In short, the District Court found that:
- Mr Gibson was an officer of a “person conducting a business or undertaking” (a PCBU) (i.e., POAL);
- who failed to exercise due diligence to ensure that POAL complied with its primary duty of care to ensure, so far as was reasonably practicable, the health and safety of workers at work in POAL’s business or undertaking; and
- that failure exposed POAL’s workers to a risk of death or serious injury.
The decision includes detailed analysis regarding the elements of the officer’s due diligence duty, in explaining why Mr Gibson had not met the relevant standards in the particular facts of this case.
The judgment is significant as it is the first time that an officer of a large New Zealand company has been charged and found guilty of offences under the HSW Act.
Judge Bonnar recognised this significance in the judgment:
“A practical tension exists… between the purpose of the legislation, which is to sheet home the due diligence duty to those at the “apex of large hierarchical organisations” and the fact that officers in such organisations will be, by virtue of the nature of their role and the size of such organisations, removed from the day-to-day implementation of business systems, processes and health and safety standards.”
Background
In August 2021, POAL and Mr Gibson were each charged with offences under the HSW Act, relating to the death of port worker, Mr Pala’amo (Amo) Kalati, on 30 August 2020. Mr Kalati died after being crushed when a container was dropped during a lifting operation.
POAL pleaded guilty to the charges laid against it. In doing so, it admitted that:
- it failed to ensure, so far as was reasonably practicable, the health and safety of its workers on the date of the incident leading to Mr Kalati’s death, and thereby exposed Mr Kalati and one other worker to a risk of death or serious injury; and
- it had committed a series of systemic failures, which meant that it had failed to ensure, so far as was reasonably practicable, the health and safety of its workers over a period of 14 months, which exposed those workers to a risk of death or serious injury.
Maritime NZ charged Mr Gibson as an “officer” of a PCBU, with offences under sections 48 and 49 of the HSW Act. Please refer to our previous article here for further information regarding the background to Maritime NZ’s prosecution.
Judgment: summary
In our previous article, we anticipated that the District Court might follow or rely on the recent decision from the District Court of New South Wales (NSW), SafeWork NSW v Miller Logistics Pty Ltd; SafeWork NSW v Mitchell Doble [2024] NSWDC 58 (Doble).
In that case, the NSW District Court considered an officer’s due diligence duties under an equivalent provision applicable in NSW. SafeWork NSW (the NSW equivalent of WorkSafe New Zealand) alleged that the sole managing director of the company (the “officer”) breached his due diligence duties following an incident involving a worker being struck by a forklift. The NSW District Court held that, although there had been a failure by the PCBU, the officer had not failed to exercise due diligence. In particular, the NSW District Court held that the “duty on an officer to exercise due diligence does not mean that the officer must do everything that the PCBU must do to ensure compliance with its own duty and that a failure by the PCBU does not, of itself, demonstrate a failure by an officer to exercise due diligence.”
Judge Bonnar considered the Doble decision, as well as other Australian cases decided under previous statutes. However, Judge Bonnar recognised that the Australian precedents, including Doble, were not binding and that the charges faced by Mr Gibson needed to be determined on the facts of his own case.
Judge Bonnar’s analysis included reference to the following facts, which were material to the finding that Mr Gibson had failed to exercise the care, diligence and skills that a reasonable officer would have exercised in the same circumstances:
- Mr Gibson was ultimately responsible for health and safety at POAL. He was tasked with a number of key health and safety responsibilities and retained responsibility for monitoring and reviewing the performances of his subordinates and POAL’s systems. In this sense, he was a “hands on” CEO in relation to port operations and safety issues in many practical ways (as opposed to “acting remotely from actual port operations or acting simply as a ‘head office-based CEO’”).
- Mr Gibson had failed to adequately address recommendations to make changes to the structure of assigned responsibilities and accountability for the POAL executive team with regards to health and safety, despite being aware of the specific recommendations to do so.
- Mr Gibson failed to ensure that POAL’s Health and Safety Steering Committee (the functional body for overseeing occupational health and safety management within POAL) was adequately performing its functions (Judge Bonnar found that it was not).
- Mr Gibson was aware that POAL’s assessments of critical risks were inadequate (or ought to have been aware of this, by reason of monthly safety and wellbeing reports).
- Mr Gibson was on notice to POAL’s ongoing difficulties in adequately monitoring work done on wharves, by virtue of POAL’s previous convictions. It was his responsibility to ensure that appropriate systems and processes were put in place to address those failures.
- Mr Gibson, with his knowledge and experience in all the circumstances, would have recognised the shortfalls in POAL’s management of the specific work that led to Mr Kalati’s death and should have ensured that POAL utilised appropriate resources to address those shortfalls.
Judge Bonnar held that these circumstances made it materially more likely that POAL would breach its duty of care to ensure that stevedores were not exposed to the risk of death or serious harm. Mr Gibson’s failure to exercise due diligence as a result of these matters thereby exposed the stevedores to the risk of death or serious harm by being struck by objects from operating cranes. Accordingly, Mr Gibson was found guilty of charges under section 48.
Importantly, Judge Bonnar confirmed that the fact that POAL breached its primary duty of care to workers did not automatically lead to the conclusion that Mr Gibson failed in his personal duty:
“A PCBU can breach its duties despite proper efforts by its officer to do all that he or she could reasonably have been expected to do in the circumstances, having regard to what the officer knew, what they ought to have known, and their ability to make or influence decisions in relation to the relevant matter.”
Broader considerations
While each case turns on its own facts, it is important for New Zealand officers to carefully review this decision, and reflect on learnings for their own organisational contexts.
In our view, some key reflections may include:
- How do I review the business’ health and safety systems and ensure that they adequately address health and safety risks – on an ongoing basis?
The decision confirms that compliance with the due diligence duty is not achieved through simply relying upon personnel with specific health and safety duties – rather, officers should ensure that they properly enquire into the organisation’s systems and are adequately addressing health and safety risks. This requires regular monitoring, review, and auditing of systems, and pro-active monitoring, verification, and interrogation of the information received. - How am I demonstrating active engagement in my due diligence obligations, beyond “oversight”?
The decision emphasises that the duty to exercise due diligence is not met through “governance or directorial oversight functions” alone – it requires something more. The officer must personally acquire and maintain sufficient knowledge to be reasonably satisfied that the PCBU is complying with its duties under the HSW Act. - Am I relying on the “best” expertise and advice in relation to health and safety matters in my industry?
Although evidence about the state of knowledge of health and safety matters within the relevant industry at the time, and practices of comparable businesses, may be relevant to an assessment of whether the required due diligence standard has been met, Judge Bonnar noted that “if the officer’s actions objectively fall below the standard required by the statute it does not assist the officer that comparator officers may also have routinely been falling below that standard.”
This decision confirms that due diligence duties apply to all officers across all PCBUs, large and small, with both flat and hierarchical structures: “the fact that an officer may operate at the head of a large, hierarchical organisation does not mean that the officer’s obligations are diminished.” However, we note that Judge Bonnar emphasised that each case is highly fact specific.
It is not known at this stage whether Mr Gibson will appeal this decision. The maximum penalty that Mr Gibson may face in respect of the charges upheld against him is a fine of NZ$300,000.
If you have any questions about the matters raised in this article, please get in touch with the contacts listed or your usual Bell Gully adviser.