The High Court of Australia and the Victorian Supreme Court of Appeal have recently handed down important decisions in connection with the duty of care owed under the Occupational Health and Safety Act 2004 (Vic) (OHS Act). The first of these decisions deals with the concept of "reasonable practicability" and will therefore have application beyond Victoria to all States and Territories operating under harmonised work health and safety laws. Both of these decisions serve as a timely reminder to review OHS compliance in your business and ensure the adequacy of your safety management system.
On 30 March 2012, the High Court handed down its decision in Baiada Poultry Pty Ltd v the Queen  HCA 14. The decision clarified what reasonable practicability requires in the context of the OHS Act.
General duties under the OHS Act to ensure health and safety are qualified by the concept of what is reasonably practicable. A duty holder must ensure, so far as is reasonably practicable, that risks to health and safety are:
‘Reasonably practicable’ means doing that which is or was at the particular time reasonably able to be done in relation to ensuring health and safety. In determining this, the following factors must be considered:
The test of reasonably practicable is an objective test.
The High Court’s decision in Baiada confirms that control is a necessary element in the consideration of what is reasonably practicable. It also confirms that in some circumstances, a duty to do what is reasonably practicable can be discharged by engaging specialist contractors, and that the duty can be discharged even if the duty holder has not taken every possible step that it was capable of taking.
Baiada Poultry Pty Ltd (Baiada), a broiler chicken processing business, engaged independent contractors DMP Poultech Pty Ltd (DMP) and Azzopardi Haulage Pty Ltd (Azzopardi) to round up and pack chickens into crates, and transport the crates to a processing plant.
During the operation on 4 December 2005, an unlicensed DMP forklift driver used a forklift to load steel pallets carrying the crates onto a trailer. The DMP employee asked the director of Azzopardi to help shift the steel pallets to even up the load and as this was being done one of the steel pallets fell on and killed the director.
Baiada was charged with breaching s.21(1) of the OHS Act by failing to provide and maintain, so far as was reasonably practicable, a safe working environment (attributed to its failure to control how the forklift was to be operated).
Baiada pleaded not guilty, arguing that it did not have the right to control how the forklift was used because the forklift was within the control of DMP, and that Baiada was entitled to rely on DMP, as a competent and experienced contractor, to carry out the work that Baiada could not do itself.
The trial judge rejected Baiada’s argument on the basis that it had contractual power to give safety directions relating to the loading activities at the farm, and that it was “entirely practicable for [Baiada] to require the contractor to put loading and unloading safety measures in place.” Baiada was fined $100,000.
The High Court accepted that Baiada had a contractual right to direct DMP on health and safety matters, but stated:
“Demonstration that a step could have been taken, and that, if taken, it might have had some effect on the safety of a working environment, does not, without more, demonstrate that an employer has broken the duty imposed by s21(1)...
Showing that Baiada had the legal right to issue instructions showed only that it was possible for Baiada to take that step, it did not show that this was a step that was reasonably practicable to achieve the relevant result of providing and maintaining a safe working environment.”
Justice Heydon noted that in some circumstances employing independent contractors “may be the only reasonably practicable way of ensuring and maintaining a safe working environment.”
In light of this decision:
On 3 May 2012, the Victorian Supreme Court of Appeal in Orbit Drilling Pty Ltd v Queen  VSCA 82 upheld a $750,000 fine imposed on a Victorian employer for recklessly engaging in conduct which placed its employee in danger of serious injury.
Under s.32 of the OHS Act, a person (company or individual) who, without lawful excuse, recklessly engages in conduct which places or may place another person at the workplace in danger of serious injury, may be prosecuted. Potential penalties include fines and imprisonment.
Conduct is reckless if there is foresight on the part of an accused of the probable consequences of their actions and they turn a blind eye to the risk of serious injury arising from the danger.
Unlike the general duties which are strict liability offences, this offence is only established by proof of the requisite state of mind on the part of the accused.
On 9 December 2006 a 21 year old employee of Orbit Drilling Pty Ltd (Orbit) was killed while driving a Mack truck with defective brakes. At the time, Orbit was performing drilling works for a mining company, and the employee had been working for Orbit for just over a week.
The employee was driving a heavily loaded truck when instructed to park the truck on a drill pad which involved driving down a steep slope. At the time the truck’s brakes were defective and the employee had not been effectively trained. The employee was unable to control the truck on the sleep slope, which resulted in the truck becoming airborne, rolling and killing the employee.
Orbit admitted that it had recklessly engaged in conduct which placed the employee in danger of serious injury, thereby breaching s.32. The drill crew supervisor’s recklessness was attributed to the company. The company was fined $750,000 ($966,870.00 being the maximum fine available at the time).
Mr Smith, Orbit’s sole director, pleaded guilty to breaching s.144 of the OHS Act, thereby admitting that Orbit had breached its general duty under s.21 (failing to provide and maintain a safe working environment) because of his failure to take reasonable care. Mr Smith was fined $120,000.
The Court of Appeal rejected Orbit and Mr Smith’s argument that the fines were manifestly excessive. Unchallenged evidence showed that the truck had not been adequately maintained, nor had the employee received appropriate training. The Court was satisfied that the fatal injury to the employee highlighted the gravity of the danger to which the employee was exposed by Orbit, and the high degree of culpability attaching to its reckless conduct.
The Court endorsed the trial judge’s findings that Orbit’s response to the incident demonstrated how easily it could have been prevented.
The Court rejected the argument that the fines had the effect of imposing a double penalty because Mr Smith was the sole director of Orbit. The Court held there was a fundamental distinction between Mr Smith’s personal liability and Orbit’s corporate liability.
Interestingly, the Court expressly recommended that the adequacy of the maximum penalty under s.32 be examined “as a matter of urgency to ensure that it accurately reflects the seriousness of the offence as Parliament conceived of it.” In making this recommendation, the Court noted the corresponding provision under NSW’s Work Health and Safety Act which carries a maximum fine of $3 million.
The decision provides a useful restatement of the matters to be considered in determining liability and sentencing, namely: