Sentencing trends under new penalty regime
The Health and Safety at Work Act 2015 (HSWA) came into force in April 2016 and there have now been enough sentencing decisions pursuant to the new penalty regime (which increased the maximum penalty for offences not involving recklessness six-fold from $250,000 to $1.5 million) to see some trends emerging.
Although we are yet to see comment from the High Court on the sentencing methodology adopted by the District Court, the following trends are apparent:
- The courts have continued to apply the well-established general approach set out by the High Court in Department of Labour v Hanham and Philip Contractors Ltd (2009) 90 NZELC 93,095, (2008) 6 NZELR 79.
- It appears to be generally accepted that the starting point for a fine ought to be determined by reference to cumulative "bands" which reflect the offender's culpability (for example low culpability up $0 to $400,000, medium culpability $400,000 to $800,000 etc). There has been some disagreement as to how many bands there should be, with different judges favouring 4, 5 and 6 separate bands. However, it appears that the starting points adopted have been relatively consistent regardless of how many bands have been used.
- Significant discounts for guilty pleas and other mitigating factors are routinely applied (discounts in the order of 50-60% are relatively common). To date all of the decisions that we have seen have involved a guilty plea.
- Perhaps unsurprisingly, given the significant increase in penalties, inability to pay fines is becoming an important additional consideration leading to substantial reductions in fines for small businesses. In two cases that has led to the imposition of fines reduced by more than half again from the (already discounted) fine otherwise payable. The Courts have adopted the view that imposing a fine that would effectively force the closure of a business would only occur in "quite exceptional" cases involving repeat offending or "the most egregious of breaches".
Enforceable undertakings take off
An enforceable undertaking is a legally binding agreement between a duty holder and Worksafe following an alleged breach of the HSWA. As enforceable undertakings present an alternative to prosecution, they warrant careful consideration by duty holders in the event of a breach, or investigation by Worksafe.
Over the past year, Worksafe has accepted nine enforceable undertakings, all in relation to incidents involving death or injury. Of the nine undertakings, there were two from each of the waste management, manufacturing and building and construction sectors and the remaining three were from agriculture, education and recreation. Interestingly, we have not yet seen an undertaking in relation to a near miss, despite the requirement that notifiable incidents be reported to Worksafe as soon as possible in accordance with s 56 of the Act.
Enforceable undertakings are not proactively offered by Worksafe, and must be raised by the duty holder. An enforceable undertaking will usually require significant actions in response to an alleged breach to:
- support progressively higher standards of work health and safety for the benefit of the workers, the workplace, the wider industry or sector and the community;
- remedy the harm caused to any victims; and
- support Worksafe to meet its strategic priorities.
Those actions can be onerous, and will be costly in most cases (the average cost incurred by the duty holders in relation to the nine undertakings referred to above was approximately $140,000). It is also an offence to contravene an enforceable undertaking once in force, which means than even a minor failure to comply with the terms of the undertaking may expose the duty holder to prosecution.
However, that should be balanced against the likely need to undertake at least some of the required actions (audits, training staff, updating procedures etc) in response to a prosecution in any event, and the potential for a significant fine and, where appropriate, reparations if an offence is successfully prosecuted.
More detail on the application process and the criteria applied by Worksafe is available in the Enforceable Undertakings Operational Policy and the Enforceable Undertakings Practice Guide (both available on the Worksafe website here).
Revisiting corporate manslaughter
In the wake of the decision not to prosecute in respect of the CTV Building collapse, Justice Minister Andrew Little announced in December that the Government is again considering introducing a corporate manslaughter offence. Mr Little remarked that he hoped to consider changes during 2018, following advice and a consultation period. It is, of course, possible to prosecute an individual for manslaughter, including in relation to conduct occurring in a corporate role. The introduction of a corporate manslaughter offence would enable the prosecution of a corporate entity.
Historically, the prospect of introducing a corporate manslaughter charge has drawn mixed reviews. While submissions were made in support of the adoption of the offence in the lead up to the enactment of the HSWA, the offence was not ultimately included. At the time, questions were raised about the desirability of creating a corporate manslaughter offence in the absence of a more general overhaul of corporate criminal responsibility.
Comparisons will likely be made with corporate manslaughter regimes introduced overseas, notably in the United Kingdom, Canada and the Australian Capital Territory. Those jurisdictions take different approaches, and in addition to consideration of what features might be desirable in New Zealand, the following questions may be raised:
- Whether a standalone manslaughter offence would be a significant addition to the present regime considering the significant penalties already available pursuant to the HSWA (up to $3 million in cases of recklessness).
- Whether it would provide for aggregation of the elements of the offence, even if committed by different individuals across an organisation.
- Whether elements of the offence would need to be committed by "directing minds" of the company.
The next steps from the Government may shed some additional light on this interesting issue.
This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.