31 May 2007
Key Points:
* This decision has potentially wide-reaching implications for Commonwealth construction and maintenance contracts. * When drafting agreements with project management companies, close attention should be paid to the extent of interference with the management and construction of the project.
Large national organisations governed by the Occupational Health and Safety Act (Commonwealth Employment) Act 1991 (Cth) ("OHS Act") may be held responsible for OHS at sites that are maintained by contractors. The recent decision of the Australian Industrial Relations Commission in Telstra v Comcare [2007] AIRC 136 found that under the OHS Act, safety at a site where the operation and maintenance of a Telstra network facility was undertaken by a joint venture (contractor) was the ultimate responsibility of Telstra.
This decision has potentially wide-reaching implications for Commonwealth construction and maintenance contracts, particularly Public Private Partnership arrangements where a middle layer or special vehicle is often created to manage projects (and manage the construction company).
The primary issue for determination in this case was the meaning of "control" of the workplace for "construction and maintenance purposes". Under section 14 of the OHS Act, if a workplace is "controlled" by a contractor for construction and maintenance purposes, the OHS Act (save for section 20) will not apply to that workplace, whilst it is so controlled by that contractor.
Please note that this decision was appealed to a Full Bench by Telstra and dismissed.
The injury
Mr X's hand was caught in a pulley system which severed three of his fingers. The pulley system was attached to an air-conditioning unit and, at the time of the injury, Mr X was involved in cleaning the plant room associated with that air-conditioning unit. The parties admitted that the injury occurred because of inadequate guarding, which was subsequently rectified.
Mr X was an employee of Trilogy, an air-conditioning contractor subcontracted by a joint venture. The joint venture was engaged by Telstra Corporation Limited to provide facilities management services pursuant to an agreement entitled "Facilities Management and Telepower Services Agreement" on an as required basis from time to time. The injury occurred at one of Telstra's unmanned telephone exchanges, where various employees and contractors of Telstra visited the site from time to time.
"Control" of the workplace
The Commission was asked to consider whether the joint venture "controlled" the workplace for the purposes of section 14(1) of the OHS Act. If it did, that would mean that the joint venture had responsibility for the worksite in these circumstances and not Telstra. This is because, while Vice President Lawler accepted that the joint venture had some measure of control, the issue here was who had ultimate control of the workplace. That is, and in contrast to the majority of State OHS legislation, section 14(1) of the OHS Act appears to leave no room for different degrees of control to be allocated.
A unique feature of this case was that the workplace in question was generally unmanned and the joint venture was granted a limited right of access to carry out maintenance works as required from time to time. Thus, the joint venture was carrying out works at the workplace on an intermittent basis.
Telstra argued the OHS Act did not operate in a way to make them responsible in the particular circumstances of this case because the site was a workplace "controlled" by the joint venture for maintenance purposes.
Vice President Lawler assessed which party was in "control" of the workplace by looking at the parties' obligations over the whole term of the Agreement, for both the period when the joint venture was on and off the site. He found that the safety at the site managed by the joint venture was ultimately the responsibility of Telstra. The Commission placed heavy emphasis on the terms of the Agreement and found that it, by a number of its terms, placed ultimate control of the site with Telstra. For example, under the Agreement, Telstra had the right to audit the works, suspend the work, and take over the work (through other suppliers). An exclusive licence was never granted to the joint venture and Telstra always retained the right for it and its subcontractors to enter the premises. Importantly, under the Agreement, Telstra required the joint venture to comply with all safety measures and site rules specified by Telstra when attending the site.
Furthermore, evidence demonstrated that Telstra had the frequent access to the site, including attending to ensure that all services of maintenance work had been conducted.
Appeal
The decision was appealed to a Full Bench by Telstra and dismissed. The Full Bench agreed with Vice President Lawler that the issue of whether the contractor had control for the purposes of section 14 of the OHS Act was to be determined primarily by reference to the terms of the contract.
The Full Bench also made particular note of the fact that the contractor did not have exclusive possession of the premises.
Implications of the decision
It should be emphasised that this decision turns very much on the wording of the OHS Act and hence its relevance to the interpretation of State OHS legislation is negligible.
The decision raises significant issues on who is responsible for the management of OHS at worksites (where the OHS Act is applicable). The decision is particularly relevant where large corporate/government clients contract with a project management (construction) company to undertake the project design and construction of a project.
In such cases, very detailed and complex project deeds are usually entered into that frequently deal with the types of matters that Vice President Lawler placed emphasis on in determining that Telstra retained ultimate control of the workplace.
As a consequence of this decision, when drafting agreements with project management companies, clients need to pay close attention as to how far and to what degree they allow themselves to interfere with the management of the project and its construction, including such things as:
Understandably, it is often a fine balance between ensuring there are the necessary controls in a project deed to effectively administer a construction project and going so far as to exhibit that level of control which causes the client to be found liable under the OHS Act.
Whenever such agreements are being negotiated and entered into, however, it is an exercise that needs careful consideration, particularly given it is always possible that a court or tribunal may one day have to examine its terms and decide who has the ultimate control.
