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OSH Tracker

Department of Labour v Areva T & D New Zealand Ltd (HC, 09/11/05)

Sentencing Tracker

Principal Offences:
Failing to ensure safety of employee (s6 and s 50 Health and Safety in Employment Act 1992)
Plea:
Guilty
Non-Custodial Sentences:
$35,000 fine imposed on appeal
Sentence of conviction and discharge quashed on appeal
Appeal:
Non-Custodial Sentence Increased
Mitigating Factors:
Early guilty plea
Full co-operation with police
Reparation paid to family of victim - $100,000 life insurance policy and $35,000 for expenses
Lack of previous convictions
Notes:
Successful appeal by Crown
Victim:
Male

OSH Tracker

Defendant:
Areva T & D NZ Ltd
A district court judge's ruling that an employer had "done enough" and did not deserve to be fined following the death of a line mechanic has been overturned in the High Court. After hearing an appeal against sentence brought by the Department of Labour, Justice John Priestley found that the decision to convict and discharge Areva T & D NZ Ltd under s6 of the HSE Act had been manifestly inadequate, and instead imposed a $35,000 fine (HC Rotorua, November 9). The appeal related to an incident in which an Areva employee was electrocuted when the crane he was leaning against touched high voltage lines while removing a power pole. Both the crane hire company and its operator were fined in relation to the incident, and ordered to pay reparations to the man's widow. In a separate hearing in Whakatane District Court, however, Judge Thomas Ingram ruled that financial arrangements already made by Areva negated any need for reparations and, in light of the company's responsible approach to risk management, a fine was not justified. Considering the appeal, Justice Priestley said the absence of a fine sat uneasily with the $15,000 fine imposed on the crane company. He took issue with Judge Ingram's statement that, because Areva provided $100,000 life insurance for all its workers, and had made other voluntary payments totalling $38,000 to the dead man's family, nothing further could properly be required of it. Under the Sentencing Act, he said, offenders must not be convicted and discharged unless conviction alone is sufficient penalty. He did not regard the payments to the victim's family as grounds for concluding that conviction alone was enough, and noted that Judge Ingram had given no reasons to support his alternative view. 
Industry:
Electricity, Gas and Water Supply
Sub-Industry:
Electricity and Gas Supply
Risk:
Electrocution
Harm:
Death
Penalty Amount:
$35000.00
Reparation Amount:
$0.00
Appeared in Safeguard issue 95

Judgment Text

RESERVED JUDGMENT OF PRIESTLEY J 
Priestley J
[1]
The respondent was prosecuted in the Whakatane District Court under ss 6 and 50 of the Health and Safety in Employment Act 1992 (“the Act”). The charge was one of failing to ensure the safety of an employee. It pleaded guilty to the single charge laid. 
[2]
On 12 April 2005 Ingram DCJ, for reasons apparent later in this judgment, convicted and discharged the respondent. 
[3]
The appellant, represented by the Crown Solicitor in Tauranga, has challenged the imposed sentence on the ground that it was manifestly inadequate. 
[4]
At a broad level this appeal requires some examination of the interplay between s 51(A) of the Act and the provisions of the Sentencing Act 2002. At a specific level the appeal requires consideration of whether the failure of the Judge to impose a fine because, directly and indirectly, the respondent had provided financial benefit to the family and estate of its deceased employee, was correct in principle. 
Background 
[5]
The deceased, Mr A Mokomoko, was the respondent's employee. Whilst working as a line mechanic in a rural area in the Bay of Plenty on 20 February 2004 he was electrocuted. 
[6]
The deceased was part of a team, working in conjunction with a mobile crane operated by an independent contractor, removing poles which carried a high voltage transmission line. The deceased and a co-employee were responsible for guiding the poles to the ground after their removal by the crane. 
[7]
The deceased had the misfortune to be in contact with the crane's extended outrigger when a wire rope on the crane's fly jib brushed against a second high voltage line adjacent to the one from which poles were being removed. 
[8]
Specific breaches were alleged against the respondent under s 6 which, on a factual basis, included a failure to identify the hazard at the start of the work being carried out and failure to appoint a dog man to observe the required separation between the crane and nearby live transmission wires. 
[9]
The maximum fine to which the respondent was exposed was $250,000 representing a five-fold increase in the previous maximum penalty under s 50. This increase was enacted in May 2003 by the Health and Safety in Employment Amendment Act 2002. 
Relevant Statutory Provisions 
[10]
Section 51A of the Act relevantly provides: 
“51A Sentencing criteria 
(1)
This section applies when the Court is determining how to sentence or otherwise deal with a person convicted of an offence under this Act. 
(2)
The Court must apply the Sentencing Act 2002 and must have particular regard to— 
(a)
sections 7 to 10 of that Act; and 
(b)
the requirements of sections 35 and 40 of that Act relating to the financial capacity of the person to pay any fine or sentence of reparation imposed; and 
(c)
the degree of harm, if any, that has occurred; and 
(d)
the safety record of the person (which includes but is not limited to warnings and notices referred to in section 56C) to the extent that it shows whether any aggravating factor is absent; and 
(e)
whether the person has— 
(i)
pleaded guilty: 
(ii)
shown remorse for the offence and any harm caused by the offence: 
(iii)
co-operated with the authorities in relation to the investigation and prosecution of the offence: 
(iv)
taken remedial action to prevent circumstances of the kind that led to the commission of the offence occurring in the future. 
(3)
This section does not limit the Sentencing Act 2002. ”
[11]
Parliament, as a matter of policy, has expressly prohibited an employer from insuring against fines. Section 56I provides: 
“56I Insurance against fines unlawful and of no effect 
(1)
To the extent that an insurance policy or contract of insurance indemnifies or purports to indemnify a person for the person's liability to pay a fine or an infringement fee under this Act,— 
(a)
the policy or contract is of no effect; and 
(b)
No court or tribunal has jurisdiction to grant relief in respect of the policy or contract, whether under section 7 of the Illegal Contracts Act 1970 or otherwise. 
(2)
A person must not— 
(a)
enter into, or offer to enter into, a policy or contract described in subsection (1); or 
(b)
indemnify, or offer to indemnify, another person for the other person's liability to pay a fine or an infringement fee under this Act; or 
(c)
be indemnified, or agree to be indemnified, by another person for that person's liability to pay a fine or an infringement fee under this Act; or 
(d)
pay to another person, or receive from another person, an indemnity for a fine or an infringement fee under this Act. 
(3)
If an insurance policy or contract of insurance described in subsection (1) exists at the date of commencement of this section,— 
(a)
subsections (1) and (2)(c) and (d) apply to it from that date; and 
(b)
this section does not prevent the parties to it agreeing to the refund of an amount of the premium. ”
[12]
As is apparent from s 51A(2)(a) (supra) a sentencing court is obliged to apply the provisions of ss 7-10 of the Sentencing Act 2002. It is unnecessary to set out ss 7, 8, and 9 which enact the well known purposes and principles of sentencing and also categorise aggravating and mitigating factors. 
[13]
Section 10(1) of the Sentencing Act, however, has some particular relevance in this case. It provides: 
“10 Court must take into account offer, agreement, response, or measure to make amends 
(1)
In sentencing or otherwise dealing with an offender the court must take into account— 
(a)
any offer of amends, whether financial or by means of the performance of any work or service, made by or on behalf of the offender to the victim: 
(b)
any agreement between the offender and the victim as to how the offender may remedy the wrong, loss, or damage caused by the offender or ensure that the offending will not continue or recur: 
(c)
the response of the offender or the offender's family, whanau, or family group to the offending: 
(d)
any measures taken or proposed to be taken by the offender or the family, whanau, or family group of the offender to— 
(i)
make compensation to any victim of the offending or family, whanau, or family group of the victim; or 
(ii)
apologise to any victim of the offending or family, whanau, or family group of the victim; or 
(iii)
otherwise make good the harm that has occurred: 
(e)
any remedial action taken or proposed to be taken by the offender in relation to the circumstances of the offending. ”
[14]
Of some relevance too is the ability of a sentencing court to impose a sentence of reparation under s 12 which provides: 
“12 Reparation 
(1)
If a court is lawfully entitled under Part 2 to impose a sentence of reparation, it must impose it unless it is satisfied that the sentence would result in undue hardship for the offender or the dependants of the offender, or that any other special circumstances would make it inappropriate. 
(2)
A sentence of reparation may be imposed, in relation to any particular offence, on its own or in addition to any other sentence. 
(3)
If a court does not impose a sentence of reparation in a case where it is lawfully entitled to do so, it must give reasons for not doing so. ”
[15]
Given that a fine is prescribed for the offence committed by the respondent, s 13 applies. 
“13 Sentence of fine 
(1)
If a court is lawfully entitled under this or any other enactment to impose a fine in addition to, or instead of, any other sentence, the court must regard a fine as the appropriate sentence for the particular offence unless— 
(a)
the court is satisfied that the purpose or purposes for which sentence is being imposed cannot be achieved by imposing a fine; or 
(b)
the court is satisfied that the application of any of the principles in section 8 to the particular case make a fine inappropriate; or 
(c)
any provision applicable to the particular offence in this or any other enactment provides a presumption in favour of imposing any other sentence or requires the court to impose any other sentence; or 
(d)
the court is satisfied that a fine, on its own or in addition to a sentence of reparation, would otherwise be clearly inadequate in the circumstances. ”
[16]
The interplay between s 51A and the relevant provisions of the Sentencing Act 2002 is not complex. Section 51A(3) spells out that the latter statute is not limited. The Sentencing Act's universal provisions clearly apply to the Act. However, in terms of s 51A(2)(b), to (e) certain specific Sentencing Act criteria, and also a defendant's safety record as a present or absent aggravating factor, must be considered. 
The District Court Decision 
[17]
It is unnecessary to deal extensively with the Judge's sentencing notes. He correctly referred to the relevant legislation. He was impressed, and properly so, by the training programme the respondent operated in respect of its employees. 
[18]
He considered that the hazard posed by the live transmission wire was not easy to discern. It had been missed by senior and experienced employees of both the respondent and the independent contractor operating the crane on the site inspection a fortnight before the fatality. Nor had it been identified at a site meeting involving the entire team on the day of the accident. 
[19]
The Judge considered the respondent's offending did not fall into the most serious category. He referred to the fact that the respondent carried insurance cover for all its 700 employees, providing a policy which paid out $100,000 (the case here) on an employee's death. He referred additionally to payments and expenses totalling $38,000 made by the respondent to the deceased's family to cover various cash needs and expenses flowing from the deceased's death. 
[20]
The Judge then turned his mind to mitigating factors which he identified as being the respondent's full co-operation with a departmental investigation and also its early guilty plea. To these factors in combination the Judge considered that the “greatest possible credit” he could give would be in the order of 40%. 
[21]
The Judge also, as he was obliged to do, gave consideration to the penalties inflicted on co-offenders. Both the crane hire company and the crane's operator were prosecuted. In sentencing them in Auckland on 10 March 2005 Thorburn DCJ imposed a fine of $15,000 and a reparation sentence of $30,000 on the crane hire company. The crane operator was fined $2,500 and sentenced to pay reparation of $5,000. 
[22]
The Judge concluded his sentencing thus: 
“[31]
Turning then to consider where an appropriate starting point for sentence in a case of this kind should be, I must take into account the defendant's excellent record and compare the circumstances to other similar cases. To the best of my knowledge no corporate defendant in any prosecution of this kind anywhere in New Zealand has faced a total penalty in excess of $100,000.00. This defendant company has already paid well in excess of that sum. It seems to me that I should put to one side the amount of the payments that have been made and simply assess this case against the matrix of similar cases under this legislation over a period of time. 
[32]
Adopting that approach, and taking this as being a failure by a mid level employee, to carry out the tasks which he had been properly trained for, it seems to me that the employer's liability should not exceed one third of the maximum penalty. Rounding the figure to specifics, I would approach this case on the basis that a maximum penalty in the order of $75,000.00, could perhaps be justified before taking into account aggravating and mitigating circumstances. 
[33]
The aggravating circumstances I have already covered and they are few. The mitigating circumstances are such that considerable credit would have to be given. Had nothing been paid to the deceased's estate and his family I would have given a credit in the order of $40,000.00 from the starting point of $75,000.00, taking into account the guilty plea, co-operation and the quality of the company's training programme. 
[34]
It might be said that such a level of penalty does not provide sufficient deterrence within the industry. The answer to that criticism lies in an assessment of the level at which the identified failure has occurred. It seems to me that it cannot be right for huge penalties to be imposed where the fault as is ascribed to a mid level or lower employee, who has been properly trained and who has made a human error. In my view higher fines should be reserved for cases where a deliberate policy choice has been taken at a high level to run risks. No such suggestion could be made in this case. 
[35]
Accordingly, whilst denunciation and deterrence are significant features, in my view fines in the order of $75,000.00 are sufficient to mark the Court's denunciation and to deter other offenders in cases where the error or mistake has occurred at a relatively low corporate level. Had there been a failure in the training programme which had been identified by the informant, then the penalties could well have gone up to twice the starting point that I have referred to. 
[36]
Taking all those matters into account, I have reached a conclusion which might appear naïve to some and might on its face appear to avoid the objects of the legislation. For the reasons that I have given I consider that the defendant company has done enough by making the proceeds of the insurance policy available to the deceased's family, by carrying that insurance in the first place, by the quality of its training programmes in particular and by meeting the payments and liabilities that I have referred to in paying over the sum of $38,000.00 to date, with further expenses lying ahead, as agreed at the restorative justice programme. 
[37]
As I said at the outset, in my view this case has an exemplary feature. The tragedy of Mr Mokomoko's death is all too plain but the purposes of the legislation are to ensure that the appropriate reparation is paid and that denunciation and deterrence assume a significant level of importance in the sentencing process. I consider that nothing further can properly be required of this particular defendant, given that the out of pocket costs are in the order of the total penalty imposed on the crane hire company and the total payments to the family of the deceased are in the order of three times or three and a half times as much. For those reasons I consider that the interests of justice would here best be served if the defendant were today convicted and discharged and it is accordingly convicted and discharged. ”
Discussion 
[23]
There are three problems immediately apparent with the route (supra) which the Judge travelled to convict and discharge the respondent without the imposition of a penalty. 
[24]
The first is that the absence of a fine sits uneasily with the $15,000 fine imposed on the crane hire company. Although that company and the crane's operator can properly be seen as having caused the accident through carelessness and oversight, negligence is not the focus of the Act. The emphasis is instead on safety. The primary s 5 purpose is to promote the prevention of harm in the workplace. The deceased was the respondent's employee. The obligation to ensure the safety of its employees at work rests primarily on the respondent. 
[25]
The second problem is the Judge's conclusion, prefaced as it is by disclaimers that it may appear naïve and avoidant of the objects of the Act, that the respondent “has done enough” and that “nothing further can properly be required” of it in the light of the various payments made to or received by the deceased's family which were three and a half times the penalty inflicted on the crane hire company. 
[26]
With respect, this reasoning fails to address why a prescribed penalty should not have been imposed. There is nothing improper about imposing a fine where Parliament has prescribed one. A fine is a penalty and sentence. It is not simply an obligation. Nor is a fine something which requires a defendant to do more (the alternative to “done enough”) for the deceased's family. 
[27]
The third problem is presented by s 109 of the Sentencing Act which provides: 
“109
Guidance on conviction and discharge 
The court must not convict and discharge an offender unless it is satisfied that a conviction is sufficient penalty in itself. ”
[28]
This provision clearly prohibits a court convicting and discharging unless it is satisfied the conviction alone is a sufficient penalty. Payment to a victim's family under a $100,000 insurance policy coupled with voluntary payments to the family of $38,000 do not strike me as sufficient reasons for concluding that a conviction alone is a sufficient penalty. Nor, importantly, has the judge given any reasons as to why that might have been his view. 
[29]
Mr Hollister-Jones for the appellant queried the Judge's $75,000 start point. He considered that the hypothetical credit the Judge would have given of $40,000 (supra para [33]) was too high representing 53% of the start point. The Judge had earlier indicated a 40% “credit” for the early guilty plea and co-operation of the departmental investigation. It is difficult to see how an additional 13% can be justified as a credit for the quality of the respondent's training programme, particularly since that programme was unsuccessful in preventing the accident. 
[30]
Mr Hollister-Jones presented a schedule of fines and reparation orders imposed under the Act since the maximum penalty was increased to $250,000. Imposed fines range from $5,000 to $55,000. Reparation orders range from $5,000 to $120,000. In no case had there been a mere conviction and discharge. 
[31]
The Judge commented in paragraph [31] of his decision (supra) that no “corporate defendant” appeared to have faced a “total penalty” in excess of $100,000. This observation in itself has not led to any error. Courts must take care to avoid rules of thumb. The $100,000 figure mentioned by the Judge, with respect, leads nowhere. The gravity and seriousness of an offence must be assessed in relation to the maximum penalty as the s 8(d) Sentencing Act principle requires. Equally the s 8(e) principle of consistency of sentencing levels needs consideration. 
[32]
As best I can assess it, the Judge has endeavoured to follow those principles in reaching his $75,000 start point. 
[33]
Relying on a District Court decision, Department of Labour v Ferrier Woolscours (Canterbury) Ltd (Timaru District Court, CRN 30765100701072, 29 November 2004, Judge Abbott), Mr Hollister-Jones recommended a two stage approach. The first step must be for the Judge to fix the amount the offender should pay by way of reparation on a stand alone basis. Secondly the Judge should then determine whether any additional penalty by way of fine should be imposed, with the quantum of the reparation sentence being taken into account in assessing the quantum of the fine. 
[34]
Abbott DCJ's decision conducted a helpful historical analysis of the power of courts to order compensation. He referred to the approach adopted by Harrison J in Police v Ferrier (High Court, Auckland, CRI 2003-404-000195, 18 November 2003) who stated: 
“[15]
In submitting that the Judge erred, [counsel] places reliance upon the Court's obligation to take into account the amount payable by way of reparation when imposing and quantifying a fine in addition to a sentence of reparation (s 40(4)). Critically, there is no reciprocal or corresponding requirement when fixing the amount of reparation. Accordingly, in my judgment there is no scope to apply a totality principle. Its place is elsewhere, namely where the offender is liable for terms of imprisonment on a series of charges (s 85). The reason, with respect, is obvious. A fine is essentially punitive; it is a pecuniary penalty imposed by and for the state. By contrast, an order for reparation is compensatory in nature, designed to recompense an individual or her family for financial loss or emotional harm suffered as a result of another's offending (s 32(1)). The two are conceptually different and serve disparate purposes. ”
[35]
In the context of this appeal I do not consider it necessary for me to examine definitively the relationship between a sentence by way of a reparation order and a sentence by way of fine. Harrison J is, of course, correct that the totality principle has no obvious relevance to a consideration of whether or not to impose a s 12 reparation sentence. A court has a discretion to impose a sentence of reparation under s 32(1) of the Sentencing Act 2002 which provides: 
“32 Sentence of reparation 
(1)
A court may impose a sentence of reparation if an offender has, through or by means of an offence of which the offender is convicted, caused a person to suffer— 
(a)
loss of or damage to property; or 
(b)
emotional harm; or 
(c)
loss or damage consequential on any emotional or physical harm or loss of, or damage to, property. ”
[36]
Under s 12(3) of the same statute a court must give reasons for not imposing a sentence of reparation. There is obvious sense in the two step approach outlined in Department of Labour v Ferrier Woolscours (Canterbury) Limited. If, having regard to the relevant criteria, the court imposes a reparation sentence, then obviously, as a next step, whether or not to impose a fine and if so the quantum of the fine, must be considered in the light of all Sentencing Act criteria and in particular the totality principle and the overall appropriateness of sentences and orders imposed. 
[37]
For the respondent Mr McLellan placed much emphasis on the purposes and principles of the Sentencing Act. He submitted that an analysis of the Judge's sentencing notes demonstrated he had understood and applied all relevant principles correctly. The Judge had turned his mind to the proceeds of the $100,000 insurance policy and the additional payments made by the respondent to the deceased's family of $38,000. On that basis he had declined to make a sentence of reparation regarding the insurance policy as being a matter legitimately taken into account under s 10(1) of the Sentencing Act. 
[38]
In counsel's submission the respondent's culpability was low. The respondent had an exemplary safety record with no previous convictions, added to which was its praiseworthy training programme. Given that the Judge was bound by s 8(g) of the Sentencing Act to impose the least restrictive outcome the conviction and discharge was appropriate. It could not be said the result was manifestly inadequate. 
Decision 
[39]
In my judgment, given the clear purpose of the Act is to promote and enforce workplace safety, and given the fairly recent Parliamentary increase of the maximum penalty from $50,000 to $250,000, it would be a rare case indeed for a conviction not to be met by the imposition of a fine. 
[40]
In successful prosecutions in this area, the s 7 purposes of denunciation, deterrence, and promoting a sense of responsibility must be given significant weight. 
[41]
Against the undisputed background that the crane hire company and the crane operator were both fined, it is difficult to discern any convincing reason why the respondent escaped a fine. Certainly no clear reasons were given by the Judge for that outcome as s 109 required. 
[42]
The approach of the Judge, clear from his sentencing comments (supra para [22]), was that a series of factors, and in particular the financial payments made to the deceased's family totalling $138,000, resulted in a situation where imposition of a monetary penalty was unjustified. In my judgment this approach was an error. 
[43]
The payments to the deceased's family were properly considered in terms of s 10(1). The $38,000 was clearly covered by s 10(1)(a). The insurance policy, being presumably part of the deceased's contract of employment, was probably covered by s 10(1)(b). All those factors, coupled with the restorative justice conference report and the victim impact statements which the Judge had received, made it clear that the respondent had been generous in its treatment of the deceased's family. For those reasons the Judge was absolutely correct not to impose a sentence of reparation under s 12. But, having properly considered a fine and indeed fixed a $75,000 start point, the Judge erred in not imposing a fine and fixing its quantum against the backdrop of the relevant provisions of the Act s 51A of the Act. 
[44]
So far as that latter provision was concerned the Judge was required to have regard to ss 7-10 of the Sentencing Act and was clearly entitled to consider the respondent's safety record, the guilty plea, its co-operation, and its remorse. 
[45]
Despite Mr Hollister-Jones submission that the $75,000 start point was too low I do not consider, having regard to the aggravating features of the offence that the start point should be interfered with. (See generally R v Taueki [2005] 3 NZLR 372, 396 (CA)Has partially negative history or cases citing, but has not been reversed or overruled[Yellow] ; a judgment not delivered at the time the sentence was imposed). 
[46]
The overall culpability of the respondent's offending (which in essence was a failure either to identify or to operate a system capable of identifying a potentially lethal hazard) was correctly described by the Judge as a “human error”. Set against a maximum fine of $250,000 for the most serious offending, I consider the Judge's $75,000 start point was appropriate and in accord with the s 8(d) and (e) principles. 

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