INTRODUCTION
In late 2024, a significant $4 million settlement was approved by the High Court, following an attempt by the Commissioner of Police to seize “proceeds of crime” from a company and director-shareholder that had previously been found guilty of health and safety offences.
While no case was heard due to the settlement being reached, shareholders and directors of businesses need to understand what could be at stake if they or their businesses breach health and safety laws and the preparedness of the Police to pursue “proceeds of crime” in connection with health and safety convictions.
SALTERS CARTAGE CASE
In September 2015, Salters Cartage Limited, a company specializing in hazardous waste transport and disposal, faced charges under the Health and Safety in Employment Act 1992 (HSEA) and the Hazardous Substances and New Organisms Act 1996 (HSNO). The company’s founder, Mr. Salter, was found to be responsible in connection with an incident where an employee of a contractor engaged by the company was killed in an explosion while installing a metal stairway on a storage tank containing combustible material. The fatality was due to a failure to take practicable steps to ensure the worker’s safety.
Salters Cartage and Mr. Salter pleaded guilty to charges under the HSEA and HSNO, which resulted in significant fines and penalties. The District Court imposed a sentence of reparations totalling around $128,000. The Court also fined Salters Cartage over $200,000 for pre-explosion offenses, and around $56,000 for post-explosion offenses. Mr. Salter received a 4½ months home detention sentence and a $25,000 fine for his involvement.
SIGNIFICANT FINES AND PENALTIES POSSIBLE UNDER HEALTH AND SAFETY LAW
The charges were filed under the HSEA because that Act was in place at the time of the incident. However, since then, the Health and Safety at Work Act 2015 has superseded the HSEA. It contains even broader offences and stronger penalties for breaches of health and safety obligations than were previously in place under the HSEA.
The HSWA’s penalty regime involves significant maximum penalties and potential imprisonment, depending on the nature of the offence. For example:
- Offences involving reckless conduct that exposes individuals to risk of death or serious injury can result in:
- Up to five years’ imprisonment or a $600,000 fine, or both, for an individual who is a person conducting a business or undertaking (PCBU) or an officer of the PCBU (which includes any person occupying the position of a director of the company and any other person able to exercise significant influence over the management of the business or undertaking).
- A fine of up to $3 million for companies.
- Offences involving failure to comply with duties that expose individuals to risk of death or serious injury can result in:
- A maximum fine of $150,000 for individuals who are not a PCBU or officer of a PCBU.
- A fine up to $300,000 for individuals who are a PCBU or an officer of a PCBU.
- A fine of up to $1.5 million for companies.
POTENTIAL FOR SEIZURE OF ASSETS UNDER CRIMINAL PROCEEDS LAW
In the Salters Cartage case, the Commissioner of Police attempted to seize almost $11 million of “proceeds of crime” from Salters Cartage and its director and shareholder, Ron Salter, under the Criminal Proceeds Recovery Act 2009 (CPRA) on the basis that they had knowingly obtained such benefits as a result of “significant criminal activity” (non-compliance with health and safety and hazardous substance legislation). Police were granted orders by the High Court to restrain Salter’s family home in Auckland, and other properties on Waiheke Island, in Paerata and the Salters Cartage business premises in Wiri.
The CPRA is commonly used to confiscate the wealth of drug dealers, gang members and money launderers, but this was the first time Police had used it to take action against a commercial business that they alleged was running unlawfully, ignoring the laws around the handling of hazardous substances.
Just after the hearing began, the parties agreed to a $4 million settlement, which was subsequently approved by the High Court. This settlement was payable in addition to the significant penalties that Salters Cartage and Mr. Salter had already received as a result of their prosecution under the HSEA. Interestingly, the settlement exceeded even the penalties available under the HSWA.
CONCLUSION
As the settlement cut the hearing short, there is still uncertainty around how successful a similar claim under the CPRA might be in future, in terms of benefits gained from health and safety breaches.
However, what is clear is that, in addition to significant fines and penalties under health and safety legislation, the Police are prepared to at least initiate additional measures under the CPRA for health and safety breaches where there are, according to the head of the Financial Crime Group, “unique features and aggravating circumstances.”
This reinforces the need for businesses and their owners to ensure strict compliance with health and safety regulations to mitigate risks and, thereby, protect their assets.