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Health and Safety Update – May 2016

Home Insights Health and Safety Update – May 2016

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Contributed by: Malcolm Crotty, Kylie Dunn, Adrian Olney and Mark Campbell

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Published on: May 12, 2016

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New Zealand directors will no doubt be interested in an Australian case fining a director AU$85,500 for breach of his due diligence obligations, and fining the ‘Person Conducting a Business or Undertaking’ (PCBU), Romanous Contractors Pty Ltd, AU$425,000 after a worker fell to his death. The charges were laid under the equivalent to s 48 of the Health and Safety at Work Act (ie failing to comply with a duty that exposes an individual to risk of serious injury). 

Although the fine is eye-catching, the case sheds little light on the nature of the due diligence obligations and the director’s breaches were of a kind that would have been covered by New Zealand’s old health and safety laws (under which a director could be convicted for acquiescing in or participating in a breach by the company). 

The charges were laid after a subcontractor, Mr Czyz, fell 5.1 metres through an inadequately covered penetration in a second story concrete slab. Mr Romanous was the site manager, sole director and shareholder of Romanous Contractors, and attended the site daily.

The prosecution was therefore similar to the ‘one man band’ prosecutions that have been brought in New Zealand previously (see for example, our coverage in April). The hazard posed by slab penetrations had not been adequately addressed in safety planning, and while Mr Romanous had requested that slab penetrations be covered, he had not followed up despite being on notice that they may not have been properly secured.  He had previously received warnings from the regulator relating to uncovered penetrations at other workplaces. 

As in New Zealand, the maximum penalty for the offence was a fine of AU$300,000 and Mr Romanous’ conduct was considered to fall “slightly above” the middle range of seriousness. The judge set the starting point for the fine at AU$90,000 and provided a 5% discount for a late guilty plea. It remains to be seen whether the similar fines available in the two jurisdictions encourages New Zealand courts to follow Australia’s lead on sentencing.

The case is therefore of limited application for directors whose duties are restricted to a governance role. Mr Romanous failed to respond to a specific hazard that he knew of for about for a week, and there is no analysis of what due diligence means, either in the context of the ‘hands on’ director or more generally. Instead, the judgment focuses on Mr Romanous’ practical failings as the man on the ground, and draws no distinction between the operation, ownership and governance of Romanous Contractors.

 


This publication 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.

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