A court has heard three sections of water pipe in Auckland contained gas in the months before a fatal explosion.
Auckland Council's water company Watercare entered a surprise guilty plea to two health and safety charges in Auckland District Court on Monday but its contractor, Canadian Pacific Ltd, denies it endangered its staff and others.
The lawyer for the Ministry of Business, Innovation and Employment, Shona Carr, told the court a report showed gas was present in the pipeline, in Onehunga, in February 2011. That was four months before the explosion on 4 June, during work to join two main line pipes.
Engineer Philomen Gulland, 48, was killed in the blast; another employee, Ian Winson, lost both legs; and five others were injured.
Canadian Pacific's lawyer Paul White says his client was never told of gas being found before one of its employees did welding work on the line.
Ms Carr said Ms Gulland and Mr Winson re-entered the pipe, despite initially sensing gas.
"After Ms Gulland and Mr Winson had taken a few steps inside the pipe, an explosion occurred. The force of the explosion blew them both out of the east section of the pipe and into the west section. Ms Gulland died at the scene from multiple injuries. Mr Winson is now a double amputee above the knee."
Ms Carr said Canadian Pacific failed to ensure the safety of its employees and others.
Mr White told the court no standards existed covering the kind of work being undertaken that day. "The work that was being done in that chamber in June 2011 did not involve entry in terms of the standard and therefore the standards don't apply."
Mr White said Watercare never informed Canadian Pacific that gas testing was required.
Watercare will be sentenced in two weeks.
A statement from chief executive Mark Ford says Watercare has reinforced its health and safety procedures since the explosion.
He says the council-owned company has done everything to ensure such a thing never happens again.