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Safeguard OSH Solutions - Thomson Reuters

Safeguard OSH Solutions - Thomson Reuters



Safeguard Magazine

Legal roundup: Bespoke options neglected

The HSW Act offers the potential for tailored penalties, yet the focus of the regulator, courts and defendants remains on fines. Why? JACKIE BROWN-HAYSOM laments an opportunity lost.

In April 2016 the door opened on a bold new world of health and safety sentencing.

The newly enacted Health and Safety at Work Act not only provided WorkSafe with the power to approve significant and innovative out-of-court penalties, but also gave the courts access to a collection of new sentencing options, including project, training and adverse publicity orders (see sidebar page 24).

The regulator, it seemed, had an opportunity like never before to make the punishment fit the crime.

However, more than four years down the track, most of these new sentences have barely been unpacked, and only the DIY option, enforceable undertakings, has been decently worn in. Are health and safety’s bespoke penalties being wasted, or are they best saved for special occasions?

Industry doyen Mike Cosman, who as a Taskforce member helped craft the HSW Act, admits to some disappointment that alternative sentences aren’t being more widely used.

“I think the opportunity is there for these things to be used in quite a subtle and targeted way,” he says. “But until the regulators, defence lawyers and courts really get their heads around them and start using them in the way they were intended, they risk being a little bit of a loose cannon.”

He’s concerned, too, that the relative absence of significant project orders shuts off a potential source of investment for H&S innovation.

“I’ve been pushing WorkSafe for some time to make better use of them.

“The intention was that they [project orders] would be genuine alternatives to a traditional fine, and would be giving back, by improving health and safety at an industry level.”

DETERRED BY FINES

Senior H&S litigators Grant Nicholson and Sherridan Cook agree project orders are potentially valuable devices that are currently under-utilised. WorkSafe, they say, will seldom suggest an alternative penalty, so the onus is on defendants to propose them. However, both say they have never seriously discussed such a possibility with their clients.

“The problem is that defendants perceive a risk that the court will use them [project orders] as additional to a fine rather than alternative, so they are not incentivised to put the idea forward,” says Nicholson, a partner in Anthony Harper.

Cook, a partner in Buddle Findlay, points to the only significant project order to date – a two-year initiative in which ferry operator Fullers Group is developing a learning teams competency framework for the maritime sector – as a somewhat harsh sentence that may dissuade others from stepping up.

“When accepting EUs, WorkSafe looks for a level of expenditure similar to the fine that would otherwise be faced, [but here] the court made a $200,000 reduction [to the fine] for a project order costing $300,750,” he says. “In addition, a project order requires planning and execution, which could be more onerous than paying a one-off fine.”

With no certainty of a dollar-for-dollar discount, he believes defendants will continue to avoid project orders, and industry will miss the opportunity to put money into health and safety rather than the government’s coffers.

Apart from the Fullers case there have been only five project orders, all of which involved defendants with limited resources. In these circumstances the orders were seen – apparently by all parties – as an appropriate way to demonstrate culpability and remorse when a large fine was not possible. There was, however, no consistency in how the courts dealt with the financial aspects of these penalties. One defendant received only a reparations order, while the others received fines of varying magnitude, ranging up to $150,000.

FULLERS: A BIG EFFORT

Auckland H&S consultant Brent Sutton, of Safety Associates, knows more than most about the challenges that come with project orders. He oversaw the planning for Fullers’ project and is now leading its implementation. He’s excited by the scope of what the company has taken on and is grateful to be part of it, but warns that project orders are not for the faint-hearted.

“The effort that goes into them is considerable,” he says, describing months of consultation and volumes of documentation, involving the regulator (in this case Maritime NZ), a range of industry stakeholders and regulatory bodies, lawyers and, ultimately, the judge.

Unless presiding Judge Nicola Mathers understood what was being proposed there was a risk she would refuse the order, rendering all the hard preparatory work a waste of time, so a lot of effort went into affidavits to explain the concept of learning teams and how they would benefit health and safety across the wider maritime industry.

When Fullers came to Sutton they had already decided to request a project order and were looking for a suitably significant focus. Together they developed some ideas and sent them to MNZ, which picked learning teams as its preferred option.

“Once we agreed a theme, they basically told us to go away and explore it much deeper.

“This was a first for MNZ as well as for us, but they supported our request and there was a good level of dialogue.”

BIGGEST CHALLENGE

The biggest challenge with the order, Sutton says, was meeting the criteria set out in the regulator’s policy document.

“Among other things it says a project needs to go beyond compliance with the act, and not propose something that already exists.

“This creates a real dilemma because it seems to require innovation, and if you’re planning something completely new, what assurance do you have that it will actually work?”

Although the requirement is regulator policy rather than law, and thus not something the courts are bound to consider, Sutton says it does make the process more difficult.

In contrast to Cook, he has no issue with the way Judge Mathers handled the fine, pointing out that because MNZ had opposed a dollar-for-dollar discount, a more generous allowance might have been appealed.

“I think it’s quite clear that there will always be some element of fine [in addition to the order], because that acts as a deterrent.”

Although he admits it’s been a demanding process, Sutton hopes Fullers’ determination to create a positive legacy from a bad event will inspire other larger employers to also take on project orders.

“It’s about looking at what you can do for health and safety in your industry, rather than just your organisation.”

OPTIONS LITTLE USED

Project orders are just one item in a package of alternative sentencing options, but – apart from enforceable undertakings – none of the others appear to have been widely used.

Safeguard found records of only one training order, requiring a small company to train staff in scaffold safety; a single adverse publicity order (issued in conjunction with two project orders, after a wall on a demolition site collapsed, trapping a disabled neighbour in her home, and causing a gas leak that required houses to be evacuated); and the first court-ordered EU was imposed only in June, when Otago Polytechnic asked the court to reconsider WorkSafe’s refusal to grant its EU application in relation to an incident in which a carpentry student was injured while using a power saw.

One of the likely reasons for these low levels of uptake is that WorkSafe’s policy framework, which sets out the processes for using the penalties, was not published until May last year, and without guidelines and support structures, neither the regulator nor the courts were keen to test the waters.

This is something that still frustrates Mike Cosman. As a consultant he encouraged a sawmilling company to put together an ambitious half-million-dollar project order proposal in early 2019.

“We put a lot of work into it. We came up with a proposal with potential to address some significant sector-level issues, including developing a training course for machinery engineers so they would know how to retrofit guarding on sawmilling machines.

“We had the support of the unions, and an industry body had agreed to administer it. But WorkSafe said they had no policy on project orders, and no mechanism for checking compliance, so the court had no option but to revert to a fine.”

A SOFT OPTION?

A subsequent decision, in which a different sawmilling company was refused a court-ordered EU on the grounds that it was not a first offender and that its level of culpability was not sufficiently low, suggests the courts regard alternative sentencing options as comparatively soft, and feel more comfortable with fines for higher level offending.

Cosman says this isn’t what the Taskforce had in mind. He points to Australia’s quite different regime, where EUs – here generally regarded as suitable for matters not bad enough to go to court – are used for a much wider range of offences, and often involve undertakings worth well over a million dollars.

On this side of the Tasman the use of EUs has been declining, with WorkSafe’s website showing only four accepted EUs for the 2019 year, compared to 15 in 2018.

Grant Nicholson suggests at least part of the reason for this may be a shortage of easy and obvious initiatives that can be used for undertakings.

“It appears they’ve hit a point where most of the low-hanging fruit – preparing guidance materials, writing articles for industry magazines, speaking at conferences – have been exhausted. It’s becoming increasingly challenging for businesses to come up with novel ideas that have enough tangible safety benefits to satisfy WorkSafe,” he says.

“There are clearly fewer EUs being accepted than was initially the case, so something needs to change if they are going to be a viable and meaningful alternative in future.”

STAFF OVERLOAD A FACTOR

A recently released assessment of WorkSafe’s investigative performance revealed something that may be a key factor in its slow response to alternative sentencing. Former senior police officer Gavin Jones found both investigation and prosecution staff were under constant pressure because of tight timeframes and low staff numbers, and often struggled to meet the 12-month limitation period for bringing HSW Act prosecutions.

In such circumstances it’s little surprise that the regulator isn’t actively looking for new ways of doing things

Without the luxury of a more user-friendly prosecution timeframe (as they have in Australia) and better resourcing, it seems unlikely WorkSafe will pursue alternative sentences in all but exceptional cases.

It seems alternative sentencing options are likely to continue being unpopular, even with defendants who might otherwise be keener to invest in their industry’s future than pay a fine – at least until the High Court can establish firm sentencing guidelines to clarify how (and if) the alternatives should be combined with financial penalties.

WHAT ARE THE ALTERNATIVES?

The HSW Act provides a number of non-monetary penalties requiring specific courses of action.

Adverse publicity order: The offender must inform others of the consequences of its own wrongdoing, by publicising them or notifying a specified third party.

Order for restoration: The offender must remedy any issues resulting from the offence, other than those covered by reparation awards.

Work health and safety project order: The offender must carry out a specified project to improve health and safety, within a defined timeframe.

Enforceable undertaking: The offender may avoid prosecution by undertaking a specified health and safety initiative within an agreed timeframe. WorkSafe has the right to accept or decline the EU application.

Court-ordered enforceable undertaking: The court can grant an EU that has been declined by WorkSafe, with or without convicting the offender.

Training order: The offender must undertake training or provide workers with specified training.

JACKIE BROWN-HAYSOM

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