Landmark conviction of former CEO under the Health and Safety at Work Act 2015

Former Port of Auckland CEO Tony Gibson has been found guilty of health and safety breaches in relation to the death of a Port employee. The conviction, for failing to fulfill his due diligence obligations under the Health and Safety at Work Act, provides useful guidance about an officer’s due diligence duty under the Health and Safety at Work Act for all directors and officers of businesses and organisations.

We discuss below the background to the case and the key takeaways, including the principles the court applied.

INCIDENT

In the early hours of 30 August 2020, a tragic incident occurred at the Ports of Auckland, resulting in the death of stevedore Pala’amo Kalati, who was fatally crushed by a falling container during a lifting operation. This event led to significant legal proceedings under the Health and Safety at Work Act 2015 (HSWA), culminating in the conviction of former Port of Auckland Limited (POAL) Chief Executive, Tony Gibson in November last year.

LEGAL PROCEEDINGS AGAINST PCBU AND CHIEF EXECUTIVE

Following the incident, Maritime New Zealand initiated an investigation, leading to charges against both POAL (an Auckland Council-controlled organisation and a “person conducting a business or undertaking” or “PCBU” under the HSWA) and Gibson (an “officer” of the PCBU).

POAL pleaded guilty to breaches of the HSWA and was fined $500,000 in December 2023.

Gibson faced charges under sections 48 (and 49 in the alternative) of the HSWA, alleging failures in his duties as an officer of the organisation.

DIRECTORS AND CHIEF EXECUTIVES AS “OFFICERS” UNDER THE HSWA

Section 44(1) of the HSWA imposes a duty on “officers” of PCBUs. The definition of “officer” is broad, including.

• any person occupying the position of director (no matter what they are called), if the PCBU is a company; and
• any other person able to exercise significant influence over the management of a business or undertaking, such as a chief executive.

DUTY OF OFFICERS UNDER SECTION 44(1) OF THE HSWA

The duty on officers under the HSWA is to exercise due diligence to ensure that their PCBU complies with its health and safety obligations. The officer must exercise the care, diligence, and skill that a reasonable officer would exercise in the same circumstances, taking into account the nature of the business or undertaking and the position of the officer and the nature of the responsibilities undertaken by the officer.

“Due diligence” under the HSWA includes taking reasonable steps to:

• acquire and maintain up-to-date knowledge of health and safety matters;
• understand the nature of the PCBU’s operations and associated hazards and risks;
• ensure the PCBU has appropriate resources and processes to eliminate or minimise risks to health and safety;
• ensure the PCBU has appropriate processes for receiving and considering information about incidents, hazards and risks, and for responding to those in a timely way;
• ensure that the PCBU has and implements HSWA compliance processes; and
• verify the provision and use of the resources and processes referred to above.

OFFENCES FOR BREACH OF OFFICER’S DUTY

Under sections 48(1) and 49(1) it is an offence for an officer to fail to comply with the section 44 duty described above. Conviction can result in a fine not exceeding $100,000 (under section 49(1)), or a fine not exceeding $300,000 (under section 48(1)) if the failure exposes individuals to the risk of death or serious injury.

CONVICTION

Tony Gibson was found guilty of an offence under section 48(1) of the HSWA, being that his failure to comply with his duty as an officer exposed an individual to risk of death or serious injury or serious illness. He is yet to be sentenced but, as above, he faces a fine not exceeding $300,000.  Once sentenced, he will have 20 working days to appeal.

While he had introduced a number of health and safety initiatives, Judge Bonnar KC noted that “[a] good leader and conscientious officer may have the best intentions in the world but may still breach that [due diligence] duty”.

KEY TAKEAWAYS FROM THE COURT’S DECISION

While the case had a unique set of facts, the Court set out a number of core principles relevant to an officer’s due diligence duty. These and other takeaways are set out below.

The Court summarised a number of general principles relating to the exercise of an officer’s duty of due diligence (at paragraph 80). These principles included:

1. Fact-Specific Assessment: Compliance with the due diligence duty depends on the unique facts and circumstances of each case.
2. Universal Application Regardless of Size or Complexity: The due diligence duty applies to all officers, regardless of the size or structure (flat or hierarchical) of the organisation. The Court said that “[t]he fact that an officer may operate at the head of a large, hierarchical organisation does not mean that the officer’s obligations are diminished.”
3. Beyond Governance: For large, hierarchical organisations, due diligence extends beyond governance or directorial oversight. This means that officers must obtain sufficient knowledge to be reasonably satisfied that the PCBU is complying with its health and safety duties. And officers who are senior managers who have a role that involves more than governance will be expected to apply due diligence to those duties.
4. Distinct from PCBU Duties: Officers are not required to do everything a PCBU is required to do.
5. Personal Knowledge and Active Oversight: Officers of a large PCBU do need to engage in day-to-day operations but must not solely rely on others to meet health and safety obligations. The officer must personally acquire and maintain sufficient knowledge to reasonably assess health and safety compliance.                                                                                                                                                          The Court noted (at paragraph 55) that “[a] practical tension exists … between the purpose of the legislation, which is to sheet home the due diligence duty to those at the “apex of large hierarchical organisations” and the fact that officers in such organisations will be, by virtue of the nature of their role and the size of such organisations, removed from the day-to-day implementation of business systems, processes and health and safety standards. There may be several tiers of management sitting between the officer and those on the shop floor. It is clear, however, from the scheme of the legislation and existing authority, that an officer cannot comply with his or her due diligence obligations by simply relying upon those with specific responsibilities for health and safety in the management chain below them or by assuming, without proper enquiry, that the organisation’s systems are adequately addressing health and safety risks.”                                                                                                                                                           
6. Monitoring Delegated H&S Roles: Officers must ensure those with assigned health and safety roles have the necessary skills and experience to properly execute their roles and must adequately and regularly monitor their performance to ensure they are properly discharging their functions.
7. Understanding Operations: Officers must have adequate knowledge of the PCBU’s operations, including “shop floor” activities, to identify and address workplace hazards effectively.
8. Appropriate Systems: It is insufficient to merely implement policies; officers must establish adequate systems and make sure they are entrenched to ensure the PCBU meets its health and safety obligations. In any large system, the existence, adequacy and effectiveness of such systems is key.
9. Effective Reporting Systems: Officers must ensure there are robust systems for health and safety information to flow to the officer and others in supervisory roles.
10. Proactive Monitoring: Officers cannot assume compliance or rely unquestioningly on subordinate reports. They must actively monitor, verify, and interrogate health and safety information.
11. Audits and Reviews: Officers must ensure ongoing monitoring, review, and auditing of systems, processes and work practices to verify their effectiveness in achieving safety objectives.
12. Industry Standards: While industry practices and standards provide context, the Court will objectively assess whether an officer’s actions meet the statutory requirements, even if common industry practices fall below the required standard. It is important for officers to rely on good practices and standards.

OTHER TAKEAWAYS FROM THE CASE INCLUDE:

• It is important for officers to understand the “work as done” – in contrast with the work as intended/required by management – to identify and address risks.
• Effective systems (including reporting) are critical for a large organisation.
• An officer’s hands-on involvement with health and safety and implementing positive health and safety initiatives does not reduce the officer’s responsibility, rather it sets the benchmark for the due diligence expected of the officer.
• Relying on workers to comply with safe working rules is unlikely to be adequate where there are known issues with non-compliance. Effective supervision, hard controls and technological solutions should be considered to keep workers safe (and interim measures may be necessary until other controls can be put in place).
• Where the need for improvements in health and safety systems and processes is identified, those improvements need to be implemented in a timely manner.
• Clear and understandable documentation and safe working rules is important. As is documenting health and safety decisions made and the reasons for these decisions.
• Adequate training and supervision of workers is critical.
• A CEO does not have to approve all health and safety changes – in a large organisation there will in practice need to be an appropriate level or threshold of risk before a CEO is required to sign off on a change.
• The fact that a PCBU breached its duty of care in this case to ensure, so far as reasonably practicable, the health of safety of its workers does not automatically lead to a conclusion that the officers have failed in their duty. The Court noted (at paragraph 49) that “[a] PCBU can breach its duties despite proper efforts by its officer to do all that he or she could reasonably have been expected to do in the circumstances, having regard to what the officer knew, what they ought to have known, and their ability to make or influence decisions in relation to the relevant matter”.
• Chief Executives are ultimately responsible for both the strategic approach to health and safety (under the oversight and direction of the Board) and ensuring that appropriate health and safety systems are implemented, entrenched and work as intended in practice “at the coal face”.

FURTHER GUIDANCE

Further guidance is available in the Institute of Directors’ 2024 Good Practice Guide for Health and Safety Governance in association with WorkSafe and others. Click here for a copy.

Please contact us if you would like to discuss any issues raised in this article.

Disclaimer: The information contained in this publication is of a general nature and is not intended as legal advice. It is important that you seek legal advice that is specific to your circumstances.