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OSH Tracker

Department of Labour v The Owens Cargo Company Limited (DC, 17/06/09)

OSH Tracker

Defendant:
Owens Cargo Ltd
Senior managers quickly changed their minds as to their company’s guilt in an accident where a worker’s leg was crushed by a logging truck after hearing evidence that a site manager had ignored workplace risks. 
This was revealed in the sentencing notes of Judge Stan Thorburn in the case of Owens Cargo Co Ltd which had been charged under section 6 of the HSE Act. The company was fined $150,000 and ordered to pay reparations of $22,000, in addition to $28,000 already paid. ( Wellington DC May 9, 2008). 
Owens Cargo, a log marshalling company, is a subsidiary of Toll Owens Ltd. It runs a depot at the Gisborne port where employees scan loaded logging trucks to record volumes of wood to be loaded on to freighters. 
In 2007 an employee fell into the path of a moving logging truck after the rope used to raise and lower a walking platform broke. 
The matter was set down for a defended hearing in May 2008. After evidence began counsel advised the company would change its plea to guilty, and the company was sentenced the following day. 
Judge Thorburn said because of time constraints he had not given reasons for his sentencing decision so he was now releasing them in a memorandum (June 17 2009). 
In his reserved decision Judge Thorburn said the state of disrepair of the ropes was “clearly there to be observed”, and had been well known for an extended period. 
He said there was a trail of evidence that Laurie Owen, the site manager at the time, had known about the poor state of some ropes. That included Owen’s own observations of the ropes, specific approaches by staff about them, and an almost identical accident preceding the February incident. 
The company had initially entered a not guilty plea to the section 49 charge, but after hearing evidence of the first three witnesses in the case changed its mind and pleaded guilty. 
Judge Thorburn said it appeared Owen’s knowledge of the risks had not been previously appreciated by senior management. He allowed a discount for the guilty plea as the company had changed its plea “very quickly” after hearing what Owen had known about the state of the ropes. 
He said the knowledge of Owen satisfied the section 49 requirement to establish an actual awareness of a failure to act that was reasonably likely to cause serious harm. “The attribution of knowledge through Owen of the condition of the ropes, their need for maintenance and repair (or even replacement) is inescapable.” 
The accident had occurred when a steel rope broke that was used to raise and lower a hinged platform used as a walkway to scan the logs. With the sudden release of tension the worker tumbled backwards and fell off the structure into the path of a truck which was beginning its exit from the other side. The trailer’s front right pair of tyres crushed his lower limbs, resulting in compound fractures to both legs. 
Judge Thorburn called it a “terrible event”. One witness had said he thought he was watching someone get killed and indeed there was a “judicial gasp” when the court heard of the moment of injury, he said. 
A Department of Labour investigation found that the release wire was in poor condition due to severe rusting, and wear and tear. Previous concerns had been expressed about the state of the ramp ropes, a fact noted in the company’s accident investigation report after the incident. 
For some time before the incident the state of the ropes had deteriorated to the extent that some of the ramps did not have ropes at all, others were not in good condition and were described as fraying. Five or six months before the incident a rope broke and a worker fell back into the truck bay, an incident reported to Owen. The court had heard employees had more than once expressed their concerns to Owen that someone would fall if one of the ropes snapped. 
The day before the accident it was recorded at a health and safety meeting that the ramps needed new cables and that it should be taken care of as soon as possible. Owen, present at the meeting, was responsible for undertaking the task. 
The company’s manual of standard operating procedures and safety rules identified interactions with logging trucks as one of most hazardous situations, with an obligation to report wear and tear in equipment including the ropes used to raise walkways. It was specifically identified that “ropes can break leading to the worker falling from the platform possibly into the path of a logging truck”. 
Judge Thorburn gave discounts for the guilty plea, remorse and the company’s efforts to make amends to the victim, having done “everything it could” by way of response. 
Industry:
Transport and Storage
Sub-Industry:
Other Transport
Risk:
Fall from height
Struck by moving object
Harm:
Injury
Penalty Amount:
$172000.00
Reparation Amount:
$22000.00
Appeared in Safeguard issue 118

Judgment Text

RESERVED DECISION OF JUDGE S A THORBURN ON SENTENCING 
Judge S A Thorburn
[1]
The defendant company is charged with an offence against s 49(2) of the Health and Safety in Employment Act 1992 (hereinafter referred to as “the Act”) in that on or about 22 February 2007 being an employer, it did fail to take all practicable steps to ensure that plant used by an employee Paul Coker was safe for him to use, knowing that that failure was reasonably likely to cause serious harm to him. 
[2]
The matter was set down for a defended hearing on 7 May 2008 and after evidence began, on the morning of 8 May counsel advised that the defendant was pleading guilty. 
[3]
Sentencing submissions were heard on the afternoon of 9 May and the Court announced that the defendant was fined $150,000 and ordered to pay reparation to Mr Coker in the sum of $22,000. Costs and witness expenses of $2,000 were imposed. 
[4]
Because of time constraints at the end of the day no reasons were given upon imposing these outcomes and so this memorandum is now released in order to provide reasons. 
[5]
The defendant is a large company operating in several portside venues in New Zealand. It has a depot at Gisborne Port where logging trucks (usually with a trailer) stop to enable the defendant's employees to scan the laden logs in order to record the volume of wood to be loaded onto an awaiting freighter. 
[6]
To do this the company had designed a platform as a short walkway that when resting unused would be in a vertical position, but when required for use could be lowered (being hinged at one end) to a horizontal position onto which an employee could walk in order to scan the logs. 
[7]
The platform could be lowered into the space between the truck and trailer and the person scanning could stand on it and scan the log ends on the trailer and then turn around and scan the log ends on the truck in the same operation. 
[8]
The platform was counterbalanced, so that when the scanning had been done, the person would step back off the platform and heave energetically on a steel rope that was attached to the far end to raise it to a vertical position because it was attached to a structure by hinges at its near end. The counterbalances would take effect and make the raising of it easier. 
[9]
On or about the 22 February, Mr Coker had scanned some logs and stepped back to heave on the rope to raise the platform when the rope broke and with the sudden release of tension, he tumbled backwards and fell off the structure that divided the measuring station into the path of another truck which was beginning its exit from the other side, and a set of axles ran over his legs. His injuries as a result required urgent and emergency hospitalisation because his legs were obviously crushed. He suffered compound fractures to both of his legs and of course crush injuries to them as well as crush injuries to his right hand, fractured ribs, and extensive bruising. The Court heard of his hospitalisation and his recovery struggle including complications which at one point raised possibilities of leg amputation. 
[10]
The incident was witnessed by others, one of whom has said that he thought he was watching someone get killed (Mr Manual) and indeed there was a judicial gasp when the Court heard of the moment of injury. This was a terrible event. 
[11]
The defendant has made ex gratia payments to Mr Coker totalling $28,000 as well as “topping up” his ACC payments in order to ensure that his income whilst not working, was no less than if he was working, and it has seen to other practical matters for his family such as lawn mowing. It has recently has re-employed him on office tasks. 
[12]
The maximum penalty for an offence under s 49 of the Act was increased by amendment in 2003 (as were other maximums) from a fine of $100,000 to $500,000, obviously to reflect the legislature's intent to significantly drive home the importance of employers taking proper steps to ensure the health and safety of employees and to resoundingly demonstrate deterrence and denunciation where there are employer failures. In recent times it has been observed that the Courts are indicating a willingness to impose quite substantial fines to reflect the policy of the legislation. 
[13]
Because s 49 requires knowledge as an essential element, the defendant's position had always been to defend the charge on the basis that knowledge was not provable. Objectively of course, there can be no criticism of a defendant for mounting a defence on the basis that an essential element in a prosecution might not be proven. For a corporate defendant, mens rea where “knowledge” is an element, will have to exist in the mind of an individual through whom it would be legitimate to impute that knowledge to the corporation. At the hearing on 7 May the chief executive of the defendant and a general manager, Messrs Bolt and Jenkins, were present in Court and after hearing the evidence of the first three witnesses, instructed the change of plea, advising the Court through counsel that it was now accepted that unbeknown to the senior management team actual knowledge did exist that could satisfy the requirements of the section - knowledge specifically held by Mr Owens, the site manager at the time. 
[14]
It seems, whether or not through shortcomings of disclosure or viva voce evidence having been given by the witnesses that exceeded the content of their prepared briefs previously exchanged, testimony came into the arena that very clearly indicated a state of detailed knowledge on the part of Mr Owens which had not been previously appreciated by senior management. Counsel for the defendant put it that “senior management were not the people who were in possession of the relevant mens rea … ” and explained when senior management heard the information for the first time, they made the decision to plead. 
[15]
Clearly the Court's observation of the evidence was that although at an early stage of the hearing, it was leaving a trail of evidence of knowledge possessed by Mr Owens through previous incidences, specific approaches by employees to him, discussions at the point of the ramps and observations of the state of the ropes etc., such that the poise of the evidence was begging a conclusion that he had direct knowledge that might indeed satisfy the requirements to establish actual awareness that there had been a failure to act that was reasonably likely to cause serious harm. 
[16]
The level of culpability can be assessed from the evidence then by noting the following: 
(1)
The defendant's own manual of Standard Operating Procedure and Safety Rules: July '04 (document 7 in the agreed bundle of documents) identifies “interaction with logging trucks” by a checkpoint operator as one of the most hazardous situations (section 3 p7); that reporting of wear and tear in equipment including the ropes used to raise the walkways is an obligation (section 9 p29); and specifically identifying that “ropes can break leading to the worker falling from the platform possibly into the path of a logging truck” where there is failure to repair equipment or regularly maintain it (section 9 p29); that a workplace inspection checklist and safe behaviour checklist procedure be developed so that every six weeks just prior to a scheduled safety meeting the workplace is inspected so that identified hazards can be raised at the meeting (section 9 p30). 
(2)
Previous concerns had been expressed about the state of the ramp wires/ropes, a matter that is noted in the defendant's own Accident Investigation report after the incident (Tab 10 agreed bundle of documents, para 3.3 p6). 
(3)
For some time before the incident the state of the ropes had deteriorated to the extent that some of the ramps did not have ropes at all, others were not in good condition described as “fraying” and in the comment of Mr Leaf “you wouldn't grab them because they would cut your hand being fraying and rusty”
(4)
Five or six months before the incident Mr Leaf had experienced a similar event when raising a ramp. The rope broke and he fell back into the truck bay behind him - his work companion Mr Hongara being a witness. Both of them went to Mr Owens to report the incident and both testified to Mr Owens instructing them to fix the rope and giving them pliers, etc. to do so. 
(5)
On that occasion Mr Leaf says he wrote out an incident report which he “took to the front office - left it on the keyboard — never heard what happened to it”
(6)
The state of the ropes had clearly become a matter of concern and Mr Coker the victim and another employee Mr Callow went to Mr Owens on more than one occasion expressing their concern that someone would fall if one of the ropes snapped. 
Mr Coker's evidence was, sometime before the incident, perhaps a few weeks, he first remembers reporting his concerns to Mr Owens accompanied by Mr Callow. Then a week or two later - being two or three weeks before the incident he thought, he and Mr Owens actually went to the truck bay and looked at the wires. 
(7)
On 21 February 2007 (the day before the incident) there was a meeting of the defendant's Health and Safety Committee led by the site manager Mr Owens and attended by the employees and the minutes record that “Sarah informed us that the ramps need new cables. This will be taken care of ASAP” (Tab 6 agreed bundle of documents). 
(8)
Mr Coker's evidence under cross-examination included testimony that because of the state of the ropes, some missing entirely, he got to the point where he would not use them because it was “beyond a joke”. He said he himself barely used the ramps because he was not happy with their state and that the scanning of the logs could be undertaken by using ladders. In cross-examination it was put to him that Mr Owens would say that it had never been suggested to him that there was a foreseeable risk of an accident like Mr Coker's happening - to which Mr Coker replied “he'd be lying”
[17]
The combined effect of these points shows a clearly identified area of risk in that: 
a)
it was recorded in the defendant's safety procedures; 
b)
there had previously been an actual incident equivalent to Mr Coker's and not dealt with; 
c)
it was self-evident because of maintenance and repair issues clearly visible and actually known about; 
d)
it had been the subject of specific communications with Mr Owens raising discreet and identifiable concerns pertaining precisely to the failure that eventuated, and that obviously were not acted upon; 
e)
that minutes of the defendant's Safety Committee are corroborative of the foregoing; 
f)
there was a failure to comply with the company's six-week safety and maintenance review cycle. 
[18]
The relevant criteria for sentencing in such matters has been classically set out and constantly referred to in the leading case of the Department of Labour v De Spa & Co. Limited [1994] 1 ERNZ 339Has Cases Citing which are not known to be negative[Green]  at 343. They are: 
(1)
Degree of culpability. 
(2)
Degree of harm. 
(3)
Financial circumstances of offender. 
(4)
Attitude of offender. 
(5)
Plea of guilty. 
(6)
Need for deterrence. 
(7)
Payment of reparation. 
(8)
The defendant's safety record. 
(9)
Other relevant particulars. 
[19]
To strike the right balance for sentencing in this case the Court is inevitably drawn to conclude that the degree of culpability because of the matters aforementioned, is high. Of course the degree of harm that resulted is high indeed, and is clearly serious harm (see Schedule 1 of the Act). Furthermore in the light of the foregoing points, the defendant's knowledge through Mr Owens of the circumstances makes it's obligation to take all practicable steps very clear when measured against the provisions of s 2A of the Act (see below and in particular ss 2): 
“S 2A All practicable steps 
(1)
In this Act, all practicable steps, in relation to achieving any result in any circumstances, means all steps to achieve the result that it is reasonably practicable to take in the circumstances, having regard to — 
(a)
the nature and severity of the harm that may be suffered if the result is not achieved; and 
(b)
the current state of knowledge about the likelihood that harm of that nature and severity will be suffered if the result is not achieved; and 
(c)
the current state of knowledge about harm of that nature; and 
(d)
the current sate of knowledge about the means available to achieve the result, and about the likely efficacy of each of those means; and 
(e)
the availability and cost of each of those means. 
(2)
To avoid doubt, a person required by this Act to take all practicable steps is required to take those steps only in respect of circumstances that the person knows or ought reasonably to know about. ”
[20]
All things being considered, the attribution of knowledge through Mr Owens of the condition of the ropes, their need for maintenance and repair (or even replacement), is inescapable in my view. Clearly this situation with regard to the ropes was there for all to see and it was part of the common knowledge on the site of those working there as evidenced by the record in respect to the meetings of the Safety Committee. In addition to that the late revelation of actual engagement with Mr Owens by Messrs Leaf and Hongara some time earlier in respect to the previous event which resulted in Mr Owens instructing them to fix the rope, and the engagement in the issue by Mr Coker and Mr Callow with Mr Owens but weeks before the accident, surely settle the issue of culpability under the charge. 
[21]
The financial circumstances of the defendant do not need addressing; it's safety record hitherto, has been good; and the appropriateness of an award for emotional harm is obvious — so therefore in addition to the degree of culpability, consideration of the need for deterrence, the relevance of the late guilty plea and the attitude of the defendant are the particular matters that remain to be addressed. 
[22]
The need for deterrence is not difficult to establish. In Department of Labour v De Spa (supra) at p342 the Court stated: 
“It is obvious from this legislative scheme that Parliament has deliberately placed on employers a positive duty to seek out hazards in order to determine whether they are significant and if they are, to eliminate them, isolate them or minimise them, as the case may be. What is important is that the Act casts on employers these positive duties. ”
- and in Transrail Limited v Department of Labour [1977] ERNZ 316 at 320: 
“The obligations on an employer are uncompromising and onerous. An employer must be pro-active and anticipate harm and take all practicable steps to minimise it. ”
[23]
The defendant company cannot get any discount for early plea but under s 51A of the Act the provisions of the Sentencing Act 2002 apply and s 9(2)(b) of that Act nevertheless does require the Court to take into account the fact of a plea (and I take it that that provision is applicable albeit when plea is late). 
[24]
Corporate culpability by attribution requires further comment. The principle of attribution is found in Linework Ltd v Department of Labour [2001] 1 ERNZ 80, i.e. that a corporate entity can be liable for the acts and/or omissions of its employees. My reading of Linework is that the attribution under assessment was to do with of the actus reus of an offence but the Court was broad in its language saying at para [23]: 
“An employer which is a corporation can discharge its statutory duties under the Act only through a human agent. The Act is concerned with safety of the employee's at work - for example, on the floor of the factory, on building sites, and while operating vehicles, plant and machinery. 
In practical terms, this is a world far removed from administrative offices which are the natural habitat of senior of middle level management. The statutory obligations upon an employer and, in particular, its obligations to provide on the job supervision of safety practices, must be viewed with this setting in mind. It is difficult to believe that Parliament would have intended that the relevant Acts and omissions of the person in charge of a work site should not be attributable to the employer. ”
[25]
In Department of Labour v Fletcher Concrete and Infrastructure Limited t/a Stresscrete (unreported 26.03.2007 DC Papakura, CRN-505500763: Cadenhead DCJ), relied upon Linework for the application of the attribution principle in respect to the existence of mens rea in the corporate mind through knowledge of a corporation's employees. 
[26]
In the case before the Court counsel for the informant accepted that it must prove actual knowledge that the failure to take action (as alleged) was reasonably likely to cause serious harm. 
[27]
In Department of Labour v Fletcher Concrete and Infrastructure Limited t/a Stresscrete (supra) at para [58] the learned Judge said: 
“The knowledge is that knowing that the consequences of failing to take any action are reasonably likely to cause serious harm. It is not necessary to predicate the actual harm caused. It is knowledge that the failure to take action is reasonably likely to cause serious harm within the meaning of the ‘serious harm’ as defined by statute. ”
[28]
Although the state of disrepair of the ropes and/or their need for attention was clearly there to be observed, it was also well known, even commented on at the site over an extended period of time. Whether or not Mr Owens actually transferred knowledge of the state of affairs to his own senior management seems doubtful. In my own view, however having regard to the attribution principle and applying it obviously to the mens rea element, and having regard to the nature of the work environment with the knowledge of the state of the wires being there to be observed from day to day and even talked about in the bay, the fact that that may not have been communicated to the senior manager or managers as the human face of the defendant corporation would in my view be unlikely to set aside the attribution principle. 
[29]
Knowledge at the end of the day is not something of concept only. It is something which must actually exist in the mind of a human being somewhere, and so therefore if the degree of knowledge which was held by Mr Owens was only appreciated for the first time on the day of testimony, that would have been a matter of significant, additional, direct information that required responsible and executive assessment quickly. If the assumption is to be made that Messrs Bolt and Jenkins did not know of the level of direct knowledge prior to that date, then their decision to plead came very quickly upon being seised of that information. Accordingly I am prepared to consider discount for plea. 
[30]
The Court is also obligated to take into account remorse shown by the defendant and evidence of previous good character (Sentencing Act 2002 ss 9(20(f) and (g)) and the defendant can gain the benefit of good character. I am prepared to regard it as of good repute and apart from the complexities around the late plea, the Court is quite satisfied that its conduct after the accident, has been impeccable with regard to its own internal accident investigation, its co-operation with the informant, and its attitude to the victim. 
[31]
The victim has suffered no economic loss that the Court can identify insofar as ex gratia payments of $28,000 have been made to him in order to meet expenses incurred for him and his family whilst he was in recovery and provide some other assistance from time to time. 
[32]
Section 9(2)(f) of the Sentencing Act 2002 also connects with s 10 which obligates the Court to take into account a defendants offer, agreement, response or measure to make amends and it is relevant to that, that the victim has also been paid an amount in order to make up the difference between what his wages would have been and what he was receiving under Accident Compensation. The defendant has freshly employed the victim in clerical and/or office duties. In this case the Court is prepared to regard the defendant as having done everything it could be expected to do by way of response to the victim in the light of the incident. 
[33]
Culpability was high and therefore the beginning place for fine setting in my view ought to be around the $300,000 mark. In the case of Stresscrete the starting point was $350,000. There was a death in that case and behind the incident there was a serious abrogation of responsibility to safety on the part of one of the key responsible personnel that the Judge observed, because the need for production and profit was a priority over safety. In the case before this Court I do not think that the facts support such paucity of commitment to safety and the need for denunciation and deterrence is not quite at the same level. 
[34]
I apply a 25% reduction for plea, namely $75,000. I recognise remorse and s 10 responses by further reduction of $25,000. 
[35]
I consider that reparation is appropriate in an amount of $50,000 (total). Twenty eight thousand dollars has already been paid ex gratia. I order a further payment pursuant to this sentencing of $22,000 to the victim. 
[36]
Taking into account s 40(4) of the Sentencing Act 2002 and regarding therefore total reparation to amount to $50,000, I impose a fine of $150,000 upon the defendant company. 
[37]
I order $1000 solicitors costs and I order $1000 witnesses expenses, the particulars of which for apportionment can be forwarded to the Registrar by the informant. 

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