Director, health and safety officer jailed for not reporting previous workplace incident
Siddhartha Gautama said that “lies are like huge, gaudy vessels, the rafters of which are rotten and worm-eaten, and that those who embark in them are fated to be shipwrecked.” Two remarkable health and safety cases went before the courts this year which confirm this conventional wisdom.
In 2019, an apprentice worker of a marine industrial engineering company, Aimex Ltd, suffered a hypoxic brain injury after being overcome by toxic fumes while cleaning the engine of a boat with brake cleaner.
WorkSafe alleged that Aimex had failed to develop, implement and monitor an effective and safe system for workers using the brake cleaner. In 2021, Aimex pleaded guilty to failing to ensure, so far as was reasonably practicable, the health and safety of the worker. It was fined $250,000 and ordered to pay $50,000 in reparations to the injured worker: see Worksafe New Zealand v. Aimex Ltd [2021] NZDC 14313.
At sentencing, the District Court allowed a significant discount to the fine for Aimex’s “good character.” The court held:
“… [Aimex] is entitled to a bigger discount than the prosecution has submitted. I think it is entitled to a 10 per cent discount [for good character]. The company is a relatively large company, large employer, 60-odd employees. It is in an industry where there is a reasonably high risk of workplace accidents. It has been in business for more than 10 years and it has no previous convictions, nor any other warning or the like during that time, so it is entitled to recognition of that in the normal way.”
During its investigation into the 2019 incident, WorkSafe became aware of an alleged earlier incident involving a different worker using brake cleaner in an enclosed area. WorkSafe sought “all incident, accident, near miss, or similar reports” for the 12 months prior to the apprentice worker’s injury. In response, Aimex denied knowledge of the previous incident having occurred or of any incident report being submitted by the worker.
At sentencing, Aimex rejected the proposition that a previous similar incident had been reported to it in a manner that could reasonably have been followed up on. It submitted that it could not be concluded that Aimex “should have, or reasonably could have, known about the previous alleged incident by the time of [the victim’s] incident.”
After sentencing, however, a whistle-blower alerted WorkSafe to the fact that information had been withheld by Aimex during its investigation. Police initiated an investigation, executed a search warrant and located a copy of the incident report from the earlier incident at an ex-employee’s residence.
As it transpired, Aimex’s Health and Safety Officer, William Sullivan, was aware of the previous incident which – save for the resultant injury to the apprentice – was almost identical to the 2019 incident. This earlier incident had occurred five days prior to the 2019 incident. The worker had reported the incident to William Sullivan. The worker and William Sullivan had completed an incident report together. In the incident report, the cause of the incident is recorded as being from a “lack of ventilation” and “incorrect product for task,” and the probable consequence was noted as being “significant.” No steps were taken by Aimex to address the hazard when it became aware of the earlier incident.
During the WorkSafe investigation, Aimex’s Managing Director and shareholder, Steven Sullivan, became aware of the earlier incident, but denied an incident report had been created.
In July 2023, the District Court sentenced William Sullivan to nine months’ imprisonment for making a false statement to WorkSafe (R v. Sullivan [2023] NZDC 15041). In its judgment, the District Court was extremely critical of his involvement:
“… It is absolutely imperative that health and safety regulations be strictly abided by and that people do not put their own interests before the health and safety of those who they are tasked with caring for. They must ensure that employees do work in a safe environment, so that they do go home at the end of the day not in an ambulance but under their own steam.”
A week later, the District Court sentenced Steven Sullivan to 20 months’ imprisonment for attempting to pervert the course of justice (R v. Sullivan [2023] NZDC 15433). This is a serious charge that has a maximum penalty of no more than seven years imprisonment.
Both Steven and William Sullivan appealed their sentences.
In respect of Steven Sullivan’s sentence, the High Court considered the sentence was not manifestly excessive (R v. Sullivan [2023] NZHC 2453). It concluded that the starting point adopted for the sentence was low in the circumstances. The court also found there was no error in declining to impose a sentence of home detention simply because it was available as a sentencing option. While the court is required to impose the least restrictive sentence, the gravity of Steven Sullivan’s offense meant that imprisonment was an option available to the sentencing judge.
Considering William Sullivan’s sentence, the High Court came to a different conclusion (R v. Sullivan [2023] NZHC 2251). It considered that the sentence was manifestly excessive on the basis that the judge failed to consider whether home detention would have been sufficient to meet the purposes and principles of sentencing. The sentence of imprisonment was remitted back to the District Court for resentencing.
Why were the outcomes different? The simple reason is that Steven Sullivan was charged with a more serious offence (maximum penalty for the offence of seven years’ imprisonment), than William Sullivan (maximum penalty of three years’ imprisonment). Aside from that, the High Court noted in Steven Sullivan’s appeal decision that a sentence of home detention would not have prevented him from continuing to act as a company director, and in those circumstances a sentence of imprisonment was, in fact, the least restrictive outcome available. This was not applicable to William Sullivan.
At the risk of pointing out the obvious, honesty is always the best policy.
It is an offence against the Health and Safety at Work Act 2015 to “hinder or obstruct an inspector in exercising his or her compliance powers, or cause or attempt to cause any other person to do so.” The maximum penalties for this offence, however, do not include imprisonment. It is unsurprising then that WorkSafe referred the matter to Police for investigation and a decision on whether prosecution was required.
Regulatory agencies and the courts take a dim view on providing false or misleading statements, or attempting to or causing the perversion of the course of justice. As the High Court has confirmed in the appeals, this type of offending strikes at the heart of justice and requires a “condign and deterrent sentence.”
While we have not seen this to date, there is a potential for WorkSafe to take similar action in suitable cases where an organisation or an individual attempts to “cover up” potential offending by interfering with evidence, or failing to report incidents where required (the Health and Safety at Work Act creates offences for failing to preserve sites where events have occurred, and for failing to notify WorkSafe of ‘notifiable events,’ but these offences do not allow for sentences of imprisonment).
In the case of Steven Sullivan, his offending was financially motivated. By taking an active part in concealing the existence of the earlier incident, the fine that was imposed by the District Court represented a “considerable financial saving that would not have been available if [he] had told the truth in the first place.”
While the High Court accepted that Steven Sullivan was not directly responsible for the apprentice worker’s injury, WorkSafe was precluded from investigating whether Steven Sullivan, as a director of Aimex, had breached his duty as an officer of Aimex to exercise due diligence.
Interestingly, the High Court accepted that Steven Sullivan’s offending was not the worst of its type, but still accepted that the gravity of this type of offending in a health and safety context was properly met with a sentence of imprisonment.
Imprisonment for health and safety offending is not common in New Zealand, but these cases clearly demonstrate that the courts will not hesitate to impose weighty sanctions for those who seek to undermine WorkSafe’s role in ensuring workers are afforded the highest levels of protection while at work. On that note, one only has to look at the robust approaches being taken by health and safety regulators in the United Kingdom and in Australia (where WorkSafe Victoria have laid charges following the alleged failure of the Victorian Building Authority to provide a safe workplace free from health risks, including workplace-related stress and psychological injury such as anxiety and depression) as part of a trend that WorkSafe is likely to follow in the fullness of time.
Sam Houliston is a senior associate in the Disputes Team and specialises in employment law at Hesketh Henry in Auckland. Bridget Perkins is a graduate in the Employment Law Team at Hesketh Henry in Auckland.
