FEDERAL COURT OF AUSTRALIA

Comcare v Australian Postal Corporation [2011] FCA 530

THE COURT DECLARES THAT:

1.    In April and May 2008, the respondent contravened clause 2(1) of Schedule 2 of the Occupational Health and Safety Act 1991 (Cth) (“OHS Act”) by reason of its having breached section 16(1) of the OHS Act in that:

a)    despite documenting procedures (“documented procedures”) for the inspection, maintenance and repair of motorcycles, which were used by Postal Delivery Officers (“PDOs”) employed or engaged under contract at the Palmerston Delivery Centre in the Northern Territory (Palmerston DC) to perform postal delivery services, it failed to effectively implement the documented procedures;

b)    it failed to provide the supervisor/manager at the Palmerston DC with adequate training in relation to the documented procedures necessary to enable him to:

i)    understand the obligation upon him as supervisor to observe PDOs carrying out daily inspections of their motorcycles;

ii)    understand and carry out the obligations he was required to discharge as supervisor under the documented procedures;

iii)    understand and carry out the obligations he was required to discharge as manager under the documented procedures;

c)    it failed to provide the PDOs at the Palmerston DC with the training necessary to enable them to perform their work consistent with the documented procedures by:

i)    causing the PDOs to undertake training conducted by someone who understood the documented procedures; and

ii)    causing the PDOs to be tested on their understanding of the training by someone who understood the documented procedures;

d)    it failed to maintain six of the motorcycles used by the PDOs at the Palmerston DC in a manner which was safe for the PDOs and without risk to their health.

2.    By the matters set out in paragraph 1, the respondent breached its duty under section 16 (1) of the OHS Act to take all reasonably practicable steps to protect the health and safety at work of its employees and (by the operation of s 16(4) of the OHS Act) a contractor, being the PDOs, in that, in April and May 2008 it failed to take all reasonably practicable steps:

a)    to ensure that each of the six workplaces under its control, being each of the six motorcycles, was safe for the PDOs at the Palmerston DC and without risk to their health;

b)    to ensure the safety at work of, and the absence of risks at work to the health of, the PDOs at the Palmerston DC in connection with the use of the plant, being each of the same six motorcycles;

c)    to provide to Mr Nurton the instruction and training and to the PDOs at the Palmerston DC the instruction, training and supervision, necessary to enable them to perform their work in a manner that was safe and without risk to their health.

3.    The Commonwealth Authority to which the conduct relates is the Australian Postal Corporation.

THE COURT ORDERS THAT:

4.    Pursuant to clause 4 of Schedule 2 of the OHS Act, on or before 4.00pm on 30 April 2011, the respondent pay a penalty of $95,000.00.

5.    The respondent pay the applicant’s costs fixed in the amount of $80,000.00.

6.    The application be otherwise dismissed.

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

INTRODUCTION

1    The applicant in this proceeding, Comcare, sought declarations and orders imposing pecuniary penalties on the respondent, Australian Postal Corporation (“Australia Post”), for contravention of clause 2(1) of Part 1 of Schedule 2 of the Occupational Health and Safety Act 1991 (Cth) (“the OHS Act”) by reason of its having breached s 16(1) of the OHS Act.

2    Comcare is a body established by s 68 of the Safety, Rehabilitation and Compensation Act 1988 (Cth). Comcare may institute proceedings for breach of the OHS Act and may seek a declaration of contravention or pecuniary penalty: see OHS Act, s 77(1) and subclause 5(1) of Part 1 of Schedule 2. Australia Post is and was at all material times a “Commonwealth authority” and an “employer” as those terms are defined in s 5(1) of the OHS Act.

3    By Comcare’s amended statement of claim filed on 18 February 2011, Comcare alleged that Australia Post had breached s 16(1) of the OHS Act by failing to implement safety procedures relating to motorcycles used for the delivery of mail at the Palmerston Delivery Centre (“PDC”) in the Northern Territory. Comcare sought declaratory relief and the imposition of a penalty.

4    The matter was listed for hearing on liability only for 3 days in March and April this year. On 25 March 2011, however, Comcare filed a Statement of Agreed Facts and Contraventions (“statement of agreed facts”), in which Australia Post admitted one contravention of s 16(1) of the OHS Act. In its written submissions, Australia Post stated that the parties agreed that there had been a failure on its part:

-    to ensure that each of the six workplaces under its control, being each of the six motorcycles, was safe for the postal delivery officers (PDOs) at the PDC and without risk to their health;

-    to ensure the safety at work of, and the absence of risks at work to the health of, the PDOs at the PDC in connection with the use of plant, being each of the same motorcycles;

-    to provide to Mr Nurton (the manager/supervisor of the PDC) the instruction and training, and the PDOs at the Palmerston DC the instruction, training and supervision, necessary to enable them to perform their work in a manner that was safe and without risk to their health.

5    The parties also agreed on final relief. Notwithstanding this agreement, however, it is ultimately for the Court to make an assessment of what, if any, penalties should be imposed. It is also for the Court to determine the appropriate terms of any declaration of contravention. The parties addressed these matters orally at a hearing on the morning of 31 March 2011. Comcare also filed written submissions on 25 March 2011. Australia Post filed written submissions on 29 March 2011 and an affidavit affirmed by Mr Stephen Hehir on 29 March 2011. Mr Hehir was the Manager of Technical Safety, Enterprise Safety, People and Community of Australia Post.

6    On the afternoon of 31 March 2011, after considering the parties’ submissions, I made the declarations and imposed a penalty generally in accordance with the parties’ submissions. I also ordered that Australia Post pay Comcare’s costs fixed in the amount of $80,000. The following are the declarations and orders made that day:

THE COURT DECLARES THAT:

1.    In April and May 2008, the respondent contravened clause 2(1) of Schedule 2 of the Occupational Health and Safety Act 1991 (Cth) (“the OHS Act”) by reason of its having breached section 16(1) of the OHS Act in that:

(a)    despite documenting procedures (“documented procedures”) for the inspection, maintenance and repair of motorcycles, which were used by the Postal Delivery Officers (“PDOs”) employed or engaged under contract at the Palmerston Delivery Centre in the Northern Territory (Palmerston DC) to perform postal delivery services, it failed to effectively implement the documented procedures;

(b)    it failed to provide the supervisor/manager at the Palmerston DC with adequate training in relation to the documented procedures necessary to enable him to:

(i)    understand the obligation upon him as supervisor to observe PDOs carrying out daily inspections of their motorcycles;

(ii)    understand and carry out the obligations he was required to discharge as supervisor under the documented procedures;

(iii)    understand and carry out the obligations he was required to discharge as manager under the documented procedures;

(c)    it failed to provide the PDOs at the Palmerston DC with the training necessary to enable them to perform their work consistent with the documented procedures by:

(i)    causing the PDOs to undertake training conducted by someone who understood the documented procedures; and

(ii)    causing the PDOs to be tested on their understanding of the training by someone who understood the documented procedures;

(d)    it failed to maintain six of the motorcycles used by the PDOs at the Palmerston DC in a manner which was safe for the PDOs and without risk to their health.

2.    By the matters set out in paragraph 1, the respondent breached its duty under section 16(1) of the OHS Act to take all reasonably practicable steps to protect the health and safety at work of its employees and (by the operation of s 16(4) of the OHS Act) a contractor, being the PDOs, in that, in April and May 2008 it failed to take all reasonably practicable steps:

(a)    to ensure that each of the six workplaces under its control, being each of the six motorcycles, was safe for the PDOs at the Palmerston DC and without risk to their health;

(b)    to ensure the safety at work of, and the absence of risks at work to the health of, the PDOs at the Palmerston DC in connection with the use of the plant, being each of the same six motorcyles;

(c)    to provide to Mr Nurton the instruction and training and to the PDOs at the Palmerston DC the instruction, training and supervision, necessary to enable them to perform their work in a manner that was safe and without risk to their health.

3.    The Commonwealth Authority to which the conduct relates is the Australian Postal Corporation.

THE COURT ORDERS THAT:

4.    Pursuant to clause 4 of Schedule 2 of the OHS Act, on or before 4.00pm on 30 April 2011, the respondent pay a penalty of $95,000.000.

5.    The respondent pay the applicant’s costs fixed in the amount of $80,000.00.

6.    The application be otherwise dismissed.

I stated that I would deliver my reasons for judgment at a later date. What follows are my reasons for judgment.

relevant legislative provisions

7    Section 16 of the OHS Act relevantly provides as follows:

Duties of employers in relation to their employees etc.

(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:

…

(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

(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

…

(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.

…

(4)    The obligations of an employer in respect of the employer’s employees that are set out in subsections (1) and (2) apply also in respect of persons who are contractors of that employer but only in relation to:

(a)    matters over which the employer has control; …

…

(5)    Without limiting the generality of subsection (1) insofar as that section applies in relation to an employer’s employees, the employer breaches that subsection if the employer fails to take all reasonably practicable steps:

(a)    to take appropriate action to monitor the employees’ health and safety at work, and the conditions of the workplaces under the employer’s control; or

(b)    to maintain appropriate information and records relating to the employees’ health and safety; …

…

In this provision, an employer includes a Commonwealth authority, such as Australia Post. The meaning of “contractor” is set out in s 9A of the OHS Act.

8    Part 1 of Schedule 2 to the Act deals with civil proceedings. Clause 2(1) states that, if a court considers that a person has breached certain provisions, including s 16(1), then “it must make a declaration that the person has contravened” the subclause. A declaration of contravention must, by virtue of clause 2(3), specify:

(a)    the court that made the declaration;

(b)    that the subclause was contravened;

(c)    any provision that the person who contravened that subclause breached or was involved in breaching;

(d)    the person who contravened that subclause;

(e)    the conduct that constituted the contravention;

(f)    the Entity, Commonwealth authority or non-Commonwealth licensee to which the conduct related.

9    Clause 4 of Part 1 of Schedule 2 further stated that:

(1)    If a court has declared, under subclause 2(1), a contravention of that subclause by a person because the person breached, or was involved in the breach of, a provision listed in that subclause, the court may order the person to pay the Commonwealth a pecuniary penalty.

(2)    The pecuniary penalty must not exceed the amount stated in the table to be the maximum penalty in relation to the provision concerned.

The maximum penalty stated in relation to s 16(1) is 2,200 penalty units. A “penalty unit” is defined by s 4AA of the Crimes Act 1914 (Cth) as being $110. Therefore, the maximum penalty for a contravention of s 16(1) of the OHS Act is $242,000.

APPLICABLE PRINCIPLES

10    The parties agree, and I accept, that the Court should inform itself of the facts relevant to the grant of declaratory relief by reference to the statement of agreed facts, the admissions contained in Australia Post’s Defence, and the parties’ consent to the granting of the declaratory relief. This is consistent with the approach taken in other cases involving clause 2 of Part 1 of Schedule 2 to the OHS Act: see Comcare v Linfox Australia Pty Ltd (2010) 198 IR 160 (“Linfox”) at 167 [35] and Comcare v Post Logistics Australasia Pty Ltd (2008) 107 ALD 578 (“Post Logistics”) at 583 [24].

11    A summary of the guiding principles where the parties have agreed on penalty is contained in the Full Court’s judgment in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 (‘Mobil’) at [51], where the Court in substance said:

(a)    it is the responsibility of the court to determine the appropriate penalty;

(b)    determining the amount of penalty is not an exact science;

(c)    within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another;

(d)    there is public interest in promoting settlement of litigation, particularly where it is likely to be lengthy;

(e)    the view of the regulator, as a specialist body, is a relevant, but not determinative, consideration;

(f)    in determining whether the proposed penalty is appropriate, the court examines all of the circumstances of the case; and

(g)    where the parties have jointly proposed a penalty, it will not be useful to investigate whether the court would have arrived at that precise figure in the absence of agreement. The question is whether that figure, in the court’s view, is appropriate in the circumstances of the case. In answering that question, the court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if it is within the permissible range.

Mobil was under different legislation from that with which I am presently concerned. Nonetheless, Mobil provides some guidance in a case such as this, where the parties have agreed upon the appropriate penalty.

12    Courts exercising the current jurisdiction have identified numerous factors that may be relevant in assessing the appropriate penalty: see, for example, Comcare v Commonwealth (2007) 163 FCR 207 at 228-229 [120]-[123]; Comcare v Commonwealth (2009) 184 IR 441 at 461 [71]; Comcare v John Holland Rail Pty Ltd (2009) 188 IR 415 at 428-429 [136]-[142]; Comcare v National Gallery of Australia (2007) 98 ALD 67 at 68-69 [5]-[7]; and Linfox at 168 [40]. Compare too DPP v Amcor Packaging Australia Pty Ltd (2005) 11 VR 557 at 565 [35]. To quote Flick J in Post Logistics at 585-8 [32]-[39]:

[32]    In the statutory context of the present legislation, Madgwick J has focussed attention upon those considerations relevant to the imposition of a penalty in Comcare v Commonwealth (2007) 163 FCR 207 … . A member of the Australian Defence Force had there died in November 1994 as a result of heat stress sustained during an army training exercise. His Honour there observed (at [120]):

[120]    Decisions under the cognate New South Wales Act refer to the following considerations among others:

(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 the 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;

(ix)    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.

These considerations, it was concluded, “provide[d] useful, analogical, general guidance as to the approach to be taken in consideration of penalties under the Commonwealth Act”.

…

[36]    In the statutory context of the Trade Practices Act 1974 (Cth), French J … has attempted to summarise some of these considerations: Trade Practices Commission v CSR Ltd (1991) ATPR 41-076. When assessing the penalty to be imposed pursuant to s 76(1) of the 1974 Act his Honour observed (at 52,152-3):

The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following:

1.    The nature and extent of the contravening conduct.

2.    The amount of loss and damage caused.

3.    The circumstances in which the conduct took place.

4.    The size of the contravening company.

5.    The degree of power it has, as evidenced by its market share and ease of entry into the market.

6.    The deliberateness of the contravention and the period over which it extended.

7.    Whether the contravention arose out of the conduct of senior management or at a lower level.

8.    Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.

9.    Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.

…

[37]    These considerations may also be applied to the task of assessing the penalty to be imposed under the current legislation. To some extent the considerations set forth by Madgwick J overlap with those set forth by French J; to some extent they do not.

[38]    Care must be taken to ensure that any listing of potentially relevant considerations do not themselves become an impermissible substitute for considering the terms of the legislation in issue or an unnecessary constraint upon a discretion conferred in otherwise unconfined terms. …

[39]    … It is inappropriate to fix a penalty simply by reference to the quantum of a penalty imposed in another case.

13    In its written submissions and at the hearing, Australia Post submitted that the Court should be cautious about relying on cases from another jurisdiction where the legislation imposes an “absolute liability” to ensure the health, safety and welfare at work of its employees. Its counsel contrasted the terms of s 16(1) of the OHS Act with the language of ss 8 and 28 of the Occupational Health and Safety Act 2000 (NSW), submitting that the differences should be borne in mind when reading the NSW cases to which Madgwick J referred in Comcare v Commonwealth (2007) 163 FCR 207 and also in considering items (ii), (iii) and (ix) in his list at 228. Referring to Chugg v Pacific Dunlop Limited (1990) 170 CLR 249 at 263, Australia Post observed that, unlike this State legislation, under the OHS Act, “it is more likely that the construction of section 16 requires the Regulator to prove that the employer did not take a reasonably practicable step to protect the health and safety of its employees, rather than the employer prove this question of fact in its defence”: see also Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 at 553-555 [14]-[19]. Australia Post submitted that “the Court should be careful to ensure that it does not cause the facts underpinning the element of the offence to also constitute an aggravation of the offence”.

14    Without the benefit of full argument, it would be inappropriate for me to make any definitive statements about these submissions. As I indicated at the hearing, however, it seemed to me that these submissions had merit. I accept that the facts underpinning the elements of the offence should not also be treated as an aggravation of the offence. I doubt, however, that, in this particular case, acceptance of this principle affects the outcome.

15    In the end, as Buchanan J said in Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at 580, “the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations”.

CONSIDERATION

16    As Comcare noted in its written submissions, the remedies for which Part 1 of Schedule 2 of the Act provides are designed to promote the objects of the Act as stated in s 3.

17    The statement of agreed facts sets forth matters relevant to the nature and extent of the contravening conduct; the circumstances in which it took place; the size of the contravener; the deliberateness of the contravention; the period of the contravention; and the amount of loss and damage. I outline below the salient facts drawn from the statement of agreed facts. It is necessary to set out the facts in some detail in order to appreciate why a penalty of $95,000 falls within the permissible range notwithstanding that this is not a case in which injury has resulted from the admitted breaches.

The contravener

18    Australia Post is a body corporate established for a public purpose under a law of the Commonwealth and, amongst other things, engaged in the mail delivery business. At all times material, Australia Post had a number of employees acting as Postal Delivery Officers (“PDOs”) in its mail delivery business at Palmerston. Each PDO was a “Commonwealth authority employee” within s 9(2A); and an “employee” within s 9(1)(b) or a “Commonwealth authority contractor” within s 9(1)(b) and (3) of the OHS Act. The duties of a PDO at Palmerston included the delivery of mail using motorcycles owned by Australia Post. At the relevant time, Mr Michael Nurton was employed at the PDC as the Acting Postal Delivery Centre Manager.

19    At all relevant time Australia Post was the registered owner of the six motorcycles based at the PDC. Each of these motorcycles was used by the PDOs to deliver mail in Australia Post’s mail delivery business. Furthermore, each of these motorcycles was “plant” and a “workplace” as defined in s 5(1) of the OHS Act.

Past events – the undertaking

20    Some factors relevant to the present assessment of penalty relate to Australia Post’s giving of an enforceable undertaking to Comcare in December 2007 and the contents of that undertaking. The undertaking is an attachment to the statement of agreed facts. Amongst other things, the undertaking:

-    records that Australia Post has a sizeable workforce and operates nationally.

-    describes an incident in November 2004 in which an employee suffered serious personal injury when engaged in duties as a PDO attached to the Bundoora Delivery Centre in Melbourne. The undertaking states that the employee was hurt in a road traffic collision after losing control of a motorcycle used to deliver mail, following a “blow out” and pressure loss in the rear tyre. In the undertaking, Australia Post conceded that the failure of the tyre arose because of deficiencies on its part in ensuring the effective implementation of Australia Post’s motorcycle maintenance and inspection practices at the Bundoora Delivery Centre.

-    sets out the initiatives taken by Australia Post during 2004 through to 2006 to ensure the safety of PDOs working in its mail delivery business.

-    details Australia Post’s review and revision of procedures in 2007 to seek to ensure that motorcycles used in its mail delivery business were inspected each day and any faults were identified and repaired.

-    states that Australia Post would arrange an independent national compliance audit of the revised procedures to be completed by July 2008; that Comcare would be informed of the identity of the audit agency; and that the results of the audit would be given to Australia Post’s Corporate Audit Group and reported to its Board for any subsequent action. Australia Post was also to notify Comcare of the results and subsequent action. The statement of agreed facts indicates that these steps were taken.

The applicable documented procedures

21    The statement of agreed facts recorded that, during April and May 2008, there were three documented procedures applied at the PDC that set out the responsibilities of PDOs, supervisors of PDOs, and managers of PDOs in respect of a motorcycle pre-ride inspections. These documented procedures were described as:

1.    pre-ride inspection delivery work instruction DWI version 1.0;

2.    fault repairs DWI; and

3.    checklist guidelines.

22    The pre-ride inspection DWI version 1.0 set out the process of conducting daily pre-ride inspections and weekly facility audits. It set out the responsibilities of the PDO, the supervisor and the manager.

23    Broadly, the supervisor was described as being responsible for PDOs directly under his or her supervision conducting motorcycle daily pre-ride inspections as detailed in the DWI. The supervisor was responsible for conducting a weekly motorcycle pre-ride inspection with each PDO, in groups of up to 5 PDOs. The DWI version 1.0 stated that it was the supervisor’s responsibility to observe the PDOs conducting the check to ensure compliance with the pre-ride inspection kit. In doing this, under the pre-ride inspection DWI version 1.0, a supervisor was: to observe the PDOs conducting the motorcycle check to ensure it was performed in accordance with the checklist guidelines and checklist form; to provide instruction to the PDOs regarding the correct checking process/technique; to initial the checklist form on the day of the observation of the check; to report any non-compliance at the supervised motorcycle check to the manager; and to initial corrective action under the direction of the manager to rectify non-compliance with the pre-ride inspection conducted by the PDO.

24    Also under the pre-ride inspection DWI version 1.0, the supervisor had other responsibilities – to record the details of each pre-ride inspection on the weekly audit register; to assess each checklist form for compliance and describe the results on the weekly audit register; sign off the weekly audit register against each motorcycle used by a PDO under the supervisor’s supervision; and initiate corrective action under the direction of the manager to rectify non-compliance with the pre-ride inspection conducted by each PDO.

25    DWI version 1.0 broadly described the manager’s responsibilities as ensuring that: (1) the PDOs conduct daily motorcycle pre-ride inspections as set out in the DWI; and (2) supervisors conduct a pre-ride inspection observing the motorcycle check of the PDOs under their supervision. The DWI stated that it was the manager’s responsibility: to review the weekly audit register and checklist forms with the supervisor; to direct action to be taken where a non-compliance has been identified; to document action taken to rectify non-compliance; and to sign-off on the weekly audit register ensuring that a checklist form has been completed for each motorcycle within the facility.

26    The fault repairs DWI detailed the responsibilities of supervisors and managers for reporting and repair of motorcycle faults reported by the PDOs and for removing faulty motorcycles from service until satisfactory repairs were made. The manager and the supervisor had responsibilities for the recording of motorcycle faults reported by the PDO and for arranging for repair by an approved repairer as detailed in the fault repairs DWI. Either the manager or the supervisor could discharge the responsibility of: recording details of the motorcycle faults reported by the PDO in the Motorcycle Fault Reporting/Repair and Tag Out Register; signing off the checklist form acknowledging the fault has been reported and recorded for repair on the fault register; assessing if the motorcycle was in a safe condition for mail delivery or tagging out (removing the motorcycle from use) if the motorcycle were not in a safe condition; and documenting details of the motorcycle faults on the repair form and recording the “registration number” and the “PT 35 number” on the fault register.

27    Under the fault repairs DWI, the manager and the supervisor had responsibilities for ensuring the repair of any faulty motorcycles. Either might discharge the following responsibilities – contacting the authorised repairer to arrange repair of any faulty motorcycle and advising necessary details; on completion of repairs, examining the motorcycle and confirming repairs have been completed as detailed on the repair form and that the motorcycle was available for delivery duties; on completion of repairs, verifying the fault register has been rectified by the repairer as detailed on the repair form and the checklist form and that the repairer has signed off the repair form confirming that repair has been completed; and signing off the fault register verifying the fault repair has been completed.

28    In addition, the manager was responsible for verifying that all the details on the fault register had been entered correctly at the end of each week. The manager had also to go through the fault register with the supervisor to detail and action non-compliance issues and to sign off the fault register entering such details as name, signature and the date. The manager had also to perform random audit checks to ensure that any fault identified on the checklist form had been entered onto the fault register.

29    The checklist guidelines set out the way in which a PDO was required to perform the motorcycle daily pre-ride inspection, along with the acceptable ranges for tyre depth, tyre pressure, and brake and chain free play. The checklist guidelines set out 13 pre-ride inspections that needed to be carried out every day on the motorcycles (including general visual check, mirrors, throttle, general check items, side stands, SafePak, tyres (pressure and tread), wheels and spokes, brakes, drive chain, fuel system, engine oil and electrics) and what to look for when checking the motorcycles. In accordance with the pre-ride inspection DWI version 1.0, each PDO was required to check their motorcycle each day and to complete the checklist form in accordance with each of the items as outlined in the checklist guidelines.

The paperwork for compliance

30    The statement of agreed facts showed that there were four sets of paperwork used to document and ensure compliance with the documented procedures, namely:

(a)    the PDOs were to fill out the ‘checklist’ when completing their daily pre-ride inspection;

(b)    the weekly audit register designed to record whether the motorcycles were compliant based on the completed checklist forms and to record whether the PDO was performing the check properly;

(c)    the fault register designed for the supervisor or manager to record any fault with a motorcycle that requires repair and to verify that that fault was repaired; and

(d)    the repair form used to communicate between Australia Post and the approved mechanic, and containing details of any fault that required repair with a corresponding section where the mechanic detailed the maintenance performed.

Processes contemplated by the documented procedures

31    In April and May 2008, when conducted in accordance with the pre-ride inspection DWI version 1.0 and checklist guidelines, the relevant procedures were as follows:

-    The PDOs conducted a check of their motorcycles as outlined in the checklist guidelines on each day they rode a particular motorcycle.

    If there were no faults, the PDO marked the checklist form with a tick and initials to indicate the check had been done on each day.

    If there were faults, the PDO marked the checklist form with a cross, detailed the fault in the “faults reported” section and initialled to indicate the check had been done on that day. If the recorded fault required repair, the PDO was to notify the supervisor and the supervisor would assess whether the motorcycle was in a safe condition for mail delivery or whether it ought to be tagged out if it were not in a safe condition. If the recorded fault could be attended to by the PDO (as for example, by putting air into tyres, topping up the oil level, or filling a motorcycle with petrol) the supervisor would not need to be notified.

-    The supervisor conducted a weekly supervised check of the PDOs conducting their check of their motorcycles as outlined in the checklist guidelines.

    If the PDO’s check was conducted in accordance with the pre-ride inspection DWI version 1.0 and checklist guidelines, the supervisor would initial the checklist form to indicate the weekly supervised check had been done on a particular day, in compliance with the documented procedures.

    If the PDO’s check had not been conducted in accordance with the pre-ride inspection DWI version 1.0 and checklist guidelines, the supervisor would provide instruction to the PDO regarding correct checking processes or techniques. Once this was done the supervisor would initial the checklist form verifying it occurred on the day the PDO was observed performing the check.

-    The supervisor was to collect each of the checklist forms, check them for compliance, and record details of each PDO’s check in the weekly audit register. The supervisor was to sign off the weekly audit register against each motorcycle used by the PDOs under their supervision and report any non-compliance to the manager in the right hand column of the weekly audit register.

-    The manager was to review the weekly audit register and checklist forms with the supervisor. If there was an error in the PDO’s completion of the pre-ride inspection or checklist form, the manager was to direct that action be taken in relation to the non-compliance and record the action taken to rectify the non-compliance. The action was recorded in the right hand column of the weekly audit register.

-    When a fault was reported, the supervisor or manager would record details of the faults by: signing off the checklist form acknowledging that the fault had been reported and recorded for repair on the fault register; recording the fault in the fault register; and assessing the motorcycle to ensure that it was in a safe condition for mail delivery and tagging it out if it was not.

-    The supervisor or manager would arrange to contact a mechanic to repair any fault with a motorcycle. Once the fault was repaired, the supervisor or manager would examine the motorcycle and confirm the repairs had been completed; and sign the fault register verifying the fault had been repaired.

The process operating at PDC in April and May 2008

Checklist forms

32    The documented procedures contemplated a separation of duties between the supervisor and the manager. In April and May 2008, however, both roles were being performed by the one person, Mr Nurton.

33    The parties agreed that Mr Nurton was not adequately trained for his role as both supervisor and manager at this time and, as a consequence, the process for ensuring inspection and maintenance of the motorcycles was not consistent with the pre-ride inspection DWI version 1.0 and checklist guidelines. The parties have agreed that, as a consequence of receiving inadequate training, Mr Nurton was not able to perform this dual role in a meaningful manner.

34    According to the statement of agreed facts, during April and May 2008, the PDOs would generally conduct their pre-ride inspections and complete their checklist forms when they first arrived at work at about 7:15 am. They would do so as a group. Mr Nurton did not supervise the inspections as required by the DWIs, but the inspections were generally done in his presence so that the PDOs could raise any concerns or questions.

Weekly audit register

35    The statement of agreed facts also described the use of the weekly audit register. The following account is drawn from it.

36    In the period from November to May 2008, Mr Nurton also misunderstood the role of the supervisor when the pre-ride inspections were being conducted and the correct way to complete the weekly audit register. Mr Nurton understood that his duties, in regard to the safety of the motorcycles and the PDOs, were to ensure that: (1) the motorcycles were compliant with the checks on the motorcycle pre-ride check; (2) the PDOs were trained in pre-ride check procedure and had safety gear (issued by Australia Post or their own); (3) the motorcycles were maintained on a regular basis; and the motorcycles were not overloaded with mail. In light of this, Mr Nurton believed that he needed to check the motorcycle himself. Weekly and randomly, Mr Nurton conducted his own checks of the motorcycles, then initialled the section on the checklist form to indicate that he had completed an ad hoc check. This was based on his previous experience as team leader at the Darwin Delivery Centre, where he had to check a selected motorcycle each day. In a three-week period, Mr Nurton would get through all the motorcycles and he would do a pre-ride inspection check on them. Generally he would either be there with the PDO when he did his own check or he would come after they had done their check. Mr Nurton did not observe the PDOs do their check.

37    Mr Nurton did not understand that it was the manager’s duty to confirm that the supervisor’s duties were being complied with, by signing off on the maintenance and tagging out of motorcycles.

38    According to the statement of agreed facts, Mr Nurton is now aware of what the documented procedures require him to do in his role as supervisor with respect to the pre-ride inspections undertaken by the PDOs under his supervision.

Repair Form

39    The statement of agreed facts gave the following account of the use of the repair forms.

40    During April and May 2008, if the PDO found a fault, the PDO would record the fault in the “faults reported” section of the checklist form. In turn, Mr Nurton would record the fault in the weekly audit register and the fault register in accordance with the documented procedures. Alternatively, however, a fault may have been identified and reported by being written on a white board in the bike shed by Mr Nurton or the PDOs.

41    If the fault required the attention of a mechanic, Mr Nurton would call Alicross (the approved mechanic) and tell them of the faults that needed repair. If the motorcycle had to be removed from use pending repair, Mr Nurton would complete the repair form. Alternatively, as already noted, a fault may have been identified and reported by being written on a white board by Mr Nurton or the PDO for the Alicross mechanic. In turn, the Alicross mechanic would write on the white board what parts needed to be ordered or occasionally other faults that he may have found.

42    During April and May 2008, Mr Nurton had to call Alicross when he needed motorcycles repaired or serviced. As at May 2008 the Alicross mechanic would come to the PDC only if Mr Nurton called him. Thursday was the day allocated for maintenance but Alicross would also come out earlier for flat tyres and other essential maintenance, or if a motorcycle broke down on the road. During this period, when repair work was done on the motorcycles, a repair form was completed.

43    Between November 2007 and mid-March 2008, the Alicross mechanic completed the top part of the repair form. After this, Mr Nurton would fill out the top section stating what repairs or servicing needed to be done. The Alicross mechanic would use either the white board or the repair form to identify the repairs required. The supervisor would complete the repair verification column of the fault register after the actual repair work was done on the motorcycle.

44    Alicross mechanics would come out and do whatever work they considered they had to do on the motorcycle. Later Alicross would generally only do the work it was asked to do, although the Alicross mechanic that usually came to the PDC would often make suggestions to Mr Nurton about additional work that needed to be done or if a service was due. Mr Nurton generally went along with his suggestions. When the work was done by the Alicross mechanic, the mechanic would sign off the repair form. Mr Nurton would then sign off on the repair in the fault register to indicate that the work had been done.

April and May 2008 –Failure to comply with the documented procedure

45    The agreed statement of facts details specific instances where the documented procedures were not adequately complied with during April and May 2008. These included:

(a)    failures to complete the checklist forms in relation to three motorcycles – in the case of one motorcycle, for the weeks ending 16 and 30 May 2008; in the case of a second motorcycle, for the week ending 23 May 2008; and, in the case of a third, for the week ending 16 May 2008.

(b)    instances of failures to complete the checklist forms so as to communicate the existence of faults in accordance with the documented procedures.

(c)    instances where a fault reported in a checklist form had no equivalent entry on the fault register showing whether action was taken to remedy the fault (including tagging out of the motorcycle) as required by the documented procedures.

46    The parties agreed that, during April and May 2008, Mr Nurton failed to conduct a weekly motorcycle pre-ride inspection with each PDO under his direct supervision, as required by the documented procedures. The statement of agreed facts provides specific instances where Mr Nurton did not to conduct any check of specified motorcycles, as indicated by an absence of an entry on the weekly audit register in respect of that particular motorcycle. In the same months, Mr Nurton also failed to observe the PDOs conducting their motorcycle pre-ride inspections as required by the pre-ride inspection DWIs. Instead of observing the PDOs conduct a pre-ride inspection, Mr Nurton performed the pre-ride inspection himself and recorded the results in the weekly audit register. If he detected a fault, he would informally remind the PDO that it needed to be attended to, rather than highlight the PDO’s failure to inspect properly in the documentation. Further, during April and May 2008, Mr Nurton failed to provide consistent instructions to PDOs regarding correct checking processes and technique in circumstances in which the PDOs were not completing the inspections appropriately.

47    During April and May 2008, Mr Nurton (or a Mr Alderson) failed to identify and/or record faults with the motorcycles and failed to detect that the PDOs were not completing their pre-ride inspections appropriately, when conducting inspections of the motorcycles. In circumstances where a fault was recorded on the checklist form, but not on the fault register or the weekly audit register, Mr Nurton (or Mr Alderson) did not record the fault in the register documents.

48    In summary, the statement of agreed facts recorded that, during April and May 2008, Mr Nurton failed: (1) to record details of each motorcycle check on the weekly audit register; (2) failed to assess each checklist form for compliance and describe the result on the weekly audit register; (3) in his capacity as manager, failed to review the weekly audit register and checklist forms; and (4) by reason of the absence of equivalent entries in the fault register, Mr Nurton failed on a number of occasions to assess whether faults, which the PDOs had reported in their checklist forms as required by the fault repairs DWI, were required to be actioned. These failures constituted failures on Australia Post’s part to inspect, maintain and repair each of the motorcycles in accordance with the documented procedures.

Faults identified with the motorcycle and the risks identified at the PDC

49    The statement of agreed facts stated that, on 30 May 2008, there were numerous faults found on various motorcycles at the PDC, including on one motorcycle – rear tyres worn such that the motorcycle was unroadworthy; on a second motorcycle – a front tyre tread was worn below the manufacturer’s wear marks and the Australia Post tread depth gauge and the rear brakes were worn beyond the arrow indicators indicating safety; and on a third motorcycle – the front tyre tread was worn below the manufacturer’s wear marks and the Australia Post tread depth gauge. In sum, six of the nine motorcycles were found to have faults. The statement of agreed facts recorded that each of the motorcycles in which fault was found presented a risk to the health and safety of the PDOs designated to ride the particular motorcycle.

Training requirements

50    The statement of agreed facts recorded that Australia Post provided Mr Nurton with training that was “rushed, inadequate and inconsistent with [its] own requirements”. Mr Nurton received training on the pre-ride inspections from the then Delivery Manager at the Darwin Delivery Centre, Mr Mark Woods, for about 20-25 minutes. Australia Post did not formally train Mr Nurton in respect of his role as PDC manager as set out in the DWIs; and Mr Nurton was not clearly instructed about his responsibilities as supervisor and manager when conducting and supervising pre-ride inspections.

51    The parties agreed that:

Had Mr Nurton and the PDOs implemented the documented procedures as prescribed, it is more likely than not that, on 30 May 2008, the motorcycles would have presented for use as safe and without risk to health.

Failure by the respondent to comply with its duties

52    The parties agreed that it was reasonably practicable for Australia Post to take the following steps to protect the health and safety at work of the PDOs at the PDC:

1.    effectively implement the procedures contained in the pre-ride inspection DWIs and the fault repairs DWI;

2.    provide Mr Nurton with training in relation to the pre-ride inspection DWIs and the fault repairs DWI:

a.    by providing the pre-ride inspection DWI version 1.0 and the fault repairs DWI to Mr Nurton either before, or at the time of, his training;

b.    necessary to enable Mr Nurton to understand and carry out the obligation to observe PDOs carrying out checks of their motorcycles;

c.    necessary to enable Mr Nurton to understand and carry out the obligations he was required to discharge as supervisor by testing him so as to be satisfied that they were understood; and

d.    necessary to enable Mr Nurton to understand and carry out the obligations he was required to discharge as manager by testing him so as to be satisfied that they were understood;

3.    provide to the PDOs at the PDC training necessary to enable them to perform their work consistent with the relevant procedures by:

a.    causing the PDOs to undertake training conducted by someone who understood the DWIs; and

b.    causing the PDOs to be tested on their understanding of the training by someone who so understood the DWIs.

53    As a consequence of the matters listed above, Australia Post agreed that it had failed to take reasonably practicable steps to protect the health and safety of its employees at the PDC; and that it had contravened s 16(1) of the OHS Act by failing to: (1) take all reasonably practicable steps to ensure each workplace under its control (namely, the motorcycles) was safe for the PDOs at the PDC and without risk to their health; (2) take all reasonably practicable steps to ensure the safety at work of, and the absence of risks at work to the health of, the PDOs at the PDC in connection with the use of plant (namely, the motorcycles); and (3) take all reasonably practicable steps to provide to Mr Nurton the instruction and training, and to the PDOs at the PDC the instruction, training and supervision necessary to enable them to perform their work in a manner that was safe and without risk to their health.

Some observations about the agreed facts

54    This is not a case, like many cases in this area, where a breach of s 16(1) of the OHS Act has resulted in injury, or even death, of an employee (or contractor). What is notable here is the undertaking given by Australia Post to Comcare in December 2007, some several months or so before the breaches in question in this case. The undertaking in terms shows that it came about following the injury of an Australia Post employee after a motorcycle tyre ‘blew-out’ in 2004 at least in part because of excessive tyre wear. The seriousness of the injury occasioned by this incident is also apparent from the undertaking that records that the employee was unable to work for a number of months. In these circumstances, Australia Post acknowledged that it “had foreseen the risks associated with postal delivery motorcycles”. Evidently too the risk of serious injury as a result of riding motorcycles with faults of the kind identified in the motorcycles at the PDC (as, for example, worn tyres) was plain enough.

55    Following the incident in 2004, Australia Post developed the documented procedures for the systematic maintenance and repair of motorcycles used in its mail delivery business. It is not, however, suggested that the failure to implement the documented procedures at the PDC constituted a systemic failure at a national level. Australia Post submitted (and, for present purposes, I accept) that this was “an example of a large national employer that did foresee a risk, developed a system to protect its employees against that risk, and failed to correctly implement that system at a specific locality over a specified period of time”. Australia Post added (and, for present purposes, I accept) that “[t]hat the Breach occurred in the context of the Respondent’s response to a previous incident is a relevant consideration. But only insofar as it contextualises the objective seriousness of the omission on this occasion”. Further, for the same reason, whilst not a circumstance of aggravation, it is also relevant that non-compliance with the documented procedures exposed the PDOs riding the motorcycles to the risk that the motorcycles would not be free of faults that could endanger their health and safety. Indeed, it was agreed that the state of the six faulty motorcycles at the PDC was attributable to the failure properly to implement the documented procedures.

56    The documented procedures were straightforward enough: compliance with them involved reasonably practicable steps to protect the health and safety at work of the PDOs. The failure to conform to the documented procedures was largely attributable to the lack of adequate training and instruction given by Australia Post to the then supervisor/manager at the PDC and to the PDOs themselves. The breach was not, however, deliberate; and only a two-month period is in question.

Deterrence – General and Specific

57    General deterrence is plainly important. The agreed penalty is likely to compel attention generally to the need to conform to the OHS Act. Further, specific deterrence is, in my view, a relevant consideration notwithstanding the enforceable undertaking that Australia Post has already given and its taking of corrective steps to avoid exposing its PDOs to health and safety risks when using motorcycles in its mail delivery business in future (as deposed to by Mr Hehir; see below).

Conduct of Contravener after the contravention

58    Contrition, corrective action and co-operation with enforcement authorities are all relevant mitigating factors.

59    Comcare acknowledged unreservedly that Australia Post had co-operated fully with it during the course of its investigation into the conduct at the PDC, which is the subject of this proceeding. Comcare stated that Australia Post’s representatives attended recorded interviews and made concessions where warranted. Further, as noted, Australia Post ultimately entered into the statement of agreed facts (in which the contravention was admitted) and agreed on penalty: see Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 cited in Post Logistics at 589 [45]. Australia Post’s agreement on these matters obviated the need for a trial, which in turn would have required the attendance in court of numerous witnesses.

60    Furthermore, in his affidavit, Mr Hehir explained the safety systems and processes utilised by the respondent to protect its employees and others engaged in postal services, including the implementation of a new state of the art computer system designed to assist Australia Post monitor and audit the implementation of its occupational health and safety policies and procedures; the adoption of a system to identify areas of concern and to ensure that they were properly addressed; and the engagement of external auditors, to make compliance findings. Mr Hehir also described the proposed future program with respect to occupational health and safety initiatives, including a cultural change initiative “to develop … a grass roots cultural approach to OHS”. On the basis of Mr Hehir’s affidavit, it would appear that Australia Post is now adopting a comprehensive and proactive approach to occupational health and safety and, in particular, has taken steps to avoid further contravention of the OHS Act, especially of the kind that occurred at the PDC.

61    There is also evidence of contrition on the part of Australia Post’s senior management. In his affidavit, Mr Hehir on behalf of Australia Post, offered an apology for the conduct that gave rise to the breach at the PDC in the Northern Territory. Mr Hehir stated that Australia Post deeply regretted the circumstances that gave rise to the proceedings. Mr Hehir has responsibility for systems of the type in question in this case. Moreover, in this connection, I noted at the hearing that Australia Post’s national manager of workplace relations, human resources, mail and networks division, Mr Furlan, was present in court on the day. Mr Furlan’s responsibilities include responsibility for those responsible for training Australia Post’s staff. I understand from his presence and that of Mr Hehir that the representatives of Australia Post appropriately understood the seriousness of the present matter.

62    Ultimately, as I have said, the assessment of appropriate penalties is a matter for the Court’s discretion, which is to be exercised judicially and in accordance with received principles. There is no prescriptive or exhaustive list of factors that fall for consideration. I have mentioned above those that have chiefly concerned me in this case. The principles that should inform the Court’s exercise of discretion are generally well-established: see, in a different context, CFMEU v Williams (2009) 262 ALR 417 at 428; Stuart v CFMEU (2010) 185 FCR 308 at 321; CFMEU v Cahill (2010) 194 IR 461; and Australian Building & Construction Commissioner v CFMEU (No 2) (2010) 199 IR 373, 376-378 at [3]-[17]. It is unnecessary to restate them here.

63    Having regard to the governing principles and the matters mentioned, I was satisfied that the agreed penalty was within the permissible range. Further, having regard to the matters mentioned, I was persuaded that it was proper to make the declarations of contravention in the form agreed by the parties.

64    The parties also agreed that the Court should order that Australia Post pay Comcare’s costs of the proceeding fixed at $80,000. Australia Post agreed that the figure of $80,000 represented a fair assessment of Comcare’s party and party costs (including disbursements). I considered that it would be an appropriate exercise of the judicial discretion to award costs in this sum to Comcare.

Associate:

Dated:    20 May 2011