Directors, officers liable for health and safety breaches

The Whakaari/White Island trial came to an end recently, with the District Court retiring to consider whether the one remaining defendant, Whakaari Management Limited (WML) (the company incorporated to manage Whakaari) has breached its duties under the Health and Safety at Work Act 2015 (HSWA).

WML's directors were also personally charged under section 44 of the HSWA for failing to exercise the necessary due diligence to ensure WML complied with its health and safety duties, in particular, in relation to getting expert advice about risk. However, in an oral ruling of the Court on 5 September 2023, these charges were dismissed. The court found the charges could not be progressed as there was insufficient evidence to enable the court to assess whether they were established.

The court said that, crucially, in conducting its investigation, WorkSafe had not obtained copies of board or management meeting minutes from WML relating to its internal decision-making. This was largely because WorkSafe had initially recommended that no enforcement action be taken against the directors, but then late in the piece decided to prosecute. As the court explained, "[WorkSafe] did not appear to have enough time to further investigate before its self-imposed charging deadline."

Lack of documentation for decision-making

Without documentation around internal decision-making, the court could not assess whether each director had separately discharged their duties. The court was not willing to draw inferences from decisions of the board as a whole: " [h]ow a company presents itself to the rest of the world reflects the will of the board as a whole, not the will of individual directors."

However, this perhaps would have been possible if there was one director (to whom the acts and omissions of the company could be attributed), or if there was a requirement in the company's constitution that all actions and decisions of directors be unanimous. Here, there was no evidence of whether the three directors agreed on who would have responsibility for expert advice or how much should be done.

The key takeaway from the court's ruling is that the due diligence duty under section 44 is personal to each officer and will be considered on a strictly individual basis. In the case of directors, the courts will be reluctant to draw inferences from the board acting as a whole – there must be information attributing responsibility/decision-making to each director personally. Officers should therefore ensure that they are acting closely in line with any responsibilities they are expressly assuming and that their dissent is recorded should they disagree with any action taken by the group. Of course, this focus on individual responsibility should not diminish the importance of board/management processes that must otherwise appropriately deal with health and safety risk, to discharge the broader duties of the organisation.

Prison terms for health and safety cover-up

In a recent prosecution, a director and an employee found out the hard way that trying to hide health and safety incidents can land you in jail. 

In 2019, a young Aimex apprentice suffered serious brain injuries after exposure to toxic fumes while cleaning an engine room. Aimex was prosecuted and, during its investigations, WorkSafe was informed that a similar incident had happened to another employee the week prior. This was refuted by Aimex. However, an internal whistleblower later informed WorkSafe that management of Aimex had destroyed and/or hid documents relating to the previous incident. WorkSafe informed the police of the cover-up, who prosecuted the individuals involved.

In July 2023, William Sullivan (health and safety officer) was sentenced to nine months’ imprisonment for making a false statement, and Steven Sullivan (managing director) received a 20-month sentence for perverting the course of justice. William Sullivan successfully appealed the court's decision and in August 2023, the High Court substituted a sentence of home detention for the sentence of imprisonment.

The High Court considered that imprisonment was a manifestly excessive punishment in the circumstances. Steven Sullivan also appealed against his sentence; however, the appeal was dismissed by the High Court. The High Court noted that his short sentence of imprisonment "was the least restrictive outcome available in the circumstances." Although the Aimex director was prosecuted under the Crimes Act 1961 in this case, it is worth bearing in mind that officers can be imprisoned for up to five years for breaches of the HSWA. 

These prosecutions, and the Whakaari ones above (even though unsuccessful) highlight the need for officers to take their duties seriously, act proactively, and to exercise independent judgement (not simply relying on others).  

Fostering psychosocial wellbeing in the workplace

The concept of mentally healthy work has been gaining increased recognition in recent years, mirroring the broader discourse on mental health more generally. In essence, the concept revolves around ensuring that workplaces remove or minimise potential psychosocial hazards, thereby curbing risks to employees' mental health while prioritising their overall wellbeing.

WorkSafe has been increasing its capacity in this area in recent years, including the establishment of a specialist mentally healthy work team, and the provision of an online reporting channel, which can be used to directly report issues to WorkSafe. Despite this, WorkSafe has faced recent criticism for its limited focus on mental health issues and its ongoing failure to prosecute any case relating to mental health harm stemming from a HSWA breach. 

In contrast, Australia has taken a much stronger stance, and there are regular prosecutions of organisations for failures to protect workers' mental health, often in the context of bullying and harassment. New South Wales has recently unveiled a comprehensive Code of Practice for Managing Psychosocial Hazards at Work, which provides detailed and directive guidance to organisations.

It is just a matter of time before there is a prosecution for mental harm here in New Zealand, and we expect WorkSafe to continue to ramp up its focus in this area.

In alignment with its increasing focus on mental wellbeing, WorkSafe has published a series of short essays about mentally healthy work, authored by a range of experts and thought leaders. The essays cover a range of topics and are well worth a read.

As the approach by WorkSafe to workplace wellness continues to evolve, we encourage organisations to consider what steps can be taken to safeguard workers' mental health and boost wellbeing.

Overview of the new health and safety act

The Health and Safety at Work (Health and Safety Representatives and Committees) Amendment Act, which came into force on 13 June 2023, has increased workers' access to health and safety representatives, and health and safety committees (HSC). The Act introduced the following provisions:

• If a worker asks for a health and safety representative, the organisation must initiate an election for such a representative within the worker's work group
• If a health and safety representative, or five or more workers, ask for an HSC, the organisation must establish one.

The Act does not make health and safety representatives or HSCs mandatory for organisations, but they are now required to initiate an election for representatives, or establish an HSC, where workers request them. If they fail to do so, they can be fined up to $5,000 for individuals and up to $25,000 for companies.

Under the HSWA, the main function of an HSC is to facilitate co-operation between an organisation and its workers in instigating, developing and carrying out measures designed to ensure workers' health and safety at work. Crucially, if the HSC makes a recommendation regarding work health and safety, the organisation must either adopt the recommendation, or provide a written statement advising the HSC of the reasons for not doing so.

Covid-19 restrictions dropped

Effective from 15 August 2023, the Government has lifted all remaining COVID-19 restrictions, including the end of the mandatory seven-day isolation period and the wearing of face masks for visitors to healthcare facilities. Now may be an appropriate juncture for organisations and businesses to review and refresh their own internal policies on COVID-19. Organisations should ensure they consult with staff before making any changes to existing policies. While mandatory isolation has ended, the Ministry of Health still recommends that people stay home when they are unwell (as would be advisable with any contagious illness).

Whilst the end of restrictions has been welcomed by many, it may have generated concerns for some workers. Employers should check in with those who are vulnerable or have close family members who may be at risk, and consider whether any support can be offered.

Hamish Kynaston is a partner in Wellington, Peter Chemis is a partner in Wellington, Sherridan Cook is a partner in Auckland, Susan Rowe is a partner in Christchurch, and Shaun Brookes is a special counsel in Christchurch – all with Buddle Findlay.