltd (“Subsee”) was contracted for the supply of the six IRVs. The contract with Subsee contained specific descriptions of the proposed vessels, the equipment to be fitted, the standards of construction, and the certificates required to accompany the vessels.

11    Significantly, the contract stipulated that the vessels be supplied to the certified requirements of the Uniform Shipping Laws Code (“USL Code”), Class 2C, and comply with the Australian Standard (“AS”) 1799 and AS 1665. However as subsequently became clear, a prototype vessel constructed by Subsee did not meet these requirements and this omission was not disclosed or discovered at the time of the sea trials. Further, no reference to the omission was made in the modifications specified.

12    The contract also stipulated that Subsee was to provide six different certificates for each of the IRVs. Only one certificate was provided, a certificate of flotation. The positive flotation statement (issued by a Mr Radke, the principal of Subsee) was a document declaring that the vessel when filled with water would remain afloat in an upright position while carrying its normal operational equipment and six passengers. The other five certificates, including certificates that the vessels were to class 2C survey standard, and confirmation they complied with AS 1799 and AS 1665, were never provided to DIAC.

13    Following acceptance of the prototype trial with specified modifications, the remaining five IRVs were completed by Subsee in early August 2005. These vessels were subsequently delivered to Thursday Island on 21 and 22 August 2005.

14    The IRVs were of a centre console configuration and were constructed of aluminium plate aluminium alloy. They had a designed overall length of 6.65 metres, a designed measured length of 5.90 metres, a breadth of 2.15 metres, and a draft of 0.45 metres. The vessels were designed to carry up to six people or 510 kilograms.

15    The navigation equipment on board consisted of a magnetic compass and navigation lights. The safety equipment included a 121.5/243 MHz analogue emergency positioning indicating radio beacon (“EPIRB”), life-jackets, flares, a fire extinguisher, bailing buckets, first-aid kit, tool-kit, paddles and two hand-held torches. The communication equipment consisted of a hand-held satellite/CDMA telephone and a “hands-free” system for the telephone.

16    As “Commonwealth ships” within the meaning of the Navigation Act 1912 (Cth), the IRVs were not required to be surveyed. Instead, the operator of Commonwealth vessels under seven metres in length could request the Chief Marine Surveyor to issue a letter of survey acknowledging that the vessel met specific criteria. The letter would be subject to the provision of assurances to the Chief Marine Surveyor about the construction, equipment and area of operation of the vessel.

17    On 24 August 2005, Mr Chaston applied for a letter of survey for the IRVs by writing a letter to the Australian Maritime Safety Authority (“AMSA”) declaring:

(a)    he was the officer responsible for the safe operation of the six IRVs;

(b)    the IRVs were built to AS 1799;

(c)    the vessels were suitable for their intended operations and were in a seaworthy condition prior to each operation;

(d)    a planned maintenance program was in place;

(e)    a risk assessment was undertaken prior to each operation; and

(f)    the vessel’s area of operation was the partially smooth waters of the Torres Strait.

18    On 2 September 2005, AMSA issued a letter of survey for the six IRVs.

19    DIAC had standard operating procedures (“SOPS”) for the IRVs containing instructions for the MMOs, including administrative processes and operational information. These procedures required the submission of a “tasking request form” prior to operations and a “post-patrol report” after each patrol. In relation to the operation of the IRVs, the SOPs included information relating to limits of operation in terms of area, time of day, duration, weather and crew qualifications.

20    An annual training workshop for the MMOs was arranged to be held on Saibai Island from 8 to 13 October 2005. Three of the IRVs, including the Malu Sara, were to travel to the island for the workshop. The Malu Sara left Badu Island for Saibai Island on 8 October 2005, a journey of 58 nautical miles. On Wednesday 12 October 2005, the Malu Sara was used in two training patrols. In the first, the outboard motor stopped without apparent reason but was restarted and no further problems were reported. In the second, a significant quantity of water entered the cockpit through the scuppers in the cockpit transom while the vessel was anchored with five persons on board.

21    After the patrol was completed, the crew reported to Mr Chaston that the vessel appeared to be sitting low at the stern. Mr Chaston inspected the vessel while it remained in the water and told the crew to inspect the boat overnight to ensure the problem did not reoccur. No further action was taken.

22    On 14 October 2005, the Malu Sara left Saibai Island shortly before 12.30 pm carrying two employees of the respondent and three members of the public. Mr Baira was the skipper. He called DIAC’s Thursday Island office (then staffed by Mr Jerry Stephen) at 12.22 pm to advise of the departure and arranged a subsequent call when he reached Turnagain Island. At 2.08 pm he made the scheduled call reporting that he was near Turnagain Island, and arranged to call again when near Mabuiag Island.

23    Between 3.54 pm and 3.57 pm Mr Baira rang the office on four occasions telling Mr Stephen he was “a bit lost in a fog” but that all onboard were well and he had plenty of fuel. Mr Stephen advised Mr Baira to steer at 160 degrees or 170 degrees to get into the lee of the reefs and towards Mabuiag Island.

24    Failed attempts by Mr Baira to call Mr Stephen were made at 4.25 pm, 5.50 pm and 6.05 pm. At 6.22 pm Mr Baira rang Mr Stephen reporting that he had sighted an island but was still lost. Mr Stephen told Mr Baira that he should activate his EPIRB to fix his position if he could not locate the island. There was further contact at 7.34 pm when Mr Stephen and Mr Baira had further discussions about activating the EPIRB.

25    At about 7.15 pm the Queensland Police Service at Thursday Island was notified by Mr Chaston that the Malu Sara was overdue and seemingly lost. At 7.40 pm Sergeant Warren Flegg, an officer from the Queensland Water Police on Thursday Island, began co-ordinating the search. The Australian Search and Rescue organisation (“AusSAR”) in Canberra was contacted at 8.11 pm.

26    Some telephone contact was maintained with Mr Baira between about 7.45 pm and 9.30 pm. About 10 of 20 attempted calls were successful and the EPIRB was transmitting. Based on the satellite information, AusSAR established an approximate position of the vessel at approximately 10.00 pm and relayed this to Mr Stephen asking that he advise Mr Baira to head due east towards Mabuiag Island. Thereafter, telephone contact with the vessel was difficult to establish.

27    At about 1.37 am on 15 October 2005 Mr Baira informed Sergeant Flegg that the vessel was at anchor but was out of oil. At 2.15 am Mr Baira told Mr Stephen the vessel was taking on water and was sinking. No further contact with the vessel could be established.

28    At approximately 2.30 am, Sergeant Flegg contacted the Thursday Island Volunteer Marine Rescue (“VMR”) requesting a search vessel be sent out. At about 4.15 am, the “Pedro Stephen” left Thursday Island with three crew onboard. Shortly before 6.00 am the IRV from Mabuiag Island also joined the search.

29    Intensive air and sea searches ensued in the following days. At approximately 10.30 am on 15 October 2005 the vessel’s EPIRB was found with a 1.5m length of its lanyard attached. No other debris has been recovered.

30    At about 2.30 pm on 16 October 2005 a fixed wing aircraft sighted a person in the water but despite attempts, the person was unable to be recovered. On 26 October 2005, a body subsequently identified as being that of Ms Flora Enosa was found by Indonesian fisherman about 50 miles west of the vessel’s last known position. No other bodies have been recovered.

31    It is not in dispute that the telephone on the vessel would not have functioned in the water. As the telephone on the vessel was still accessing the network until 3.57 am it is estimated the vessel finally sank at some time around or after 4.00 am on 15 October 2005.

32    Upon the search being scaled back, an investigation into the incident was instigated by DIAC. The Entry Policy and Procedures Branch issued a report dated 3 November 2005 which found a combination of factors had contributed to the incident. The use of the remaining IRVs was suspended on 15 or 16 October 2005.

Sections 16 and 17 of the OHS Act

33    Section 16 of the OHS Act provides:

(1)    An employer must take all reasonably practicable steps to protect the health and safety at work of the employer’s employees.

Note:    An employer who breaches subsection (1) may be subject to civil action or a criminal prosecution (see Schedule 2).

(2)    Without limiting the generality of subsection (1), an employer breaches that subsection if the employer fails to take all reasonably practicable steps:

(a)    to provide and maintain a working environment (including plant and systems of work):

(i)    that is safe for the employer’s employees and without risk to their health; and

(ii)    that provides adequate facilities for their welfare at work; and

(b)    in relation to any workplace under the employer’s control, to:

(i)    ensure the workplace is safe for the employees and without risk to their health; and

(ii)    provide and maintain a means of access to, and egress from, the workplace that is safe for the employees and without risk to their health; and

(c)    to ensure the safety at work of, and the absence of risks at work to the health of, the employees in connection with the use, handling, storage or transport of plant or of substances; and

(d)    to develop, in consultation with the employees of the employer, written health and safety management arrangements that will:

(i)    enable effective cooperation between the employer and the employees in promoting and developing measures to ensure the employees’ health, safety and welfare at work; and

(ii)    provide adequate mechanisms for informing the employees about the arrangements; and

(iii)    provide adequate mechanisms for reviewing the effectiveness of the arrangements; and

(iv)    provide adequate mechanisms for the variation of the arrangements in consultation with the employees; and

(v)    provide for a dispute resolution mechanism to deal with disputes arising in the course of consultations held under this Act (other than section 24) between the employer and the employees; and

(vi)    in the case of an employer who is required under section 34 to establish a health and safety committee—provide for the manner in which the health and safety committee is to be constituted and to operate; and

Note:    The establishment of health and safety committees is dealt with in section 34.

(e)    to provide to the employees, in appropriate languages, the information, instruction, training and supervision necessary to enable them to perform their work in a manner that is safe and without risk to their health.

34    Section 17 of the OHS Act provides:

An employer must take all reasonably practicable steps to ensure that persons at or near a workplace under the employer’s control who are not the employer’s employees or contractors are not exposed to risk to their health or safety arising from the conduct of the employer’s undertaking.

Note:    An employer who breaches section 17 may be subject to civil action or a criminal prosecution (see Schedule 2).

Pecuniary penalty – general principles

35    Pursuant to cl 4 of Pt 1 of Sch 2 of the OHS Act, the maximum penalty payable for a breach of s 16(1) and s 17 is 2200 penalty units or $242,000.00.

36    In Comcare v Commonwealth of Australia (2007) 163 FCR 207 Madgwick J explained the overriding principle in determining the quantum of penalty as follows:

The overriding principle in assessing penalty is that the amount of the penalty should reflect the Court’s view of the seriousness of the offending conduct in all the relevant circumstances. (at [116])

37    In Comcare, Madgwick J accepted that the sentencing principles developed by State Courts and the State Workplace Health & Safety legislation provide relevant guidance when considering penalties under the OHS Act. Consequently, his Honour identified a number of considerations, derived from these sources, relevant to the determination of penalty:

(i)    the penalty must be such as to compel attention to occupational health and safety generally, to ensure that workers whilst at work will not be exposed to risks to their health and safety;

(ii)    it is a significant aggravating factor that the risk of injury was foreseeable even if the precise cause or circumstances of exposure to the risk were not foreseeable;

(iii)    the offence may be further aggravated if the risk of injury is not only foreseeable but actually foreseen and an adequate response to that risk is not taken by the employer;

(iv)    the gravity of the consequences of an accident does not of itself dictate the seriousness of the offence or the amount of penalty. However the occurrence of death or serious injury may manifest the degree of the seriousness of the relevant detriment to safety;

(v)    a systemic failure by an employer to appropriately address a known or foreseeable risk is likely to be viewed more seriously than a risk to which an employee was exposed because of a combination of inadvertence on the part of an employee and a momentary lapse of supervision;

(vi)    general deterrence and specific deterrence are particularly relevant factors in light of the objects and terms of the Act;

(vii)    employers are required to take all practicable precautions to ensure safety in the workplace. This implies constant vigilance. Employers must adopt an approach to safety which is proactive and not merely reactive. In view of the scope of those obligations, in most cases it will be necessary to have regard to the need to encourage a sufficient level of diligence by the employer in the future. This is particularly so where the employer conducts a large enterprise which involves inherent risks to safety;

(viii)    regard should be had to the levels of maximum penalty set by the legislature as indicative of the seriousness of the breach under consideration;

(xi)    the neglect of simple, well-known precautions to deal with an evident and great risk of injury, take a matter towards the worst case category;

(x)    the objective seriousness of the offence, without more may call for the imposition of a very substantial penalty to vindicate the social and industrial policies of the legislation and its regime of penalties.

38    While some guidance may be drawn from other cases in determining penalty, the Court has a responsibility to determine quantum according to the particular circumstances before it. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, Burchett and Kiefel JJ observed (at 295):

Another form of comparison is not appropriate. The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case. The point was well made by Spender J in Trade Practices Commission v Annand and Thompson Pty Ltd [(1987) ATPR 40-772] (at 48,394) when he said:

Each case must, of course, be viewed on its own facts and facts may be infinite in their variety.

It follows, as his Honour also said, that “[t]he quantum of penalties imposed in other cases can seldom be of very much direct assistance”.

39    This view was subsequently adopted by Gray J in Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [13]:

Penalty decisions in other cases can be of value in demonstrating that there is a range of penalties generally considered appropriate to a particular type of case. The individual circumstances of the case at hand must then be examined in order to determine at what point in the appropriate range the penalty should be set. This does not involve a comparison with the facts of other cases.

Submissions of the applicant

40    The applicant submitted that the penalty imposed on the respondent on account of its contravention of s 16(1) and s 17 of the OHS Act should be the highest penalty which the OHS Act empowers the Court to impose.

41    In respect of the Commonwealth employees, the applicant submitted that pursuant to s 16(1) of the OHS Act, the respondent failed to take all reasonably practicable steps to protect the health and safety at work of its employees, namely Mr Baira and Mr Harry. The details of this failure, as asserted and relied upon by the applicant, are admitted by the respondents and are set out in para 95 and para 96 in the statement of agreed facts filed 15 June 2010.

42    In respect of the members of the public being carried on the Malu Sara, the applicant submitted that, pursuant to s 17 of the OHS Act, the respondent failed to take all reasonably practicable steps to ensure that Ms Valerie Saub, Ms Flora Enosa and Ms Ethena Enosa were not exposed to risk to their health or safety arising from the conduct of the respondent’s undertaking. The detail of this failure, as asserted and relied upon by the applicant, is also admitted by the respondents and set out in para 95 and para 96 in the Statement of Agreed Facts filed 15 June 2010.

43    In extensive oral submissions, counsel for the applicant submitted that the failures of the respondent towards its employees and the relevant members of the public in relation to the incident were, in summary:

    the vessel was inadequate, compromised as to its flotation, and unsafe;

    the likely consequence that the vessel might become so full of water that it could not travel properly was actually known and imminently foreseeable;

    the crew of the vessel were asked to undertake a journey without safety equipment that was readily available. In particular, as became clear at the hearing, Mr Baira’s satellite phone was equipped with a navigation facility which would have enabled him to navigate in fog, however he was never informed of this facility;

    not only did DIAC did not have as any of its functions the operation of a marine fleet, but a line manager with no relevant expertise was tasked to put together a fleet of boats;

    no analysis had been undertaken by DIAC as to the risks and hazards associated with commissioning the relevant vessels or operating the fleet;

    no analysis had been performed at Saibai Island as to the consequences of putting a vessel to sea which had demonstrated that it was compromised in terms of its flotation;

    no analysis had been performed as to the consequences of putting a vessel to sea without commonly available navigation equipment.

44    In terms of the penalty, the applicant submitted in summary that the fact that such catastrophic consequences occurred so quickly and easily in relation to the tragedy, and were so easily and readily avoidable, indicates that this matter is one that calls for the maximum penalty available under the OHS Act in respect of each of the contraventions.

Submissions of the respondent

45    As identified earlier in this judgment, in its submissions the respondent admits contraventions of s 16(1) and s 17 of the OHS Act and admits further that it is appropriate that it pay a pecuniary penalty pursuant to cl 4 of Pt 1 of Sch 2 of the OHS Act. The respondent also acknowledges that in light of its systematic failures, considerations of general deterrence, and the extreme gravity of the consequences of the conduct, the imposition of a penalty towards the maximum available would be appropriate.

46    In its submissions, the respondent has brought to the Court’s attention various mitigating factors for its consideration. The following is a summary of these factors:

    Due to his inexperience, Mr Chaston acted in co-ordination with a range of people in the acquisition of the marine vessels and the operation of the marine fleets, including:

    Mr Paul Nemes, a senior contract advisor in the Contracts Procurement and Advice Unit of DIAC;

    Mr Greg Hellessey, a qualified marine engineer employed by the Australian Customs Service in Canberra;

    the MMOs;

    the Queensland Police Service;

    the Royal Australian Navy;

    the Army; and

    an evaluation team for the tenders received including Mr Bin Juda (a team leader within DIAC in its Thursday Island office), Mr Gordon Munro (a marine engineer from the Australian Army), and Mr Steve Gibson (a marine engineer from the Royal Australian Navy).

    Although Mr Chaston did not have the relevant expertise to determine satisfactorily whether the vessels were constructed in compliance with the Subsee contract, the USL Code and AS 1799 and AS 1665, he made two visits to the builder’s yard through the construction process.

    The principal of Subsee, Mr Don Radke executed statements and certificates of positive flotation for each of the vessels, including the Malu Sara, certifying that the vessels were able to remain afloat in an upright position when filled with water. These positive flotation statements were false.

    DIAC had in place SOPs for the IRVs containing instructions for the MMOs including administrative processes and operational information. The information included limits of operation in terms of area, day of operation, duration, weather, and crew qualifications.

    DIAC has acted in an appropriate and responsible manner following the scale back for the search of the vessel and its occupants. Its actions have included:

    instigating an investigation into the circumstances of the loss of the vessel and its occupants;

    making a number of recommendations including the suspension of the use of the vessels and an examination of the remaining vessels by independent marine experts;

    the immediate suspension of the use of the remaining vessels on 15 October 2010;

    the implementation of new procurement and contractual management procedures (see para 91 Statement of Agreed Facts filed 15 June 2010);

    specific further steps in relation to its Torres Strait operations (see para 92 Statement of Agreed Facts filed 15 June 2010); and

    no longer owning and operating vessels used in the Torres Strait;

    DIAC co-operated with the applicant from an early stage in its investigation of the circumstances of the incident and in these proceedings generally by indicating it would admit the contraventions; and

    DIAC has made formal apologies to the families of the victims, offered financial support for the family members of those lost, and implemented a new MMO development program.

Consideration

47    In my view, the seriousness of the respondent’s offending conduct in these circumstances is of the highest degree. It follows that the appropriate order is the imposition of the maximum statutory penalty. I make this finding in light of the systematic failures of the respondent, considerations of general deterrence, and in particular, the extreme gravity of the consequences of the respondent’s conduct.

48    Reference to the sentencing principles derived by Madgwick J in Comcare in the context of the circumstances of this case supports this finding. In particular:

(i)    The maximum penalty compels the most attention allowed by statute in this case.

(ii)    In the relevant circumstances the risk of injury to Commonwealth employees and members of the public was clearly foreseeable, in so far as the failure to satisfactorily construct and equip a seagoing vessel for transport on the open waters of Torres Strait was likely to cause extreme risk to the health and safety of those who would be entirely reliant on that vessel to sustain their lives.

(iii)    The risk of injury in this case was not only foreseeable, it was actually foreseen. Only two days before the fatal journey the Malu Sara experienced problems with its buoyancy. The actions taken to address this issue was clearly inadequate in the circumstances of this case.

(iv)    The occurrence of multiple deaths has, in these circumstances, manifested the degree of seriousness of the relevant detriment to safety.

(v)    The tragic events in this case have not been caused by inadvertence or by a momentary lapse of supervision, but by a systematic failure of the respondent to appropriately address known and foreseeable risks. While Mr Chaston did act in co-ordination with various people in the acquisition of the marine vessels and the operation of the marine fleets, he clearly did not have the relevant expertise to oversee the project, and indeed this absence of expertise appeared known to DIAC. Despite this, Mr Chaston was responsible for the entirety of the implementation and supervision of the project. Three failures, in particular, highlight Mr Chaston’s inexperience and the failure of the respondent in this respect:

(a)    his lack of awareness of the consequences of reducing the specification in the request for tender to omit a reference to the vessels being capable of use in open waters;

(b)    his lack of awareness of the implications of failing to ensure all six written certificates in relation to the construction of the vessels were received before finalising the contract with Subsee; and

(c)    his failure to take appropriate action in relation to the Malu Sara after evidence of the vessel’s compromised buoyancy was brought to his attention just two days before its fatal journey.

(vi)    Although DIAC no longer owns or operates vessels used in the Torres Strait, it is appropriate that those responsible for the procurement, construction and maintenance of vessels of this kind be held to the highest standards in respect of those responsibilities.

(vii)    The respondent’s approach to safety was not sufficiently proactive. This is particularly so in light of the size of the respondent’s enterprise and the inherent risks to safety involved with sending employees on sea voyages. While DIAC had SOPs in place, they were inadequate and their implementation was clearly unsatisfactory.

(viii)    The level of the maximum penalty set by the OHS Act is relatively high. In my view it is fit that it be imposed in light of the seriousness of the breach in these proceedings.

(ix)    While not required by the legislation, the circumstances incorporating Mr Chaston’s inexperience would, in my view, demand the simple precaution of having the vessel inspected by an independent marine surveyor. This apparently simple precaution may have ensured that the vessels were constructed in compliance with the contract standards stipulated.

49    I note that all possible steps were taken to search for the Malu Sara and its crew and passengers once relevant authorities understood the gravity of the circumstances involving the vessel.

50    I note further the respondent’s submissions, in mitigation, that:

    DIAC acted appropriately and responsibly following the scale back for the search of the vessel and its occupants; and

    DIAC co-operated with the applicant from the early stages of the incident’s investigation and through the proceedings generally, including admitting to the contraventions.

51    I acknowledge the positive actions of the respondent following the incident to avoid a repetition of a similar tragedy, as well as the steps taken by DIAC to compensate the families of the deceased, and to honour the memory of the deceased.

52    There are no statutory entitlements to “credit” or “discount” on penalty where a respondent acknowledges fault and indeed co-operates with the applicant through the proceeding. However, as a matter of public policy, such actions will commonly entitle a respondent to additional consideration when penalty is assessed: Barker J in Comcare v John Holland Rail Pty Ltd [2009] FCA 771 at [143].

53    In the present circumstances however I consider that no reduction in the maximum penalty is warranted. Notwithstanding the positive actions of the respondent following the incident, I accept the submissions of the applicant that the respondent acted in a manner no more than one would expect of a Commonwealth department when confronted with the extraordinary tragedy which occurred in these circumstances. The manifest seriousness of the shortcomings in the conduct of the respondent leading to the tragic events can not, in my view, be qualified in any respect by subsequent actions taken by DIAC. The events leading to the loss of five lives were entirely avoidable, and indeed entirely avoidable on numerous occasions in this disastrous sequence of events.

54    Accordingly, the appropriate penalty is the maximum penalty of $242,000.00.

Family impact evidence

55    At the hearing of this matter, Mr Herbert for the applicant tendered the victim impact statement of Mr Fred Joe (partner of Ms Flora Enosa and father of Ms Ethena Enosa) and the family impact statement of Mr and Mrs John and Henrietta Saub (parents of Ms Valerie Saub). These statements provide a stark insight into the grief caused by the loss of their family members. The Court extends its regret and sympathy to all of the families and friends of those aboard the Malu Sara who so tragically were lost at sea.

Associate:

Dated:    2 December 2010