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Osborne v WorkSafe New Zealand (SCNZ, 23/11/17)

OSH Tracker

Defendant:
Peter Whittall
The Supreme Court has allowed an appeal by Anna Osborne and Sonya Rockhouse and has issued a declaration that the December 2013 decision by WorkSafe New Zealand to offer no evidence in the prosecution of former Pike River mine boss Peter Whittall was unlawful, in that the $3.14 million conditionally offered by Whittall’s counsel for payment to the victims of the Pike disaster, and accepted by WorkSafe, constituted an unlawful bargain to avoid prosecution (Supreme Court, 23 November 2017). 
Industry:
Mining
Sub-Industry:
Coal Mining
Risk:
Burns/explosion
Harm:
Death
Penalty Amount:
$0.00
Reparation Amount:
$0.00
Appeared in Safeguard issue 167

Judgment Text

Judgment of the Court 
A
The appeal is allowed. 
B
A declaration is made that the decision of WorkSafe New Zealand to offer no evidence in the prosecution of Peter William Whittall was unlawful. 
C
Costs are reserved. The parties may file memoranda by 31 January 2018 if an order for costs is sought. 
REASONS 
Elias CJ, William Young, Glazebrook and O'Regan JJ (Given by Elias CJ)
[1]
It is contrary to the public interest and unlawful for an arrangement to be made that a prosecution will not be brought or maintained on the condition that a sum of money is paid. The principle is not in contention on this appeal. The issue is, rather, whether WorkSafe New Zealand1
| X |Footnote: 1
WorkSafe New Zealand is the government agency with responsibility for workplace safety legislation, having succeeded to the responsibilities formerly undertaken by the Department of Labour and then the Ministry of Business Innovation and Employment, following restructuring of government activities in July 2012 and December 2013 respectively. The initial investigation and charging decisions in issue in the appeal were undertaken by the Department of Labour. I have, however, referred throughout to WorkSafe New Zealand. 
acted to give effect to an unlawful agreement of this nature when it offered no evidence on charges against Peter William Whittall for breaches of the Health and Safety in Employment Act 1992.2
| X |Footnote: 2
The Health and Safety in Employment Act 1992 has now been replaced by the Health and Safety at Work Act 2015, enacted following the Pike River disaster: see Health and Safety Reform Bill 2014 (192-1) (explanatory note) at 1. 
 
The prosecutions 
[2]
Twenty-nine men died following explosions at the Pike River coal mine on 19 November 2010. Two others were injured but survived. WorkSafe described what happened as “the employment related disaster of a generation.” At the sentencing of the mine owner, Pike River Coal Ltd, for breaches of the Health and Safety in Employment Act, WorkSafe submitted that the case was “as serious as one can contemplate … not only with regard to the breath taking omissions and failures at the mine but also in terms of the number of men killed”. The view that the omissions and failures in safety at the mine were “breath taking” is also substantiated by the 2012 report of the Royal Commission into the explosions.3
| X |Footnote: 3
See Graham Panckhurst, Stewart Bell and David Henry Report of the Royal Commission on the Pike River Coal Mine Tragedy (30 October 2012) vol 1 at 15. The findings of the Royal Commission led to the creation of WorkSafe: Health and Safety (Pike River Implementation) Bill 2013 (130-1) (explanatory note) at 1. 
 
[3]
The Pike River mine explosions were the subject of investigation by the police for possible criminal offending under the Crimes Act 1961 and investigation by the Department of Labour (later WorkSafe) for breaches of the Health and Safety in Employment Act. The investigations were launched within days of the explosions. 
[4]
Twelve charges under the Health and Safety in Employment Act were laid in November 2011 against Mr Whittall, a director and chief executive officer of Pike River Coal. Eight of the charges were laid under s 56(1) of the Act on the basis that Mr Whittall, as director and officer of Pike River Coal, had “directed, authorised, assented to, acquiesced in, or participated in” the safety failures of the company. These are stand-alone charges that can be laid under s 56 whether or not charges are brought against the company. The failures alleged were principally in relation to the management of the risk of methane gas explosion and inadequacies in ventilation.4
| X |Footnote: 4
Section 56(1) of the Health and Safety in Employment Act provides that where a body corporate fails to comply with the Act “any of its officers, directors, or agents who directed, authorised, assented to, acquiesced in, or participated in, the failure is a party to and guilty of the failure and is liable on conviction to the punishment provided or the offence, whether or not the body corporate has been prosecuted or convicted.” 
The remaining four charges were laid under s 19 of the Act for alleged failures of Mr Whittall as an employee to take all practicable steps to avoid harm to others.5
| X |Footnote: 5
Section 19 makes it an offence for an employee to fail to take “all practicable steps to ensure … that no action or inaction of the employee while at work causes harm to any other person”
Under s 54A(2) of the Act, the laying of charges by WorkSafe prevents any private prosecution for the breaches. 
[5]
Mr Whittall was the only natural person charged in relation to the safety conditions at the Pike River mine. But at the same time the charges were laid against Mr Whittall, the company itself was charged in relation to similar breaches of the Act. Three charges under the Health and Safety in Employment Act were also brought against VLI Drilling Ltd, a contractor engaged by Pike River Coal. 
[6]
It was unnecessary under the Health and Safety in Employment Act for the charges based on the safety conditions at the mine to attribute responsibility for the explosions and therefore the deaths.6
| X |Footnote: 6
See ss 6, 18, 19 and 56. 
WorkSafe did not seek to do so in the charges it brought. 
[7]
VLI Drilling pleaded guilty and was convicted in respect of the three charges laid against it. On 26 October 2012 it was fined a total of $46,800.7
| X |Footnote: 7
Department of Labour v VLI Drilling Pty Ltd DC Greymouth CRI-2011-018-1036, 26 October 2012
The sentencing Judge, Judge Farish, described the culpability of VLI Drilling as “moderate.”8
| X |Footnote: 8
At [48]. 
She expressly found there to have been no causal connection established between the omissions by VLI Drilling and the explosions but declined an invitation to discharge it without conviction on the basis that the offence was in allowing unsafe conditions and “[t]he culpability is the same regardless of whether the risk materialised”.9
| X |Footnote: 9
At [34]. 
The Judge allowed a discount of 25 per cent to reflect VLI Drilling's early guilty pleas and further total discounts of 30 per cent in recognition of its cooperation with the investigation, amends to the families of the deceased, and the steps it had taken to improve its operations.10
| X |Footnote: 10
At [51]—[53]. 
 
[8]
Pike River Coal, by then in receivership, pleaded not guilty but thereafter did not actively defend the charges. The charges were determined following a formal proof hearing in March 2013 at which the company was not represented. Pike River Coal was found guilty in April 2013 and convicted on nine charges.11
| X |Footnote: 11
See Department of Labour v Pike River Coal Ltd DC Greymouth CRN-1101-8500-202/202,211, 18 April 2013 (an interim judgment); and Department of Labour v Pike River Coal Ltd DC Greymouth CRN-1101-8500-202/202,211, 3 May 2013 (the final judgment). 
Judge Farish, in entering convictions, found that the failures of the company in relation to methane and ventilation management were causative of the explosions12
| X |Footnote: 12
Department of Labour v Pike River Coal Ltd DC Greymouth CRN-1101-8500-202/202,211, 3 May 2013 (final judgment) at [34]. 
and that failures in relation to panel geology13
| X |Footnote: 13
A “panel” is a specific area of coal extraction within a mine. The geological properties of a panel and its surrounding rock affect the risks associated with mining that coal: for example, the chance that roof of the “goaf” (the void left behind once the coal is mined) will collapse, causing a windblast effect and/or expelling explosive gas or coal dust. In turn, this affects the safe width of mining operations (the wider the extraction the more likely the roof of the goaf is to cave in): see Graham Panckhurst, Stewart Bell and David Henry Report of the Royal Commission on the Pike River Coal Mine Tragedy (30 October 2012) vol 2 at 12—16, 159 and 168. 
represented “crucial and fundamental error”.14
| X |Footnote: 14
Department of Labour v Pike River Coal Ltd DC Greymouth CRN-1101-8500-202/202,211, 3 May 2013 at [118]. 
These findings that the safety failings of Pike River Coal had caused the explosions and therefore the deaths and injuries meant that a sentence of reparation was available.15
| X |Footnote: 15
A sentence of reparation can be made only to compensate for loss proved to have been caused by offending: see s 32(1) of the Sentencing Act 2002. 
 
[9]
At sentencing on 5 July 2013 Pike River Coal was fined a total of $760,000 and ordered to pay $3.41 million in reparations to the survivors and to the families of the 29 men who died.16
| X |Footnote: 16
Department of Labour v Pike River Coal Ltd DC Greymouth CRI-2012-018-822, 5 July 2013 (sentencing judgment) at [41]. 
In sentencing the company, Judge Farish referred to its “systemic and sustained series of errors and omissions from the mine's conception to its ultimate demise”.17
| X |Footnote: 17
At [4]. 
The hazards were said to be well known, predictable and preventable. Health and safety issues were “not given priority by the company” which, at the time of the explosions “was under extreme pressure to produce coal” and was “well behind in their production targets”.18
| X |Footnote: 18
At [5]. 
The Judge highlighted the company's significant departure from safety standards, including departure from the company's “own acknowledged plans and safety plans”.19
| X |Footnote: 19
At [35]. 
She indicated that the fine imposed reflected her assessment that the case was within the worst kind, justifying maximum penalties. 
[10]
As the Judge's sentencing remarks indicate, it was appreciated that the chances of payment of the fines and the reparations were doubtful. Judge Farish however expressed some optimism that a combination of the directors and shareholders could yet come up with the reparation ordered.20
| X |Footnote: 20
At [20]. 
In that connection she referred to the fact that the directors had significant insurance. The company itself was however already in receivership at the time of the sentencing and was eventually removed from the register without the payments being made. 
[11]
Mr Whittall pleaded not guilty to all charges under the Health and Safety in Employment Act. Preparation for summary trial began. It included substantial disclosure, some of which proved contentious, and the briefing of expert evidence. 
[12]
The police investigation took longer to be concluded than the Health and Safety in Employment Act investigation. One of the charges being investigated was manslaughter and, unlike the charges under the Health and Safety in Employment Act, it required demonstration to the criminal standard that the conduct of the defendants caused the death of the men in the mine. In July 2013 the police announced they would not be laying charges under the Crimes Act. There was “insufficient evidence to prove a causal link between the actions of any individual and the specific events which led to the explosion”, as was required for a charge of manslaughter.21
| X |Footnote: 21
It had not been possible to establish the cause of the explosion because the mine remained inaccessible after the explosion. 
Although the police acknowledged that there was “enough evidence to support a charge of criminal nuisance”,22
| X |Footnote: 22
An offence punishable by up to one year's imprisonment under s 145 of the Crimes Act 1961 for any unlawful act or omission to carry out a legal duty known to be an act or omission which would endanger others. 
they concluded that a prosecution for criminal nuisance did not meet the public interest test under the Solicitor-General's Prosecution Guidelines,23
| X |Footnote: 23
The Guidelines are described below from [27]. 
“given the ongoing prosecutions led by [WorkSafe] under the Health and Safety in Employment Act”
[13]
The present appeal concerns the eventual decision of WorkSafe to offer no evidence on all charges against Mr Whittall after he agreed to make a payment into court of $3.41 million. The source of the money was director insurance which, although not available to pay fines under the Act,24
| X |Footnote: 24
Health and Safety in Employment Act, s 56I. 
seems to have been available for the payment proposed and was being used for the costs of Mr Whittall's defence. As a result of the decision to offer no evidence, the charges against Mr Whittall were dismissed in December 2013.25
| X |Footnote: 25
Department of Labour v Whittall DC Christchurch CRI-2012-018-821, 12 December 2013
The District Court made an order for payment out of the money in satisfaction of the order for reparation earlier made against Pike River Coal. 
Judicial review 
[14]
Anna Elizabeth Osborne and Sonia Lynn Rockhouse applied for judicial review in the High Court of the WorkSafe decision to offer no evidence and the decision of the District Court to dismiss the charges against Mr Whittall. Ms Osborne is the widow of Milton Osborne and Ms Rockhouse is the mother of Ben Rockhouse. Both men died in the mine. The applicants claimed that the decisions of WorkSafe and the District Court were unlawful because they were based on a bargain to stifle prosecution and failed to comply either with the Solicitor-General's Prosecution Guidelines or the purposes of the Health and Safety in Employment Act.26
| X |Footnote: 26
Other bases of review were advanced in the High Court and Court of Appeal but are no longer pursued. It is therefore unnecessary to refer to them for the purposes of these reasons. 
 
[15]
The claims have been unsuccessful in the High Court and the Court of Appeal.27
| X |Footnote: 27
Osborne v WorkSafe New Zealand [2015] NZHC 2991, [2016] 2 NZLR 485Has Litigation History which is not known to be negative[Blue]  (Brown J); and Osborne v WorkSafe New Zealand [2017] NZCA 11, [2017] 2 NZLR 513Has negative litigation history or citing cases, having been wholly or partly reversed or overruled[Red]  (Kós P, Randerson and French JJ). 
The claim in respect of the decision of the District Court is no longer maintained and does not need to be dealt with when describing the history of the litigation. The challenge that remains live is that relating to the decision by WorkSafe to offer no evidence to the charges. The appellants seek a declaration that the decision to offer no evidence was unlawful. It is accepted by them that orders to set aside the decision to offer no evidence and to require the prosecution to proceed is no longer an available option with the passage of time. 
[16]
In the High Court, Brown J considered that the claims for judicial review were “not amenable to judicial review” because he considered the allegations did not amount to abuse of power or the exceptional circumstances which could justify review of the wide discretion available to prosecutors.28
| X |Footnote: 28
Osborne v WorkSafe New Zealand [2015] NZHC 2991, [2016] 2 NZLR 485Has Litigation History which is not known to be negative[Blue]  at [42]. 
In case wrong in that view, Brown J indicated why in any event he considered there was no error which would justify judicial review. 
[17]
WorkSafe had accepted that an agreement to make a payment in return for the charges being dropped would constitute an illegal arrangement which would not be consistent with the Solicitor-General's Prosecution Guidelines.29
| X |Footnote: 29
At [54]. 
It argued however that the arrangement was a voluntary one which WorkSafe was entitled to consider with other matters properly bearing on the decision whether or not to continue the prosecution. Brown J accepted the WorkSafe position. He took the view that the payment made by Mr Whittall, although conditional on no evidence being led, had not been pursuant to an illegal “binding bargain” to stifle prosecution (such as WorkSafe had accepted would not be consistent with the Solicitor-General's Prosecution Guidelines).30
| X |Footnote: 30
At [57]—[59]. 
The Judge took the view that WorkSafe had not fettered its discretion and had arrived at its decision after considering a range of matters it was able properly to consider. The prospect of securing the payment of the reparation order made against Pike River Coal was a matter it was entitled to take into account consistently with the Solicitor-General's Prosecution Guidelines in the absence of a binding agreement that payment would lead to the withdrawal of the charges.31
| X |Footnote: 31
At [60]—[63]. 
 
[18]
Other matters taken into account by WorkSafe (such as the high cost of the trial, the “low” prospects of guilty verdicts, the fact that any fines imposed were not likely to be substantial fines, and the fact that a comprehensive report about the disaster had been obtained through the Royal Commission) were not irrelevant considerations, as the applicants had suggested, but rather considerations which, even if they might have been differently weighed, could not justify judicial review of the discretion of the prosecutor.32
| X |Footnote: 32
At [64]—[77]. 
The Judge also rejected the arguments that WorkSafe had failed to consider the objects of the Act and had failed to meet the claimed legitimate expectations of the applicants that they would be consulted about the decision to discontinue the prosecution (a matter no longer pressed in this Court).33
| X |Footnote: 33
At [78]—[94]. 
He took the view that although there was no reference in the documents evidencing WorkSafe's consideration of the decision to s 5(g) of the Health and Safety in Employment Act (requiring “appropriate response to a failure to comply with the Act depending on its nature and gravity”), it could not be said that the object was not one to which WorkSafe had regard. 
[19]
On appeal, the Court of Appeal differed from the High Court in taking the view that the decision to offer no evidence was justiciable. It accepted however that it would be rare for relief to be available because of the wide range of considerations open to the decision-maker.34
| X |Footnote: 34
Osborne v WorkSafe New Zealand [2017] NZCA 11, [2017] 2 NZLR 513Has negative litigation history or citing cases, having been wholly or partly reversed or overruled[Red]  at [32]—[53]. 
Such exceptional error could, it thought, have arisen in the case in three circumstances: if the decision to offer no evidence had resulted from an unlawful bargain to stifle prosecution; if the decision was inconsistent with the Solicitor-General's Prosecution Guidelines; and if WorkSafe had failed to act in accordance with the purposes of the Act contained in s 5(g).35
| X |Footnote: 35
At [51]. 
 
[20]
The Court of Appeal concluded it could not be inferred from the evidence there was “a meeting of minds and striking of a bargain over the payment of reparation in return for withdrawal of charges”.36
| X |Footnote: 36
At [67]. 
The Court of Appeal pointed to four considerations that had driven its conclusion that there was no “improper bargain”:37
| X |Footnote: 37
At [68]—[72]. 
 
(a)
Although discussions between counsel had the characteristics of a negotiation, counsel for WorkSafe did not have authority to settle the outcome. 
(b)
It was Mr Whittall who put forward a “conditional reparation undertaking: that in the event the prosecution terminated, the payment would be made” but “it was then for WorkSafe to make its decision whether to pursue the prosecution or not”; it was proper for the conditional reparation undertaking to be a factor in the final decision. 
(c)
The decision was made by the Chief Inspector, Response and Investigations, Keith Stewart, who was “an independent public servant”, not interested in the outcome or the bargain and free of any mindset arising out of the negotiations because he had not been party to them; Mr Stewart's initial assessments as to whether to proceed with the prosecution were principally concerned with the prospects of success and were undertaken without reference to the conditional offer; the offer was taken into account only at a late stage when Mr Stewart was reassured, after legal advice, that it was proper to do so. 
(d)
It was not suggested that Mr Stewart had acted in bad faith and nor could it be suggested that he did not fulfil the applicable test of bringing a “fair and honest mind” to the decision whether to proceed with the prosecution. 
[21]
The Court of Appeal therefore concluded that, on the facts, the decision to offer no evidence on the charges was not taken as a result of bargain. Rather, it accepted that Mr Stewart had made the decision with a “fair and honest mind”, which the Court of Appeal considered to be the test for a bargain to stifle prosecution.38
| X |Footnote: 38
At [71]. 
In that decision Mr Stewart was “entitled in law” to consider the “conditional reparation undertaking”.39
| X |Footnote: 39
At [72]. 
The Court considered that it was appropriate to take into account the reparation enabled by the conditional payment and took the view that the reparation ordered against Pike River Coal (which was otherwise unlikely to be paid) could not be “disentangle[d] from Mr Whittall's proposal”.40
| X |Footnote: 40
At [77]. 
 
[22]
The Court of Appeal was critical of the submission that the decision did not reflect the Solicitor-General's Prosecution Guidelines because under them rectification of harm is a factor only where it is accepted by the victims. It pointed out that the Guidelines are not a code.41
| X |Footnote: 41
At [77]. 
The Court considered that it was open to WorkSafe to prioritise recovery of the reparation ordered against Pike River Coal over any acknowledgement of responsibility or other accountability on the part of Mr Whittall. 
[23]
Nor did the Court accept that the arrangement was contrary to the policy of s 5(g) of the Act. That section looks to “an appropriate response to a failure to comply with the Act depending on its nature and gravity”. The Court of Appeal took the view that “[t]he section does not preclude a prosecutor from facilitating finality in the dismissal of charges” and said that it was not clear that Mr Whittall's alleged offending (“rather than [Pike River Coal's] proven offending”) was grave.42
| X |Footnote: 42
At [82]—[84]. 
In any event, the weighing of factors such as the gravity of offending was held to be “beyond the proper scope of judicial review of a prosecution decision”.43
| X |Footnote: 43
At [84]. 
 
The appeal 
[24]
From the decision of the Court of Appeal, Ms Osborne and Ms Rockhouse appeal with leave.44
| X |Footnote: 44
Osborne v WorkSafe New Zealand [2017] NZSC 90Has Litigation History which is not known to be negative[Blue] 
WorkSafe no longer contends that the decision to offer no evidence is not justiciable. It accepts the approach to judicial review of prosecutorial discretion taken by the Court of Appeal. WorkSafe also continues to accept, as it did in the High Court and Court of Appeal, that an agreement not to prosecute in return for payment is contrary to public policy and the Solicitor-General's Prosecution Guidelines and is illegality that would justify judicial review to quash a decision based on it to offer no evidence. 
[25]
The appeal turns on whether the Court of Appeal was right to hold that the conditional arrangement made by Mr Whittall to pay the reparations ordered against Pike River Coal was not an agreement to prevent the prosecution but an offer of voluntary payment which WorkSafe was entitled to take into account in making its decision about prosecution. In order to address this matter it is necessary to traverse the facts behind the offer and the decision made by WorkSafe in some detail. Before doing so we set out the legal framework in which prosecution decisions are taken under the Health and Safety in Employment Act. 
Prosecution under the Health and Safety in Employment Act 
[26]
The charges against Mr Whittall were laid in the District Court by information by Mr Stewart who was, at the relevant time, an inspector appointed under the Health and Safety in Employment Act.45
| X |Footnote: 45
Section 54A(1) of the Health and Safety in Employment Act. The functions of inspectors include investigation and enforcement under the Act: s 30. 
The laying of the informations by an inspector precluded any private prosecution for the breaches of the Act.46
| X |Footnote: 46
Section 54A(2). 
By March 2013, when the formal proof hearing against Pike River Coal was heard, Mr Stewart was Chief Inspector, Response and Investigations and the manager who headed the Pike River investigation team. 
[27]
The case against Mr Whittall proceeded under the provisions of the Summary Proceedings Act 1957. As public prosecutions, the informations were subject to the general responsibilities of the Solicitor-General and the Guidelines established by the Solicitor-General. Since the coming into effect of the Criminal Procedure Act 2011, the role of the Solicitor-General in the “general oversight of public prosecutions”, including through the maintenance of guidelines and general advice and guidance, has been recognised by statute.47
| X |Footnote: 47
Criminal Procedure Act 2011, s 185. 
In the present case, the decision to offer no evidence explicitly invoked the Solicitor-General's Prosecution Guidelines. That reliance is consistent with the expectations expressed in the Guidelines that “[a]ll public prosecutions … whether conducted by Crown prosecutors, government agencies or instructed counsel, should be conducted in accordance with these Guidelines”.48
| X |Footnote: 48
Solicitor-General's Prosecution Guidelines (Crown Law, 1 July 2013) at [2.1]. 
 

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