Industrial Relations Commission of New South Wales in Court Session CITATION : Inspector Sharpin v Enpro Engineering Pty Ltd [2002] NSWIRComm 211 PROSECUTOR Inspector John Sharpin PARTIES : DEFENDANT Enpro Engineering Pty Limited FILE NUMBER: IRC4902 of 2000 CORAM: Peterson J CATCHWORDS : Occupational health and safety - alleged breach of s15(1) - representation by counsel withdrawn - no appearance by defendant at trial - decision to proceed ex parte - deceased foreman not established to be employee - charge dealt with under s16(1) - question whether defendant an employer - foreman suffered fatal burn injuries when cutting disused fuel pipe with oxy torch - offence established. Occupational Health and Safety Act 1983 s15 s16 LEGISLATION CITED : Supreme Court (Summary Jurisdiction) Act 1967 Industrial Relations Act 1996 CASES CITED : Hollis v Vabu Pty Ltd t/a Crisis Couriers [2001] HCA 44 (2001) 106 IR 80 Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 81 IR 150 HEARING DATES: 06/24/2002 DATE OF JUDGMENT: 08/23/2002 PROSECUTOR Ms P McDonald of counsel SOLICITOR Phillips Fox LEGAL REPRESENTATIVES: SYDNEY. DEFENDANT No appearance JUDGMENT: - 12 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: PETERSON J DATE: 23 AUGUST 2002 Matter No IRC4902 of 2000 INSPECTOR JOHN SHARPIN v ENPRO ENGINEERING PTY LIMITED Prosecution under s15(1) of the Occupational Health and Safety Act 1983. JUDGMENT 1 Inspector John Sharpin, acting on behalf of the WorkCover Authority of New South Wales, has commenced a prosecution of the defendant, Enpro Engineering Pty Limited ('Enpro'), in relation to an alleged breach of s15(1) of the Occupational Health and Safety Act 1983 ('the OHS Act'). The prosecutor is an Inspector in the employ of the Authority and is authorised by s48 of the OHS Act to institute the proceedings. The charge alleges a failure by the defendant to ensure the health, safety and welfare at work of its employees contrary to s15(1) of the OHS Act. The alleged offence is described as follows: It is alleged that the defendant, Enpro Engineering Pty Limited (ACN 001 487 001), an employer, breached Section 15(1) of the Occupational Health and Safety Act 1983 on 9 October 1998 at the undercroft site located at the Warringah Mall, 109A Old Pittwater Road, Brookvale in the State of New South Wales in that it failed to ensure the health, safety and welfare of its employees at work, in particular Bozo Marcelja. In particular, the Defendant failed: (a) to provide or maintain a system of work for the erection of structural steel that was safe and without risks to health. (b) to ensure that a fuel pipeline located at the undercroft site had been removed. (c) to provide or maintain a system of work for the removal of the fuel pipeline that was safe and without risks to health. (d) to ensure that the fuel pipeline was safe and without risks to health before allowing its employees to work on or near the fuel pipeline. (e) to adequately assess risks to its employees' health and safety of performing work on or near the fuel pipeline. (f) to organise for a hot work permit for the work area detailing precautions to be taken before using oxy-acetylene cutting equipment as detailed in AS1940 and AS1674.1. (g) to warn or to warn adequately its employees of the danger of performing work with oxy-acetylene cutting equipment on or near the fuel pipeline. 2 The matter was before the President on 22 November 2000 for plea and directions, at which time the defendant was represented by a solicitor as agent for Lough and Wells, solicitors of Wollongong. The matter was then next before the Registrar on 1 February 2001 and again on 1 March 2001, the defendant on each occasion being represented by counsel. The matter was then allocated to me on 23 July 2001 for hearing. It was mentioned on 3 August 2001 and stood over by consent. It was next mentioned on 6 November 2001 when there was no appearance for the defendant; it was adjourned to be re-listed on application. It was then mentioned on 5 February 2002, on which occasion the defendant was represented by a solicitor. A plea of not guilty was entered and the matter was adjourned for hearing on 24 June 2002 to continue on the following two days as necessary. Upon the matter being called for hearing on 24 June, counsel appeared for the defendant for the purpose of seeking leave to withdraw as counsel and indicated that the defendant had been in administration but had recently been released therefrom carrying substantial debts. Leave to counsel to withdraw being granted, there was no appearance for the defendant. 3 In those circumstances, the prosecutor, for whom Ms P McDonald of counsel appeared, applied pursuant to s11 of the Supreme Court (Summary Jurisdiction) Act 1967 for the court to proceed in the absence of the defendant. Section 11(1) provides as follows: 11(1) If, upon the day at the time and place to which the hearing or further hearing of a charge has been adjourned, either or both of the parties does not, or do not, appear in person or by a counsel or attorney, the Judge then and there present may proceed with the hearing as if that party or those parties were present, and in a case where it is the prosecutor who does not so appear may dismiss the charge with or without costs. 4 Ms McDonald also submitted that the Commission should, pursuant to s162 of the Industrial Relations Act 1996, determine its own procedure for the purpose of that hearing. Accordingly, I determined to hear the matter in the absence of the defendant upon the basis of the affidavit of Inspector Sharpin, filed in support of the application, a statement of facts and the prosecution brief of evidence. The makers of relevant statements contained in the brief of evidence were the subject of Summonses to Appear for the purpose of giving evidence on the three days fixed for the hearing of the matter. In the event, it was unnecessary for the prosecutor to resort to oral evidence save in respect of Mr Frank Selmo, a boilermaker who was working with the deceased employee at the time of the incident, the subject of the proceedings. 5 The defendant contracted to Christie Civil Contracting Pty Limited to supply and erect structural steel at a building project known as the Warringah Mall Stage 2 Development at Brookvale. The work was to be undertaken in an area known as the undercroft area. The steel work was to support a concrete overhead structure while drainage works were undertaken beneath that structure. Christie Civil Contracting Pty Limited and Bovis McLachlan Pty Limited, engaged by the property owners to manage the project, have also been prosecuted for offences under the OHS Act arising from the same incident. 6 On 9 October 1998 the defendant's foreman, Bozo (Bob) Marcelja, was present on site with Mr Selmo. Mr Marcelja received burns from flames caused by his oxy-acetylene torch cutting through a disused fuel pipeline. He died approximately 13 hours after the incident because of the burn injuries. 7 An issue of significance arose in the course of the prosecution's case. It related to the status of Mr Marcelja as, it was alleged by the prosecutor, an employee. The evidence contains a statement by the principal of the defendant, Enrico Prosperi. In the course of an interview by Inspector Sharpin he indicated that Mr Marcelja had been his foreman for 22 years. Upon being asked whether Mr Prosperi had proof of the employment arrangement between Mr Marcelja and Enpro, Mr Prosperi replied: He was a long term employee but about 6 or 7 years ago he changed to a contract basis on PPS. I have copies of variation certificate which shows him trading as AME Engineering. He was not a direct employee of ENPRO Engineering. 8 In order to seek to deal with the question of employment, which is a fundamental requirement of s15(1) of the OHS Act, the prosecution called evidence from Mr Selmo. His record of interview contained the following paragraph: My name is Frank SELMO, my date of birth is 27/2/50. I live at 2/15 Katrina St, Lake Heights and my telephone number is 02 4274 6346. I am currently a boilermaker on subcontract to Enpro Engineering Pty Ltd. They pay me an hourly rate to work for them. Sometimes I have a few days of (sic) if I want to or if my hand hurts or if I want to go home early. They take out 20% tax and my accountant works out the rest. I just work for the company, nobody else. 9 Mr Selmo, in oral evidence, testified to having worked from 1978 for approximately 11 years as an employee boilermaker of the defendant. He then left to establish his own business, which he conducted for five years, then closed it down and returned to Enpro. His evidence was that he was paid by the hours he was working. Payments were made to him in the name of Frank Selmo, 20% tax was deducted from them; he worked five days per week, 7am to 3.30pm. He received his instructions for the work from Mr Marcelja, he had his own box of tools but other equipment was supplied by the defendant. He worked only for the defendant and he had to ask permission of either Mr Prosperi or Mr Marcelja when he wished to take time off in the way that he described in the interview quoted above. 10 The prosecutor submitted that this evidence, together with pay records of Mr Marcelja, which indicate a $31.00 per hour rate of payment for 40 hours each week over a period leading up to the accident giving $1,240.00 per week, were indicative that the true relationship between the defendant and Mr Marcelja was one of employment. The judgment of the High Court in Hollis v Vabu Pty Ltd t/a Crisis Couriers [2001] HCA 44; (2001) 106 IR 80 was called in aid in favour of the proposition that the nature of the relationship described between the defendant company and Mr Marcelja was one of employment and not one of independent contractor or subcontractor. 11 Alternatively, it was submitted that should the court be against the prosecution on the employment point, then under s15(4) of the OHS Act the court should, if it were satisfied that the offence was one which properly arose under s16(1), convict under that section. 12 The relevant provisions of s15 of the OHS Act are: 15(1) Every employer shall ensure the health, safety and welfare at work of all the employer's employees. …. 15(4) If in proceedings against a person for an offence against this section the court is not satisfied that the person contravened this section but is satisfied that the act or omission concerned constituted a contravention of section 16, the court may convict the person of an offence against that section. 13 As I have observed, the legal relationship of employer and employee is fundamental to a prosecution under s15(1) of the OHS Act. In the absence of such a relationship, a prosecution under that section is not sustainable. The nature of the relationship is a matter which the prosecution is obliged to satisfy upon the criminal onus, namely, beyond reasonable doubt. The evidence of Mr Selmo may be suggestive of a relationship consistent with that which the prosecution has contended, namely, employment. His work, however, was different to that of Mr Marcelja, who was his foreman or supervisor. Whether or not Mr Selmo was an employee is not relevant to this point as it was Mr Marcelja who was particularised as the relevant employee. 14 I consider that, on the face of the evidence, the prosecution has not established beyond reasonable doubt that Mr Marcelja, contrary to the relationship of independent contractor or subcontractor as it appears on the face on the evidence, was in truth an employee. I consider Mr Selmo's position is not decisive of that matter, as it would seem to me it would need to be in order to overcome the direct evidence on the point. Whilst the judgment of the High Court in Hollis v Vabu adverts to matters of significance in considering the competing views of employment or contractor relationships, it makes a cautionary observation which I would apply in the present case. 15 Hollis v Vabu was the second case involving Vabu where employment was under consideration. Mr Hollis, who was a courier with another firm, was struck by a bicycle courier whilst leaving a building in Ultimo. He suffered injuries. The bicycle courier left the scene and remained unidentified although he was wearing a green jacket with the name Crisis Couriers, the business name of Vabu, on its front and back. Mr Hollis commenced proceedings against Vabu in relation to his injuries. The trial judge made findings which would have supported Hollis' action in negligence against Vabu were the bicycle courier an employee of Vabu. However, it was held that the bicycle couriers who worked for Vabu were independent contractors and not its servants or agents for whom it was vicariously liable. 16 The trial Judge was influenced substantially by the judgment of the New South Wales Court of Appeal in Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 81 IR 150 which considered whether Vabu was the "employer" for the purposes of the Superannuation Guarantee (Administration) Act 1992 (Cth). As to that, the High Court in Hollis v Vabu noted: It is important to note that the couriers retained by Vabu and whose classification was at stake in the taxation decision included those who might be termed motor vehicle and motorcycle couriers as well as bicycle couriers. Before Ireland J, evidence was adduced from three couriers as to the method and manner in which they operated as couriers for Vabu. In each case the witnesses had purchased their own transportation, being light commercial or alternatively domestic-type motor vehicles. No evidence was led from any of the bicycle couriers. However, Ireland J appears to have reached a decision applicable indifferently to all the couriers. 17 Later the High Court said: It is significant to note that one of the considerations mentioned by Meagher JA in the taxation decision as indicating that the couriers were independent contractors was that they bore the "very considerable" expense of providing, maintaining and insuring their own vehicles. It is apparent that Meagher JA was there concerned with expense in relation to motor vehicles and motorcycles. The purchase and maintenance of a bicycle could hardly be termed a "very considerable" expense. It may be that, in the taxation decision, a case that was, as his Honour put it, "hardly without difficulty", a different result might properly have been reached respecting Vabu's bicycle couriers from that which obtained respecting its other couriers. However, it is unnecessary to express any conclusion on this matter. It is sufficient to say that this case concerns liability arising from the activity of a bicycle courier, not a motor vehicle or motorbike courier. 18 It is that distinction, as described by the High Court, which causes me to consider that it would be both incorrect in principle and dangerous to attempt to decide the true nature of the relationship between Mr Marcelja and the defendant, essentially by reference to the circumstances of Mr Selmo. The other evidence available on the point is substantially in favour of the view that the relationship was one of independent contractor. 19 In those circumstances, consideration may properly be given pursuant to s15(4) of the OHS Act as to whether an offence has been made out under s16 of the OHS Act. That section is as follows: Employers and self-employed persons to ensure health and safety of persons other than employees at place of work 16(1) Every employer shall ensure that persons not in the employer's employment are not exposed to risks to their health or safety arising from the conduct of the employer's undertaking while they are at the employer's place of work. (2) Every self-employed person shall ensure that persons not in the person's employment are not exposed to risks to their health or safety arising from the conduct of the person's undertaking while they are at the person's place of work. (3) If in proceedings against a person for an offence against this section the court is not satisfied that the person contravened this section but is satisfied that the act or omission concerned constituted a contravention of section 15, the court may convict the person of an offence against that section. 20 Another aspect of the evidence of significance now is that of Mr Prosperi in relation to the work which was to be undertaken by his people at the Brookvale site. In his interview he gave this answer: A21 "On Wednesday or the day before (6/10/98) I go on site with Bob and Frank to visit the site before my men start working. I remark to the foreman from Christie Civil for all services to be fixed or cut from the site before my men start to work on site. The foreman of Christie Civil, Erian Abrahams (sic) and an Engineer from Bovis met us at the job and I remarked for everything to be cut off before my men go to the job. I asked Bovis why the steel beams were under the floor and he said the designer is here I will ask him. He said doesn't know but he reckons there was enough structural support. The foreman from Christie Civil asked for it in black and white and then said they would put supports under the beams. I know before they cut the beams the tri-sures were in place. The Bovis representative assured me the services would be cut the next day and asked could they use the Enpro cherry picker if it was available. I left about 11-12. Bob and Frank stayed there for another couple of hours drilling holes in the concrete and the ground for anchor bolts. After that I don't see Bob anymore. Bob and Frank went up the next day to start work. Enpro ordered a crane from Brambles, a cherry picker from Wreck Air." And also: Q23 "What arrangements were made between yourself and Christie Civil in relation to removing the existing service lines from the area in which Bob was injured?" A23 "I asked them to make sure the service lines were removed before we started." Q24 "Specifically what can you tell me about the fuel line that was fitted to the ceiling adjacent to where the steel had to go?" A24 "Nobody told to us there were diesel lines I just asked them to remove everything." 21 The services to be removed were at least the electrical wiring and a sprinkler system. Whether the disused fuel pipe could be included in the description 'services' is perhaps questionable given that it no longer serviced anything. The evidence contained a record of interview with Mr Solomon Hava, an electrician who described himself as self-employed by SEC Services Pty Ltd, a company of which he was the Managing Director. He undertook the task of removing the electrical services, lights and power and disconnecting the fuel pump. He was unaware who removed the sprinkler piping. 22 In his record of interview he supplied this answer: A couple of days before the accident Hayden Berry asked me about the 2 inch pipe down there and I told him it was an old petrol service for Grace Bros but that it hadn't been used as far as I knew for about 10 years. I heard Hayden say to Bozo and Frank the labourer that it was a disused fuel pipe. I was in the cherry picker to disconnect and remove the electrical services from the ceiling. Bozo told me to hurry up because he wanted to use the cherry picker so I came down and told the Christie Civil labourer that they (Enpro) could cut the conduits with a grinder because I couldn't reach it from the cherry picker. I told the Christie labourer also to tell them to cut the fuel pipe with a grinder. 23 Mr Hayden Berry was also interviewed by Inspector Sharpin. He was employed by Bovis McLachlan, the Project Manager at the site and was responsible for coordination of the contractors' work. He indicated in the interview that the sprinkler pipelines and electric cables were removed after Christie Civil had notified that they may be in the way of the steel erection. The fire services piping was removed by "FFE". Mr Berry said that he had told Mr Marcelja about the fuel pipe and its dangers. He said that Erian Ibrahim of Christie Civil and Solomon Hava had also told Bob the same thing. On being asked why the fuel line had been left in position he said "We didn't remove it because we weren't asked by Christies or Bob (Marcelja) as we were informed it wasn't an obstacle." In his record of interview Mr Selmo described the work which he and Mr Marcelja, his foreman, did, on the Warringah Mall site. They were in the course of erecting steel beams. He said: Now the beam was propped, I went up in the cherry picker myself and marked the beam and cut it. Bob said to me while I was up there to cut the pipe. I said I'm not going to cut it. He said why? I said because I don't know what's in it. He said they had cleared it the 240, everything. They told him it's a dead pipe. I'm not going to cut it I'm not sure what's in it and I came down. I was talking to the Christies labourer and he went up. I told him don't worry about the pipe, do the sprinkler as it has a cut end. He cut the sprinkler and then he blew a hole in the galvanised pipe and a little flame came out, about 40mm long. I said to him there must be something in there. He said there is nothing in there. He said there is nothing in there. He cut all the way through. Then he swung the cherry picker to another spot, and he started cutting the pipe again. He cut it until the pipe came down. It was about 3 or 4 metres long. It came down one side first and then he cut the last bit and the pipe dropped to the ground. Then it looked like he was cutting a bracket that was holding the rest of the pipe up. Then we saw a fire. His shirt was on fire. He then described how Mr Marcelja was assisted to the ground and the fire was put out. 24 In the light of the evidence, it seems to me the prosecutor has failed to establish that the defendant is responsible for relevant failures as described in particulars (c), (d), (e), (f) and (g). In approaching those particulars, I have substituted a notion of independent contractor for employment described in those particulars. In any event, it seems to me that those failures for the purpose of s16(1) may only be established by reference to a contractual duty borne by the defendant which itself, in the carrying out of the work thereunder, gave rise to a statutory duty to conform with the relevant requirements of the OHS Act. 25 Particular (c) relates to a failure to provide or maintain a system of work for the removal of the fuel pipeline that was safe etc. The evidence does not establish that there was any duty, obligation or need for Enpro to provide or maintain such a system when the work was not Enpro's to perform. The same conclusion seems to me to affect particular (d) which related to ensuring the safety of the pipeline before "allowing its (subcontractors) to work on or near the fuel pipeline". The same position affects particulars (e) and (f). As to particular (g), which concerns a failure to warn or warn adequately of the danger of performing oxy-acetylene work on the pipeline, while in theory it is correct to say that Mr Prosperi and Enpro did not issue any warning, I find that the prosecution has not established beyond reasonable doubt that no warning or no adequate warning was given to Mr Marcelja. That conclusion seems to me to be unavoidable in the light of the evidence of Mr Berry and Mr Hava. 26 I conclude that the prosecution has established beyond reasonable doubt that the defendant failed: (a) to provide or maintain a system of work for the erection of structural steel that was safe and without risks to health. (b) to ensure that a fuel pipeline located at the undercroft site had been removed. 27 I also find that Enpro was an employer as s16(1) requires. I rely for that conclusion upon Mr Prosperi's interview when he described himself as formerly the General Manager of Enpro and now the owner of it. I note the functions he performed on behalf of the company as undertaking the tendering work and talking with people although the day to day running was left to Mr Marcelja. I also rely on the evidence of and relating to Mr Selmo as establishing that his relationship with Enpro was one of employment. I also find as earlier noted that Mr Marcelja was a person not in Enpro's employment. Those findings satisfy the requirements of s16(1). It follows that I must find the defendant guilty of the offence as charged. 28 I will proceed to a conviction subsequently, after giving the parties an opportunity to address on the issue of penalty. As Ms McDonald submitted the defendant may wish to put material before the court on that subject matter. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.