31 May 2007
Key Points:
Persons concerned with, or that take part in, the management of a corporation could be found personally liable for the actions (or lack thereof) of a corporation in relation to safety.
In recent times, we have seen a steady increase in relation to the number of prosecutions against company officers where the company has been responsible for a workplace injury or fatality. In Queensland, the legislation allows for the imposition of "deemed" personal responsibility on company officers in such circumstances.[1]
While similar provisions are in force around Australia, the provision has been used more extensively in New South Wales than in other States, including Queensland. It is for this reason that we examine some recent significant decisions in New South Wales that provide guidance as to how the courts may interpret the Queensland provision in the future.
Who is an executive officer?
An "executive officer" is a person who is concerned with, or takes part in, a corporation's management whether or not the person is a director, or the person's position is given the name of "executive officer".[2] Therefore, the definition is not limited to the Board of a company and extends to persons who are in management roles. It is not sufficient to just consider the title of position held by an employee to determine whether or not the employee is concerned with, or takes part in, the management of the corporation and one must look at the substance of the duties and responsibilities assigned to the person.
What is the main obligation imposed on executive officers?
Executive officers must ensure the corporation complies with the relevant Act.[3] If a corporation commits an offence against a provision of the relevant Act, then each executive officer is also deemed to have committed an offence of failing to ensure that the corporation complied with the provision.[4] Evidence that a corporation has been convicted of an offence is evidence that an executive officer committed the offence of failing to ensure that the corporation complied with the provision.[5]
There are provisions in New South Wales that impose similar obligations on directors and persons concerned in the management of a corporation, however, an executive officer will be deemed to have committed the same offence as that of the corporation and the executive officer can be proceeded against and convicted even if the corporation has not been proceeded against and convicted.[6]
What are the penalties in Qld?
If an executive officer commits an offence then he/she can be liable for the same penalty as that imposed on an individual for the contravention of the provision.[7] The penalties vary depending upon the relevant Act. The table below sets out the varying maximum penalties under the different Acts:[8]
If the breach results in: | Workplace Health & Safety Act 1995 (Qld) | Petroleum and Gas (Production and Safety) Act 2004 (Qld) [9] | Coal Mining Safety and Health Act 1999 (Qld) and Mining and Quarrying Safety and Health Act 1999 (Qld) | |||
Maximum fine | Maximum imprisonment term | Maximum fine | Maximum imprisonment term | Maximum fine | Maximum imprisonment term | |
Multiple deaths | $150,000 | 3 years | Not applicable | Not applicable | Not applicable | Not applicable |
Death or Grievous Bodily Harm to more than 1 person | Not applicable | Not applicable | $375,000 | 3 years | Not applicable | Not applicable |
Death or Grievous Bodily Harm | $75,000 | 2 years | $225,000 | 2 years | $60,000 | 2 years |
Bodily Harm | $56,250 | 1 year | $75,000 | 1 year | $37,500 | 1 year |
Exposure to a substance likely to cause death or Grievous Bodily Harm | $56,250 | 1 year | $75,000 | 1 year | $37,500 | 1 year |
Other | $37,500 | 6 months | Not applicable | Not applicable | $30,000 | Not applicable |
What are the defences?
In Queensland, the following are the defences:
There is a reverse onus of proof on the executive officer to prove the defence.
In New South Wales, similar defences exist with the exception that an executive officer must show he/she used all due diligence, as opposed to all reasonable diligence.[12]
Recent cases
Newcastle Wallsend Coal Company Pty Ltd and Ors v Inspector McMartin [2006] NSWIRComm 339
In 1996, four miners were working underground at the Gretley Colliery in New South Wales when they accidentally cut into an abandoned mineshaft causing a sudden inrush of water into the mine killing all four. Mine management were not aware that the abandoned mineshaft was so close to where the miners were working, having relied on government plans about the location of the old mineshaft that were inaccurate. This led management to believe there was no risk of breaking through into the old workings.
At first instance, the lessee of the coal mine lease and its parent company were both convicted of failing to ensure the health and safety of the workers by failing to properly research the location and extent of the old workings and were fined $730,000 each. The mine manager at the time of the incident and the mine surveyor were both convicted as they were deemed to have been "concerned in the management of the corporation" and the mine manager was fined $42,000 and the mine surveyor $30,000.
In December 2006, appeals by both companies and by the mine manager were dismissed. In relation to the mine manager, the New South Wales Industrial Court found him to have had the widest possible charge (as General and Statutory Mine Manager) and control of the mine and its operations.[13] The appeal by the mine surveyor was allowed on the basis that the court did not see him as being a person "concerned in the management of either company", but rather someone who was more of an advisor or consultant and as one who provided more of a supportive role, rather than one of managing or directing the business.
Inspector Kumar v David Ritchie [2006] NSWIRComm 323
An employee of Owens Container Services Australia Pty Ltd died when spraying methyl ketone to clean a tank which had contained resin solution. The methyl ketone should not have been used is such a confined space and no risk assessment had been performed. The company, its CEO and the general manager of the container division were all prosecuted. The company was part of the Owens Group of about 30 companies operating in Australia, New Zealand and Fiji. The CEO defended the charge on the following basis:
In October 2006, the company and general manager pleaded guilty to the charges and were fined $160,000 and $18,500 respectively. In relation to the CEO, the Court found that the defences were not made out, stating that "by the very nature of their roles, all directors are capable of influencing the actions of the corporation". The CEO was given actual authority and control to influence the conduct of the company in relation to occupational health and safety contraventions and his reliance upon the extensive systems of safety and his own significant involvement in the creation and maintenance of that system did not demonstrate that he had used all due diligence. The CEO was fined $22,500.
Conclusion
A person who may be concerned with, or takes part in, the management of a corporation must ask themselves the following questions:
The key message for those persons who may be concerned with, or that take part in, the management of a corporation is that there is the potential to be found personally liable for the actions (or lack thereof) of a corporation in relation to safety. Executive officers have onerous obligations to ensure that the corporation complies with the relevant Act and the courts will reject defences based on distance and commercial reasons alone. Executive officers need to ensure that there are clear lines for effective communication in relation to issues of safety. Persons in management roles ignore issues of safety at their own peril.
