Directors found personally liable for breaches of WHS may face hefty penalties and jail time!
Posted on February 13, 2019
In 2018, a number of decisions in Victoria and New South Wales saw an increase in willingness for interstate regulators to pursue company officers personally for breaches of Work Health Safety (WHS) laws. As this is a national law, the decisions are extremely relevant to South Australian businesses.
Most WHS laws impose a general duty on a person conducting a business or undertaking (PCBU) to ensure, so far as reasonably practicable, the health and safety of workers.
A breach of WHS laws is a criminal offence and the state based regulator will generally pursue the body corporate responsible. However, recently in Victoria and NSW, regulators have prosecuted both the body corporate and the individuals driving the entity - particularly sole directors or onsite officers in the construction industry.
An officer of a PCBU is subject to a separate duty to exercise ‘due diligence’ to ensure that the PCBU complies with their obligations under WHS laws. They hold an overarching responsibility to implement and monitor systems which ensure, so far as is reasonably practical, safe working practices in the workplace.
An “officer” is defined to mean any officer within the meaning of section 9 of the Corporations Act 2001 (Cth).
Recent Interstate Cases
- In SafeWork NSW v Opcon Plumbing Pty Ltd; SafeWork NSW v Annous  [i] Housam Annous, sole director of a small plumbing business ‘Opcon’ was prosecuted for failing to exercise due diligence as an officer, which exposed a worker to a risk of death or serious injury. Annous pleaded guilty to the offence and was convicted and ordered to pay a fine of $10,000 reduced $7,500 plus costs of $35,000.
- In SafeWork NSW v Meixing Jiang [ii] Mr Meixing Jiang pleaded guilty to a failure to exercise due diligence to ensure that Yaofu Pty Ltd complied with its duty under s 19(1) of the Act. Mr Jiang was the sole director of Yaofu when a worker fell three storeys down a shaft, sustaining serious injuries. Mr Jiang was convicted, and ordered to pay a fine of $30,000 reduced to $22,500 plus costs of $15,000.
- In SafeWork NSW v Cai [iii] Mr Cilin Cai pleaded guilty to a failure to exercise due diligence to ensure that Grandcity Constructions Pty Ltd complied with its duty under s 19(1) of the Act. Mr Cai was one of two directors of Grandcity. Mr Cai is a licensed builder holding approximately 10 years’ experience at the time of the incident when Mr Wang, a cleaner, fell three meters from an unprotected edge at the worksite, sustaining serious injuries. Mr Cai was convicted, and ordered to pay a fine of $32,000 reduced to $24,000 plus costs of $45,000.
- In SafeWork NSW v Shaun David Scott Mehan [iv] Mr Mehan pleaded guilty to a failure to exercise due diligence to ensure that Sydney Mechanical & Air Conditioning Services Pty Ltd (SMAC) complied with its duty under s 19(2) of the Act. One of SMAC’s apprentices sustained leg injuries when he was struck by a 525kg air conditioning unit that he was moving down a stairwell. Mr Mehan was convicted and ordered to pay a fine of $30,000 reduced to $7,500.
- In a Victorian WorkSafe matter 72 year old Maria Carla Jackson was convicted and sentenced to six months' jail in December 2018 after the death of a man at her scrap metal yard in Foster. A worker fell from a bin he had been standing in, which had been raised 3 meters off the ground by a forklift operated by Ms Jackson, who did not hold a licence to operate a forklift. Ms Jackson pleaded guilty to failing to comply with her duty as the owner and operator of the scrap metal yard, and to the more serious offence of reckless endangerment. Ms Jackson was also fined $10,000 and ordered to pay $7,336 in costs. Ms Jackson has appealed against the sentence.
- In Di Tonto v The Queen [v] Aldo Di Tonto pleaded guilty to a failure to take reasonable care to ensure that persons other than employees were not exposed to risks. Di Tonto prepared structural design drawings for the basement excavation of a development which collapsed, forcing residents of dwellings adjoining the site to evacuate. Originally, Di Tonoto was convicted and ordered to pay a fine of $100,000, however on appeal the fine was reduced to $50,000.
In 2018, SA saw a tragic matter of Campbell v Jarred MacGillivray Pty Ltd & Anor [vi] in which a 17 year old carpenter died in a accident onsite.
The respective sole directors of the two defendant companies, Jarred MacGillivray and Callan MacGilliray were originally charged in their capacity as directors of their respective companies, for failing to exercise due diligence in ensuring that the companies complied with their obligations under the WHS Act. However the charges against the individuals as sole directors were withdrawn when the defendant entities agreed to enter enforceable undertakings focused on the preventative measure of “construction sequencing”.
In his sentencing remarks, DP Magistrate Lieschke stated “simply repeating old patterns of work, and assuming all job sites have the same hazards, without asking what could go wrong and thinking how to minimise any identified risks of injury, is not acceptable to the community and is not permitted by law.”
Each defendant entity was ordered to pay compensation of $10,000 to each of Mr Norris’ parents and three siblings and a fine of $105,000.
The common failings of the officer’s in each of these decisions included:
- Failing to carry out adequate risk assessments or prepare adequate safe work method statements in order to identify reasonably foreseeable risks;
- Failing to provide adequate instructions or training in relation to the work;
- Failing to make use or provide appropriate equipment to enable the work to be undertaken safely.
The above decisions are important lessons for officers and directors, confirming that the Court will have no problem in penalising officers for failing in their positive duty to exercise due diligence in relation to work health and safety.
In South Australia, the maximum penalty for a category 1 offence of reckless conduct is $600,000 or 5 years imprisonment or both. A category 2 offence, being a failure to comply with a health and safety duty that exposes a person to risk of death or injury, attracts a maximum penalty of $300,000. A category 3 offence, being a failure to comply with a health and safety duty, attracts a maximum penalty of $100,000.
Good corporate governance has never been more important!
Directors, if you require advice about your duties under the WHS Act, please contact a member of Lynch Meyer’s workplace relations team.
[i] SafeWork NSW v Opcon Plumbing Pty Ltd; SafeWork NSW v Annous  NSWDC 350 (23 November 2018)
[ii] SafeWork NSW v Meixing Jiang  NSWDC 400 (17 December 2018)
[iii] SafeWork NSW v Grandcity Constructions Pty Ltd; SafeWork NSW v Cai  NSWDC 398 (14 December 2018)
[iv] SafeWork NSW v Shaun David Scott Mehan  NSWDC 391 (13 December 2018)
[v] Di Tonto v The Queen  VSCA 312 (21 November 2018)
[vi] Campbell v Jarred MacGillivray Pty Ltd & Anor  SAET 87 (11 May 2018)