FEDERAL COURT OF AUSTRALIA

Comcare v John Holland Pty Ltd [2014] FCA 1191

THE COURT DECLARES THAT:

Pursuant to Schedule 2 Part 1 of the Occupational Health and Safety Act 1991 (Cth) (the “Act”):

1    On about 30 December 2011, the First Respondent breached s 16(1) of the Act in that it failed to take all reasonably practicable steps to protect the health and safety at work of its employee, Anthony Phelan, by its use of the Vehicle (registration number 1DAI 982) where it had:

1.1    failed to identify the hazards relating to the Vehicle namely that:

1.1.1    the Vehicle could have its front and rear road wheels or hi-rail wheels, raised simultaneously;

1.1.2    when the Vehicle had its front and rear road wheels raised simultaneously in an off-tracking, the Vehicle would not have braking capability;

1.1.3    the controls in the cabin of the Vehicle were not suitably identified, nor able to be readily and conveniently operated, such that the operator of the Vehicle was not aware that when the hi-rail levers were pushed into the float detent position the hi-rail wheels were not lowered and there was nothing to indicate to the operator that the Hi-Rail wheels were not being lowered;

1.2     failed to appropriately or adequately train the operator of the Vehicle who:

1.2.1    had not received any formal or specific training in relation to the operation of the Vehicle;

1.2.2    had not been advised that pushing the Hi-Rail Lever too far forward to lower the hi-rail wheels (so that it was in the float detent position) would result in an effective loss of function;

1.2.3    had been advised by the day shift operator that the Vehicle could be off-tracked more quickly by raising both sets of hi-rail wheels at the same time;

1.2.4    had not been specifically instructed that he should not raise the front and rear road wheels simultaneously when off-tracking the Vehicle;

1.3    failed to ensure that there was a spotter in place at the place of the off-tracking of the Vehicle and also at the place where Mr Phelan (the deceased) was cleaning the rail tracks.

2    In about 2009 the Third Respondent breached:

2.1    s 18(1)(a) of the Act in that it failed to take all reasonably practicable steps to ensure that the Vehicle was designed and constructed to be safe to be used by employees in that it had:

2.1.1    not ensured that the Vehicle was incapable of having its front and rear road wheels or hi-rail wheels raised simultaneously;

2.1.2    not removed or disabled the redundant function of the float detent position for the hydraulic levers;

2.1.3    not ensured that the signage inside the cabin of the Vehicle was accurate as it related to the functions of the lever positions;

2.2    s 18(1)(c) of the Act by not informing the First Respondent of adequate information as to the necessary conditions to ensure the Vehicle would be safe for employees and without risk to their health, namely that:

2.2.1    the Vehicle could have its front and rear road wheels or hi-rail wheels, raised simultaneously;

2.2.2    when the Vehicle had its front and rear road wheels raised simultaneously in an off-tracking, the Vehicle would not have braking capability;

2.2.3    operators of the Vehicle should be trained so as not to raise the front and road rear wheels simultaneously in off-tracking the Vehicle;

2.2.4    the controls in the cabin of the Vehicle were not suitably identified, nor able to be readily and conveniently operated, such that the operator of the vehicle would not be aware that when the hi-rail levers were pushed into the float detent position the hi-rail wheels were not lowered and there would be nothing to indicate to the operator that the hi-rail wheels were not being lowered.

THE COURT ORDERS THAT:

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

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

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

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

REASONS FOR JUDGMENT

1    In December 2011, John Holland Pty Ltd, the first respondent, was undertaking an engineering project for the sinking of the railway tracks to and from Perth Central railway station at a site in Perth (the City Rail project). One of the vehicles which the first respondent was using on the site was an agricultural tractor which had been modified by the third respondent, John Holland Rail Pty Ltd, to operate both on the road and on the rail. This type of vehicle is referred to in the industry as a hi-rail vehicle.

2    At about 9:00 pm on 30 December 2011, Mr Anthony Phelan was working on the site. He was operating a high pressure water and air mist hose cleaning debris and dust from the rail tracks. He was wearing earplugs. At the same time, about 160 metres further up the rail tracks was the hi-rail vehicle. It had been operating on the rail tracks in rail mode, and had just completed its task in that mode. An employee of the first respondent, Mr Kelvin Lovett, commenced the process of converting it from rail mode to road mode. This process is called “off-tracking”. The hi-rail vehicle was located on a decline. During the off-tracking process, the hi-rail vehicle lost its braking capability whilst still on the rail tracks. It then started descending the decline gathering momentum as it went. Mr Lovett lost control of the vehicle. He sounded the vehicle’s warning horn. Mr Phelan was directly in the path of the runaway vehicle. There were also warning shouts from other workers. Mr Phelan appears not to have heard the warning horn or shouts because of the earplugs he was wearing and the noise from the hose he was using. The hi-rail vehicle struck Mr Phelan and he was fatally injured.

3    The applicant commenced a proceeding in this Court alleging that the respondents breached their duties under the Occupational Health and Safety Act 1991 (Cth) (the Act). The applicant did not, at trial, proceed against the second respondent. Further, early in the proceeding, the applicant and the first and third respondents agreed a statement of facts; and also the terms of proposed declarations that recorded that each of the first and third respondents had breached the Act in respect of the fatal accident.

4    At trial, the parties’ submissions were directed to the penalties which should be imposed upon the first and third respondents in respect of their admitted breaches of the Act.

background

5    On 30 December 2011, the first respondent was engaged in sinking railway lines to and from Perth Central train station and carrying out associated works. It engaged employees and contractors to carry out the works at that site. The first respondent was in effective control of the employees and the contractors who were engaged at the site. One of the contractors working at the site was the deceased, Mr Anthony Phelan, a 63 year old man. Whilst working at the site, Mr Phelan was under the control of the first respondent, and an employee of the first respondent for the purposes of the Act.

6    Among the vehicles at the site was a modified JCB Fastrac 3185 agricultural tractor. The tractor had been modified by the third respondent in 2009 at a workshop in Kewdale, by adding to the base of the vehicle a further set of four metal wheels for the purpose of permitting the tractor to operate on a set of railway tracks. These wheels were referred to as “hi-rail wheels”. There was a cylindrical drum, called a “friction drum“, which was attached to and protruded from the centre of each of four metal hi-rail wheels. The modifications also included the addition of a hydraulic system operated by two levers in the tractor’s cabin for the lowering and raising of the hi-rail wheels. The modified tractor was capable of being driven on an ordinary road using its conventional tyre wheels and also as a vehicle to be driven on railway tracks using its hi-rail wheels. In that case, of course, the conventional front and rear road wheels would be in a position elevated from the ground.

7    The conversion of the vehicle from its capacity to operate normally on road surfaces to one that operated on railway tracks involved a process known as “on-tracking”. This process involved the hi-rail wheels being hydraulically lowered into place onto the railway tracks, and the road wheels being raised into a position whereby the tyres of the road wheels were in contact with the friction drums which were attached to and protruded from the hi-rail wheels. When the vehicle was in rail operation mode, the vehicle’s brakes were operated by applying the brakes for the road wheels which then acted via the friction drums on the hi-rail wheels to slow or stop the vehicle.

8    As mentioned, the process of converting the vehicle from rail operation to normal road operation was known as “off-tracking”. By this process, the hi-rail wheels were raised. In the course of that process, the road wheels lost contact with the hi-rail friction drums as the hi-rail wheels and attached friction drums were moved out of the way and the road wheels were progressively lowered on to the normal ground surface.

9    In order to maintain the braking capacity of the vehicle during the off-tracking or on-tracking process, it was necessary to raise or lower the front hi-rail wheels separately from the rear hi-rail wheels. The vehicle had the capacity to brake safely during this process if the front hi-rail wheels were moved into the correct position separately to the rear hi-rail wheels.

10    Converting the vehicle from its road operation to its rail operation was carried out by the operator of the vehicle, who was located in the tractor cabin. The cabin had Perspex windows.

11    Inside the cabin there were two levers for the operator to use to control the hydraulic lowering and raising of the hi-rail wheels. These levers were called “hi-rail levers”. Both the hi-rail levers had four positions:

(a)    raise hi-rail wheels;

(b)    neutral;

(c)    lower hi-rail wheels; and

(d)    float detent position - a position to be used for the original farming use of the tractor so as to enable ploughing on undulating ground.

12    There were signs in the vehicle’s cabin instructing the operator as to the use of the hi-rail levers. However, the signs did not identify the existence of the float detent position. The signs in the cabin instructed the operator to push the hi-rail levers forward to lower the hi-rail wheels and to pull the hi-rail levers backwards to raise the hi-rail wheels. When the hi-rail levers were pushed into the float detent position the process for lowering the hi-rail wheels was not engaged, and there was nothing in the cabin to indicate to the operator that the hi-rail wheels were not being lowered.

13    Mr Lovett was the operator in control of the hi-rail vehicle on the night of 30 December 2011. As mentioned, at about 9:00 pm that night Mr Lovett was engaged in off-tracking the vehicle from the rail tracks at the top of a decline about 160 metres away from where Mr Phelan was working at the time. Mr Phelan was a member of a different crew to Mr Lovett.

14    Mr Lovett was in the cabin of the vehicle. In carrying out the off-tracking operation, Mr Lovett pulled both the hi-rail levers at the same time, so as to commence the process of raising the vehicle’s front and rear hi-rail wheels simultaneously. This had the consequence that the road wheels moved away from the hi-rail friction drums of both the front and rear sets of hi-rail wheels, whilst the two sets of hi-rail wheels were still on the rail tracks. This manoeuvre by Mr Lovett had the consequence that the vehicle’s hi-rail wheels were still on the rail tracks but there was no contact between the road wheels and the friction drums and no contact between the road wheels and the ground, with the consequence that the vehicle had no braking capacity. Mr Lovett attempted to apply the brakes but they did not have any effect. Mr Lovett was unable to regain control of the vehicle.

15    Mr Lovett sounded the horn and also contacted his superintendent by radio to advise the superintendent that he was unable to recover control of the vehicle. The superintendent started to run further down the decline in order to warn the workers working at the bottom of the decline that the vehicle was out of control. Some of the workers who were working at the bottom of the decline yelled out to other workers in the vicinity that the vehicle was out of control. One of those workers in the vicinity was Mr Phelan, who, as I have mentioned, was working on the rail tracks cleaning debris and dust from the rail tracks using a high pressure water and air mist spray hose. Mr Phelan had his back to the top of the decline and appears to have not heard the vehicle’s horn or his co-workers, probably due to the sound of the hose which he was operating and also because he was wearing ear plugs.

16    The free-wheeling vehicle gained momentum as it descended the decline. Mr Phelan was struck by the vehicle and fatally injured.

17    Spotters were normally engaged to accompany the hi-rail vehicle when it was on the rail tracks carrying out its usual operations. However, there were no spotters in place to watch the off-tracking exercise or Mr Phelan’s task of cleaning the rail tracks and give early warning of any problems arising during those exercises.

further matters which the parties agreed

18    The narrative of the facts set out above is derived primarily from the agreed statement of facts. The parties also agreed facts which go to the culpability of each of the first and third respondents. I set out those agreed facts in relation to the first respondent’s conduct:

37.    Mr Lovett, who commenced working at the Site on 21 December 2011, was not trained appropriately or adequately in the operation of the Vehicle in that he:

37.1    had not received any formal or specific training in relation to the operation of the Vehicle;

37.2    was subject only to a familiarisation session from the day shift operator of the Vehicle;

37.3    was not advised that pushing the Hi-Rail Lever too far forward to lower the hi-rail wheels (so that it was in the float detent position) would result in an effective loss of function;

37.4    was advised by the day shift operator that the Vehicle could be off-tracked quicker by raising both sets of hi-rail wheels at the same time;

37.5    was not advised that in raising both sets of hi-rail wheels simultaneously the Vehicle had a tendency to move backwards, with the potential to move from the off tracking pad and onto the decline; and

37.6    was not specifically instructed that he should not raise the front and rear road wheels simultaneously when off-tracking the Vehicle.

19    In relation to the third respondent’s conduct, the parties agreed to the following facts and matters:

42.    In undertaking the manufacture of the Vehicle the third respondent failed to ensure that:

42.1    the Vehicle could not have its front and rear wheels or hi-rail wheels, raised simultaneously;

42.2    redundant functions such as the float detent position for the hydraulic levers were removed or disabled; and

42.3    signage inside the cabin of the vehicle was accurate, in particular, signage relating to the functions of the lever position.

43    The third respondent did not inform the first respondent that:

43.1    the Vehicle could have its front and rear road wheels or hi-rail wheels, raised simultaneously;

43.2    when the Vehicle had its front and rear road wheels raised simultaneously in off-tracking the Vehicle would not for a period of time have any braking capability;

43.3    the Vehicle had a tendency to move backwards when both sets of hi-rail wheels were raised simultaneously; and

43.4    drivers of the Vehicle should be trained so as not to raise the front and road rear wheels simultaneously in off-tracking the Vehicle.

20    The parties also agreed that prior to the hi-rail vehicle being introduced into service, the third respondent conducted a “plant hazard and risk assessment worksheet” dated 4 February 2009. The risk of a runaway vehicle was not identified at the time. However, other risks such as “accident caused by design fault of hi-rail gear” and “accident caused by operator not identifying correct operational controls” were identified. To control these risks, the third respondent did not identify the need for engineering controls but opted for administrative controls of “operator training” and “use of licenced experienced operators”. Neither of these controls was implemented at the time of the fatal incident.

21    The parties agreed further that:

47.    As part of its s 16 OHS Act duty, the first respondent had to take all reasonably practicable steps to ensure hazards relating to plant at work are identified before and during the introduction of plant to a workplace.

48.    The first respondent and the third respondent also had a duty to take all reasonably practicable steps to ensure that the operational controls on plant were suitably identified and able to be readily and conveniently operated.

49.    When the plant was introduced onto the Site, the first respondent failed to identify and control faults in the Vehicle which contributed to the Fatal Incident.

50.    When it owned the vehicle, the third respondent failed to identify and control faults in the vehicle which contributed to the Fatal Incident.

22    The parties also agreed the following facts:

51.    A safety alert was released by the Office of Rail Safety Western Australia on 10 January 2011 following an incident where a hi-rail vehicle ran away while being on-tracked where the road wheels were above the road surface but not in contact with the rail wheels.

52.    In the John Holland Engineering Standard Rolling Stock for Country Regional Network document titled “Minimum Operating Requirements for Road-Rail Infrastructure Maintenance Vehicles” dated December 2011 it states:

Transferring to and from rail operation:

At all stages during the transfer from road to rail and vice-versa, road rail vehicles must be restrained to prevent the potential for runaway. This requirement is particularly important where the road wheels are used to drive the rail wheels through a friction drive…

23    Further, the parties agreed that the first and third respondents had cooperated with the investigation of the fatal incident undertaken by the applicant.

proposed declarations

24    The parties handed up an agreed minute of declarations which they submitted that the Court should make. The proposed declarations are in the following terms:

The Court declares that, pursuant to clause 2(1)(a) of Schedule 2 Part 1 of the Occupational Health and Safety Act 1991 (Cth) (the “Act”):

1    on about 30 December 2011, the First Respondent breached s 16(1) of the Act in that it failed to take all reasonably practicable steps to protect the health and safety at work of its employee, Anthony Phelan, by its use of the Vehicle (registration number 1DAI 982) where it had:

1.1    failed to identify the hazards relating to the Vehicle namely that:

1.1.1    the Vehicle could have its front and rear road wheels or hi-rail wheels, raised simultaneously;

1.1.2    when the Vehicle had its front and rear road wheels raised simultaneously in an off-tracking, the Vehicle would not have braking capability;

1.1.3    the controls in the cabin of the Vehicle were not suitably identified, nor able to be readily and conveniently operated, such that the operator of the Vehicle was not aware that when the hi-rail levers were pushed into the float detent position the hi-rail wheels were not lowered and there was nothing to indicate to the operator that the Hi-Rail wheels were not being lowered;

1.2    failed to appropriately or adequately train the operator of the Vehicle who:

1.1.1    had not received any formal or specific training in relation to the operation of the Vehicle;

1.1.2    had not been advised that pushing the Hi-Rail Lever too far forward to lower the hi-rail wheels (so that it was in the float detent position) would result in an effective loss of function;

1.1.3    had been advised by the day shift operator that the Vehicle could be off-tracked more quickly by raising both sets of hi-rail wheels at the same time;

1.1.4    had not been specifically instructed that he should not raise the front and rear road wheels simultaneously when off-tracking the Vehicle;

1.1    failed to ensure that there was a spotter in place at the place of the off-tracking of the Vehicle and also at the place where Mr Phelan (the deceased) was cleaning the rail tracks.

The Court declares that, pursuant to clause 2(1)(c) of Schedule 2, Part 1 of the Act:

1    in about 2009 the Third Respondent breached:

1.2    s 18(1)(a) of the Act in that it failed to take all reasonably practicable steps to ensure that the Vehicle was designed and constructed to be safe to be used by employees in that it had:

1.2.1    not ensured that the Vehicle was incapable of having its front and rear road wheels or hi-rail wheels raised simultaneously;

1.2.2    not removed or disabled the redundant function of the float detent position for the hydraulic levers;

1.2.3    not ensured that the signage inside the cabin of the Vehicle was accurate as it related to the functions of the lever positions;

1.3    s 18(1)(c) of the Act by not informing the First Respondent of adequate information as to the necessary conditions to ensure the Vehicle would be safe for employees and without risk to their health, namely that:

1.3.1    the Vehicle could have its front and rear road wheels or hi-rail wheels, raised simultaneously;

1.3.2    when the Vehicle had its front and rear road wheels raised simultaneously in an off-tracking, the Vehicle would not have braking capability;

1.3.3    operators of the Vehicle should be trained so as not to raise the front and road rear wheels simultaneously in off-tracking the Vehicle;

1.3.4    the controls in the cabin of the Vehicle were not suitably identified, nor able to be readily and conveniently operated, such that the operator of the vehicle would not be aware that when the hi-rail levers were pushed into the float detent position the hi-rail wheels were not lowered and there would be nothing to indicate to the operator that the hi-rail wheels were not being lowered.

25    The parties disagreed as to the amount of the penalty which should be imposed on each of the respondents in respect of the contraventions identified in the declarations.

26    The applicant observed that each of the first respondent and third respondent had admitted a breach of s 16(1) and s 18(1) of the Act respectively and that the maximum penalty to be imposed on each of those respondents in respect of each of the said breaches was $242,000. The applicant went on to contend that the nature of the contraventions and the circumstances in which they occurred, warranted that the penalty imposed should be at the higher levels towards the maximum penalty.

27    The respondents, however, contended that the penalty imposed in respect of each of the respondents should be no higher than $120,000. The first and third respondents read an 87 page (excluding annexures) affidavit of Mr Dean John Cipolla dated 3 September 2014. Mr Cipolla was not cross-examined.

28    In relation to the issues raised by the High Court decision of Barbaro v The Queen (2014) 305 ALR 323 (Barbaro), I agree with the views expressed by Middleton J in Australian Competition and Consumer Commission v Energy Australia Pty Ltd [2014] FCA 336, and adopted also by Barker J in Australian Competition and Consumer Commission v Safe Breast Imaging Pty Ltd (No 2) [2014] FCA 998, that Barbaro is to be distinguished from cases, such as this, dealing with the imposition of a civil penalty.

the evidence of mr Cipolla

29    At the time of affirming the affidavit, Mr Cipolla was employed by John Holland Group Pty Ltd and was the acting group general manager, health, safety and environment for the John Holland Group of companies, of which the first and third respondents are, and were, member companies. Mr Cipolla said that he had been employed in a managerial capacity relating to safety within the John Holland Group for 11 years.

30    Mr Cipolla expressed his deepest sorrow and regret on behalf of the respondents at the death of Mr Phelan and the hardship created for his family and friends, as well as workers on the project generally. Mr Cipolla also deposed that the John Holland Group of companies had facilitated the provision of financial assistance and counselling to the family of Mr Phelan and counselling to other workers present at the site at the time of the fatal incident.

31    Mr Cipolla deposed that immediately after the incident, the John Holland Group had commenced an investigation. Mr Cipolla also identified the safety failures which the investigation revealed had contributed to the fatal incident.

32    Mr Cipolla deposed comprehensively to the extensive occupational health and safety systems operated by the respondents before the fatal incident for the purpose of demonstrating that each respondent was conscientious in seeking to protect the health and safety of its employees, and complying with its obligations under the Act. Mr Cipolla said that in the calendar years ending 31 December 2012 and 31 December 2013, the companies in the John Holland Group had spent in excess of $67 million and $59 million on health and safety measures respectively. Mr Cipolla also identified a number of John Holland Group projects and personnel who had either won or been a finalist in a number of safety awards.

33    Mr Cipolla also referred to an audit carried out by the applicant during February and March 2013 of a number of the John Holland Group’s operations including the City Rail project. The applicant’s audit was to assess legislative compliance and effectiveness of the John Holland Group’s safety policies, procedures and management systems. The audit report recorded, said Mr Cipolla, that out of 112 applicable criteria, there was 100% compliance by the John Holland Group.

34    Mr Cipolla deposed to a number of actions which the respondents had undertaken since, and in response to, the fatal accident. These included decommissioning the hi-rail vehicle, removing the hi-rail components and selling the vehicle. Further, said Mr Cipolla, additional engineering controls were implemented in respect of hi-rail vehicles, including controls that preclude the front and rear wheels being raised simultaneously, controls that preclude the levers from being operated simultaneously and controls that ensure that hi-rail vehicles possess secondary “braking capabilities”.

35    Mr Cipolla also deposed that the John Holland Group had issued safety alerts, including one relating specifically to the fatal incident and another relating to plant and equipment modification generally, had reviewed the training and competency requirements for operators of hi-rail vehicles and had stipulated for a minimum training requirement for them. Also, the John Holland Group had developed and implemented a spotter training programme.

36    Further, said Mr Cipolla, the first respondent had taken other steps to improve safety on the City Rail project more generally including conducting a review of all elements of occupational health and safety, introducing an additional safety adviser for the project and a spotter training programme, implementing mandatory requirements which included a minimum requirement that communications be maintained between operators of mobile plant and those conducting ground operations, and conducting safety lever workshops.

37    In relation to the safety alert from the Office of Rail Safety Western Australia, referred to in the agreed statement of facts (see [23] above), Mr Cipolla deposed that the alert warned about a hi-rail vehicle that had run away whilst being on-tracked when the road wheels were not in contact with the rail wheels. Mr Cipolla said that the email had been received by Mr Alan Ross, the John Holland Group’s then national rail safety manager, on 11 January 2011, but disregarded by him because Mr Ross believed that John Holland Group had no hi-rail rolling stock.

38    Mr Cipolla deposed to John Holland Group’s strong commitment to community involvement and workplace diversity. In regard to community involvement, Mr Cipolla said that the John Holland Group had expended $1.3 million in Australia in corporate sponsorships, charitable donations and in-kind contributions such as assistance to schools, community groups and health care organisations.

39    Mr Cipolla also gave evidence as to two previous incidents involving hi-rail plant running away on the first respondent’s controlled sites. The first incident occurred on 2 August 2007 on the Perth Southern Suburbs Railway project when a hi-rail vehicle was being off-tracked. That incident involved a contractor to the first respondent who failed to provide any familiarisation training to the operator of the vehicle. There had been no involvement of the respondents in the operation of the vehicle. The second incident occurred on 2 April 2010 on the Cronulla Rail Duplication project. This incident also involved a contractor to the first respondent, without any involvement of the respondents in relation to the hi-rail vehicle.

40    Further, Mr Cipolla deposed that the first respondent had been found to have contravened s 16 of the Act in respect of two previous incidents in which an employee was fatally injured.

41    The first incident occurred on 6 May 2008 at the Dalrymple Bay Coal Terminal. In that case, an employee was fatally injured when he was run over by a large vehicle carrying precast concrete decks after the deceased employee’s leg became trapped and he was not able to escape from the path of the vehicle. In that case, a penalty of $180,000 was imposed (Comcare v John Holland Pty Ltd (No 2) [2009] FCA 1515).

42    The second incident occurred on 19 March 2009, when an employee was fatally injured after walking across an unsecured grid mesh which gave way causing him to fall to his death. This injury came at the end of a week in which there were two incidents when the unsecured grid mesh had fallen from a height in the same general proximity although no injury had occurred. In that case, the maximum penalty of $242,000 was imposed (Comcare v John Holland Pty Ltd [2012] FCA 449).

43    Mr Cipolla also deposed that the third respondent had been found to have contravened the Act on a previous occasion. The circumstances giving rise to the imposition of that penalty were that an employee sought to refuel a friction saw close to a heat source. Because of the proximity to the heat source, the fuel which he was using to refuel the friction saw caught on fire and the employee sustained second degree burns to 20% of his body. The penalty imposed was $124,960 (Comcare v John Holland Rail Pty Ltd (2009) 188 IR 415 (John Holland Rail)).

the respondents’ contentions on penalty

44    The respondents contended that some of the relevant principles in assessing a civil penalty were described in the “Madgwick factors”. These factors are the factors identified by Madgwick J in Comcare v Commonwealth (2007) 163 FCR 207 (Trooper Lawrence) at [120]. However, said the respondents, there were additional factors to be considered in their favour. These included the early admission of the contraventions, contrition, cooperation with the applicant, agreement to a statement of facts and proposed relief, steps taken before the fatal incident to develop a corporate occupational health and safety culture and steps taken after the incident to prevent recurrence.

45    In relation to the circumstances of the incident, the respondents accepted that the risk of death of another worker arising from the absence of braking capability whilst off-tracking a hi-rail vehicle on a decline was foreseeable. However, the respondents argued that the actual accident was not foreseen.

46    Also, the respondents contended that there were other factors regarding the fatal accident that were relevant. These included the following:

(a)    It had not been suggested that the vehicle was a safety risk whilst engaged in normal operations in the rail mode.

(b)    The vehicle was capable of being off-tracked with braking capabilities if the front and rear wheels were not raised simultaneously.

(c)    The vehicle did contain a horn which permitted warnings to be given.

(d)    There was a radio in the cabin which permitted the operator to communicate with the supervisor and that there was a supervisor present.

(e)    The fact that if both front and rear hi-rail wheels were moved simultaneously during off-tracking that the vehicle would lose its braking capacity, was a design failure by the third respondent, and it had not informed the first respondent of this characteristic, nor of the need to inform operators not to raise the front and rear wheels simultaneously.

(f)    The first respondent had arranged for Mr Lovett to undergo a familiarisation session in respect of the hi-rail vehicle with an experienced operator before leaving Mr Lovett in control of the vehicle. However, the first respondent accepted that the training instruction given in that session was inadequate.

(g)    The first respondent took immediate steps after the fatal accident to prevent a recurrence, including the cessation of the use of the vehicle and implementation of engineering controls in other hi-rail vehicles.

47    As to the third respondent, senior counsel for the respondents drew attention to the fact that the third respondent undertook an engineering review and risk assessment of the modification before releasing the hi-rail vehicle for use. It is also said that there was no Australian design standard in relation to the modification made, and that the third respondent prepared a hi-rail operator’s procedure handbook after completing the modification. The respondents accepted that this procedure handbook did not address the lack of braking capability of the front and rear hi-rail wheels when raised simultaneously.

48    Further, it was said that the respondents had implemented comprehensive health and safety systems before the fatal accident, and continued to enhance those systems after the accident.

49    The respondents contended that in light of the circumstances in which the risk of the accident had materialised, the respondents’ demonstrated and abiding commitment to occupational health and safety, the measures taken following the incident, the objective seriousness of the contraventions should be assessed at the top of the mid-range or the bottom of the top range when considering the appropriate penalty, bearing in mind that the maximum penalty should be reserved for the worst case of contravention.

50    The respondents went on to contend that albeit that the Court was required to have regard to specific deterrence as an element in setting the penalty, the measures that the respondents had taken after the accident to prevent a recurrence of such an incident, and the respondents’ “demonstrated and abiding commitment to OHS” meant that there was “no need for the Court to include a component for specific deterrence to compel the respondents’ attention to health and safety at work issues”.

51    As to the previous occasions when there had been incidents involving hi-rail plant and equipment which had got out of control, the respondents contended that those circumstances were distinguishable from the circumstances of the fatal incident in this case. None of those incidents involved conduct by the respondents nor did they involve a lack of braking capability. Further, said the respondents, the circumstances of the workplace accidents which led to the respondents being found to have contravened the Act, were all distinguishable.

52    The first respondent by senior counsel also brought to the attention of the Court, that, in addition to the two cases of contraventions of the Act referred to by Mr Cipolla, the first respondent had also admitted to two other contraventions of s 16 of the Act. These contraventions were the subject of proceedings QUD 772 of 2013 and QUD 778 of 2013. However, said the first respondent, the incidents the subject of those contraventions involved conduct of a different kind to that the subject of this proceeding. The first incident occurred on 29 September 2011 and involved the cutting and removal of formwork structure on a Queensland project; and the second occurred on 8 December 2011, about two months later, and involved the movement of a formwork structure on the same Queensland project. However, the respondents said that these contraventions did not constitute prior contraventions for the purpose of the assessment of penalty, because no findings of contraventions had been made, before the fatal accident in this case had occurred.

53    The respondents also submitted that they had admitted contraventions of the Act before the pleadings had closed and before the matter had been set down for hearing; and had thus admitted the contravention at the earliest opportunity. The respondents also drew attention to the fact that they had expressed sorrow and regret for the death of Mr Phelan, reinforced by the early admissions of the contraventions, their agreement to the agreed statements of fact and their consent to the relief in the form of the agreed declarations. The respondents also referred to the fact that they had cooperated with the applicant at all times throughout the investigation, including by providing documentation and by arranging for their employees and contractors to attend interviews as well as by voluntarily providing a copy of their investigation report to the applicant.

54    Further, said the respondents, they had taken “proactive and comprehensive steps” to address health and safety issues before the fatal incident and had implemented a series of measures after the incident to prevent a recurrence of such an incident. The respondents also drew attention to the financial assistance provided to the family of Mr Phelan and the counselling provided to the family and the workers at the site. Also, said the respondents, the Court should have regard to the fact that the John Holland Group of companies had displayed a strong commitment to corporate citizenship, community involvement and workplace diversity.

55    The respondents went on to contend that the earlier admission of contravention should result in a discount in penalty of 25%. The remaining additional factors should result in a further discount of 10% to 15%.

56    The respondents relied particularly upon observations made by Stone and Buchanan JJ in Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 (Mornington Inn) and Jagot J in the case of Tax Practitioners Board v Su [2014] FCA 731 (Tax Practitioners) in support of their contention that a discount of 25% should be applied to the penalty which would otherwise have been imposed to reflect the objective seriousness of the contraventions by reason of their early admission of the contraventions. The respondents also relied upon observations by analogy in R v Thompson (2000) 49 NSWLR 383 at [160]. Further, the respondents referred to a number of decisions in the New South Wales Industrial Court where a discount of 25% had been applied in favour of a corporate defendant in respect of an early plea of guilty in respect of criminal charges brought under the Occupational Health and Safety Act 1983 (NSW) and the Occupational Health and Safety Act 2000 (NSW). The respondents also referred to other instances in the State courts where a similar discount had been applied in respect of criminal prosecutions for contraventions of health and safety legislation.

57    The applicant argued that the respondents’ contention in favour of a 25% discount by analogy with criminal law sentencing canons, reflected an approach which did not accord with the flexible approach to imposing a penalty endorsed by the Full Court of this Court in Comcare v Post Logistics Australasia Pty Ltd (2012) 207 FCR 178 (Post Logistics appeal).

58    The Mornington Inn case, relied on by the respondents, was an appeal from a penalty which had been imposed consequent upon contraventions of s 400(5) and s 792 of the Workplace Relations Act 1996 (Cth). Relevantly for this case, the primary judge had given a discount of 10% in respect of the admission of the contraventions made shortly before the trial. The employer appealed on the basis that a discount of 10% was inadequate. The majority of the Full Court (Stone and Buchanan JJ) rejected that ground of appeal. In the course of considering that ground of appeal, Stone and Buchanan JJ referred to observations by the High Court in the case of Cameron v The Queen (2002) 209 CLR 339 which acknowledged that a discount may be applied to a sentence where there has been an early plea of guilty in criminal cases. At [75]-[76], Stone and Buchanan JJ went on to observe:

A conventional consideration in assessing a discount in a criminal case for a plea of guilty is the stage in the proceedings at which the plea is entered. Normally, the maximum discount for this factor, sometimes thought to be 25%, is reserved for a plea made at the first reasonable opportunity although, as was indicated in Cameron 209 CLR 339 at [23]-[24] there is no obligation to make an early plea to a charge which wrongly particularises the substance to which the charge relates.

As Branson J has pointed out (see Alfred v Walter Construction Group Ltd [2005] FCA 497) the rationale for providing a discount for an early plea of guilty in a criminal case does not apply neatly to a case, such as the present, where a civil penalty is sought and the case proceeds on pleadings. Nevertheless, in our view, it should be accepted, for the same reasons as given in Cameron 209 CLR 339, that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.

59    It is apparent, therefore, that the majority of the Full Court acknowledged in the context of assessing a civil penalty for a statutory contravention, the relevance by analogy of the criminal law sentencing practises in relation to an early plea of guilty; and were content to adopt the criminal law nomenclature of a “discount” and, at least implicitly, the criminal law practice of applying a discount for an early plea of up to 25% by reference to a sentence which would otherwise have been imposed.

60    Further, the criminal law sentencing analogy of giving a “discount” of up to 25% for an early plea of guilty, was adopted by Jagot J in the Tax Practitioners case at [22]-[24]. In that case, Jagot J referred to and applied a 25% discount as a reflection of the respondent’s early admission of liability and the respondent’s contrition.

61    Whilst, neither of these cases dealt specifically with the imposition of a penalty under the Act, there are authorities which treat as relevant, cases in which a penalty is imposed in respect of contraventions of other Commonwealth statutes. It is accepted, therefore, that those cases provide some support for a contention that the proper approach to the imposition of a penalty for a contravention of the Act is one which embraces an expectation that a contravening employer will get a “discount” of up to 25% on the penalty otherwise to be imposed for an “early plea”.

62    However, in my view, the Full Court decision in the Post Logistics appeal does not endorse or support the adoption, by analogy with criminal law sentencing canons, of an arithmetical discount approach to the imposition of a penalty for a contravention of the Act, in respect of an early admission of the contravention. I prefer to follow the approach endorsed by the Full Court in the Post Logistics appeal, even though the Full Court did not there refer to the observations made in Mornington Inn. This is because the Post Logistics appeal is concerned specifically with the imposition of penalties for contraventions of the Act, whereas Mornington Inn is not.

the full court decision in post logistics

63    The Full Court in the Post Logistics appeal considered the approach to be taken in imposing a penalty in civil penalty proceedings for a contravention of the Act. In that case, an employee was walking next to a forklift vehicle being driven by Mr Cox, an employee of Post Logistics Australasia Pty Ltd holding a roll of shrink wrap which was attached to an object on a pallet which was being moved by the forklift vehicle. The employee, Ms Borg, was walking too close to the forklift vehicle with the consequence that the forklift vehicle ran over her foot and she suffered a broken toe.

64    The primary judge imposed a penalty of $80,000. In imposing that penalty, the primary judge, Buchanan J, observed:

[35]    An area as important as workplace health and safety should be accompanied by the greatest level of practicality which can be brought to bear on the ultimate task of providing a safe working environment. Nobody sets out to create an unsafe workplace. I entertain great doubt whether concepts of deterrence are appropriate in the context of a case such as the present. What is involved is the necessity to reinforce a positive obligation of protection rather than to emphasise an obligation not to commit a civil wrong. It is unnecessary, in my view, for the Court, when giving effect to the statutory objectives in the OHS Act, or when fixing a punishment for a particular breach, to do so by reference to “deterring” somebody from such a breach. Adoption of a concept such as this from the criminal law risks becoming a ritual incantation deflecting attention from what is a practical issue — namely, how to provide appropriate incentive and encouragement (as well as punishment) to enhance workplace safety.

65    The applicant, Comcare, appealed. One of the grounds of appeal was that the primary judge had failed to have regard to the concept of deterrence in imposing the penalty.

66    The Full Court (Rares, Cowdroy and Griffiths JJ) considered the appropriate approach to imposing a penalty in respect of contraventions of s 16 of the Act.

67    The Full Court observed that in determining the penalty, primacy should be given to the particular statutory context, and that the objects and purposes of the Act were central to determining the factors that were relevant to take into account. The penalty imposed, said the Full Court, should be one which gives effect to the statutory purpose. The Full Court observed at [43]:

Deterrence, both general and specific, is a fundamental purpose of the role of civil pecuniary penalties. First, the object in s 3(g) of the OH&S Act evinced a legislative intention to provide for effective remedies where the obligations imposed by s 16 on an employer, such as the respondent, were not met.

68    The Full Court then went on to observe that the approach taken in a number of first instance decisions in this Court, which had regard to specific and general deterrence in fixing a civil pecuniary penalty under the Act, was consistent with the objects of the Act.

69    However, the Full Court went on to identify two qualifications to this general approach. First, said the Full Court, there may be good reason why the concept of specific deterrence has no or little relevance in the circumstances of a particular case.

70    Secondly, observed the Full Court, there was a “need to ensure that any list of relevant considerations guiding the exercise of discretion to impose a civil penalty not be permitted to fetter the proper exercise of the discretion which is expressed in relatively unconfined terms in the Act”. The Full Court then referred to the observations made by Flick J and Barker J in the cases of Comcare v Post Logistics Australasia Pty Ltd (2008) 178 IR 200 and John Holland Rail respectively, in which each had expressed concern about the inflexible use and application of the so-called “Madgwick factors” which were founded upon the factors relevant to the sentencing of employers criminally convicted of health and safety offences under the New South Wales legislation. The Full Court said at [68]:

We agree with the reservations expressed by Flick and Barker JJ concerning the Madgwick factors. If a court applied the Madgwick factors dogmatically or inflexibly, there is a significant chance an error would be committed in the reasoning process. As Mahoney JA stated in Kable v Director of Public Prosecutions (NSW) (1995) 36 NSWLR 374 at 394, “If justice is not individual, it is nothing”. The various factors for consideration in assessing a penalty for breach of the OH&S Act may have greater or lesser importance in any given case, depending on the various objective and subjective elements of the breach. The penalty assessment process cannot be reduced to an inflexible set of criteria.

71    The Full Court then went on to say at [69] that they considered that the “Madgwick factors” provided “a useful foundation or starting point for an assessment of a civil pecuniary penalty”, and they were consistent with a body of authority, and “the theoretical principles concerning the role of deterrence” and properly recognised deterrence as a relevant consideration in imposing a civil penalty under the Act.

72    The Full Court also observed that “although a court was not required to specifically refer to these factors, in most cases it would be prudent to do so”.

73    The Full Court went on to cite with approval the following observations of Barker J in Comcare v Transpacific Industries Pty Ltd (2012) 129 ALD 486 (Transpacific) at [38]:

I do not disagree with observations recently made by Buchanan J in Comcare v Post Logistics Australasia Pty Limited [2011] FCA 1422 (Post Logistics 2011), where his Honour expressed his concerns about adopting an automatic application of a checklist drawn from criminal law sentencing principles, as suggested in Trooper Lawrence. I agree there is a danger in any ritual incantation of a set of considerations in deciding what penalty is appropriate in a particular case. In the present case, the fundamental need to impose a penalty that highlights the importance of compliance with occupational health and safety law in order to ensure the safety of employees at work must always be kept at the forefront of the penalty assessment process. That is not to say that notions of “deterrence”, either specific or general, are irrelevant, for, in my view, they plainly are closely allied to this primary objective of ensuring the objects of the OHS Act are met. It is important that a particular respondent who admits contravention of the OHS Act or is found guilty of contravening the OHS Act should suffer a sufficient penalty, having regard to the seriousness of the contravention, so as to remind them of the significance of their responsibilities under the OHS Act. It is also important to remind employers more generally of the significance of their responsibilities under the OHS Act. No doubt the concept of “deterrence” can be expressed in different ways; but so long as the penalty is assessed with the importance of meeting the occupational health and safety obligations under the OHS Act are steadfastly borne in mind — not mere punishment or retribution against a contravener — then, in my view, the penalty assessment process will be properly undertaken.

74    The Full Court upheld the appeal and then re-assessed the penalty.

75    The reference in the aforementioned observations by Barker J in Transpacific to the observations of Buchanan J was a reference to observations Buchanan J made in Comcare v Post Logistics Australasia Pty Limited [2011] FCA 1422 - the first instance decision which was the subject of the appeal in the Post Logistics appeal. It is relevant to observe that in those observations, amongst other things, Buchanan J had expressed reservations about applying criminal sentencing canons in relation to factors such as an early admission of a contravention and contrition in civil penalty proceedings. However, Buchanan J accepted that those considerations were relevant to penalty and could be taken into account along with other factors in the context of considering the appropriate penalty. Barker J in John Holland Rail at [143] also recognised these factors as being relevant; but not in the context of supporting an expectation that an arithmetical “discount”, analogous to criminal law sentencing canons, would be applied.

76    Whilst the Full Court criticised the approach taken by Buchanan J specifically in relation to deterrence, it did not comment adversely upon Buchanan J’s observations advising caution in relation to the importation of criminal law sentencing canons founded upon an early plea of guilty and contrition, into the process of imposing a penalty in respect of a contravention of the Act. More importantly, though the Full Court endorsed an approach to penalty by reference to the exercise of an unfettered discretion (free from the strictures of the canons of criminal law sentencing) with the object of imposing a penalty which gives effect to the objects of the Act and recognises the differences inherent in the individual circumstances of each case.

77    I now turn to consider the matters raised by the respondents in relation to the objective seriousness of the contraventions and the application of the “Madgwick factors”.

78    In Trooper Lawrence, Madgwick J observed at [116] that 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.

79    Madgwick J then went on at [120] to identify the following factors which are now known as the “Madgwick factors”:

(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;

(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.

80    I accept and place considerable weight on the fact that, as the respondents conceded, an accident arising from the circumstance which led to the death of Mr Phelan was foreseeable. But, I also place weight in the fact that there is no suggestion that the accident was actually foreseen.

81    I place no weight on the respondents’ contention that the vehicle was able to carry out its “normal operations”, in other words, moving along the rail tracks, with a functional braking capacity. In my view, that takes too narrow a view of “normal operations”. This is because integral to the process of placing the vehicle into a position to move along the rail tracks, was the need first to convert it from a road vehicle to a rail vehicle. It is of little comfort that it was only during part of the process for operating the vehicle, namely, whilst moving along the rail tracks, in rail mode, that the vehicle had a safe functional braking system.

82    Nor do I place any weight on the fact that it was possible for the vehicle to be off-tracked in a manner which did not disable its braking capability and thereby put at risk the health and safety of workers. It seems to me that the minimum requirement for the introduction of a vehicle on to an engineering site is that it have a safe functional braking system. The difficulty with this particular vehicle, however, was that unless it was off-tracked in a specific manner which was not clearly identified in the cabin of the vehicle, it did not satisfy that minimum requirement. As the first respondent accepted, it failed to ensure that the vehicle had an effective braking capability by failing to recognise the hazard inherent in the vehicle’s braking system which called for a trained operator, and by failing to train its hi-rail vehicle operators. Furthermore, the third respondent accepted that it had failed in its duty by designing a braking system which provided only a limited braking capability, and failing to warn the first respondent of the limitation on the vehicle’s capacity to brake.

83    I place no weight in favour of the respondents on the fact that there was a horn on the vehicle. This is because the horn to which the respondents referred was part of the original factory supplied tractor equipment. The presence of the tractor horn on the vehicle did not reflect a recognition by the first and third respondents of the need to install an adequate warning system to accommodate the risks associated with a failure in the braking system of the vehicle during the off-tracking process. As it transpired, the blowing of the tractor horn proved to be an inadequate means of warning Mr Phelan of the oncoming runaway vehicle.

84    I do place some, but not a great deal of weight on the fact that there was a radio on board the vehicle. The radio was a means whereby the operator could communicate with the supervisor whilst he was operating the vehicle as it carried out its operations moving along the tracks in rail mode. The presence of the radio, therefore, included a safety element as well as an operational element. However, the presence of the radio in the cabin did not reflect a recognition by the first and third respondents of the specific risks associated with the lack of braking capacity of the vehicle during the off-tracking operation.

85    I do not place any weight in favour of the respondents on the fact that Mr Lovett was given a familiarisation session by an experienced operator. This is because the operator who conducted the session had not received training in the safe operation of the vehicle, and it was during this session that Mr Lovett was encouraged to embark upon the dangerous practice of raising the front and rear hi-rail wheels simultaneously. In short, the familiarisation session did not assist in the promotion of health and safety at work.

86    In relation to the third respondent, I also place little weight on the fact that, in accordance with its existing procedures, the third respondent conducted a risk assessment process in respect of the modification of the Fastrac tractor before the vehicle was released for use on John Holland Group engineering sites. This is because the risk assessment analysis which was undertaken by the officers of the third respondent did not address the risks associated with off-tracking or on-tracking and the attendant risk that the braking capability of the vehicle may be disengaged during that time. It is the case that the risk assessment did identify the need for training operators of the vehicle but that was not in the context of the special risks associated with on-tracking and off-tracking. The need for training was identified at a higher level of generality; and did not specifically address training about the risks to the effective operation of the braking system as designed, during the on-tracking and off-tracking operation.

87    Further, I place no weight on the fact that the third respondent made some alterations to the operator’s procedure handbook published by the manufacturer in respect of the tractor. Such additional alterations as were made comprised only one typewritten page, was at a very basic level and did not recognise the risks associated with the front and rear hi-rail wheels being raised simultaneously.

88    The respondents also contended that there was no need for the Court to have regard to specific deterrence in imposing the penalty. The respondents said that they had of their own accord, following the fatal accident, taken effective measures to ensure that a hi-rail vehicle could not again get out of control by reason of the failure of a braking system during the off-tracking or on-tracking operation. There was, therefore, no need to include any element of the penalty which was directed towards ensuring that the respondents took steps to preclude any repetition of the circumstances which led to the fatal accident. The respondents also pointed to Mr Cipolla’s evidence of the respondents’ longstanding and conscientious commitment to ensuring health and safety at the workplace, the promotion of a health and safety culture, and to the results of the applicant’s audit.

89    I accept that following the fatal accident, the first and third respondents have taken a number of steps to ensure deficiencies in their safety systems and safety procedures, which led to the accident, were eliminated. Thus, for example, the third respondent has taken engineering steps to ensure that the front hi-rail wheels and the rear hi-rail wheels of a hi-rail vehicle cannot be raised simultaneously and has introduced a secondary braking system. Further, the first respondent has reviewed the manner in which hi-rail vehicles are deployed and, reviewed and introduced new training requirements in relation to the operation of hi-rail vehicles. I also accept that the improved measures have very substantially reduced the risk that such an accident will again occur.

90    However, notwithstanding the laudable steps taken by the respondents in reducing the risk of serious accident arising from the on-tracking and off-tracking of a hi-rail vehicle, and the results of the applicant’s audit, it is, still necessary, in my view, to include in the penalty, a substantial element in recognition of the need for specific deterrence. This is because, as is demonstrated by the facts of this case, the operation of an effective health and safety system at the workplace requires as Madgwick J said, “constant vigilance” and the need to adopt a proactive rather than a reactive approach to safety.

91    Mr Cipolla’s evidence went to some lengths in identifying the safety systems that were in place, at the date of the fatal accident, for the health and safety at the workplace of the John Holland Group of companies, and those companies’ commitments to ensuring the safety of their employees. However, notwithstanding that commitment and the existence and operation of those extensive safety measures, those measures failed to prevent the fatal accident on 30 December 2011. The respondents have, in this proceeding, admitted that in December 2011 there were still gaps in their safety systems in relation to the manufacture and operation of hi-rail vehicles which each of the respondents has identified in their agreed statement of facts and proposed declarations.

92    The failure by the first and third respondents to take the steps identified by them in relation to the manufacture and operation of the hi-rail vehicle, were significant failures. Another failure which is troubling is the failure of the respondents to respond to the safety notice warning which was sent by the Office of Rail Safety Western Australia (see [38] above). The disturbing aspect of this failure is the fact that Mr Ross, the then national rail safety manager of the John Holland Group of companies, did not know that the first respondent was operating hi-rail vehicles. The evidence in relation to Mr Ross’s ignorance did not descend into detail. However, Mr Ross’s ignorance in conjunction with the serious failures to which the first and third respondents have admitted, leave open the inference that the safety systems which related to the manufacturing and operation of hi-rail vehicles within the John Holland Group of companies in December 2011 were seriously deficient.

93    The evidence demonstrates, therefore, that notwithstanding that the John Holland Group of companies were in December 2011 conscientious in relation to ensuring work safety in the workplace, there was, in December 2011 still substantially more that the first and third respondents could have done in relation to ensuring safety in respect of the manufacture and operation of hi-rail vehicles. In other words, the first and third respondents could have been more vigilant and proactive than they were.

94    Further, the fatal accident in this case, was the third fatal accident in five years which had occurred at sites in Australia under the control of the first respondent. The other two fatalities did not involve hi-rail vehicles and I do not take these fatalities into account as relevant previous convictions. However, I do refer to these fatalities as instances of the need for the first respondent to be reminded that it needs to be constantly vigilant and proactive in relation to safety at the workplace in relation to all aspects of its diverse operations – whether they be in relation to hi-rail vehicles, the movement of precast concrete decking or employees walking across unsecured grid mesh.

95    The need to remind the first and third respondents of the importance of constant vigilance in relation to workplace safety, is particularly important because the first and third respondents operate in an industry which on a daily basis requires their employees to carry out inherently dangerous activities or to operate, and work in the vicinity of, vehicles which have the propensity to put their lives at risk. Constant vigilance was not present in the circumstances of this tragic case. The result was that a man lost his life. The objects of the Act are advanced if the respondents are reminded of this as an incentive to do better and to be constantly alert and proactive in relation to workplace safety issues.

96    The respondents did not take issue with the contention that general deterrence was a relevant consideration in imposing the penalty.

97    I accept that the John Holland Group of companies have made, and continue to make, financial and other contributions to community projects and have adopted enlightened and inclusive employment practices. However, in my view, little weight can be attached to this factor in the assessment of the penalty. The objects of the Act, and the duties imposed thereunder, are directed to all employers, whether or not they are good corporate citizens. The Act is directed towards one specific aspect of the way in which the employer conducts its business operations, namely, the employer’s conduct in relation to protecting the safety of its employees at the workplace. It is that specific aspect of an employer’s conduct which forms the focus of attention in relation to the imposition of a civil penalty.

98    I do place weight on the fact that the first and third respondents cooperated with the applicant during the investigation and admitted the contraventions at a very early stage of this proceeding and have cooperated with the applicant in the efficient conduct of this proceeding. I also observe, in passing, that the manner in which the parties and their legal representatives have cooperated in the conduct of this proceeding to reduce the matters in dispute, reflects an admirable appreciation and application of the overarching principle for the conduct of civil litigation in this Court, as set out in s 37M of the Federal Court of Australia Act 1976 (Cth).

99    In addition, although there may be some conceptual difficulty in the notion of a corporation expressing “contrition”; I do also take into account, in their favour, the matters relied upon by the respondents under that rubric.

100    However, I do not accept the respondents’ contention that I should apply a 25% discount in respect of the “early plea” and an additional 10% to 15% discount in respect of the other factors, to a penalty I might otherwise have applied. As I have said, in my view, such an approach would be antithetical to the flexible approach to the imposition of penalties endorsed by the Full Court in the Post Logistics appeal.

101    The task of the Court is to impose a penalty which reflects the objective seriousness of the contravention, gives effect to objects of the Act and which will maintain the public confidence in the Act as a means of regulating workplace health and safety.

102    There was some attempt by the respondents to distinguish between the culpability of the first and third respondents. In this regard, the first respondent contended that the Court should take into account that the third respondent did not warn it that the front and rear hi-rail wheels should not be raised simultaneously. However, in my view, this is not a sufficient reason to distinguish between the relative culpability of the respondents, in light of the fact that, as the first respondent admitted, it culpably failed on its own account to recognise that fault in the operation of the vehicle.

103    Accordingly, in my view, the same penalty should be imposed on each of the first and third respondents.

104    Each of the parties contended that the objective seriousness of the fatal incident did not warrant the imposition at the highest end of the range of civil penalty. I agree. However, in my view, the facts in this case demonstrate that there were serious defects in the structure and implementation of the first and third respondents’ safety systems for the manufacture and operation of hi-rail vehicles. The contraventions in this case are serious, and the penalty should reflect this finding. As I have also mentioned, I do recognise and give weight to the considerations to which I have referred at [98] and [99] above. These factors mediate to some extent the matters to which I referred when discussing specific deterrence. But, notwithstanding that mediation, a penalty should be imposed at a high level in order to serve the purpose of reminding the first and third respondents, conscientious as they may be, of the need for constant vigilance when it comes to workplace health and safety, to warn other employers to the same effect and to encourage the public and employees to maintain confidence in the operation of the Act as a means of protecting the health and safety of employees whilst at work.

105    Taking all of the factors into account and applying an “instinctive synthesis”, I have come to the view that each of the first and third respondents should pay a penalty of $180,000.

106    I am of the view that the agreed facts support the making of the declarations in the agreed minute of declarations referred to above. I will, therefore, make the declarations in terms of that minute. I also order that each of the first and third respondents pay a penalty of $180,000.

Associate:

Dated:    7 November 2014