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Summit Wool Spinners Ltd v Department of Labour (HC, 15/06/07)

OSH Tracker

Defendant:
Summit Wool Spinners
A District Court decision granting the Department of Labour extra time to consider whether to prosecute the employer of a man killed in a faulty wool press has been overturned in the High Court. 
Summit Wool Spinners Ltd successfully appealed the June 2006 ruling, which would have given the department more time to lay charges in relation to a December 2005 fatality at the company’s Oamaru factory (High Court, Dunedin, June 15 2007). Under the HSE Act, the DoL must proceed with prosecution within six months of any incident unless the court grants an extension. 
A worker on night shift was crushed when he opened a wool press hatch while it was operating. A safety switch should have stopped the machine when the door opened, but a component in the switch had fractured, rendering it inoperable. 
Prosecution was not possible against the supplier of the press as it had been installed before amendments to s18A of the HSE Act imposed duties on suppliers of plant. 
In May 2006 the DoL advised Summit and the victim’s widow that it would not prosecute as the company had not breached the act. 
However, six days later, on June 6 – the last day on which prosecution was possible – the DoL successfully sought a time extension so it could consult an expert about safety interlock switches.  Summit appealed the extension and, in the High Court, Justice Asher agreed, saying that the mechanical failure which had caused the fatality was apparent immediately and an expert could have been consulted early in the investigation. 
Industry:
Manufacturing
Sub-Industry:
Textile, Clothing, Footwear and Leather Manufacturing
Risk:
Machinery (trapped, crushed, cuts)
Harm:
Death
Penalty Amount:
$0.00
Reparation Amount:
$0.00
Appeared in Safeguard issue 106

Judgment Text

JUDGMENT OF ASHER J 
Asher J
Introduction 
[1]
This is an appeal against a decision of the District Court at Dunedin, delivered on 8 November 2006, in which leave was granted to the Department of Labour to lay an information out of time against Summit Wool Spinners Ltd under s 54D of the Health and Safety in Employment Act 1992. 
[2]
The decision arose out of a tragic accident at the factory of Summit Wool Spinners Limited (“Summit”) in Oamaru on 6 December 2005. An employee, Peter Milton, was crushed in a wool press and died as a result of his injuries. The Department of Labour (“the Department”) commenced an investigation on that day. 
[3]
Section 54B(1) of the Health and Safety in Employment Act 1992 (“the Act”) places a six-month limitation of time from an accident for the laying of informations. The Department had, therefore, until 7 June 2006. No information was laid within that time. Instead, on 6 June 2006, the last day of the six months in which an information could be laid, an application was lodged seeking an extension of time. There is a discretionary jurisdiction to grant an extension of time under s 54D of the Act, and it is the decision granting an extension that is the subject of this appeal. 
[4]
I was informed by Mr Gunn, counsel for the Department, that there have only been two other occasions when applications to extend the period of time for the laying of informations under s 54D have occurred, and on both of those occasions the application was not opposed. This was the first time a Court has had to determine a defended application. 
[5]
Counsel for appellant, Mr Barton, advanced his submissions on the basis that the learned Judge had erred in his approach to the exercise of a discretion. He submitted that the wrong onus of proof was applied. He claimed that the learned Judge had incorrectly applied the criteria under s 54D(4), and had erred in his overall application of the discretion to grant leave. 
[6]
Counsel for the defendant, Mr Gunn, submitted that the Judge had correctly applied the onus, and that in the circumstances the decision to grant the extension was entirely open to him. 
The accident 
[7]
Mr Milton was working nightshift on 6 December 2005. He was operating a wool press that compressed loose wool that had been treated in the dye house into bales. The wool press is an automated device into which a sack is placed. The sack is filled with dyed wool and then a plate driven by hydraulic rams bears down on the wool from above. There is a hatch door high up on the wool press, which the operator can open to remedy minor problems that may arise. The operation of the hydraulically driven plate stops for safety reasons the moment the door is opened. 
[8]
The wool press in question was supplied by a company, Lyco New Zealand Ltd (“Lyco”), which I understand is the subsidiary of the Australian company that manufactures the presses. The press was purchased some years ago and had been operating without difficulty until the accident. Currently Lyco is a significant and established supplier of wool presses in Australia and New Zealand, and has been for some time. This particular press had within it the switch known as a “limit switch”, which had the function of stopping the operation of the machine when the hatch door was opened. The limit switch was described as having an operation akin to that of the button in a car door, which in a car is released when the door is opened and has the function of turning on the interior car light. In the case of this machine it had a small plunger inside the door. When the trap door was opened the plunger was released, and had the function of breaking the circuit driving the press, and immediately stopping its function. 
[9]
On the occasion of the accident, when Mr Milton opened the trap door and put his head and arms inside the press, the limit switch did not work. It turns out that what had happened was that the plunger on the limit switch had physically fractured so that it did not operate. Thus, when on this occasion, Mr Milton opened the door the plunger did not deactivate the circuit, and the press was not stopped in its operation. The press carried on working, crushing him. The plunger mechanism is not visible on any normal inspection. It is behind a steel cover. 
[10]
The broken plunger was found at the scene of the accident immediately after it had happened. Inspectors from the Department visited the site that day. There appears to have been no doubt from the outset as to the cause of the accident. 
[11]
The limit switch on this particular press had never failed before, and the indications are that the limit switch on other wool presses has never been known to fail on any other occasion, although these machines have been used throughout New Zealand and Australia over many years. 
The investigation 
[12]
The investigation commenced immediately. Two Department officers worked on it over the following six-month period. They both filed affidavits in support of the application, exhibiting their file notes relating to the investigation. The Department established quickly that Lyco had supplied the wool press in approximately 1992, and also a second wool press in early 2002. A different company, Wooltech Industries Limited (“Wooltech”), had changed the wool pressing system from a manual system where the presses were activated by a button, to an automated system in which each wool press cycled automatically, according to its program, as long as the gate and door were closed. A different company, David Newell Electrical Ltd, had supplied the programmable lodger controllers for this, and had integrated the cross-feed conveyor with the two wool presses. 
[13]
The Department officers proceeded to interview and obtain formal statements from 12 relevant employees of Summit. They checked the instruction manual, and investigated the New Zealand and International Standards Guidelines that were applicable to this type of machinery. It was established that the second wool press had had a different and superior type of cut-off device installed by its manufacturer. The Department formed the view that it could not bring prosecution action against either Lyco or Wooltech, as there was at the relevant time, which was prior to the amendment to s 18A of the Act in 2003, no provision under which those who had sold or supplied plant for use in a place of work could be prosecuted. 
[14]
The two officers who were involved have exhibited their file notes. These show that the fact that there was a broken limit switch was established on the first day of the investigation. They appear to have worked on the file for the entire six-month period, save for approximately four weeks over the Christmas period. Throughout the Department received telephone calls from Mrs Catherine Milton, Mr Milton's widow, who was obviously very concerned about the progress of the investigation. 
[15]
After the accident Summit had immediately installed a different and improved limit switch mechanism. As the six months drew to a close the interest of the concerned parties increased. On 9 May 2006 Summit's lawyer rang to inquire what was happening in the investigation. On 16 May 2006 there was a “peer review” meeting where it seems a different group of Department employees reviewed the investigation up to that point. 
[16]
On 29 May 2006 there was a meeting of senior executives of Summit and Department representatives to report on the conclusions of the Department. At that meeting the Department representatives advised Summit that no further enforcement action of the matter would be taken by the Department. The meeting was attended by two Department inspectors and four Summit representatives. The Department representatives advised that a report had been prepared, that it had been peer reviewed, and that Summit was not found to be in breach of any regulations. There was even some discussion as to whether Mrs Milton would be able to bring a private prosecution. Part of the file note of the Financial Manager of Summit, Mr Hammond-Tooke, of the discussion, read: 
“2.
Their investigation had taken time as they wanted to be very thorough. At the end they could find nothing that [Summit] had done or failed to do which would have prevented the accident. There would be no prosecution. 
3.
There would be a number of recommendations. These being: 
Maintenance programme 
Survey of all machinery to ensure no other major weaknesses 
Being more proactive in the identification of hazards 
Include hazard identifications of hazards 
Use of outside consultants to assist where necessary. 
4.
The investigation had included a review of other machines and equipment at [Summit] and they found no deficiency in our workplace and practices. 
5.
Staff they had interviewed were impressed with the way in which management had dealt with the accident. ”
The advice of the decision came as a great relief to Summit executives, who immediately advised all management and staff of the decision that had been made. 
[17]
Details of what happened then have not been provided by the Department, except in a very general way. The file notes show a telephone call with Mrs Milton on the following day, 30 May 2006. There was also a discussion with a lawyer within the Department. Mr Verwey, one of the two health and safety inspectors involved, said this in his affidavit in support of the application for an extension of time: 
“Following the Department's peer review process I advised Summit on 29 May 2006 that no further enforcement action would be taken by the Department in respect of this matter. The Department has however reconsidered its position and intends to engage the services of an electrical interlocking specialist to assist it to decide if a prosecution should proceed. ”
[18]
On 6 June 2006, a week after it had given the advice that there would be no prosecution, the Department filed its application seeking an extension of time. In its affidavits in support (sworn on 8 June 2006 after the application was filed), the Department advised that an expert would be engaged to provide advice as to the state of knowledge that a person, conducting the business of Summit, could have been expected to have acquired. It was noted that the Australian standard for safeguarding of machinery (AS4024.1-1996) provided standards for the guarding of machinery in different settings. Under a particular standard a “Category 4 interlock guarding system” is required. This is a dual controlled interlock system which would indicate if one of the interlocks had failed. There would be two limit switches instead of one to ensure a back-up mechanism in the event of a failure. 
[19]
The Department anticipated that six weeks would be sufficient to obtain the expert opinion. In fact this expectation was accurate. The report, which was annexed to a further affidavit, was obtained by 19 July 2006. It was a detailed report from a Mr Nick Frame, who is a specialist in machinery and plant safety consulting engineering. He is experienced in undertaking site safety audits and considering machinery guarding design. His report concluded that the accident (as ascertained at the outset) was caused by the failure of the limit switch. He noted that the limit switch had not been checked during maintenance inspections, and that there had been no safety review carried out to check the limit switch. He stated that such checks might not necessarily have picked up the prospective failure of the limit switch, but that they should have highlighted the unsuitability of such a limit switch in the position that it was in. He noted the Australian specification, and considered the operation of a single limit switch was substandard. He considered that Summit could have engaged a competent person to perform a machinery safety and risk assessment and make a close inspection of the safety interlocking switches in the control systems for the presses and conveyor. This report had been obtained and was before the District Court Judge when he heard the application. 
The approach of the Court on appeal 
[20]
In Alex Harvey Industries Ltd v Commissioner of Inland Revenue (2001) 15 PRNZ 361 (CA) at [13], the Court approved the following approach stated in Harris v McIntosh CA279/98 30 June 1999 at 4-5, to the exercise of a discretion of a Judge at first instance: 
“An appellant must show that the Judge acted on a wrong principle; or that he failed to take into account some relevant matter or that he took into account some irrelevant matter or that he was plainly wrong. ”
[21]
It is not appropriate on appeal to repeat the weighing and balancing of factors carried out by the Judge at first instance. However, in this case there was no cross-examination. The District Court did not, therefore, have the advantage of seeing and hearing witnesses, but rather assessed the case on the evidence in the affidavits. This Court has the same material before it as the District Court. In such circumstances, in carrying out the exercise referred to in the Alex Harvey decision, an appellate Court is more willing to form its own assessment of the evidence, although always with deference to the assessment at first instance. 
Purpose of the legislation 
[22]
The present s 5 of the Act sets out its objects. It provides: 
“5
Object of Act 
The object of this Act is to promote the prevention of harm to all persons at work and other persons in, or in the vicinity of, a place of work by— 
(a)
promoting excellence in health and safety management, in particular through promoting the systematic management of health and safety; and 
(b)
defining hazards and harm in a comprehensive way so that all hazards and harm are covered, including harm caused by work-related stress and hazardous behaviour caused by certain temporary conditions; and 
(c)
imposing various duties on persons who are responsible for work and those who do the work; and 
(d)
setting requirements that— 
(i)
relate to taking all practicable steps to ensure health and safety; and 
(ii)
are flexible to cover different circumstances; and 
(e)
recognising that volunteers doing work activities for other persons should have their health and safety protected because their well-being and work are as important as the well-being and work of employees; and 
(f)
recognising that successful management of health and safety issues is best achieved through good faith co-operation in the place of work and, in particular, through the input of the persons doing the work; and 
(g)
providing a range of enforcement methods, including various notices and prosecution, so as to enable an appropriate response to a failure to comply with the Act depending on its nature and gravity; and 
(h)
prohibiting persons from being indemnified or from indemnifying others against the cost of fines and infringement fees for failing to comply with the Act. ”
The previous s 5 was repealed and replaced in its current form on 5 May 2003. 
[23]
The Act has been held to be remedial in nature. In Central Cranes Ltd v Department of Labour [1997] 3 NZLR 694 (CA) at 701 Thomas J stated: 
“It is clear that the Act adopts a preventive approach to maintaining and promoting health and safety in the workplace. Its principal object is to provide for the prevention of harm. To achieve this object employers are required to promote safety in the workplace and both employers and others associated with the workplace are subject to the duty to take all practicable steps to ensure such safety or ensure that employees and others in the workplace are not harmed. …  
Being a remedial measure, the Act should be read so as to attain the object of the legislation and to accord with the scheme of the legislation so far as the wording fairly and reasonably permits. See Harrison v National Coal Board [1951] AC 639, per Lord Porter at p 650. Section 5(j) of the Acts Interpretation Act 1924 dictates the same approach. ”
(emphasis added) 
[24]
It is clear that the Act places a duty on employers to be proactive and to systematically identify hazards to determine their significance, and if they are to eliminate or minimise them: Department of Labour v de Spa & Co Ltd [1994] 1 ERNZ 339 (HC) at 341-342 and Tranz Rail Ltd v Department of Labour [1997] 1 ERNZ 316 at 320. I must consider the exercise of the discretion with that in mind. 
The onus of proof in a s 54D application 
[25]
It is necessary first to consider the onus of proof under s 54D. The section as a whole reads as follows: 
“54D Extension of time if inspector needs longer to decide whether to lay information 
(1)
This section applies if an inspector considers that he or she will not be able to lay an information by the end of the 6—month period referred to in section 54B. 
(2)
On application, the District Court may extend the time for laying an information. 
(3)
An application under subsection (2) must be made within the 6—month period. 
(4)
The Court must not grant an extension unless it is satisfied that— 
(a)
an inspector reasonably requires longer than the 6—month period to decide whether to lay an information; and 
(b)
the reason for requiring the longer period is that the investigation of the events and issues surrounding the alleged offence is complex or time consuming; and 
(c)
it is in the public interest in the circumstances that an information is able to be laid after the 6—month period expires; and 
(d)
laying the information after the 6—month period expires will not unfairly prejudice the proposed defendant in defending the charge. 
(5)
The Court must give the following persons an opportunity to be heard: 
(a)
the person seeking the extension: 
(b)
the proposed defendant: 
(c)
any other person who has an interest in whether or not an information should be laid, being a person described in section 54(1). ”
[26]
It is clear from this wording that the Court must be satisfied that the relevant criteria are fulfilled. Section 54D(4) states that “the Court must not grant an extension unless it is satisfied that … ”. The person that must satisfy the Court of this has to be the applicant, the Department. The word “satisfied” can be used both in the sense of the incidence of proof (the onus of proof) and in relation to the standard of proof. In Blyth v Blyth [1966] 1 AC 643, the House of Lords discussed this issue. Lord Denning commented at 667-668 that in considering the word “satisfied” it must be ascertained whether the word is used to show on whom the onus lies or, rather, the standard that must be attained. The House of Lords held that the word was used to show on whom the onus of proof rested, leaving it to the Court to decide the standard of proof that was required. 
[27]
I consider that the word “satisfied” is used in the sense of stating where the onus of proof lies. An applicant under s 54D is seeking an indulgence. It is seeking permission to go outside the stated time limit. It is up to that applicant to satisfy the Court that the criteria are met. 
[28]
As to the standard of proof, what is involved in a Court being “satisfied” is widely understood. There are only two “standards” of proof, being proof beyond reasonable doubt and proof on the balance of probabilities. As Lord Nicholls of Birkenhead commented in Re H (Minors) [1996] AC 563 (HL) at 586 “Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.” It can be expected that when there is provision for discretionary relief in the context of bringing criminal prosecutions, the standard is the balance of probabilities. If this were not so, few applications would succeed. The standard of “beyond reasonable doubt” is not suited to discretionary considerations of the type that arise in this case, where there are multiple matters that have to be taken into account, none of which are capable of absolute proof. 
[29]
For these reasons I conclude that the onus was on the Department to satisfy the District Court on the balance of probabilities that the criteria set out in s 54D(4) were met. I turn to the question of whether the Judge did in fact apply the onus and standard of proof, and whether the facts supported the conclusion he reached. 
The Judge's consideration of the onus of proof 
[30]
The Judge's consideration of the onus is set out at [23] of his judgment. It reads as follows: 
“The time limit for laying an information is, in this case, within six months of the date of the accident that caused the death of Mr Milton. An application can be made to extend the six-month period if the Court is satisfied of the matters set out in s 54D(4)(a) to (d). The Court must not grant an extension unless it is satisfied of each of those matters. In my view the onus is clearly on the Department to satisfy me of the first three matters; those in paragraphs (a)-(c). It must be for Summit to show that it would be unfairly prejudiced in its defence if the extension was granted. The approach taken to the expression ‘is satisfied’ in the exercise of judicial discretion (albeit in the sentencing context), is discussed by the Court of Appeal in R v Leitch [1998] 1 NZLR 420 at 428: 
‘The need to be “satisfied” calls for the exercise of judgment by the sentencing Court. It is inapt to import notions of the burden of proof and of setting a particular standard, eg beyond reasonable doubt. As this Court said in R v White (David) [1988] 1 NZLR 264 at p 268 with reference to s 75(2), “The phrase ‘is satisfied’ means simply ‘makes up its mind’ and is indicative of a state where the Court on the evidence comes to a judicial decision. There is no need or justification for adding any adverbial qualification … ”. ’”
(emphasis added) 
[31]
The Judge therefore initially recorded correctly that the onus was on the Department to satisfy him on the first three discretionary matters referred to in paras (a)-(c). He then said that it was for Summit to show that it would be unfairly prejudiced in its defence if the extension was granted. Then he referred to the discussion of the phrase “is satisfied” in R v Leitch, setting out the quote referred to, that it is inapt to import notions of the burden of proof and of setting a particular standard, in certain circumstances where the word is used. He did not, however, elaborate on the weight he placed on the statement in R v Leitch. While noting that it was a statement made in the sentencing context, it seems likely that having quoted the statement in R v Leitch, he applied it. 
[32]
The statement in R v Leitch was made in a particular context. Under s 75(2) of the Criminal Justice Act 1985 a Court had to be satisfied that it was “expedient for the protection of the public” that an offender should be detained in custody for a substantial period. The word “satisfied” was used in a different context in s 75(2) from the way in which it is used in s 54D of the Act. In s 75(2) of the Criminal Justice Act 1985 (which section was repealed in June 2002) it was used to set out the way in which a particular sentencing task should be carried out by a Judge. There was no issue in s 75(2) of the exercise of any indulgence by the Court, as there is in s 54D. There is a clear distinction between a Court in considering sentencing options, having to be satisfied of certain matters before choosing a particular course, and an application for permission to do something beyond that which is normally permitted, and where the applicant is required to meet specific criteria. 
[33]
In s 75(2) the word “satisfied” was not used as it is in s 54D, as part of a phrase stating that the Court “must not” grant an extension “unless” it is so satisfied. These words in s 54D, coupled with the setting out of detailed criteria, and the fact that an indulgence is sought, necessarily place the onus on the party seeking that indulgence. I do not consider, therefore, that the approach quoted in R v Leitch to the word “satisfied” is applicable to s 54D. 
[34]
The District Court judge in the paragraphs that followed his reference to the onus, made no further reference to it or to R v Leitch. He stated in [25] that “The Court will need to be satisfied” on the issue of expert evidence, and then at [33] said that he was “satisfied” that the four requirements were made out. 
[35]
In [26] of his judgment the Judge said: 
I do not agree with the position held by Summit that the investigation into the events and issues surrounding the alleged offence was not complex or time consuming. ”
(emphasis added) 
This language, used in relation to the second criterion, wrongly indicates that the onus was on Summit. The Judge does not agree with Summit's position that the investigation was not complex or time consuming. But it was not for Summit to satisfy him of lack of complexity or that it was not time consuming. It was for the Department to satisfy him of these matters. 
[36]
He stated at [32] in relation to unfair prejudice: 
“I have not been provided with evidence from Summit that I believe points to any unfair prejudice to Summit in defending the charges, should an information be laid. ”
Certainly in this part of the judgment, relating to the fourth criterion of prejudice to the defendant, he is most clearly placing the onus on Summit, in relation to unfair prejudice. This was a mistake, as any onus on the respondent could be only an evidential onus, with the overall onus remaining on the Crown. 
[37]
Then in paragraphs [34]-[35] he stated: 
“ … The issue that I have to determine is simply whether or not I should exercise my discretion and grant an extension of time to allow an inspector to lay an information. I accept that it could be permissible to refuse to allow the inspector to lay an information outside of the six-month period on the basis that it appears that at the last minute there was a reconsideration of the prosecution with a late decision being made to obtain expert evidence. 
[34]
I have decided not to refuse to grant an inspector further time outside of the six-month period to lay an information. In doing so I have taken into account and place particular weight on the seriousness of the accident, the number of parties that potentially had duties under the Act (which resulted in a time consuming investigation), the complexity of the issues regarding the adequacy of the guarding on the wool press and the absence of any prejudice to Summit by the extension of time. ”
(emphasis added) 
[38]
The error in paragraph [33] is that the learned Judge said that it “could be permissible” to refuse to allow an inspector to lay an information. However, it is not a question of whether it could be permissible to reject an extension application because of a last minute decision to seek an expert's report. The permission was not being sought by Summit, and Summit had no onus. Rather, it was being sought by the Department and the onus was on the Department. The question should have been whether it was permissible to allow the Department the extension in such circumstances. The onus was on the Department, but the Judge appears to have applied the no onus approach of R v Leitch, or indeed even reversed the onus, in a situation where it was wrong to do so. 
[39]
In his conclusion at [36] he said “Accordingly, I am satisfied that it would be in the interests of justice for the Court to exercise its discretion to allow an information to be laid”. There is no reference to the “interests of justice” in s 54D. This is a further indication that he approached the decision in a manner consistent with the “no onus” statement in R v Leitch, rather than placing an onus on the Crown. Therefore, the words used leave the clear impression that the learned Judge did not approach the case from the point of view that there was an onus on the Department, and applied R v Leitch to more than the just the issue of prejudice to the appellant. This was an error. 
[40]
I conclude, therefore, that the learned Judge failed to apply the correct onus of proof to the exercise of the discretion. 

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