Citation: WorkCover Authority of NSW v Diona Pty Ltd [2014] NSWDC 176
Court: District Court of NSW
Date: 24 July 2014
Judge: Curtis DCJ
Background
Diona Pty Ltd, a civil contractor, had contracted with Ausgrid to excavate approximately two kilometres of trench at Kogarah for underground cabling. Diona subcontracted the physical excavation work to Fer-Aim Pty Ltd, nominating Fer-Aim's principal, Mr Fullen, as on-site supervisor.
On 5 June 2010, after Fer-Aim had already safely completed the work contemplated by the contract, Ausgrid's on-site inspector verbally directed Mr Fullen to extend the trench beyond its original scope to connect with work performed by a separate contractor. Mr Fullen objected, noting it was outside Diona's scope, but was overborne by the inspector. The extension undermined the facade of an adjacent building, which partially collapsed, injuring a building occupant and endangering others.
Diona pleaded guilty to a charge under section 8(2) of the Occupational Health and Safety Act 2000, which requires a person conducting an undertaking to ensure that persons other than its employees are not exposed to risks to their health or safety. The sentencing proceedings required the court to assess the degree of Diona's culpability and determine the appropriate penalty.
Legal Issues
- What was the degree of Diona's culpability for the incident, assessed by reference to the conduct of the natural person who embodied the corporation's relevant duty?
- Whether, given the guilty plea and all subjective circumstances, it was appropriate to dismiss the charge without proceeding to conviction under section 10 of the Crimes (Sentencing Procedure) Act 1999.
Decision
Issue 1: Assessing corporate culpability
Curtis DCJ applied the Meridian principle, which requires identifying the natural person whose conduct represents the corporation's discharge of the relevant legal duty. In this case, that person was Mr Fullen. The court then measured Mr Fullen's conduct against the standard of a reasonable person in his position with his knowledge and powers of control.
The court found Mr Fullen's culpability to be low. He had objected to the instruction, but was overborne by Ausgrid's inspector in circumstances where Diona was contractually obliged to comply with that inspector's directions. Mr Fullen was not a trained engineer and had reasonable grounds to assume the inspector had assessed the risks. The court also noted that three structural factors reduced Diona's organisational culpability: the contract required departures from scope to be communicated in writing; it was not foreseeable that Mr Fullen's objection would be overridden; and it was not foreseeable that the inspector would give directions contrary to Ausgrid's own specifications. The court found Diona's broader safety systems, training, and procedures were not themselves deficient.
Issue 2: Dismissal without conviction under section 10
The court acknowledged the Prosecution's submission that section 10 dismissals should be reserved for the most exceptional cases in the OHS context, given the strong public policy underlying workplace safety legislation. Curtis DCJ accepted that standard but concluded this case met it.
Relevant factors included Diona's genuinely low culpability, the extenuating circumstances (an unauthorised verbal direction from the principal's client's inspector), Diona's exemplary safety record since the incident, its long history of good character in a high-risk industry, early guilty plea, cooperation with WorkCover, expressed remorse, and the adverse effect a conviction would have on its ability to secure future contracts. The charge was dismissed without conviction, with costs payable to the prosecutor.
Orders Made
- The charge was dismissed pursuant to section 10 of the Crimes (Sentencing Procedure) Act 1999.
- Diona was ordered to pay the prosecutor's costs in the sum of $20,300 (excluding GST).
Key Takeaways
- The District Court applied the Meridian principle to identify the natural person embodying a corporation's duty under the OHS Act, then assessed that person's conduct against a reasonable person standard to determine corporate culpability.
- A section 10 dismissal without conviction remains available for OHS offences but, consistent with the statute's public policy objectives, is reserved for cases the court regards as most exceptional.
- Low culpability will not, alone, attract a section 10 dismissal; the court here weighed it alongside the defendant's long safety record, absence of prior convictions, cooperation, early plea, genuine remorse, and the real prospect of commercial harm from a conviction.
- Where an employee or subcontractor is overborne by a third party's representative to perform work outside the agreed scope, and the contracting entity's own procedures and training were otherwise adequate, the court may find the corporation's overall culpability to be significantly reduced.
- Agreement to pay the prosecutor's costs was treated as itself constituting an element of punishment and, to that extent, a contribution to the deterrence objectives of the sentencing exercise.
Legislation and Cases Referenced
Legislation
- Occupational Health and Safety Act 2000
- Crimes (Sentencing Procedure) Act 1999
Cases
- Meridian Global Funds Management Pty Ltd v Securities Commission (1953) All ER 918