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Health and Safety Update – October 2017

Home Insights Health and Safety Update – October 2017

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Published on: October 26, 2017

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The new penalty regime introduced by the Health and Safety at Work Act 2015 (HSW Act) is starting to receive judicial consideration.

Previously, we addressed the first sentencing decision under the new legislation. In Budget Plastics, the District Court adopted the leading sentencing decision from the Health and Safety in Employment Act 1992 (HSE Act) in Hanham & Philp Contractors, adjusting the starting point of the fine considerably upward to reflect the new maximum penalties available. That approach has been refined by the recent District Court decision of WorkSafe New Zealand v Rangiora Carpets Limited (Rangiora Carpets), including by recognising the wider powers and increased penalties available to the Court.

WorkSafe New Zealand v Rangiora Carpets Limited  [2017] NZDC 22587

Background

Rangiora Carpets pleaded guilty to failing to ensure, so far as was reasonably practicable, the health and safety of a worker, while she was at work, and that failure exposed the worker to a risk of death or serious injury. This offence is punishable by a fine not exceeding $1.5 million. 

Rangiora Carpets had a mezzanine floor that was non-compliant with the building code which was used for storage. Immediately adjacent to the mezzanine was a false ceiling that was not capable of bearing any significant weight. The worker was on the mezzanine when she overbalanced and fell through the false ceiling to the floor 2 ½ metres below. The worker suffered significant injuries including a broken arm, broken shoulder, broken collarbone, fractured pelvis and a laceration to the head. Fortunately, she largely recovered from her injuries and was able to return to full-time work at the company.  

The approach to sentencing

Budget Plastics directly adopted the three-step approach to sentencing from Hanham & Philp Contractors. In Rangiora Carpets, this was modified with the addition of a further step (step three) to reflect the new ability for the Court to make a variety of ancillary orders. The approach adopted in Rangiora Carpets was:

  • step one: assessing the amount of reparation;
  • step two: fixing the amount of the fine;
  • step three: consider the making of an ancillary order; and
  • step four: making an overall assessment of the proportionality of the total imposition of reparation and the fine. 

Step one: reparations

Both Budget Plastics and Rangiora Carpets determined that no material change to the assessment of reparations was required under the HSW Act. Reparations of $20,000 were awarded in Rangiora Carpets

Step two: fixing the fine

Rangiora Carpets suggests expanding the sentencing bands to six, in order to give effect to Parliament's intention that fines should increase, while providing a workable framework that should assist with consistency in sentencing. The proposed bands were as follows:

Culpability Band

Fine

Low

$0 to $150,000

Low/Medium

$150,000 to $350,000

Medium

$350,000 to $600,000

Medium/High

$600,000 to $850,000

High

$850,000 to $1,100,000

Extremely high

$1,100,000 +

A starting point of $300,000 was adopted, representing low/medium culpability given the fact that the hazard should have been obvious and could have been easily and cheaply remedied, while acknowledging that the mezzanine was used as a storage area. 

The fine was ultimately reduced to $157,500 for mitigating factors. The factors considered included cooperation; a blemish-free safety record; remedial steps; remorse; willingness to attend restorative justice and pay reparation; and an additional 25% discount for its early guilty plea. To account for Rangiora Carpets' financial position, $50,000 was due within 28 days, with the remainder to be paid at a rate of $1,000 per week. 

Step three: ancillary orders

Under the HSW Act, the Court can now make a number of ancillary orders. These include:

  • an order for payment of the regulator's court costs;
  • an adverse publicity order;
  • a restoration order;
  • a work health and safety project order;
  • adjourning a proceeding for up to 2 years and making an order for the release of the offender if the offender gives an undertaking with specified conditions;
  • issuing an injunction; and
  • making a training order.

Rangiora Carpets holds that such orders should form an additional step (step three) in the sentencing process. WorkSafe sought an order of $1,228, being 50% of its costs in bringing the prosecution. The Court considered such costs were "very modest" and made the award. 

Step four: financial capacity

The financial capacity of offenders to pay a fine was a point that attracted some discussion in Rangiora Carpets. This is a mandatory sentencing consideration under s 151 and the Court noted that a sentence could be increased or decreased depending on the means of the defendant. This ensures that the deterrent and penal effect of any fine is maintained relative to the financial capacity of the individual entity before the Court. 

The Court took the view that there ought to be a buffer at the top end of the available sentencing range for a wealthy defendant to have an otherwise appropriate fine increased to ensure that the purposes and principles of sentencing are properly met in each case.   

Conclusion

Both Budget Plastics and Rangiora Carpets noted the desirability of appellate court guidance on sentencing under the HSW Act. Meanwhile, the different approaches taken in the District Court should not obscure the basic, and widely expected, fact that the starting point for fines have risen considerably and that moderate offending can now be expected to attract a starting point in the mid-six figures.


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. 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.

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