Health and safety laws in Australia have been framed to place primary responsibility on principals for the work carried out by their contractors. Although aimed at driving safety improvements from the “top down”, these laws, in part, ignore the commercial reality that reliance on contractors is a necessary and unavoidable component of operating a business.
Two recent decisions have added to the relatively thin body of judicial guidance on when a principal might rely on its contractor in discharging its own OHS duties. Some key points to take from these two recent decisions include:
The nature of statutory OHS duties
- statutory OHS duties require reasonably practicable steps to be taken but do not require principals to do all that is physically feasible;
- a person in control of a workplace has a duty to take reasonably practicable positive steps to control hazards and manage safety. This duty might be met by the engagement of a skilled and competent contractor to manage certain work;
- where the very nature of the hazard and the means to reduce the risk of harm are within the contractor’s expertise, it might not be practicable for the principal to do more than seek assurances from the contractor that the necessary safety practices have been adopted. This is because the principal’s ability to control the hazard is limited by its own knowledge and it may create more of a risk if the principal were to try to control the hazard where they do not have the relevant expertise to do so;
- it is unlikely to be enough to assume an apparently skilled expert contractor will attend to safety requirements, but if the assumption is based on inquiries made and assurances given and a reasonable belief as to skill then it might be a reasonable assumption. However, if anything occurs during the engagement which puts the principal on notice to question the contractor’s skill and competence, appropriate enquires should be made;
What the prosecution must prove
- it is incumbent on the prosecution to prove beyond reasonable doubt that the principal’s reliance on apparently skilled and competent contractors was insufficient to meet its statutory OHS duties; and
- proving that a principal has a contractual right to instruct or supervise the activities of a contractor and that the principal has failed to exercise that right is not enough to establish that the principal has breached its statutory OHS duties. The prosecution must then go further and prove that, in the circumstances, the principal should have exercised its contractual right to instruct or supervise the activities of the contractor in order to properly discharge its duty.
These cases shed some much needed light on when a principal is entitled to rely on its contractors in the discharge of its own OHS duties. These decisions recognise that even though a principal’s statutory OHS duties cannot be delegated to contractors, the regulator still needs to prove that it was reasonably practicable for the principal to have taken some additional measure. They also demonstrate that what knowledge or expertise the principal has of the hazards and the steps needed to manage safety will determine the extent of the steps they may need to take to manage the expert contractors. The more knowledge the principal has about the contractor’s area of expertise the more they may be required to do to supervise the contractor.
Below is a summary of these two decisions:
Kirwin v The Pilbara Infrastructure Pty Ltd  WASC 99
This decision involved an appeal by the prosecution to the Supreme Court of Western Australia.
The Pilbara Infrastructure Pty Ltd (TPI) is a wholly owned subsidiary of Fortescue Metals Group Ltd (FMG). FMG and TPI engaged Spotless Services Australia Ltd (Spotless) to handle the tender process for the installation of temporary accommodation facilities to house employees at a site in the Pilbara region. Spotless made a drafting error in a tender document, erroneously stating that the site was located within a non-cyclonic wind region, when the site was actually located in cyclonic wind region.
After a change in circumstances with Spotless, TPI directly engaged the successful tenderer, Spunbrood Pty Ltd, trading as NT Link (NT Link), for the installation of the temporary accommodation facility. NT Link was a reputable company with significant expertise and experience in the supply of transportable buildings such as camp buildings to be installed in cyclonic regions. Mr Peter Lawry, an engineer with considerable experience, was also engaged to supervise, inspect and assess the quality of the installation work.
Cyclone George hit the site in March 2007. Employees had prior warning and were advised to shelter in their dongas (as per the FMG and TPI safety procedure). During the cyclone, several dongas became detached, were damaged or completely destroyed, causing two deaths and multiple cases of serious injury to employees.
Expert evidence showed that irrespective of the fact that the dongas were designed for wind region A standards (and not cyclonic wind standards), the dongas would have provided sufficient protection if they had been correctly tied down and installed according to safety standards.
The initial charges
The Department of Consumer and Employment Protection (DOCEP) brought charges under the Western Australia Occupational Safety and Health Act 1984 (OSH Act) against 8 companies involved. Interestingly, immunity was ultimately granted to NT Link in return for giving evidence. In relation to TPI and FMG, the prosecution alleged the following failures:
- a failure by TPI and FMG to provide and maintain adequate safety procedures to be observed in the event of a cyclone;
- a failure by TPI to provide and maintain a safe refuge in the event of a cyclone; and
- a failure by TPI to maintain the residential premises so that employees occupying the premises were not exposed to hazards at the premises by failing to ensure that the premises were able to withstand cyclones.
TPI and FMG were acquitted of all criminal liability as principals, as it was reasonable for them to have believed the dongas constituted a safe refuge and could not have reasonably done more in “so far as is practical” to provide an adequate safety procedure, safe refuge or in maintaining the residential premises for their contractors and their contractor’s employees.
DOCEP failed on the “ultimate contravention issue”, to prove beyond reasonable doubt that TPI and FMG did not act reasonably in assuming the dongas were properly designed and constructed pursuant to relevant standards so as to constitute safe refuge in the event of cyclone. This is despite the extreme and inexplicable failures of NT Link (experts contracted to install the dongas) and Mr Lawry (expert engineer).
According to Magistrate Mignacca-Randazzo:
Where an employer relies upon a specialist contractor to perform a task which demonstrably fell within the contractor’s area of expertise and outside that of the employer, and if the task appears to be carefully and safely performed by the contractor, it would ordinarily be difficult to conclude the employer breached a statutory duty like s19(1) of the OSH Act… [because in these circumstances] it would not ordinarily have been practicable for the employer to have done more.
DOCEP appealed the Magistrate’s decision to Western Australia’s Supreme Court arguing that, among other things, the learned magistrate erred in law in finding that the prosecution had not disproved that TPI had acted reasonably in assuming that the dongas would be safe refuges.
Hall J rejected DOCEP’s argument. According to Hall J, DOCEP had confused what is 'technically possible' with what is 'reasonably practicable in the circumstances'. DOCEP appeared to be arguing that because some of the things that NT Link was contracted to do were capable of being understood and double-checked by TPI and FMG, then it followed that there was an obligation on them to do such checking. DOCEP considered that TPI should have been put on notice of the need to do this despite the Magistrate’s factual conclusion that they were not (which the appeal Judge was not willing to overturn as it appeared to be reasonably based).
As noted by Hall J:
In some circumstances it might be reasonably possible for an employer to ascertain whether its assumptions are correct. However, in other circumstances the relevant factors will be outside the employer's knowledge and control. Given that NT Link had assumed responsibility for the design process and for obtaining Shire approval, this was not a case where [TPI and FMG] could reasonably have been expected to undertake for themselves the task of determining the appropriate wind region…
…In the present case the very nature of the hazard and the means to reduce the risk of harm fell within the expertise of the contracted builder; other than to seek assurances that the buildings had been built to the appropriate standards, there was nothing more that the respondents could reasonably be expected to do.
Accordingly, each of the four grounds raised by DOCEP was rejected and the appeal dismissed.
Baiada Poultry Pty Ltd v The Queen  HCA 14
This decision involved an appeal by the accused principal to the High Court of Australia from a decision of the Court of Appeal of the Supreme Court of Victoria.
Baiada is a large chicken processing company. Baiada arranges with farmers and other contractors for the chickens to be raised, caught, crated, loaded and delivered to its plants for processing. Baiada arranged to collect some chickens from a farm in December 2005. Baiada provided a trailer containing empty crates into which the chickens were to be placed.
Baiada also engaged two subcontractors. One was DMP Poultech Pty Ltd (Poultech) which provided a forklift and driver to unload the empty crates. It was also to provide chicken catchers who were to catch the chickens on the farm, fill the crates, and load the full crates onto the trailer. The other subcontractor was Azzopardi Haulage Pty Ltd which provided a driver and a prime mover to convey the loaded trailer from the farm to Baiada's plant.
One of Poultech’s chicken catchers, who was not licensed to drive a forklift, began to do so while the trailer was being loaded. In the course of this activity Mr Azzopardi, director of the Haulage contractor, was killed.
Baiada was prosecuted and subsequently convicted in Victoria’s County Court on one count of failing to promote and maintain a working environment that was safe and without risks to health.
Court of Appeal
Baiada then appealed to Victoria’s Supreme Court arguing that the trial judge erred in failing to direct the jury that the prosecution had to prove beyond reasonable doubt that Baiada’s engagement of apparently skilled and competent contractors to do the tasks was insufficient to meet its OHS duty. The Court of Appeal agreed with Baiada that the trial judge should have given the jury this direction, but in a split decision, it refused Baiada leave to appeal on the basis that no substantial miscarriage of justice had occurred.
According to the Court of Appeal, despite the misdirection, on the whole of the evidence led at trial, the Court of Appeal was satisfied beyond reasonable doubt that the applicant’s engagement of Poultech and Azzopardi Haulage was indeed insufficient to discharge its OHS duty.
High Court Appeal
Baiada then appealed to the High Court. The High Court also agreed that the trial judge erred in failing to direct the jury. However, the High Court also found that it was not open to the majority of the Court of Appeal to conclude from the record of the trial that the charge laid against Baiada was proved beyond reasonable doubt.
The High Court found that the majority of the Court of Appeal relied on matters which pointed only to reasonably practicable steps which could have been taken by Baiada but none of those matters required the conclusion that failing to take the identified steps was a breach of Baiada's OHS duty.
According to the High Court, demonstration that some step identified by the prosecution was reasonably practicable does not, without more, demonstrate that failing to take that step was a breach of Baiada’s OHS duty. Tellingly, Heydon J (who agreed with the other High Court Justices but gave a separate decision) made the following remarks about the prosecution’s case:
On the [prosecution]'s case reliance on the independent contractors was incapable in law of complying with the [OHS duty]. That view is an extreme one. It is difficult to accept in the particular circumstances of these proceedings. One of those circumstances was that [Poultech], for example, had clear safety procedures in place. Another was that both [Poultech and Azzopardi] had specialist expertise in loading crates full of chickens onto trailers. Baiada had safety procedures at its own plant for its own employees. It does not follow that [the OHS duty] called for them to require its contractors to put them in place for their own employees or to check whether they were being observed.
Accordingly, the High Court set aside the Court of Appeal’s decision, granted and allowed the appeal, quashed the conviction and sentence and ordered a new trial be held.